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                  AMENDED AND RESTATED APPENDIX I ITC AGREEMENT
                  ---------------------------------------------

     This  AMENDED AND  RESTATED  APPENDIX I  INDEPENDENT  TRANSMISSION  COMPANY
AGREEMENT  (the  "Agreement")  is entered  into as of this 14th day of  February
2003, by and between the MIDWEST INDEPENDENT  TRANSMISSION SYSTEM OPERATOR, INC.
("Midwest ISO") and GRIDAMERICA LLC ("GridAmerica"). Midwest ISO and GridAmerica
are jointly referred to as the "Parties" and individually, as a "Party."

                                   BACKGROUND

     WHEREAS,  the United States Federal Energy Regulatory  Commission (together
with any successor agency,  "FERC" or "Commission") in Order No. 2000 called for
the  formation of regional  transmission  organizations  ("RTOs") to promote the
creation of large electricity  markets and to provide  reliable,  cost-efficient
services to customers;

     WHEREAS,  Midwest ISO is a FERC approved RTO with an open architecture that
accommodates  various forms of independent  transmission  company ("ITC") in its
operation;

     WHEREAS,  on April 25, 2002, the  Commission  issued an order in Docket No.
EL02-65 (99 FERC P. 61,105  (2002))  encouraging  the formation of an ITC within
Midwest ISO;

     WHEREAS,  Union Electric  Company,  d/b/a  AmerenUE,  and Central  Illinois
Public  Service  Company,   d/b/a  AmerenCIPS   (together,   "Ameren   Operating
Companies"),  American Transmission Systems, Incorporated ("ATSI"), a subsidiary
of FirstEnergy  Corp.,  and Northern  Indiana Public Service Company  ("NIPSCO")
wish to comply  with  Order No.  2000  through  the  formation  of an ITC within
Midwest ISO;

     WHEREAS, (i) the Ameren Operating Companies, ATSI, NIPSCO and National Grid
USA ("NGUSA") have executed and delivered that certain Master Agreement dated as
of October 31, 2002 (the "Original Master Agreement") regarding the creation and
operation of  GridAmerica  as an ITC within  Midwest ISO,  (ii) NGUSA has caused
GridAmerica  to be  formed  as a  limited  liability  company  with  GridAmerica
Holdings Inc., (successor to GridAmerica Holdings LLC), an affiliate of NGUSA as
managing member,  pursuant to that certain Limited  Liability  Company Agreement
dated as of October 31, 2002 (the "Original LLC Agreement"),  (iii) GridAmerica,
Ameren  Operating  Companies,  ATSI and NIPSCO have executed and delivered  that
certain  Operation  Agreement  dated  as of  October  31,  2002  (the  "Original
Operation  Agreement")  pursuant to which  GridAmerica will exercise  functional
control over the transmission facilities of the Ameren Operating Companies, ATSI
and  NIPSCO  that are not  currently  under the  operational  control  of a FERC
approved  RTO;  and (iv) the  Midwest  ISO and  GridAmerica  have  executed  and
delivered that certain  Appendix I Independent  Transmission  Company  Agreement
dated as of October 31, 2002 (the "Original MISO ITC Agreement");

     WHEREAS,  on December 19, 2002, the Commission  conditionally  accepted for
filing,  and suspended and made effective subject to refund,  future filings and
further orders, the Original Master Agreement,  the Original LLC Agreement,  the
Original Operation  Agreement and the Original MISO ITC Agreement in Docket Nos.
ER02-2233-001  and  EC03-14-000  (101 FERC P. 61,320 (2003) (the "FERC Approving
Order");

<PAGE>

     WHEREAS, the parties to each of the Original Master Agreement, the Original
LLC Agreement and the Original LLC Agreement  have agreed to, and have,  amended
and  restated  such  Agreements  to  comply  with the  requirements  of the FERC
Approving Order;

     WHEREAS, the Parties desire to set forth the terms and conditions governing
GridAmerica's  participation  in Midwest ISO as modified as required by the FERC
Approving Order;

     NOW, THEREFORE,  the Parties hereby agree to amend and restate the Original
MISO ITC Agreement in its entirety as follows:

                                    ARTICLE 1

                                   DEFINITIONS

     The terms  used in this  Agreement  shall  have the same  meaning as in the
Agreement Of Transmission  Facilities Owners To Organize The Midwest Independent
Transmission  System Operator,  Inc. on file with and accepted by the Commission
as Midwest  ISO's Rate  Schedule  FERC No. 1 ("Midwest  ISO  Agreement")  unless
otherwise specified herein.

     "Ameren" means Ameren Services  Company,  individually and as agent for the
Ameren Operating Companies.

     "Ameren  Operating  Companies"  has the meaning  set forth in the  recitals
hereto.

     "Ameren  Zone" means the RTO pricing  zone for which the rates  accepted or
approved by FERC for the Ameren Operating Companies shall apply.

     "Ameren  Zonal Rate" means the rates  applicable to the Ameren Zone, as may
be changed from time to time.

     "Approval  Order" shall mean one or more Final  Orders that,  collectively,
approve  this  Agreement  and  such  other  agreements  as may be  necessary  or
desirable  to create  GridAmerica  as an ITC within  Midwest ISO as to which the
approval  of  the  Commission  is  required  under   applicable   Law,   without
modification or condition,  other than any such  modifications and conditions as
would  not,  in the  aggregate,  cause a Party to fail to realize  any  material
benefit which it reasonably  anticipates from  participation in the transactions
contemplated by such Agreements.

     "ATSI Zone" means the RTO pricing zone for which rates for ATSI as accepted
or approved by FERC shall apply.

     "ATSI Zonal Rate" means the rates  applicable  to the ATSI Zone,  as may be
changed from time to time.

     "Authority" has the meaning set forth in Section 18.3 hereof.

                                       2

<PAGE>

     "Confidential Information" means all (i) information that is furnished to a
Recipient by the Disclosing Party or its Representatives, in whatever form, that
may constitute or contain confidential, proprietary or trade secret information,
or  which  may  otherwise  be  claimed  by  the  Disclosing  Party  to  be  of a
market-sensitive,  competitive, confidential or proprietary nature, and (ii) all
portions of any analyses, compilations,  studies or other documents that include
any of the foregoing  information prepared by or for a Recipient.  "Confidential
Information" excludes any information that (i) the Disclosing Party notifies the
Recipient  in  writing  is  not  confidential;  (ii)  becomes  available  to the
Recipient  on a  non-confidential  basis  from  a  source  other  than  (a)  the
Disclosing Party, its  Representatives or another person acting on behalf of the
Disclosing  Party,  or (b) a party who has  confidentiality  obligations  to the
Disclosing Party;  (iii) is or becomes  generally  available to the public other
than as a result of a disclosure by the Recipient,  its  Representatives  or any
person to whom such Recipient or Representatives disclosed the information; (iv)
was  previously  known to the Recipient free and clear of any obligation to keep
it  confidential;  (v) is disclosed  to third  parties by the  Disclosing  Party
without restriction or obligation of  confidentiality;  or (vi) is independently
developed  by  the  Recipient  without  reference  to  the  Disclosing   Party's
Information.

     "Consent" shall mean any authorization,  consent, opinion, order, approval,
license,  franchise,  ruling,  permit, tariff, rate,  certification,  exemption,
filing or registration from, by, or with any Governmental Authority,  any person
or any governing body of any person.

     "Control Date" has the meaning set forth in Section 4.1.3 hereof.

     "CPI Index"  shall mean the  Consumer  Price Index for All Urban  Consumers
(unadjusted for seasonal  variation) for the U.S. City Average as published from
time to time by the U.S.  Bureau of Labor  Statistics or any successor index (or
any  substantially  similar  index  in the  event  that no  successor  index  is
published) published by such bureau or any successor agency or department.

     "Direct Claim" has the meaning set forth in Section 17.6 hereof.

     "Disclosing Party" means either  GridAmerica,  Ameren,  ATSI, or NIPSCO, on
the one hand, or Midwest ISO, on the other hand, to the extent either such party
is furnishing the other party with Confidential Information concerning itself or
its affiliate(s).

     "Effective Date" has the meaning set forth in Section 2.1 hereof.

     "Facilities" mean those transmission  facilities over which GridAmerica has
functional control, as set forth on Schedule 1 attached hereto.

     "FERC Approving Order" has the meaning set forth in the recitals hereof.

     "Final Order" shall mean a final order issued by the  Commission  approving
this  Agreement  and such other  agreements  as may be necessary or desirable to
create  GridAmerica  as an ITC within  Midwest  ISO as to which  approval of the
Commission is required under applicable Law.

                                       3

<PAGE>

     "FirstEnergy Operating Companies" means The Cleveland Electric Illuminating
Company, Ohio Edison Company,  Pennsylvania Power Company, and The Toledo Edison
Company.

     "Good  Utility  Practice"  has the  meaning  set forth in the  Midwest  ISO
Agreement.

     "Governmental  Authority" or  "Governmental"  shall mean a federal,  state,
local  or  foreign  governmental  authority;  a state,  province,  commonwealth,
territory  or district  thereof;  a county or parish;  a city,  town,  township,
village or other municipality;  a district,  ward or other subdivision of any of
the foregoing; any executive,  legislative or other governing body of any of the
foregoing; any agency,  authority,  board, department,  system, service, office,
commission,  committee,  council  or  other  administrative  body  of any of the
foregoing;  any court or other judicial body and any officer,  official or other
representative of any of the foregoing.

     "GridAmerica  Integration  Costs" has the meaning set forth in Section 13.1
hereof.

     "GridAmerica Participants" means Ameren, ATSI, NIPSCO, and National Grid.

     "GridAmerica System" has the meaning set forth in Section 4.1.3 hereof.

     "GridAmerica Three" means Ameren, ATSI, and NIPSCO.

     "Indemnifying Party" has the meaning set forth in Section 17.4 hereof.

     "Indemnitee" has the meaning set forth in Section 17.4 hereof.

     "ITC Agreements"  means (i) the Amended and Restated Master Agreement dated
as of February 14, 2003 by and among GridAmerica, GridAmerica Holdings Inc., the
GridAmerica  Three and NGUSA,  (ii) the Amended and Restated  Limited  Liability
Company  Agreement of GridAmerica dated as of February 14, 2003 and entered into
by  GridAmerica  Holdings  Inc.  and (iii) the  Amended and  Restated  Operation
Agreement  dated  as of  February  14,  2003 by and  among  GridAmerica  and the
GridAmerica  Three,  in each  case  as the  same  may be  amended,  modified  or
otherwise supplemented and in effect from time to time.

     "Law" shall mean any applicable  constitutional  provision,  statute,  act,
code, law, regulation,  rule, ordinance,  order, decree,  ruling,  proclamation,
resolution,  judgment, decision, declaration or interpretive or advisory opinion
of a Governmental Authority.

     "Make-Ready  Arrangements"  shall  mean the  arrangements,  contractual  or
otherwise, made by or entered into by GridAmerica and/or Midwest ISO pursuant to
which  GridAmerica  or Midwest ISO, as the case may be,  acquires  such systems,
personnel, services,  intellectual property and other assets as are required for
GridAmeria to serve as an  Independent  Transmission  Company within Midwest ISO
and for  GridAmerica  or  Midwest  ISO,  as the  case  may be,  to  perform  its
obligations under the Delineation of Functions.

     "Member" has the meaning set forth in the Midwest ISO Agreement.

     "Midwest ISO OATT" has the meaning set forth in Section 4.1.5 hereof.

                                       4

<PAGE>

     "NDTO"  means  a  non-divesting  transmission  owner  that  has  signed  an
Operation Agreement with GridAmerica.

     "NIPSCO  Zone"  means the RTO  pricing  zone for which  rates for NIPSCO as
accepted or approved by the Commission shall apply.

     "NIPSCO  Zonal Rate" means the rates  applicable to the NIPSCO Zone, as may
be changed from time to time.

     "OASIS" has the meaning set forth in Section 6.1 hereof.

     "Order" shall mean any writ, judgment,  decree, injunction or similar order
of any Governmental Authority (in each such case, whether preliminary or final).

     "Order No. 2000" means the order of FERC set forth in Regional Transmission
Organizations,  Order No. 2000, FERC Stats and Regs  (Regulations  Preambles) P.
31,089  (1999),   order  on  reh'g,  Order  No.  2000-A,  FERC  Stats  and  Regs
(Regulations Preambles) P. 31,092 (2000).

     "Owners" has the meaning set forth in the Midwest ISO Agreement.

     "Performance Manager" has the meaning set forth in Section 12.1 hereof.

     "Recipient" means GridAmerica, Ameren, ATSI, or NIPSCO, on the one hand, or
Midwest  ISO,  on the  other  hand,  to  the  extent  such  Party  is  receiving
Confidential Information of the Disclosing Party.

     "Reliability  Coordination  Service"  has the  meaning set forth in Section
4.2.1 hereof.

     "Reliability  Coordinator"  has the  meaning  set  forth in  Section  4.2.3
hereof.

     "Representatives"   means  principals,   partners,   officers,   directors,
employees,  agents, and other representatives,  experts and advisors,  including
without  limitation,   attorneys,  independent  accountants,   consultants,  and
financial advisors, and Representatives of such Representatives.

     "Required  Consent"  shall mean with respect to  GridAmerica,  any required
consent or approval of the Securities and Exchange  Commission  under the Public
Utility Holding Company Act of 1935, as amended,  and any Consents that a member
of the GridAmerica  Three notifies  GridAmerica and Midwest ISO in writing prior
to December 31, 2002 are a precondition to its participation in GridAmerica.

     "RTO" has the meaning set forth in the recitals hereto.

     "RTO  Services"  mean those  services and  functions  which taken  together
enable  Ameren,  ATSI, and NIPSCO to comply fully with Order No. 2000, and shall
include the  transmission  services  described in, and to be provided by Midwest
ISO under, this Agreement.

     "Third Party Claim" has the meaning set forth in Section 17.4 hereof.

                                       5

<PAGE>

     "Transmission  System"  has  the  meaning  set  forth  in the  Midwest  ISO
Agreement.

     "Users" has the meaning set forth in the Midwest ISO Agreement.

                                    ARTICLE 2

           FILING, EFFECTIVE DATE, SERVICE DATE, TERM, AND TERMINATION
           -----------------------------------------------------------

     2.1  The GridAmerica  Participants,  on behalf of GridAmerica,  and Midwest
ISO shall  jointly  file with FERC for  approval  of this  Agreement  as soon as
practicable   following  the  execution  hereof.  This  Agreement  shall  become
effective  upon the date the FERC shall  have  issued  the  Approval  Order (the
"Effective  Date").  Each Party shall use its best efforts to gain FERC approval
of this  Agreement on an expedited  basis and agrees to provide  support for the
model set forth in this  Agreement  in public  fora and  elsewhere.  If the FERC
accepts and generally  approves this Agreement but requires a compliance  filing
by either of the Parties,  the Parties  shall  evaluate  whether  such  required
compliance filing materially changes or frustrates the intent of this Agreement.
The  Parties  agree to  negotiate  in good  faith to  establish  new  terms  and
conditions  that place the Parties in the same position as bargained for in this
Agreement.  In the event that the Parties  cannot reach an  agreement  within 30
days of FERC action on new terms and conditions, or the new terms and conditions
are not  subsequently  accepted by the FERC, the  GridAmerica  Participants  and
GridAmerica  may withdraw its  application  to join Midwest ISO upon thirty days
written notice.

     2.2  Subject to Sections 2.4 and 2.5, this Agreement shall remain in effect
following  the  Effective  Date for an initial  term ending at midnight  Carmel,
Indiana time on the fifth  anniversary  of the Control Date,  which initial term
shall be automatically extended from year to year unless either Party shall have
given the other six months written notice of termination prior to the end of the
initial term, or at the end of any renewal term if such notice is given at least
six months prior to the term then ending; provided,  however, that (i) if at the
time such notice of termination is given by either Party,  applicable provisions
in the  Midwest  ISO  Transmission  Owners  Agreement  governing  the right of a
"Transmission Owner" thereunder to withdraw from Midwest ISO specify a different
minimum time for notice of withdrawal  (whether  longer or shorter) from Midwest
ISO, such  different  minimum time shall apply under this  Agreement and (ii) if
GridAmerica  (x) has not acquired  transmission  facilities  of any NDTO and (y)
ceases  to  function  as an ITC,  whether  by  reason  of its  dissolution,  the
withdrawal of all of the NDTOs  participating  in GridAmerica as contemplated by
this  Agreement and as permitted by the ITC  Agreements  or otherwise,  then the
term of this Agreement shall end at the close of business on the day GridAmerica
ceases to function as an ITC.

     2.3  Notwithstanding  anything to the contrary set forth in this Agreement,
if (a) ownership of all or a substantial portion of any NDTO or its transmission
facilities is changed as a result of sale,  merger,  or acquisition  involving a
party other than an affiliate of such NDTO or (b) any NDTO  exercises  its right
to withdraw from  GridAmerica  set forth in Section  5.7(a) or Section 5.7(b) of
the  Master  Agreement  or  Section  5.1  of  the  Operation  Agreement  or  (c)
GridAmerica acquires transmission facilities of any NDTO, then such new owner or
such NDTO or  GridAmerica,  as the case may be,  may,  subject  to the terms and
conditions  set  forth  in the ITC  Agreements,  withdraw  its  facilities  from
GridAmerica;  provided,  however,  that,  unless the

                                       6

<PAGE>

Commission shall otherwise  approve,  upon the effectiveness of such withdrawal,
such new owner, NDTO or GridAmerica,  as the case may be, shall automatically be
and become a member of Midwest ISO for a term  ending no earlier  than the fifth
anniversary of the Control Date, or such later date as to which the term of this
Agreement shall have been extended pursuant to Section 2.2 hereof, and otherwise
having the same rights and  obligations as a member  "Transmission  Owner" under
the Midwest ISO Transmission Owners Agreement. Midwest ISO agrees to support the
membership of any such new owner,  NDTO or  GridAmerica,  as the case may be, in
Midwest ISO as contemplated by the immediately preceding sentence.

     2.4  Notwithstanding  anything to the contrary set forth in this Agreement,
GridAmerica  has the right to withdraw  from  Midwest  ISO upon 30 days  written
notice,  subject to FERC approval,  if other Midwest ISO Owners or ITCs withdraw
from  Midwest  ISO  where  either:   a)  GridAmerica   is  no  longer   directly
interconnected  with a remaining Midwest ISO member; or b) a material portion of
the transmission  facilities under Midwest ISO's operational control are removed
by Midwest ISO members.

     2.5  If  GridAmerica  withdraws from Midwest ISO,  GridAmerica  will remain
responsible  for all  financial  obligations  it incurs  under the  Midwest  ISO
Agreement and Midwest ISO OATT before the date of its withdrawal.

     2.6  Should,  upon the withdrawal of GridAmerica  from the Midwest ISO, the
NDTOs remain in the Midwest ISO either in another ITC or as Owners,  GridAmerica
will  not be  liable  to the  Midwest  ISO for  the  shares  of the  unamortized
GridAmerica  Integration  Costs applicable to those NDTOs that remain in Midwest
ISO.

                                    ARTICLE 3

                          STRUCTURE OF RTO ARRANGEMENT
                          ----------------------------

     3.1  GridAmerica  will  become an ITC within  Midwest  ISO  pursuant to the
terms and conditions of this Agreement.  GridAmerica will be treated as an Owner
under the Midwest ISO  Agreement to the extent it owns  transmission  facilities
within  Midwest ISO.  GridAmerica  will  represent the NDTOs with respect to the
governance  and  activities  of Midwest ISO. The NDTOs will have the same rights
and voting authority as Owners under the Midwest ISO Agreement.  Nothing in this
Agreement will preclude the NDTOs or any of their affiliates from  participating
in  appropriate   Midwest  ISO  matters.   Although  this  Agreement,   and  the
relationship   between   GridAmerica  and  Midwest  ISO  as  set  forth  herein,
incorporates certain provisions of the Midwest ISO Agreement,  any incorporation
of the terms of the Midwest ISO Agreement  herein shall not make  GridAmerica an
obligor  under  that  agreement,  nor shall  incorporation  of such  terms  make
GridAmerica in any way a party to the Midwest ISO  Agreement.  References to the
Midwest ISO Agreement in this Agreement shall mean the Midwest ISO Agreement and
the Appendices  thereto as the same exist on the date hereof and as the same may
be amended from time to time but only if and not until such amendments,  insofar
as  affecting  this  Agreement or the rights,  entitlements  or  obligations  of
GridAmerica, are also documented hereunder pursuant to Section 19.2 hereof.

                                       7

<PAGE>

     3.2  With  respect to its  supply of RTO  Services  under  this  Agreement,
not-withstanding  any other provision of this  Agreement,  Midwest ISO shall not
discriminate against GridAmerica  vis-a-vis other Midwest ISO Members (including
without limitation Owners or other ITCs) or Users to which it supplies identical
or substantially similar services.

     3.3  Except to the extent  inconsistent with the terms of this Agreement or
as otherwise  provided  herein,  the same procedures and protocols  described in
Appendix  E to  the  Midwest  ISO  Agreement  shall  govern  and  apply  to  the
relationship  of the Parties and the  provision  of RTO  Services by Midwest ISO
hereunder,  to the same extent as if  GridAmerica  were an Owner for purposes of
such Appendix E.

                                    ARTICLE 4

                 TRANSMISSION FACILITIES OPERATED BY GRIDAMERICA
                SUBJECT TO THE DIVISION OF FUNCTIONS SET FORTH IN
              SCHEDULE 5 TO THIS AGREEMENT AND TO CERTAIN PROTOCOLS
                SET FORTH IN VARIOUS SCHEDULES TO THIS AGREEMENT
                ------------------------------------------------

     4.1  Functional Control,  Reliability,  Provision of Regional  Transmission
Service.

          4.1.1  GridAmerica  will  exercise   functional   control   over   the
Facilities. The NDTOs will file applications with the Commission for approval of
the transactions contemplated by this Agreement and the ITC Agreements.

          4.1.2  After  receiving authorization  to exercise functional  control
over the  Facilities,  GridAmerica  will cede to Midwest ISO those functions set
forth in Schedule 5 to this  Agreement  that are to be performed by Midwest ISO.
GridAmerica  shall  perform  those  functions  set forth in  Schedule  5 to this
Agreement  that are to be performed by GridAmerica as an ITC, and will also, for
a  transition  period  not  to  extend  beyond  the  earlier  to  occur  of  the
implementation  of standard  market design and Midwest ISO's Day Two  congestion
management  systems,  perform  as  contractor  to  Midwest  ISO,  certain of the
functions  to be  performed  by Midwest  ISO,  as  described  on Schedule 5. All
functions  set forth in Schedule 5 that are to be  performed by  GridAmerica  as
contractor to Midwest ISO shall be performed  under the  supervision  of Midwest
ISO pursuant to protocols to be agreed  between the Parties.  Schedule 5 to this
Agreement sets forth the "Delineation of Functions" approved by FERC in Alliance
Companies,  99 FERC P. 61,105 (2002);  TransLink,  99 FERC P. 61,106 (2002). The
Parties recognize that, prior to full operations  pursuant to the Delineation of
Functions  in Schedule 5, (i) the  development  of the  GridAmerica  systems and
assets must be completed  and  integrated  into the Midwest ISO systems and (ii)
the  Parties  must agree on  procedures  for  implementing  the  Delineation  of
Functions.   Following  complete  integration  of  systems,   service  over  the
Facilities will be provided under the Midwest ISO OATT.

          4.1.3  Each of Midwest ISO and GridAmerica  shall promptly  notify the
other in writing  of the  satisfaction  of all  applicable  legal  requirements,
system readiness,  and systems integration necessary for GridAmerica and Midwest
ISO to  assume  their  respective  responsibilities  under  the  Delineation  of
Functions  (each a "Notification  of Readiness").  On the first day of the month
following the receipt of such Notifications of Readiness, but no sooner

                                       8

<PAGE>

than the fifth day following  the date of receipt of the last such  Notification
of Readiness  (the  "Control  Date"),  GridAmerica  and Midwest ISO shall assume
their  respective  responsibilities  under the Delineation of Functions over the
facilities  constituting  the  GridAmerica   transmission  system  ("GridAmerica
System"). Midwest ISO will thereafter exercise its delineated functions over the
Facilities and the GridAmerica System consistent with its responsibilities under
Article  Three,  Section  l.A of the  Midwest  ISO  Agreement.  Anything in this
Section  4.1.3 or otherwise in this  Agreement to the contrary  notwithstanding,
the occurrence of the Control Date shall be postponed and shall not occur:

               (a) unless and until the Commission shall have issued an Approval
Order and (unless waived by the Parties) none of the Final Orders comprising the
Approval  Order is subject to possible  rehearing  and each Party  requiring any
Required  Consent  shall  have  received  the same,  or shall  have  waived  the
requirement  that it shall have  received the same,  and such  Required  Consent
shall: (i) be in form and substance which would not, in the reasonable  judgment
of such Party,  and when considered in light of the Approval Order and all other
Required  Consents (A) cause such Party to fail to realize any material  benefit
which it  reasonably  anticipates  from the  transactions  contemplated  by this
Agreement and the ITC  Agreements or (B) impose any  conditions or  requirements
which could reasonably be expected to have a material and adverse effect on such
Party's or any of its  affiliates'  current or planned  operations  or  business
activities or its or their prospects; and (ii) be in full force and effect.

               (b)  unless  and until the  Make-Ready  Arrangements  shall be in
place and shall be  reasonably  satisfactory  in form and  substance  to each of
GridAmerica and Midwest ISO.

               (c)  unless and until the Parties shall have agreed on procedures
for  implementing  the Delineation of Functions as contemplated by Section 4.1.2
hereof.

               (d)  unless and until  Midwest ISO shall have made (i) a one-time
payment  equal  to the  amount  of the  actual  costs  (including  appropriately
allocated  internal costs) incurred by National Grid USA (and/or its affiliates)
and the  GridAmerica  Three as may be reasonably  necessary or  appropriate  for
GridAmerica  to obtain such  services  and acquire  such rights to  intellectual
property or other  assets as are  required  for  GridAmerica  to serve as an ITC
within  Midwest ISO as  contemplated  by the ITC  Agreements  and to perform its
obligations  under the  Delineation  of  Functions,  as the same may be amended,
modified or otherwise  supplemented by mutual  agreement of the parties prior to
the Control Date and (ii) a one-time payment to reimburse the GridAmerica  Three
for their  actual  costs  (including  appropriately  allocated  internal  costs)
incurred  in the  development  of  Alliance  RTO,  such  payments  to be made as
directed by GridAmerica;  provided,  however, that the aggregate amount required
to be paid by  Midwest  ISO  pursuant  to this  paragraph  (d) shall not  exceed
$36,200,000.  All  amounts to be paid by Midwest ISO  pursuant  to this  Section
4.1.3(d)  shall be  supported  by  documentation  submitted  to Midwest ISO with
GridAmerica's Notification of Readiness.

               (e)  unless and until  Midwest ISO shall have refunded to Ameren,
with  interest,  the  $18,000,000  payment  made by Ameren to leave  Midwest ISO
pursuant to the terms of settlement  approved in Illinois  Power Co., 95 FERC P.
61,183, order on reh'g., 96 FERC P. 61,206 (2001).

                                       9

<PAGE>

               (f)  if there  shall be in effect  any Order or Law  restraining,
enjoining or otherwise  prohibiting  or making illegal the  consummation  of the
transactions  contemplated by this Agreement,  the MISO License Agreement or the
ITC Agreements.

          4.1.4  GridAmerica shall  share  GridAmerica's  procurement  plan  for
obtaining third party services and  intellectual  property and other assets that
are  required  for  GridAmerica  to  serve  as an  ITC  within  Midwest  ISO  as
contemplated  by  this  Agreement  and to  perform  its  obligations  under  the
Delineation  of  Functions.  GridAmerica  will confer with  Midwest ISO prior to
entering  into any  contract  with a third  party  vendor  that  will  result in
expenditures  of  $500,000  or more for which  GridAmerica  will  seek  recovery
pursuant to Section 4.1.3(d).

          4.1.5  On and  after  the  Control   Date,   Midwest  ISO  shall  have
responsibility for the reliability of the GridAmerica System consistent with its
responsibilities  under the Delineation of Functions and Article Three,  Section
I.B  of  and  Appendices  B and E to  the  Midwest  ISO  Agreement.  Should  the
Commission  modify the  delineation  of  functions  between  ITCs and RTOs,  the
parties agree to negotiate to effectuate the Commission's intent with respect to
such modified delineation of functions.

          4.1.6  On and after the Control Date, GridAmerica and Midwest ISO will
provide  transmission  service over the Grid  America  System and in the Ameren,
ATSI,  and NIPSCO Zones on a  nondiscriminatory  basis under,  and in accordance
with, the Delineation of Functions and the Midwest ISO Open Access  Transmission
Tariff on file with FERC or any  successor  tariff  (the  "Midwest  ISO  OATT"),
subject to and in accordance  with the  provisions  and  limitations of Sections
3.3, 11 and 13 hereof Midwest ISO shall administer the Midwest ISO OATT.

          4.1.7  Following the Control Date,  Midwest ISO shall offer within the
Ameren,  ATSI,  and NIPSCO  Zones,  as part of the  Midwest  ISO OATT,  all such
ancillary  services as are required by FERC to be offered  under the Midwest ISO
Tariff.  Midwest ISO shall obtain such services from  providers in a manner that
minimizes  cost,  consistent  with its  reliability  responsibilities  and other
obligations under this Agreement. In obtaining such ancillary services,  Midwest
ISO shall afford no undue preference or disadvantage to any generation supplier.
The NDTOs shall maintain those schedules in the Open Access Transmission Tariffs
permitting  the  provision of ancillary  services and nothing in this  Agreement
shall preclude an NDTO from  self-supplying  any necessary  ancillary  services.
Moreover,  nothing in this Agreement shall preclude GridAmerica (consistent with
FERC policy and on behalf of the NDTOs) or the NDTOs from  participating  in any
competitive ancillary services markets that may be created within Midwest ISO.

          4.1.8  On and after  the  Control  Date,   Midwest  ISO  will  perform
congestion   management   functions  with  respect  to  the  GridAmerica  System
consistent with its responsibilities  under Attachment K of the Midwest ISO OATT
or any other FERC approved  congestion  management plan that may be administered
by Midwest ISO from time to time.

          4.1.9  Legal and  equitable   title  to  the   respective   properties
comprising the GridAmerica  System,  including all land and land rights,  and to
all the Facilities or any facilities  with  GridAmerica  may hereafter  build or
acquire, shall remain with the respective NDTOs or

                                       10

<PAGE>

their affiliates (unless the NDTOs or such affiliates  transfer title to another
entity)  and is not  changed by this  Agreement.  The NDTOs or their  affiliates
shall retain all rights incident to such legal and equitable  title,  including,
but not limited to, the right, subject to applicable federal or state regulatory
approvals and third party rights, to build,  acquire,  sell,  dispose of, use as
security or convey any part of such property,  or use such property for purposes
other than providing transmission services (such as the use of such property for
telecommunications  purposes),  provided  that the  exercise  of any such rights
shall not impair the reliability of the Transmission System.

     4.2  Reliability Coordination Service.

          4.2.1  On and after  the  Control  Date,   Midwest  ISO  will  be  the
Reliability  Coordinator for the Ameren, ATSI, and NIPSCO Zones, and shall enter
into any such  arrangements  as are necessary to perform this function.  Midwest
ISO  shall  supply  the  service  specified  in  Schedule  2 to  this  Agreement
("Reliability  Coordination  Service")  together,  in conjunction with, and as a
part of, the reliability  coordination  function  performed by Midwest ISO under
the Midwest ISO Agreement.

          4.2.2. If  appropriate,  GridAmerica  may take actions to preserve the
security of the  GridAmerica  System before  requesting  assistance from Midwest
ISO.  GridAmerica  shall inform  Midwest ISO of any such actions and  coordinate
such actions with Midwest ISO.

          4.2.3  Notwithstanding any other provision of this Agreement,  Midwest
ISO may  intercede  and direct  appropriate  actions in its role as the regional
reliability  coordinator (the  "Reliability  Coordinator").  If such Midwest ISO
action is disputed by GridAmerica,  Midwest ISO's position shall control pending
resolution of the dispute.

          4.2.4  Without limiting Midwest  ISO's general  obligation  under this
Agreement to ensure non-discriminatory service to GridAmerica, Midwest ISO shall
take no discriminatory  action in carrying out Reliability  Coordination Service
which would advantage the transmission  transactions  scheduled on the system(s)
of any other Midwest ISO Members,  Owners, other ITCs or Users over transactions
scheduled on the GridAmerica System.

                                    ARTICLE 5

                             PREEXISTING OBLIGATIONS
                             -----------------------

     5.1  GridAmerica  and  Midwest  ISO  will  execute  agency   agreements  in
substantially  the same form as  Appendix G to the Midwest  ISO  Agreement,  for
transmission  service provided over  distribution  facilities owned and operated
within the Ameren, ATSI, and NIPSCO Zones by the Ameren Operating Companies, the
FirstEnergy Operating Companies, or NIPSCO.  Notwithstanding any other provision
in Appendix G, the agency  authorization  shall not be construed as  authorizing
Midwest ISO to enter into any  agreement  that  creates any  liability,  cost or
other  obligation to be borne by the owners or by the GridAmerica  Three or Grid
America that is not expressly set forth in the Midwest ISO OATT.

     5.2  Midwest  ISO agrees to assume all  rights  and  obligations  under the
Ameren, ATSI, and NIPSCO OATT agreements entered into prior to the Control Date,
including, but not limited

                                       11

<PAGE>

to agreements for network integration service, firm point-to-point  transmission
service,  and generator  interconnection  service.  A list of such agreements is
attached as Schedule 3 to this Agreement.

     5.3  Midwest ISO will comply with all  obligations to provide  transmission
service incurred by the Ameren Operating  Companies,  the FirstEnergy  Operating
Companies,  and NIPSCO  pursuant to agreements  with third parties  entered into
prior to the effective date of the Ameren,  ATSI, and NIPSCO OATTs.  Midwest ISO
may satisfy these  obligations,  in whole or in part,  through the agreement for
network  integration  service  between  Midwest  ISO  and the  Ameren  Operating
Companies,  the  FirstEnergy  Operating  Companies,  and NIPSCO.  A list of such
agreements is attached as Schedule 4 to this Agreement.  Such  agreements  shall
continue  to be  performed  according  to their  terms  until such time as those
agreements may be modified by the Commission;  provided,  however,  that after a
transition  period of six years from the Control  Date,  all such loads shall be
served  directly  under  the  Midwest  ISO OATT  unless  the  Commission  orders
otherwise.  The Parties shall commence negotiations to address conversion to the
Midwest ISO after the transition period within three years of the Control Date.

     5.4  Midwest ISO  acknowledges  that Ameren,  ATSI, and NIPSCO have certain
obligations to  transmission  customers as a result of orders issued by the FERC
or other Governmental Authorities. GridAmerica will identify such obligations to
Midwest ISO prior to the Control Date. To the extent that  GridAmerica is unable
to perform such obligations following the Control Date, Midwest ISO will use its
best efforts to perform such  obligations on  GridAmerica's  behalf,  consistent
with the Midwest  ISO  Agreement  and the  Midwest  ISO Tariff.  Nothing in this
Section 5.4 shall be  construed  as  relieving  Ameren,  ATSI,  the  FirstEnergy
Operating  Companies  or  NIPSCO,  as the case may be, of these  obligations  to
transmission customers.

     5.5  Nothing in this Article 5 requires  Midwest ISO to assume  obligations
for transmission  service provided outside of the Ameren, ATSI, and NIPSCO Zones
or to perform any act prohibited by law.

                                    ARTICLE 6

                            SCHEDULING, ATC AND OASIS
                            -------------------------

     6.1  In order to provide for the  performance by GridAmerica of its tagging
and scheduling functions in accordance with the Delineation of Functions and the
integration  of those  functions  with the  functions to be performed by Midwest
ISO,  Midwest ISO shall provide  GridAmerica with access to and the right to use
its automated  scheduling system maintained and hosted by Midwest ISO and having
the functionality and performance  characteristics described on Schedule 6 under
the heading "Scheduling System."

     6.2  On or before the Control Date,  Midwest ISO shall  implement and shall
thereafter  maintain  an Open  Access  Same-time  Information  System or Systems
("OASIS") or  successor  system(s)  pursuant to the Midwest ISO OATT.  The OASIS
shall conform to the requirements for such systems as specified by FERC.

                                       12

<PAGE>

     6.3  On and after the  Control  Date,  GridAmerica  and  Midwest  ISO shall
review  and  approve,   as  appropriate,   requests  for  service  and  schedule
transmission  transactions  occurring over the GridAmerica  System in the manner
set forth in the  Delineation  of Functions.  GridAmerica  and Midwest ISO shall
also determine available  transmission  capability for the GridAmerica System in
the manner set forth in the  Delineation  of Functions.  In order to provide for
the  performance  by  GridAmerica  of its AFC functions in  accordance  with the
Delineation  of  Functions  and the  integration  of  those  functions  with the
functions to be  performed by Midwest ISO, (i) Midwest ISO shall make  available
to  GridAmerica  the data and other  services  described on Schedule 6 under the
heading  "AFC  System - Midwest  ISO  Obligations"  and (ii)  GridAmerica  shall
design,  implement,  host and  maintain  an  automated  AFC  system  having  the
functionality and performance  characteristics described on Schedule 6 under the
heading "AFC System - GridAmerica  Obligations." GridAmerica agrees that Midwest
ISO  shall  be a  permitted  licensee  of any  third  party  software  or  other
intellectual  property included in the GridAmerica AFC system and any agreements
with vendors in respect of any components of the GridAmerica AFC system shall be
freely  assignable  to MISO at no cost (other than ongoing  payments  under such
agreements  that would be the  obligation of  GridAmerica  in the absence of any
such assignment).

                                    ARTICLE 7

                      RATINGS AND TRANSMISSION MAINTENANCE
                      ------------------------------------

     7.1  On and after the Control  Date,  GridAmerica  shall provide to Midwest
ISO  ratings  and  operating  procedures  for the  Facilities  that  make up the
GridAmerica  System subject to dispute  resolution as set forth in Appendix D to
the Midwest ISO Agreement if Midwest ISO disagrees. GridAmerica's position shall
prevail pending resolution of the dispute.

     7.2  On  and  after  the  Control  Date,   GridAmerica   may  set  its  own
transmission  maintenance and outage  schedules  (subject to dispute  resolution
pursuant  to  Section  12 hereof if  Midwest  ISO  objects  to such  schedules).
GridAmerica shall coordinate such transmission  maintenance and outage schedules
with Midwest ISO as described in the  Delineation  of Functions.  With regard to
disputes concerning such schedules, GridAmerica's position shall prevail pending
resolution of the dispute, unless Midwest ISO, acting in its role as Reliability
Coordinator  under  Section  4.2  hereof,  determines  that  system  security is
involved,  in which case  Midwest  ISO's  determination  shall  prevail  pending
resolution  of  the  dispute.  GridAmerica  shall  maintain  the  Facilities  in
accordance with Good Utility  Practice.  In order to provide for the performance
by  GridAmerica  of its  outage  scheduling  functions  in  accordance  with the
Delineation  of  Functions,  Midwest  ISO agrees to design and  implement  those
changes to its  outage  scheduler  described  on  Schedule  6 under the  heading
"Outage Scheduler".

                                    ARTICLE 8

              CONSTRUCTION AND PLANNING; BEST PRACTICES CONSULTANCY
              -----------------------------------------------------

     8.1  On and after  the  Control  Date,  and  until  the  implementation  of
planning  processes  and  protocols  pursuant to Section 8.2 of this  Agreement,
GridAmerica  shall plan the GridAmerica  System in coordination with Midwest ISO
consistent with the Delineation of

                                       13

<PAGE>

Functions and the  provisions  and  protocols  provided for in Appendix B to the
Midwest ISO Agreement. Midwest ISO has the same obligations and responsibilities
to  GridAmerica  that Midwest ISO has to Owners under  Appendix B of the Midwest
ISO Agreement.

     8.2  The Parties  agree to develop and  implement  streamlined  coordinated
planning processes and protocols which grant GridAmerica, as a fully independent
ITC, greater  discretion and authority to plan its system to meet customer needs
than is  currently  granted  to  Owners  under  Appendix  B to the  Midwest  ISO
Agreement.  To the extent  required by  applicable  law,  any such plan shall be
approved by FERC prior to implementation.

     8.3  Notwithstanding  any other  provisions of this Article 8,  GridAmerica
shall use commercially  reasonable efforts to construct transmission  facilities
as directed by Midwest  ISO  consistent  with the  provisions  of Article  Four,
Section I.C of the Midwest ISO Agreement.

     8.4  For a period of one year following the Control Date,  GridAmerica will
provide a  consultancy  service  to  Midwest  ISO to assist  Midwest  ISO in the
development of  transmission  best  practices and will provide  Midwest ISO with
advice on enhancing existing assets, asset management and replacement,  lifetime
asset rating enhancements,  safety matters, latest technology applications, real
time  monitoring  capability  and rating,  matters  relating to  maintenance  of
facilities and outage optimization, both before and during implementation of day
ahead and real time markets.

                                    ARTICLE 9

              RESPONSIBILITY FOR GENERATOR INTERCONNECTION SERVICE
              ----------------------------------------------------

     On and  after  the  Control  Date,  GridAmerica  shall be  responsible  for
generator  interconnection service within the Ameren, ATSI, and NIPSCO Zones and
shall have the right to establish  the terms and  conditions  thereof,  provided
that FERC has approved  GridAmerica's  procedures and form of agreement for such
interconnection  service.  Until FERC  approval of such  procedures  and form of
agreement,  on  and  after  the  Control  Date,  Midwest  ISO's  interconnection
protocols  shall govern  GridAmerica's  provision  of generator  interconnection
service within the Ameren, ATSI, and NIPSCO Zones, except to the extent provided
in Section 5.2.  The Parties also  recognize  that the  Commission  has issued a
Notice of Proposed Rulemaking regarding generator interconnection agreements and
procedures  in Docket No. RM02-1 and intend that  GridAmerica  will fully comply
with FERC's policy on generator interconnections.

                                   ARTICLE 10

                     Market and Other Monitoring, Penalties
                     --------------------------------------

     10.1 On and after the Control Date,  Midwest ISO, in  accordance  with FERC
policy and directives,  will conduct market monitoring within the Ameren,  ATSI,
and  NIPSCO  Zones  consistent  with the terms of Article 8 of the  Midwest  ISO
Agreement.

                                       14

<PAGE>

     10.2 On and after the Control  Date,  Midwest ISO shall  impose and collect
penalties  within the Ameren,  ATSI,  and NIPSCO Zones as currently  provided in
Article 8 of the Midwest ISO Agreement and the Midwest ISO OATT.

                                   ARTICLE 11

                         RATES AND REVENUE DISTRIBUTION
                         ------------------------------

     11.1 In a  Section  205 rate  case to be filed  prior to the  operation  of
GridAmerica  within the Midwest  ISO,  Midwest ISO will  support the recovery of
lost revenues of each of the GridAmerica Three resulting from the elimination of
multiple  zonal   transmission  rate  charges  and  the  corresponding   revenue
allocation  consistent  with the treatment of other Owners and ITCs. The Parties
will  immediately  commence and participate in a collaborative  process with the
Owners and other  Midwest ISO  stakeholders  regarding  such lost  revenues  and
distribution  method  necessary to achieve these goals.  Nothing herein shall be
construed  as a waiver  of any of the  Parties'  rights  to file  with  FERC for
changes  to  the  Midwest  ISO  pricing  and  revenue  distribution   protocols.
GridAmerica  reserves the right to proffer as part of such filing,  individually
or with other companies,  the Alliance rate design endorsed by FERC in its April
25, 2002 Order on Petition for Declaratory Order in Docket Nos. EL02-65-000,  et
al.  Nothing  in this  Agreement  will  preclude  GridAmerica  or the NDTOs from
participating in or protesting any such FERC filings and proceedings.

     11.2 On and  after the  Control  Date,  Midwest  ISO  shall  distribute  to
GridAmerica  or the NDTOs (at the  election  of  GridAmerica  or the NDTOs) on a
monthly basis any amounts due to  GridAmerica or the NDTOs which result from the
provision of  transmission  service under the Midwest ISO OATT,  consistent with
Appendix C to the Midwest ISO Agreement and this Agreement. GridAmerica may take
no unilateral  action which interferes with or affects the revenue  distribution
provided for in Appendix C of the Midwest ISO Agreement or which interferes with
the collection by Midwest ISO of the revenues due it for services it provides or
arranges pursuant to the Midwest ISO OATT, unless such action by GridAmerica has
been approved by the FERC.  GridAmerica  shall have periodic (no more frequently
than quarterly)  audit rights with respect to revenue  distribution and shall be
entitled to have any discrepancies resolved within 90 days of the identification
of the problem.

     11.3   Rate and Tariff Term Dovetailing.

     11.3.1 On and after the Control Date,  Midwest ISO shall charge the Ameren,
ATSI, and NIPSCO Zonal Rates for all applicable  transactions  under the Midwest
ISO OATT.  In the  development  of  regional  rates,  Midwest  ISO shall use the
Ameren, ATSI, and NIPSCO Zonal Rates as an input to the rate calculations.

     11.3.2 Midwest ISO will support the use of the existing  Ameren,  ATSI, and
NIPSCO OATT rates and rate design for use within the  Ameren,  ATSI,  and NIPSCO
Zones, respectively,  and will permit Ameren, ATSI, and NIPSCO, at their option,
to convert their OATT rates for network integration service to a formula rate or
a stated rate.  Midwest ISO will support the use of Ameren,  ATSI,  and NIPSCO's
rate  structure  for  operations  within  Midwest  ISO  to the  greatest  extent
possible.

                                       15

<PAGE>

     11.3.3 To facilitate  competition in wholesale  power markets,  Midwest ISO
will either discount its total charges in the Midwest ISO OATT for Drive-Out and
Drive-Through  Service or make a Section 205 application  with the FERC to lower
the  cap on its  total  charges  in the  Midwest  ISO  OATT  for  Drive-Out  and
Drive-Through  Service.  The new cap on its  total  charges  for  Drive-Out  and
Drive-Through Service,  whether achieved by discount or application to the FERC,
will be  formulated  to provide  flexibility  for the  Midwest  ISO to  maximize
revenue while minimizing the charges applicable to this service. The GridAmerica
and the NDTOs may intervene in and/or  protest the Section 205 filing  described
in this section.

                                   ARTICLE 12

                   PERFORMANCE MANAGEMENT; DISPUTE RESOLUTION
                   ------------------------------------------

     12.1 Each of GridAmerica and Midwest ISO shall designate a senior executive
to serve as performance manager (the "Performance Manager") under this Agreement
and who shall have overall responsibility for the quality of performance by such
Party of its functions pursuant to the Delineation of Functions. The Performance
Managers shall meet at least  quarterly to review the respective  performance by
each Party of its functions under the  Delineation of Functions,  the compliance
or lack of compliance with any of the performance standards setout in Schedule 6
and any other matters relating to the quality of performance by the Parties, and
based on such review shall agree on any necessary remedial action and/or methods
to improve  performance.  In order for such quarterly  reviews to be successful,
GridAmerica and Midwest ISO agree to freely exchange  performance data and other
information helpful for the evaluation and improvement of performances.

     12.2 In order to facilitate  the  performance  by each of  GridAmerica  and
Midwest ISO under this  Agreement,  (i) each Party shall  prepare and  implement
appropriate  disaster  recovery  plans,  (ii) will  cooperate  in the design and
implementation of appropriate testing and trialing protocols,  and (iii) Midwest
ISO will  provide for  necessary  training  on its  systems  and will  provide a
customer  care  capability on a  twenty-four  hour per day,  seven days per week
basis.

     12.3 Any dispute as to any matter not  governed by the terms of the Midwest
ISO OATT and arising under or in connection with this Agreement between or among
GridAmerica  and Midwest ISO, any Owner, or any other Member shall be subject to
the same  dispute  resolution  procedures  as are set forth in Appendix D to the
Midwest ISO Agreement.

                                   ARTICLE 13

                           PROVISIONS REGARDING COSTS
                           --------------------------

     13.1 In consideration of GridAmerica's  performance of (a) its functions as
an ITC set forth in the  Delineation of Functions,  Midwest ISO will  compensate
GridAmerica in the amount of $9,500,000 per year, (b) its functions performed as
a contractor to Midwest ISO set forth in the  Delineation of Functions,  Midwest
ISO will  compensate  GridAmerica  in the amount of $1,000,000 per year for each
year or part thereof  during which  GridAmerica  performs such  functions as set
forth in Section  4.1.2 hereof and (c) the  consultancy  services to be provided
pursuant to Section 8.4 for the one year period  following the Control Date, and
the  resulting  cost

                                       16

<PAGE>

savings to Midwest ISO, Midwest ISO will compensate GridAmerica in the amount of
$1,500,000  per year.  For each twelve month period  following the Control Date,
Midwest  ISO  will  pay  GridAmerica  one-twelfth  of the  aggregate  amount  of
compensation payable to GridAmerica for such twelve month period on the 15th day
of each month during such twelve month period,  which amount shall be subject to
adjustment as follows:

     13.1.1  GridAmerica's  annual  compensation  shall be  adjusted  to reflect
changes in the CPI Index as follows:

             (a)  No  adjustment shall be  made unless on any anniversary of the
Control  Date,  the CPI Index on such  anniversary  is at least  103% of the CPI
Index on the Control Date.

             (b)  On  the  anniversary  of the  Control  Date on  which  the CPI
Index  is at least  103% of the CPI  Index on the  Control  Date,  GridAmerica's
annual compensation shall be adjusted by multiplying the amount of GridAmerica's
compensation  in the  immediately  preceding  year  by the sum of one  plus  the
percentage  increase in the CPI Index on such  anniversary over the CPI Index on
the Control Date.

             (c)  Thereafter,   GridAmerica's   annual  compensation   shall  be
adjusted on each  subsequent  anniversary of the Control Date by multiplying the
amount of  GridAmerica's  compensation in the immediately  preceding year by the
sum of one plus the  percentage  increase  in the CPI Index on such  anniversary
date over the CPI Index on the first day of such preceding year.

     13.1.2  GridAmerica  will  implement  any  necessary  modifications  to its
operations  to support  Midwest  ISO's  locational  marginal  pricing  and other
aspects of standard market design on aunified, region-wide market basis. If as a
result of the foregoing,  there is a material change in the functions  performed
by  GridAmerica,   and  as  a  result,  either  GridAmerica  believes  that  its
compensation  should be increased or Midwest ISO believes that its  compensation
should be decreased as a result of changes in such  functions,  either Party, by
written notice to the other may request that the amount of GridAmerica's  annual
compensation be the subject of good faith negotiations;  provided, however, that
if the  Parties  are not able to agree,  either  Party  shall  have the right to
commence  an  appropriate  proceeding  before  the  FERC  to  establish  whether
GridAmerica's  compensation  should be  changed  the  amount of any  appropriate
change.

     13.1.3 In performing  functions as  contractor to Midwest ISO,  GridAmerica
will,  to the degree  practicable,  locate  personnel in Midwest  ISO's  Carmel,
Indiana, facility at no additional cost to Midwest ISO.

     13.2 Midwest ISO will make no special  assessment  or other  allocation  to
GridAmerica or other Midwest ISO Owners or ITCs of capital costs associated with
the development  and  implementation  of a standard market design.  In the event
that a standard  market design is required by the FERC or otherwise  proposed by
Midwest  ISO,  Midwest  ISO will  present  its  proposal to recover the costs of
development and implementing the standard market design to its stakeholders. The
recovery   mechanism   proposed  by  Midwest  ISO,  including  any  Section  205
application  to the FERC,  must provide for recovery of standard  market  design
costs from all

                                       17

<PAGE>

market participants  through a user based mechanism  consistent with Midwest ISO
Schedule  10.  GridAmerica  and the NDTOs may  intervene  in or protest any such
filing or FERC proceeding.

     13.3 Midwest ISO will make no special  assessment  or other  allocation  to
GridAmerica or other Midwest ISO Owners or ITCs of capitalized  costs associated
with the  integration of the Southwest  Power Pool, its  transmission  owners or
members into Midwest ISO.  Midwest ISO will recover such costs under Midwest ISO
Schedule 10.

                                   ARTICLE 14

                INCLUSION OF ADDITIONAL FACILITIES BY GRIDAMERICA
                -------------------------------------------------

     In the event that GridAmerica  acquires or otherwise operates  transmission
facilities not identified in Schedule 1 to this Agreement, such facilities shall
not be deemed  "Facilities"  or become part of the  "GridAmerica  System" unless
GridAmerica so chooses to designate or assign such facilities,  such designation
or  assignment  may occur on a  case-by-case  basis or on a continuous  basis at
GridAmerica's option. In no event, however,  shall any such facilities be deemed
to be  "Facilities" or become part of the  "GridAmerica  System" unless they are
located in or electrically interconnected to Midwest ISO systems.

                                   ARTICLE 15

                     CHANGES OR AMENDMENTS TO THIS AGREEMENT
                     ---------------------------------------

     This Agreement may not be amended or changed without the written  agreement
of the Parties and acceptance by FERC, as required.

                                   ARTICLE 16

                            GENERAL RESPONSIBILITIES
                            ------------------------

     16.1 On and after the Control Date,  Midwest ISO shall have with respect to
its relationship with GridAmerica,  and performance of RTO Services contemplated
by this Agreement, all those responsibilities to GridAmerica,  which Midwest ISO
has to other ITC within Midwest ISO, as well as all other obligations of Midwest
ISO  set  forth  in  Article  Three,  Sections  III  and IV of the  Midwest  ISO
Agreement.

     16.2 Midwest ISO and its directors,  officers,  employees,  contractors and
agents  shall,  at all times,  adhere to the  Standards  of Conduct set forth in
Appendix A to the Midwest ISO Agreement.

     16.3 GridAmerica will be subject to Article Four, Section II of the Midwest
ISO Agreement in the same manner as an Owner.

     16.4 On and after the Control Date, GridAmerica shall be subject to Midwest
ISO's Enforcement  Authority in the same manner as an Owner under Article Three,
Section V of the Midwest ISO Agreement.

                                       18

<PAGE>

     16.5 On and after the  Control  Date,  Midwest  ISO shall  maintain  on its
website a listing of all members of GridAmerica  holding "Class A Units" and the
number of "Class A Units" held by such member. GridAmerica shall promptly notify
Midwest ISO of any  issuance of "Class A Units" and any  conversion  of "Class B
Units" into "Class A Units."

                                   ARTICLE 17

                             ASSUMPTION OF LIABILITY
                             -----------------------

     17.1 Midwest ISO shall assume liability for any injury or damage to persons
or property  arising from Midwest ISO's own acts or neglect,  including the acts
or neglect of its Representatives and contractors,  and shall release, indemnify
and hold  harmless  GridAmerica  from and against all damages,  losses,  claims,
demands, suits, recoveries,  costs and expenses, court costs, attorney fees, and
all other  obligations by or to third parties,  arising from Midwest ISO's gross
negligence  or willful  misconduct in the  performance  of its duties under this
Agreement,  except  in cases  where,  and only to the  extent  that,  the  gross
negligence  or willful  misconduct  of  GridAmerica  or its  Representatives  or
contractors contributes to the claimed injury or damage.

     17.2 GridAmerica shall assume liability for any injury or damage to persons
or  property  arising  from  its own  acts or  neglect,  including  the  acts or
negligence of its  Representatives or contractors,  and shall indemnify and hold
harmless  Midwest  ISO  from  any  damages,   losses,  claims,  demands,  suits,
recoveries,  costs and  expenses,  court  costs,  attorney  fees,  and all other
obligations by or of third parties,  arising from GridAmerica's gross negligence
or willful  misconduct in performing its duties under this Agreement,  except in
cases  where,  and only to the  extent  that,  the gross  negligence  or willful
misconduct of Midwest ISO or its  Representatives or contractors  contributes to
the claimed injury or damage.  For purposes of Article Two,  Section  VIII(C) of
the Midwest ISO Agreement, GridAmerica and the NDTOs shall be treated as Owners.
Nothing   in  this   Agreement   shall   preclude   GridAmerica   from   seeking
indemnification or recovery from its NDTOs.

     17.3 GridAmerica shall not be liable to Midwest ISO for any action taken at
the  direction  of Midwest  ISO,  except in cases of the failure to comport with
good business practice or gross negligence or willful misconduct of GridAmerica.

     17.4 If a Party (or its  Representative(s)  or  contractor(s))  entitled to
indemnification  or  assumption  of  liability  by the other  Party  under  this
Agreement  (an  "Indemnitee")  receives  written  notice of the assertion of any
claim or of the commencement of any claim, action, or proceeding made or brought
by any person or entity who is not a Party to this Agreement or any affiliate of
a Party  to this  Agreement  (a  "Third  Party  Claim")  with  respect  to which
indemnification  or assumption of liability is to be sought from the other Party
(an  "Indemnifying  Party"),  the Indemnitee will give such  Indemnifying  Party
reasonably prompt written notice thereof, but in any event not later than thirty
(30) days after the  Indemnitee's  receipt of written notice of such Third Party
Claim.  Such  notice  shall  describe  the  nature of the Third  Party  Claim in
reasonable  detail. The Indemnifying Party will have the right to participate in
or, by giving written notice to the  Indemnitee,  to elect to assume the defense
of, any Third Party Claim at such  Indemnifying  Party's own expense and by such
Indemnifying  Party's own counsel,  and the

                                       19

<PAGE>

Indemnitee  will cooperate in good faith and may  participate in such defense at
such Indemnitee's own expense.

     17.5 If within ten (10) calendar days after an Indemnitee  provides written
notice  to the  Indemnifying  Party of any Third  Party  Claim,  the  Indemnitee
receives written notice from the Indemnifying Party that such Indemnifying Party
has  elected to assume the  defense of such Third Party Claim as provided in the
last sentence of Section 17.4, the Indemnifying Party will not be liable for any
legal expenses  subsequently  incurred by the Indemnitee in connection  with the
defense  thereof;  provided,  however,  that the  Indemnitee  may assume its own
defense by giving written notice to the Indemnifying Party, and the Indemnifying
Party will be liable for all reasonable expenses thereof,  (i) if the Indemnitee
at any time  reasonably  determines  that  there may be a conflict  between  the
positions of the  Indemnifying  Party and of the  Indemnitee in  conducting  the
defense of any Third Party Claim, or that there may be legal defenses  available
to any  Indemnitee  different  from or in  addition  to those  available  to the
Indemnifying  Party; or (ii) if the Indemnifying  Party fails to take reasonable
steps  necessary to defend  diligently such Third Party Claim within twenty (20)
calendar days (unless  waiting  twenty (20)  calendar  days would  prejudice the
Indemnitee's  rights)  after  receiving  notice  from  the  Indemnitee  that the
Indemnitee  believes the  Indemnifying  Party has failed to take such steps. If,
within ten (10) calendar days after an Indemnitee has provided written notice to
the Indemnifying  Party of any Third Party Claim, the Indemnifying Party has not
given written notice to the Indemnitee that such Indemnifying  Party has elected
to assume the defense of such Third Party Claim, the Indemnifying Party shall be
liable  for any  legal  expenses  subsequently  incurred  by the  Indemnitee  in
connection  with the defense  thereof.  Without the prior written consent of the
Indemnitee,  the  Indemnifying  Party will not enter into any  settlement of any
Third Party Claim. If the Indemnifying  Party desires to enter into a settlement
of any  Third  Party  Claim,  and  such  settlement  would  neither  (i) lead to
liability  or  create  any  financial  or  other  obligation  on the part of the
Indemnitee  for which the  Indemnitee  is not  entitled  to  indemnification  or
assumption  of liability by the other Party  hereunder,  or (ii)  reasonably  be
construed as an  admission of  culpability  or  liability by the  Indemnitee  or
expected to create an adverse  precedent which could undermine the  Indemnitee's
defense of or position with respect to any future claims by third parties; then,
in such event, the Indemnifying Party will give written notice to the Indemnitee
to that effect. If the Indemnitee fails to consent to such settlement within ten
(10) business days after its receipt of such notice,  the  Indemnitee may assume
or continue  the  defense of such Third  Party  Claim and,  in such  event,  the
maximum liability of the Indemnifying Party as to such Third Party Claim will be
the amount of such settlement  offer, plus reasonable costs and expenses paid or
incurred by the  Indemnitee up to the date of such notice.  Notwithstanding  the
foregoing, the Indemnitee shall have the right to pay, compromise, or settle any
Third Party Claim at any time,  provided that in such event the Indemnitee shall
waive any right to indemnify or  assumption  of liability  hereunder  unless the
Indemnitee  shall have first  sought the  consent of the  Indemnifying  Party in
writing to such payment,  settlement,  or compromise and such consent was either
obtained or was  unreasonably  withheld or delayed,  in which event no claim for
indemnification or assumption of liability with respect thereto shall be waived.

     17.6 Any claim by an Indemnitee under this Article 17 which does not result
from a Third  Party  Claim (a "Direct  Claim")  will be  asserted  by giving the
Indemnifying Party reasonably prompt written notice thereof,  stating the nature
of such claim in  reasonable  detail and  indicating  the estimated  amount,  if
practicable  (provided  that such  estimate  shall in no event

                                       20

<PAGE>

limit the amount which the  Indemnitee is entitled to recover under this Article
17,  but in any  event  not later  than  thirty  (30)  calendar  days  after the
Indemnitee  becomes aware of such Direct Claim, and the Indemnifying  Party will
have a period of thirty  (30)  calendar  days  within  which to  respond to such
Direct Claim. If the Indemnifying Party does not respond within such thirty (30)
calendar day period, the Indemnifying Party will be deemed to have accepted such
Direct  Claim.  If  the  Indemnifying  Party  rejects  such  Direct  Claim,  the
Indemnitee may seek enforcement of its rights under this Agreement.

     17.7 If the amount of any loss or damages  recoverable  under this  Article
17, at any time  subsequent  to the making of a payment in respect  thereof,  is
reduced by recovery, settlement, or otherwise under or pursuant to any insurance
coverage,  or  pursuant  to any claim,  recovery,  settlement,  or payment by or
against  any  other  entity,  the  amount  of such  reduction,  less any  costs,
expenses,  or premiums incurred in connection  therewith (together with interest
thereon  from the date of payment  thereof at the prime rate as published in The
Wall  Street  Journal)  will  promptly  be  repaid  by  the  Indemnitee  to  the
Indemnifying  Party. Upon making any indemnity  payment,  the Indemnifying Party
will, to the extent of such  indemnity  payment,  be subrogated to all rights of
the  Indemnitee  against  any third  party in  respect of the claim to which the
payment  relates;  provided,  however,  that until the Indemnitee  recovers full
payment of its loss or  damages,  any and all claims of the  Indemnifying  Party
against  any such  third  party on  account  of said  payment  are  hereby  made
expressly  subordinated  and  subjected in right of payment to the  Indemnitee's
rights  against such third party.  Without  limiting the generality or effect of
any other provision  hereof,  each such Indemnitee and  Indemnifying  Party will
duly execute upon request all instruments  reasonably  necessary to evidence and
perfect the above-described subrogation and subordination rights.

     17.8 A failure to give timely  notice as  provided in this  Article 17 will
not affect the rights or obligations of any Party hereunder  except if, and only
to the extent that, as a result of such failure, the Party which was entitled to
receive such notice was actually prejudiced as a result of such failure.

                                   ARTICLE 18

                                 CONFIDENTIALITY
                                 ---------------

     18.1 Each  Party   acknowledges  the  importance  to  the  other  Party  of
preserving  the  confidentiality  of the  Confidential  Information  and  that a
Disclosing  Party will comply with this  Article 18 in  furnishing  Confidential
Information to a Recipient in connection  with the matters  contemplated by this
Agreement.

     18.2 The  Recipient  shall  treat  all  Confidential   Information  as  the
proprietary,  sensitive and strictly  confidential  information  of a Disclosing
Party, and shall not reveal,  divulge or disclose any Confidential  Information,
at any  time  or for  any  reason,  to  any  person  or  entity,  except  to the
Representatives  of such  Recipient  who have a need to know  such  Confidential
Information for the purposes  authorized in this  Agreement;  provided that such
Representatives  have been advised and  instructed  by such  Recipient  that the
Confidential  Information  is and is to be treated as strictly  confidential  in
accordance with this Agreement.  The Recipient shall safeguard the  Confidential
Information  at least  to the same  extent  that it would  its own

                                       21

<PAGE>

proprietary,   sensitive,  and  confidential  information.  The  Recipient  will
instruct  all of its  Representatives  to maintain  the  confidentiality  of all
Confidential  Information  and  will  be  responsible  for  any  breach  of  any
obligation set forth in this Article 18 that is caused by any of them.

     18.3 Notwithstanding   the  foregoing   provisions  of  Section  18.2,  the
Recipient may disclose  Confidential  Information  to the extent but only to the
extent (a) expressly approved by the Disclosing Party in writing or (b) required
by law, a court, or a governmental authority (each, an "Authority"), but only if
(i) the Recipient  attempts to notify the Disclosing  Party as far in advance as
practicable  prior to making  disclosure of its intent to disclose  Confidential
Information and of the content and mode of communication of the disclosure,  and
(ii) the Recipient  cooperates  with the Disclosing  Party's efforts to obtain a
protective  order protecting the  Confidential  Information from disclosure.  In
addition, if disclosure is required by an Authority, the Recipient to the extent
practicable,  will (a) promptly notify the Disclosing Party of the circumstances
surrounding  the  requirement,  (b)  consult  with the  Disclosing  Party on the
advisability  of taking legally  available steps to resist or narrow the request
or requirement,  and (c) disclose such Confidential Information only after using
all reasonable  efforts to comply with clauses (a) and (b) and after cooperating
with the Disclosing  Party's  reasonable efforts to obtain a protective order or
other  reliable  assurance that  confidential  treatment will be accorded to any
portion of the  Confidential  Information  designated  for such treatment by the
Disclosing  Party. If such protective  order or other assurance is not obtained,
the  Recipient  will furnish only that portion of the  Confidential  Information
that  is  required,   and  will  seek,  to  the  extent   reasonable  under  the
circumstances, to obtain assurances that confidential treatment will be accorded
to the  Confidential  Information  by the  party(ies)  to whom the  Recipient is
required   to   disclose.   Anything   in  this   Agreement   to  the   contrary
notwithstanding,  a Recipient  may disclose  Confidential  Information  to FERC;
provided  such  disclosure  relates to FERC's  evaluation  or  consideration  of
matters  contemplated by this Agreement and provided that the Recipient seeks to
the maximum extent permitted by law and by FERC's  regulations to compel FERC to
keep the information confidential.

     18.4 All  Confidential  Information  delivered by a  Disclosing  Party to a
Recipient  pursuant to this  Agreement  shall be and remain the  property of the
Disclosing Party, and such  Confidential  Information shall be promptly returned
to the  Disclosing  Party upon  request or the  termination  of this  Agreement.
Promptly after  performing its  obligations  under the preceding  sentence,  the
Recipient  will, upon request,  furnish the Disclosing  Party with a certificate
executed by an officer, certifying such return. That portion of the Confidential
Information  that may be  found  in  analyses,  compilations,  studies  or other
documents  prepared by or for a Recipient and all Confidential  Information that
is oral will be kept by the Recipient  subject to the terms of this Agreement or
destroyed.  Neither the Recipient nor any of its  Representatives  shall use the
Confidential Information for any purpose whatsoever except to consider, evaluate
or effectuate matters or services contemplated by this Agreement.

     18.5 The obligations of the Parties under this Article 18 shall survive the
termination  of this  Agreement and shall remain binding for a period of two (2)
years  thereafter;  provided,  however,  that a  Recipient's  obligations  under
Section 18.2 with respect to any trade secrets or other proprietary  information
that are clearly and conspicuously identified as such by the Disclosing Party at
the time of  disclosure  and under the third  sentence  of  Section  18.4  shall

                                       22

<PAGE>

continue, without limitation, and nothing in this Section 18.5 shall limit or be
construed to limit the term of protection of any laws otherwise  protecting such
Confidential Information under intellectual property laws.

     18.6 Although each of the Parties hereby agrees to use  reasonable  efforts
to include in  Confidential  Information  furnished  to the other Party data and
information believed by it to be relevant to the discussions,  consideration and
effectuation,  if any, of any actions or matters contemplated by this Agreement,
each Party  hereby  disclaims  and does not make  hereby any  express or implied
representation  or  warranty  concerning  the  accuracy or  completeness  of any
Confidential  Information,  and no  Disclosing  Party shall have  liability to a
Recipient for Recipient's use of any Confidential  Information of the Disclosing
Party. In addition,  determination of the amount of Confidential  Information to
be  disclosed  resides  solely  with the  Disclosing  Party  and  disclosure  of
information  of any nature shall not obligate the  Disclosing  Party to disclose
any further Confidential Information.

     18.7 No license to a Party, under any trademark, patent, copyright or other
intellectual  property  right is either  granted or implied by the  conveying of
Confidential  Information to such Party.  None of the  Confidential  Information
which  may be  disclosed  or  exchanged  by the  Parties  shall  constitute  any
representation, warranty, assurance, guarantee or inducement by any Party to the
other  Parties  of  any  kind,   and,  in   particular,   with  respect  to  the
non-infringement of trademarks,  patents,  copyrights, or any other intellectual
property rights, or other rights of third persons.

     18.8 Midwest ISO shall not use or display any logo,  tradename,  trademark,
service mark or other  intellectual  property of GridAmerica or the  GridAmerica
Three without the prior written  consent of  GridAmerica to such use or display.
Any use or display by Midwest  ISO of any logo,  tradename,  trademark,  service
mark or  other  intellectual  property  of  GridAmerica  shall be  deemed  to be
pursuant to a  non-exclusive,  non-transferable,  non-assignable  license to use
such item solely as consented to by  GridAmerica,  which license will  terminate
upon any termination of this Agreement, and shall in no way be construed to mean
that Midwest ISO has  acquired  any  ownership  interest  therein.  Other issues
related to intellectual  property will be addressed in certain of the agreements
described in the Participation Agreement dated July 3, 2002.

                                   ARTICLE 19

                    REPRESENTATIONS, WARRANTIES AND COVENANTS
                    -----------------------------------------

     19.1 In  order  to  induce  Midwest  ISO  to  enter  into  this  Agreement,
GridAmerica hereby represents and warrants that the statements contained in this
Section 19.1 are true and correct.

          (a)  GridAmerica  is  a  Delaware  limited  liability  company,   duly
organized,  validly  existing  and  in  good  standing  under  the  laws  of its
jurisdiction of  organization,  with full power and authority to own, lease, use
and  operate its  properties  and to conduct  its  business as and where  owned,
leased, used, operated and conducted.

                                       23

<PAGE>

          (b)  Subject to the receipt by GridAmerica and the  GridAmerica  Three
of any Required  Consents,  GridAmerica has all requisite power and authority to
enter into this Agreement and to consummate  the  transactions  contemplated  by
this   Agreement.   The  execution  and  delivery  of  this  Agreement  and  the
consummation of the transactions  contemplated  hereby have been duly authorized
by all necessary action on the part of GridAmerica. This Agreement has been duly
executed and delivered by GridAmerica and, subject to the receipt by GridAmerica
and its  affiliates  of any  Required  Consents  required  by it or any of them,
constitutes the legal, valid and binding obligation of GridAmerica,  enforceable
against it in  accordance  with its terms,  subject to  bankruptcy,  insolvency,
fraudulent  conveyance,  reorganization,   moratorium  and  other  similar  laws
relating to or  affecting  creditors'  rights  generally  and general  equitable
principles (whether considered in a proceeding in equity or at law).

          (c)  Neither  the  execution   and  delivery  of  this   Agreement  by
GridAmerica nor the consummation of the transactions contemplated hereby:

               (1)  will  violate,  conflict  with, or result in a breach of any
          provision of its certificate of  organization or it limited  liability
          company agreement; or

               (2)  will  violate,  conflict  with, or result in a breach of any
          provision  of, or  constitute a default (or an event  which,  with the
          giving of notice, the passage of time or otherwise, would constitute a
          default) under, require any consent under, or entitle any person (with
          the giving of notice,  the passage of time or otherwise) to terminate,
          accelerate,  modify or call a default under, or result in the creation
          of any lien, security interest,  charge or encumbrance upon any of the
          properties  or  assets  of  GridAmerica,   under  any  of  the  terms,
          conditions or provisions of any note, bond, mortgage,  indenture, deed
          of trust, license,  contract,  undertaking,  agreement, lease or other
          instrument or obligation to which  GridAmerica is a party,  the effect
          of which will have or is reasonably likely to have, a material adverse
          effect on the business, properties, condition (financial or otherwise)
          or results of operations of GridAmerica.

          (d)  Subject to the receipt by GridAmerica  or any of the  GridAmerica
Three of any Required Consents, all authorizations of and exemptions, actions or
approvals  by, and all  notices to or filings  with,  any  federal  Governmental
Authority  that are required to have been obtained or made by GridAmerica or any
of the  GridAmerica  Three, as the case may be, in connection with the execution
and delivery of this  Agreement have been obtained or made and are in full force
and effect, and all conditions of any such authorizations,  exemptions,  actions
or approvals have been complied with.

     19.2 No later  than 40 days after the  Commission  issues one or more Final
Orders,  GridAmerica  shall  notify  Midwest ISO in writing  whether or not such
Final Orders constitute an Approval Order.

     19.3 In order to induce  GridAmerica to enter into this Agreement,  Midwest
ISO hereby represents and warrants that the statements contained in this Section
19.3 are true and correct.

                                       24

<PAGE>

          (a)  Midwest ISO is a Delaware  non-stock  corporation duly organized,
validly  existing and in good  standing  under the laws of its  jurisdiction  of
organization,  with full power and authority to own, lease,  use and operate its
properties  and to  conduct  its  business  as and where  owned,  leased,  used,
operated and conducted.

          (b)  Midwest ISO has all  requisite  power and authority to enter into
this  Agreement  and  to  consummate  the  transactions   contemplated  by  this
Agreement.  The execution and delivery of this Agreement and the consummation of
the transactions  contemplated hereby have been duly authorized by all necessary
action on the part of Midwest ISO.  This  Agreement  has been duly  executed and
delivered  by  Midwest  ISO and,  subject to the  receipt by Midwest  ISO of any
Required  Consents  required  by it,  constitutes  the legal,  valid and binding
obligation of Midwest ISO,  enforceable against it in accordance with its terms,
subject  to  bankruptcy,  insolvency,  fraudulent  conveyance,   reorganization,
moratorium  and other  similar laws relating to or affecting  creditors'  rights
generally and general equitable  principles  (whether considered in a proceeding
in equity or at law).

          (c)  Neither the execution  and delivery of this  Agreement by Midwest
ISO nor the consummation of the transactions contemplated hereby:

               (1)  will  violate,  conflict  with, or result in a breach of any
          provision of its articles of incorporation; or

               (2)  will  violate,  conflict  with, or result in a breach of any
          provision  of, or  constitute a default (or an event  which,  with the
          giving of notice, the passage of time or otherwise, would constitute a
          default) under, require any consent under, or entitle any person (with
          the giving of notice,  the passage of time or otherwise) to terminate,
          accelerate,  modify or call a default under, or result in the creation
          of any lien, security interest,  charge or encumbrance upon any of the
          properties  or  assets  of  Midwest  ISO,  under  any  of  the  terms,
          conditions or provisions of any note, bond, mortgage,  indenture, deed
          of trust, license,  contract,  undertaking,  agreement, lease or other
          instrument or  obligation to which Midwest ISO is a party,  the effect
          of which will have or is reasonably likely to have, a material adverse
          effect on the business, properties, condition (financial or otherwise)
          or results of operations of Midwest ISO.

          (d)  All  authorizations  of and exemptions,  actions or approvals by,
and all notices to or filings with, any federal Governmental  Authority that are
required to have been  obtained or made by Midwest  ISO in  connection  with the
execution and delivery of this  Agreement  have been obtained or made and are in
full  force  and  effect,  and  all  conditions  of  any  such   authorizations,
exemptions, actions or approvals have been complied with.

     19.4 No later  than 40 days after the  Commission  issues one or more Final
Orders,  Midwest ISO shall  notify  GridAmerica  in writing  whether or not such
Final Orders constitute an Approval Order.

     19.5 During the term of this  Agreement and for a period of 12 months after
the  termination  hereof,  each Party  agrees,  that  without the prior  written
consent of the other Party, it

                                       25

<PAGE>

will not solicit for  employment  any  employees of such other  Party;  provided
however, that this limitation shall not prevent  solicitations  addressed to the
public generally or preclude a Party from  considering for employment  employees
of the other Party who initiated contact with such Party or who responded to any
such general solicitation.

                                   ARTICLE 20

                                  MISCELLANEOUS
                                  -------------

     20.1 The  obligations  of the Parties  shall be binding on and inure to the
benefit of their respective heirs, successors, assigns, and affiliates.

     20.2 This Agreement  constitutes the Parties' entire  agreement  concerning
the subject  matter  hereof and may be amended or modified  only by a subsequent
agreement  in  writing.  A  waiver,  discharge,   amendment,   modification,  or
termination  of this  Agreement  or any  provision  hereof,  shall be valid  and
effective only if in writing and executed by both Parties. A written waiver of a
right,  remedy  or  obligation  under a  provision  of this  Agreement  will not
constitute a waiver of the provision  itself, a waiver of any succeeding  right,
remedy or  obligation  under  the  provision,  or a waiver  of any other  right,
remedy,  or obligation under this Agreement.  Any delay or failure by a Party in
enforcing any  obligation or in exercising any right or remedy shall not operate
as a waiver of it or affect that Party's  right later to enforce the  obligation
or exercise the right or remedy,  and a single or partial exercise of a right of
remedy by a Party does not preclude  any further  exercise of it or the exercise
of any other right or remedy of that Party.

     20.3 If any  provision  of this  Agreement  is held by a court of competent
jurisdiction  to be  invalid,  void  or  unenforceable  in any  respect  or with
respect,  such provision in all other  respects and the remaining  provisions of
this  Agreement,  shall  nevertheless  continue in full force and effect without
being impaired or invalidated and shall be enforced to the full extent permitted
by law.

     20.4 This  Agreement may be executed in one or more  counterparts,  each of
which shall be deemed an original, and all of which shall constitute one and the
same instrument.

     20.5 Every  notice,  consent or approval  required or permitted  under this
Agreement  shall be valid only if in writing,  delivered  personally or by mail,
confirmed  telefacsimile.  or commercial courier, and sent by the sender to each
other Party at its address or number  below,  or to such other address or number
as each  Party may  designate  by notice to the  other  Party.  A validly  given
notice,  consent or approval  will the  effective  when  received  if  delivered
personally or by telefacsimile,  or commercial  courier,  or certified mail with
return receipt requested, postage prepaid.

                                       26

<PAGE>

If to GridAmerica, to:

                          Nick Winser
                          Senior Vice President
                          National Grid USA
                          25 Research Drive
                          Westborough, MA  01582
                          (508) 389-2855

If to Midwest ISO, to:

                          Midwest Independent transmission System Operator, Inc.
                          701 City Center Drive
                          Carmel, IN 46032
                          Attention:  James P. Torgerson, President and CEO
                          Fax No.: (317) 249-5945

     20.6 This Agreement  shall be construed and enforced  according to the laws
of the State of New York  (other  than the  choice of law  provisions  thereof),
except to the  extent  preempted  by the  federal  law of the  United  States of
America.

     20.7 As used in this Agreement, the words "herein," "hereof and "hereunder"
and other words of similar  import refer to this Agreement as a whole and not to
any particular article,  section,  paragraph,  or other subdivision.  Unless the
context of this Agreement  otherwise  requires,  (a) words of any gender will be
deemed to include  each other  gender;  (b) words  using the  singular or plural
number will also include the plural or singular  number,  respectively;  (c) the
terms or  "Section" or  "subparagraph"  will refer to the  specified  Section or
subparagraph of this Agreement;  (d) the term "or" will mean "and/or";  and. (e)
the headings of the sections of this Agreement are inserted for convenience only
and shall not be deemed to  constitute  part of this  Agreement or to affect its
construction.

     20.8 If a Recipient  breaches or threatens to breach any of its obligations
contained in Article 18 of this Agreement, the Disclosing Party of the pertinent
Confidential Information will be deemed to be irreparably harmed and entitled to
seek the issuance of a temporary  restraining  order or  preliminary  injunction
enforcing this Agreement,  and to judgment for damages caused by breach,  and to
any other remedies  provided by applicable  law. The  non-breaching  Party shall
also be entitled to recover its  attorneys'  fees and costs incurred as a result
of such breach.

     20.9 Neither  Party  may  assign  its  rights  or  obligations  under  this
Agreement  without the prior written  consent of the other Party,  which consent
shall not be unreasonably  withheld,  except that (i) GridAmerica may assign its
rights and obligations hereunder without such consent to any successor entity by
reason of a merger,  consolidation,  reorganization.  sale of assets,  spin-off,
foreclosure or other transaction,  as a result of which substantially all of the
Facilities are acquired by such successor;  and (ii) Midwest ISO may assigns its
rights and obligations hereunder without such consent to any successor entity by
reason of a merger,  consolidation,  reorganization,  sale of assets,  spin-off,
foreclosure or other transaction,  as a result of which substantially all of the
assets of Midwest ISO are acquired by such successor.

                                       27

<PAGE>

     20.10  The Parties hereto acknowledge and agree that in the  performance of
their respective duties and obligations hereunder they are acting as independent
contractors  of  each  other,   and  neither  Party  shall   represent  that  an
employer/employee,  partnership,  joint venture,  or agency  relationship exists
between them or between  GridAmerica any Owner or other Member, nor shall either
Party have the power nor will either  Party  represent  that it has the power to
bind the other Party hereto to any contract or agreement.

     20.11  Upon the reasonable request of the other  Party,  each Party  hereto
agrees to take any and all such actions as are necessary or  appropriate to give
effect to the terms set forth in this  Agreement and are not  inconsistent  with
the terms hereof.

     20.12  This Agreement shall not be  construed,  interpreted,  or applied in
such a manner as to cause GridAmerica to be in material breach,  anticipatory or
otherwise,   of  any  agreement  (in  effect  on  the  Effective  Date)  between
GridAmerica  and one or more third parties for the joint  ownership,  operation,
sharing  (including costs,  responsibilities  and/or revenues) or maintenance of
any electrical  facilities covered by this Agreement.  GridAmerica shall discuss
with  Midwest  ISO any  material  conflict  between any such  third-party  joint
agreement and this  Agreement  raised by a third party to such joint  agreement,
but the  resolution  of such a  conflict  shall be and  remain  within  the sole
discretion  of  GridAmerica;  provided,  however,  that  GridAmerica  shall,  if
otherwise   unresolved,   utilize  available  remedies  and  dispute  resolution
procedures to resolve such conflict,  including,  but not limited to, submitting
such conflict to FERC for resolution;  provided, further, that in no event shall
GridAmerica  enter into a  resolution  of such  conflict  which would impair the
reliability of the Transmission System.

     IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.

                                       28

<PAGE>

MIDWEST INDEPENDENT TRANSMISSION SYSTEM
OPERATOR, INC.

By:      \s\ James P. Torgerson
   -------------------------------------
Name:    James P. Torgerson
Title:   President and CEO

                                       29

<PAGE>

GRIDAMERICA LLC

By:      \s\ Nicholas P. Winser
   -----------------------------------
Name:     Nicholas P. Winser
Title:   Chief Executive Officer

                                       30EXECUTION COPY

--------------------------------------------------------------------------------

                              AMENDED AND RESTATED
                       LIMITED LIABILITY COMPANY AGREEMENT

                                       OF

                                 GRIDAMERICA LLC

                      A Delaware Limited Liability Company

                            Dated: February 14, 2003

--------------------------------------------------------------------------------

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page

ARTICLE I DEFINITIONS.......................................................   2

     Section 1.1.  Certian Definitions......................................   2
     Section 1.2.  Rules of Construction....................................  17

ARTICLE II FORMATION........................................................  18

     Section 2.1.  Formation................................................  18
     Section 2.2.  Name.....................................................  18
     Section 2.3.  Offices..................................................  18
     Section 2.4.  Company Purposes.........................................  19
     Section 2.5.  Foreign Qualification; Other Filings.....................  20
     Section 2.6.  Term.....................................................  20
     Section 2.7.  Certain Agreements and Arrangements......................  20
     Section 2.8.  MISO Documents...........................................  20
     Section 2.9.  Company Property.........................................  21

ARTICLE III MEMBERS; UNITS..................................................  21

    Section 3.1.   Members; Additional Members; Preemptive Rights...........  21
    Section 3.2.   Unit Classes; Automatic Conversion; Etc..................  24
    Section 3.3.   Transfers of Units; Exclusivity Period...................  26
    Section 3.4.   Resignation..............................................  27

ARTICLE IV CAPITAL CONTRIBUTIONS............................................  27

    Section 4.1.   Capital Contributions to Fund Capital Expenditures and
                    Working Capital Needs...................................  27
    Section 4.2.   Capital Contributions Upon Contribution of GridAmerica
                    Transmission Facilities.................................  28
    Section 4.3.   Additional Limitations on Commitment.....................  29
    Section 4.4.   Capital Contribitions After the Effective Date...........  30
    Section 4.5.   No Other Required Capital Contributions..................  30
    Section 4.6.   Return of Capital Contributions..........................  30
    Section 4.7.   Capital Accounts.........................................  30
    Section 4.8.   Units Issued In Respect of Capital Contributions.........  31

ARTICLE V ALLOCATIONS AND DISTRIBUTIONS.....................................  31

    Section 5.1.   Allocations of Profits and Losses........................  31
    Section 5.2.   Regulatory Allocations...................................  31
    Section 5.3.   Curative Allocations.....................................  33
    Section 5.4.   Income Tax Allocations...................................  33
    Section 5.5.   Other Allocation Rules...................................  34

                                       i

<PAGE>

    Section 5.6.   Distributions............................................  34

ARTICLE VI MANAGEMENT.......................................................  35

    Section 6.1.   Management of the Company................................  35
    Section 6.2.   Redemption of Units Upon Termination of Initial Member
                    as Managing Member; Rights of the Company...............  37
    Section 6.3.   Compensation of Managing Member; Expenses................  40
    Section 6.4.   Obligations of the Company...............................  41
    Section 6.5.   Obligations and Duties of the Managing Member............  43
    Section 6.6.   Limitations on Managing Member Activities................  43
    Section 6.7.   No Duties of Non-Managing Members........................  45
    Section 6.8.   Contracts with Members and Affiliates....................  45
    Section 6.9.   Agency of Members; Members' Businesses...................  46
    Section 6.10.  Power of Attorney........................................  46
    Section 6.11.  Reliance by Third Parties................................  47
    Section 6.12.  Reliance on Certificates.................................  47
    Section 6.13.  Limitations on Employees, Officers and Directors.........  47
    Section 6.14.  New Parties to Operation Agreement.......................  47

ARTICLE VII RECORDS AND INFORMATION.........................................  48

    Section 7.1.   Maintenance of Records...................................  48
    Section 7.2.   Reports..................................................  48
    Section 7.3.   Inspection Rights........................................  48
    Section 7.4.   Bank Accounts............................................  48

ARTICLE VIII TAXES..........................................................  49

    Section 8.1.   Tax Returns..............................................  49
    Section 8.2.   Tax Partnerships.........................................  49
    Section 8.3.   Tax Elections............................................  49
    Section 8.4.   Tax Matters..............................................  49

ARTICLE IX DISSOLUTION, WINDING-UP AND TERMINATION..........................  50

    Section 9.1.   Dissolution..............................................  50
    Section 9.2.   Winding-Up and Termination...............................  50
    Section 9.3.   Deficit Capital Accounts.................................  51
    Section 9.4.   Certificate of Cancellation..............................  51

ARTICLE X DISPUTE RESOLUTION................................................  52

    Section 10.1.  Negotiations.............................................  52
    Section 10.2.  Arbitration..............................................  52
    Section 10.3.  Arbitration of Certain Claims Regarding Removal of
                   Managing Member..........................................  55

                                       ii

<PAGE>

ARTICLE XI GENERAL..........................................................  57

    Section 11.1.  Not for Benefit of Third Parties.........................  57
    Section 11.2.  GOVERNING LAW............................................  57
    Section 11.3.  Effect of Waiver.........................................  57
    Section 11.4.  Counterparts.............................................  57
    Section 11.5.  Entire Agreement.........................................  57
    Section 11.6.  Severability.............................................  58
    Section 11.7.  Notices..................................................  58
    Section 11.8.  Remedies; Limitation on Damages; Indemnifaction..........  58
    Section 11.9.  Attorneys' Fees..........................................  61
    Section 11.10. Time is of the Essence...................................  61
    Section 11.11. Amendments to this Agreement.............................  61
    Section 11.12. Waiver of Partition......................................  62
    Section 11.13. Successors and Assigns...................................  62
    Section 11.14. Additional Documents.....................................  62
    Section 11.15. Fair Market Value........................................  62
    Section 11.16. Late Payments............................................  64

SCHEDULES

    A   Members
    B   Designated Allocation Method
    C   Certain Excluded Employees

                                      iii

<PAGE>

                              AMENDED AND RESTATED
                       LIMITED LIABILITY COMPANY AGREEMENT

                                       OF

                                 GRIDAMERICA LLC

                      A Delaware Limited Liability Company

     This  AMENDED  AND  RESTATED  LIMITED   LIABILITY   COMPANY   AGREEMENT  of
GRIDAMERICA  LLC (the  "Company") is made and entered into as of the 14th day of
February 2003, by GridAmerica Holdings Inc. as the initial member of the Company
(the "Initial Member").

                                   WITNESSETH:

     WHEREAS,  The United States Federal Energy Regulatory  Commission (together
with any successor  agency,  the  "Commission") in Order No. 2000 called for the
formation  of regional  transmission  organizations  to promote the  creation of
large electricity  markets and to provide reliable,  cost-efficient  services to
customers;

     WHEREAS,  on April 25, 2002, the  Commission  issued an order in Docket No.
EL02-65 (99 FERC P. 61,105 (2002))  encouraging  the formation of an independent
transmission company ("ITC") within the Midwest Independent  Transmission System
Operator,  Inc. (the "Midwest ISO"), a Commission approved regional transmission
organization;

     WHEREAS, the Midwest ISO has an open architecture that accommodates various
forms of ITC in its operation;

     WHEREAS, the GridAmerica  Companies (as hereinafter defined) wish to comply
with Order No. 2000 through the formation of an ITC within the Midwest ISO;

     WHEREAS, on October 31, 2002, (i) the GridAmerica Companies,  National Grid
USA  ("NGUSA"),   the  Initial  Member  and  the  predecessor  to  the  Company,
GridAmerica  Holdings LLC,  entered into a Master  Agreement dated as of October
31, 2002 (the "Original Master Agreement"),  (ii) the predecessor to the Initial
Member,  GridAmerica  Holdings LLC, entered into the Limited  Liability  Company
Agreement  of the  Company  dated as of  October  31,  2002 (the  "Original  LLC
Agreement"),  (iii) the Company and the Original GridAmerica Companies, or their
applicable affiliates,  entered into the Operation Agreement dated as of October
31,  2002 (the  "Original  Operation  Agreement")  and (iv) the  Company and the
Midwest ISO entered  into the Appendix I ITC  Agreement  dated as of October 31,
2002 (the "Original MISO ITC Agreement");

     WHEREAS,  on December 19, 2002,  the  Commission  issued an order in Docket
Nos.  ER02-2233-001  and  EC03-14-000  (101 FERC P.  61,320  (2002))  (the "FERC
Approving Order") accepting for filing,  suspending and making effective subject
to future  refund,  future  filings  and  further  orders  the  Original  Master
Agreement,  the Original LLC Agreement, the Original Operation Agreement and the
Original MISO ITC Agreement;

<PAGE>

     WHEREAS,  NGUSA  has  been  found  by the  Commission  not  to be a  Market
Participant   (as   hereinafter   defined)  with  respect  to  the   GridAmerica
Transmission Facilities (as herein defined);

     WHEREAS,  NGUSA  desires,  through one or more  Affiliates,  including  the
Initial  Member,  to make an  investment  in the  Company,  and desires that the
Initial Member serve as the initial Managing Member (as hereinafter  defined) of
the Company;

     WHEREAS, the Company will serve as an ITC under the Midwest ISO;

     WHEREAS,  the Initial  Member has caused the Company to be  organized  as a
Delaware limited  liability  company by the filing of a Certificate of Formation
(the "Certificate") under and pursuant to the Delaware Limited Liability Company
Act (as in effect from time to time, the "Act"); and

     WHEREAS, the Initial Member now desires to enter into this Agreement, as it
has agreed to modify the terms of the Original LLC Agreement in compliance  with
the FERC Approving  Order,  to govern the affairs of the Company and the conduct
of the business of the Company.

     NOW,  THEREFORE,  in consideration of the premises and the mutual covenants
and agreements herein contained,  the Initial Member agrees to amend and restate
the Original LLC Agreement in its entirety as follows:

                                    ARTICLE I
                                   DEFINITIONS
                                   -----------

     Section  1.1  Certain  Definitions.  The  following  terms  shall  have the
respective meanings set forth below when used in this Agreement (and grammatical
variations  of such terms shall have  correlative  meanings),  unless  otherwise
expressly specified herein to the contrary:

     "AAA" shall have the meaning given in Section 10.2(a).

     "Act" shall have the meaning given in the recitals hereof.

     "Additional  Arbitration  Request"  shall have the meaning given in Section
10.2(i).

     "Additional Claim" shall have the meaning given in Section 10.2(i).

     "Additional Term" shall have the meaning given in Section 6.1(c).

     "Adjusted  Capital  Account" shall mean the Capital Account  maintained for
each Member (i)  increased  by any  amounts  that such  Member is  obligated  to
restore or is treated as obligated to restore under Treasury Regulation Sections
1.704-1(b)(2)(ii)(c),  1.704-2(g)(1) and 1.704-2(i)(5) and (ii) decreased by any
amounts described in Treasury  Regulation Section  1.704-1(b)(2)(ii)(d)(4),  (5)
and (6) with respect to such Member.

                                       2

<PAGE>

     "Affiliate"  shall  mean,  with  respect to any  Person,  any other  Person
directly or indirectly  Controlling,  Controlled by or under common Control with
such Person.  As used in this  definition,  "Control" shall mean the possession,
directly or  indirectly,  of the power to direct or cause the  direction  of the
management or policies of a Person (whether  through  ownership of securities or
partnership or other ownership interests,  by contract or otherwise);  provided,
however,  that,  in any  event,  any Person  that owns  directly  or  indirectly
securities  having at least a majority of the voting  power for the  election of
directors or other members of the governing  body of a corporation or at least a
majority of the  partnership  or other  ownership  interests  (that carry voting
power) of any other Person will be deemed to Control such  corporation  or other
Person.

     "Affiliated  Investor" shall mean (i) NGUSA or any NGUSA Affiliate and (ii)
any Person in which NGUSA or any NGUSA Affiliate  directly or indirectly owns at
least a majority of the total equity value of such Person.

     "Agreement"  shall mean this Amended and Restated Limited Liability Company
Agreement  of  GridAmerica  LLC  dated as of  February  14,  2003,  as it may be
amended, modified or otherwise supplemented and in effect from time to time.

     "Arbitration" shall have the meaning given in Section 10.2.

     "Arbitration Notice" shall have the meaning given in Section 10.2(b).

     "Arbitration Rules" shall have the meaning given in Section 10.2(a).

     "Available  Cash" shall  mean,  as of any date of  determination,  the sum,
determined in  accordance  with GAAP,  of all cash and cash  equivalents  of the
Company  on such  date,  other  than  cash  held by the  Company  for or that is
otherwise  payable to a third party (including cash held for an NDTO pursuant to
the  Operation  Agreement),  less the sum of (i) any amounts that the Company is
prohibited from  distributing on such date by (A) the Act, (B) other  applicable
Laws or (C) contracts and agreements to which the Company is a party,  (ii) such
reserves as the Managing Member reasonably determines are required for operating
and other costs and expenses  incurred or to be incurred in  providing  services
under  the MISO ITC  Agreement,  (iii)  such  reserves  as the  Managing  Member
reasonably determines are required for Capital Expenditures,  (iv) such reserves
as the Managing Member  reasonably  determines are required for Company expenses
(including  Managing Member  compensation) and in respect of Debt of the Company
in each case,  then due and payable or, at the time in question,  anticipated to
become due and payable  within a reasonable  time  thereafter and (v) such other
reserves as the  Managing  Member  reasonably  determines  are  required for the
management and operation of the Company.

     "Available  Undersubscription  Amount"  shall  have  the  meaning  given in
Section 3.1(d)(ii).

     "Basic Amount" shall have the meaning given in Section 3.1(d)(i).

     "Book Value" shall mean, with respect to any property of the Company,  such
property's adjusted basis for federal income tax purposes, except as follows:

                                       3

<PAGE>

          (i)  The  initial  Book Value  reflected  in books and  records of the
     Company of any property contributed by a Member to the Company shall be the
     fair market value of such property;

          (ii) The Book  Values of all  properties  shall be  adjusted  to equal
     their  respective fair market values in connection with (A) the acquisition
     of an additional  interest in the Company by any new or existing  Member in
     exchange for more than a de minimis  Capital  Contribution  to the Company,
     (B) the  distribution  by the Company to a Member of more than a de minimis
     amount of property as  consideration  for an interest in the Company or (C)
     the  liquidation of the Company  within the meaning of Treasury  Regulation
     Section  1.704-1(b)(2)(ii)(g)(1)  (other  than  pursuant  to  Code  Section
     708(b)(1)(B));  provided, however, that adjustments pursuant to clauses (A)
     and  (B)  above  shall  be  made  only if the  Managing  Member  reasonably
     determines  that such  adjustments  are necessary or appropriate to reflect
     the relative economic interests of the Members in the Company.

          (iii)  The Book Value of  property  distributed  to a Member  shall be
     adjusted  to equal the fair  market  value of such  property on the date of
     distribution; and

          (iv) The Book Value of all property  shall be increased (or decreased)
     to reflect any adjustments to the adjusted basis of such property  pursuant
     to Code Section 734(b) or Code Section 743(b),  but only to the extent that
     such  adjustments  are taken into account in determining  Capital  Accounts
     pursuant to Treasury  Regulation  Section  1.704-1(b)(2)(iv)(m)  and clause
     (vi) of the definition of Profits and Losses; provided,  however, that Book
     Value shall not be adjusted  pursuant to clause this (iv) to the extent the
     Managing Member reasonably determines that an adjustment pursuant to clause
     (ii) hereof is necessary or appropriate in connection  with the transaction
     that would otherwise result in an adjustment pursuant to this clause (iv).

     If the Book Value of property has been  determined or adjusted  pursuant to
clauses (i), (ii) or (iv) hereof,  such Book Value shall  thereafter be adjusted
by the  Depreciation  taken  into  account  with  respect to such  property  for
purposes of computing  Profits and Losses and other items allocated  pursuant to
Article 5. The foregoing definition of Book Value is intended to comply with the
provisions  of  Treasury  Regulation  Section  1.704-1(b)(2)(iv)  and  shall  be
interpreted and applied consistently therewith.

     "Capital Account" shall mean the Capital Account established and maintained
for a Member pursuant to Section 4.7.

     "Capital  Contribution"  shall mean, with respect to any Member, any money,
other  property  or assets  contributed  to the  Company by or on behalf of such
Member in exchange for Units.

     "Capital  Expenditures"  shall mean any  expenditures  for fixed or capital
assets  that  would  be  classified,  in  accordance  with  GAAP,  as a  capital
expenditure.

     "Cash Option" shall have the meaning given in Section 4.2(a)(iii).

                                       4

<PAGE>

     "Cause"  shall mean (i) the Gross  Negligence  of the Managing  Member that
causes,  or is  reasonably  likely in the future to cause,  a  Material  Adverse
Effect,  (ii) the Willful  Misconduct of the Managing Member that causes,  or is
reasonably  likely in the future to cause, a Material Adverse Effect or (iii) in
the case of the Initial  Member as  Managing  Member (A) the  occurrence  of two
Counted  Years during any five  calendar year period or (B) the failure by NGUSA
to comply  in any  material  respect  with any of its  obligations  set forth in
Article III or Section 10.1 of the Master Agreement.

     "Certificate" shall have the meaning given in the recitals hereof.

     "Claimant Party" shall have the meaning given in Section 10.2(b).

     "Claims" shall have the meaning given in Section 10.2(a).

     "Class A Units" shall have the meaning given in Section 3.2(a).

     "Class A Percentage  Interest" shall mean, as at any time of  determination
and with  respect to any Member,  the product of (i) the number of Class A Units
held by such Member  divided by the total  number of  outstanding  Class A Units
multiplied by (ii) one hundred percent (100%).

     "Class B Units" shall have the meaning given in Section 3.2(a).

     "Code"  shall mean the United  States  Internal  Revenue  Code of 1986,  as
amended from time to time.

     "Commission" shall have the meaning given in the recitals hereof.

     "Company" shall have the meaning given in the preamble hereof.

     "Company Item" shall have the meaning given in Section 8.4(b).

     "Counted  Year"  shall  mean (i) any  calendar  year in which the  Managing
Member would have had liability under Section 11.8(e)(i) but for the application
of the limitation  contained in clause (ii) of the proviso to Section 11.8(e)(i)
or (ii) any calendar year that is an Operation Agreement Counted Year; provided,
however, that there may only be one Counted Year in any calendar year.

     "CPI Index"  shall mean the  Consumer  Price Index for All Urban  Consumers
(unadjusted for seasonal  variation) for the U.S. City Average as published from
time to time by the U.S.  Bureau of Labor  Statistics or any successor index (or
any  substantially  similar  index  in the  event  that no  successor  index  is
published) published by such Bureau or any successor agency or department.

     "Cumulative  Net Profits" shall mean,  with respect to any taxable  period,
the amount,  if any, by which  Profits,  for the current and all prior  periods,
exceed Losses for all such periods.

                                       5

<PAGE>

     "Damages" shall mean any and all damages,  losses, claims,  demands, suits,
recoveries, costs, expenses, liabilities to third-parties, reasonable attorneys'
fees and penalties or other sanctions imposed by Governmental Authorities.

     "Debt" shall mean, with respect to any Person (i) all obligations  created,
issued  or  incurred  by such  Person  for  borrowed  money or for the  deferred
purchase  price of  property  or services  (other  than trade  accounts  payable
arising, and accrued expenses incurred, in the ordinary course of business), and
all obligations of such Person  evidenced by bonds,  debentures,  notes or other
similar instruments, (ii) all obligations,  contingent or otherwise, relative to
the face amount of all  letters of credit,  whether or not drawn,  and  banker's
acceptances issued for the account of such Person, (iii) all obligations of such
Person as lessee  under  leases  which  have  been or should be  capitalized  in
accordance  with GAAP, (iv) any obligation in respect of or secured by a lien or
other Encumbrance on property owned or being purchased by such Person (including
under conditional sales or other title retention agreements), whether or not the
same shall have been assumed by such Person or is limited in  recourse,  (v) all
contingent  liabilities of such Person in respect of any of the foregoing to the
extent such  liability  is required to be recorded on the balance  sheet of such
Person in  accordance  with GAAP and (vi) all Debt of others  guaranteed by such
Person or secured by any Encumbrance on property owned or being acquired by such
Person (including under conditional sales or other title retention agreements).

     "Depreciation"  shall mean,  for each taxable  year, an amount equal to the
depreciation,  amortization  or other  cost  recovery  deduction  allowable  for
federal  income tax purposes  with  respect to property  for such taxable  year,
except that (i) with  respect to any  property  the Book Value of which  differs
from its adjusted tax basis for federal income tax purposes and which difference
is being eliminated by use of the remedial  allocation method,  Depreciation for
such taxable year shall mean the amount of book basis recovered for such taxable
year under the rules prescribed by Treasury Regulation Section 1.704-3(d)(2) and
(ii) with respect to any other property the Book Value of which differs from its
adjusted tax basis at the  beginning of such taxable  year,  Depreciation  shall
mean an amount  which bears the same ratio to such  beginning  Book Value as the
federal income tax depreciation,  amortization or other cost recovery  deduction
for such taxable  year bears to such  beginning  adjusted  tax basis;  provided,
however, that if the adjusted tax basis of any property at the beginning of such
taxable  year is zero,  Depreciation  with  respect  to such  property  shall be
determined  with  reference to such  beginning  Book Value using any  reasonable
method selected by the Managing Member.

     "Designated  Allocation  Method" shall mean the allocation method set forth
on Schedule B.

     "DGCL" shall mean the Delaware  General  Corporation Law, as in effect from
time to time.

     "Dispute Parties" shall have the meaning given in Section 10.2(b).

     "Divesting  Transmission  Owner"  or "DTO"  shall  mean a  Member  that has
Transferred  Transmission  Facilities to the Company or an NDTO that proposes to
Transfer Transmission Facilities to the Company, pursuant to Section 3.1(b).

                                       6

<PAGE>

     "Early Termination Event" shall have the meaning given in Section 6.1(b).

     "Economic Risk of Loss" shall have the meaning given in Treasury Regulation
Section 1.752-2(a).

     "Effective Date" shall mean October 31, 2002.

     "Encumbrance"  shall  mean (i) with  respect  to any Units or  Shares,  any
security  interest,  lien, pledge,  mortgage or other encumbrance,  whether such
encumbrance arises voluntarily,  involuntarily or by operation of Law other than
restrictions on the sale or transfer  thereof arising out of any Securities Laws
or the  Transaction  Agreements  and (ii) with respect to any other  asset,  any
security interest,  lien, pledge or mortgage or any other material  encumbrance,
whether such encumbrance  arises  voluntarily,  involuntarily or by operation of
Law.

     "Entity" shall mean a corporation,  limited liability company, partnership,
limited partnership,  trust, firm, association or other organization which has a
legal  existence  under  the  Laws of its  jurisdiction  of  formation  which is
separate and apart from its owner or owners and any Governmental Authority.

     "Equity  Interests"  shall mean,  with  respect to any Person,  all capital
stock, membership interests, general or limited partnership interests or similar
interests in the equity of such Person.

     "Excess Cash Amount" shall mean the sum of (i) the amount, if any, by which
the  aggregate  amount  of cash  paid or  delivered  to the  First  Divestor  in
connection  with  the  First  Divestor  Divestiture  exceeds  20% of  the  total
consideration  paid or delivered to the First  Divestor in  connection  with the
First Divestor  Divestiture plus (ii) the amount of aggregate purchases of Units
by an Affiliated  Investor  pursuant to Section 4.2,  prior to the date which is
eighteen  months  after the  Transmission  Service Date in  connection  with the
exercise  of a Put  Right  by a  GridAmerica  Company  that  is not an  Original
GridAmerica  Company  plus  (iii) the  amount,  if any,  by which the  aggregate
purchases  of Units by an  Affiliated  Investor  pursuant to Section 4.2, on and
after the date which is eighteen months after the Transmission  Service Date, in
connection with the exercise of a Put Right by a GridAmerica Company that is not
an Original GridAmerica Company exceeds $150,000,000.

     "Excluded  Employees" shall mean (i) each of the individuals  identified on
Schedule C hereto and any other  individual  (A) who was an employee of NGUSA or
any NGUSA Affiliate (other than the Initial Member,  the Company or any of their
respective  subsidiaries) for at least one (1) year prior to rendering  services
for or on behalf of the  Managing  Member or the  Company,  (B) who,  at no time
during the five (5) years prior to becoming employed by or providing services to
NGUSA or any  NGUSA  Affiliate,  was an  employee  of any  Original  GridAmerica
Company  or any  Affiliate  thereof  and (C)  who is  transferred,  seconded  or
otherwise made available to the Initial Member as Managing Member or the Company
to serve in a  senior  executive  or a senior  or  special  technical  position;
provided,  however,  that (x) the Initial  Member shall provide each Member with
notice  of  such  Excluded  Employee's  status  as such  within  30 days of such
individual's commencement of service with the Managing Member or the Company and
(y) at no time shall there be more than ten (10) Persons  designated as Excluded
Employees pursuant to this clause (i) and (ii) a reasonably limited number of

                                       7

<PAGE>

employees of NGUSA or any NGUSA Affiliate  (other than the Initial  Member,  the
Company  or any of  their  respective  subsidiaries)  that are  seconded  to the
Company or the Managing Member for less than ninety (90) days.

     "Fair Market Value" shall have the meaning given in Section 11.15(a).

     "Favorable  Opinion of Counsel"  shall mean one or more opinions of counsel
recognized  as being  competent  to opine with respect to the matter as to which
the opinion is being  delivered in form and substance  reasonably  acceptable to
the intended  addressee(s)  thereof  covering  such matters as may be reasonably
requested  by the  intended  addressee(s)  thereof and as are  customary  in the
context  of  similar  transactions  or  situations,  including,  if  applicable,
opinions  confirming the satisfaction of applicable  Securities Laws;  provided,
however, such opinion may be subject to customary and reasonable  qualifications
and assumptions; provided, further, that if the opinion is being delivered by or
on behalf of the Managing Member or an Affiliate  thereof,  such opinion must be
reasonably satisfactory to a Majority of Non-Managing Members.

     "FERC Approving Order" shall have the meaning given in the recitals hereof.

     "First Divestor" shall mean, collectively,  the GridAmerica Company and any
of its Affiliates  that  transfers  GridAmerica  Transmission  Facilities in the
First Divestor Divestiture.

     "First Divestor Divestiture" shall mean either (i) the acquisition by NGUSA
or any NGUSA Affiliate of any GridAmerica Transmission Facilities from the First
Divestor under circumstances where the Company contemporaneously or subsequently
issues  Units  in  exchange  for  some or all of such  GridAmerica  Transmission
Facilities  or (ii) the  issuance  by the  Company  of  Units to any  Affiliated
Investor in exchange for cash,  which cash is used by the Company in  connection
with the acquisition of any GridAmerica  Transmission  Facilities from the First
Divestor,  in each  case,  prior to the third  anniversary  of the  Transmission
Service Date before any other GridAmerica Company exercises its Put Right.

     "Functional  Control"  shall  have  the  meaning  given  in  the  Operation
Agreement.

     "GAAP" shall mean United States generally accepted  accounting  principles,
as in effect from time to time.

     "Good Business  Practice  Breaches" shall have the meaning given in Section
11.8(f)(i).

     "Good Utility Practice" shall have the meaning given in the MISO OATT.

     "Governmental  Authority" or  "Governmental"  shall mean a federal,  state,
local  or  foreign  governmental  authority;  a state,  province,  commonwealth,
territory  or district  thereof;  a county or parish;  a city,  town,  township,
village or other municipality;  a district,  ward or other subdivision of any of
the foregoing; any executive,  legislative or other governing body of any of the
foregoing; any agency,  authority,  board, department,  system, service, office,
commission,  committee,  council  or  other  administrative  body  of any of the
foregoing;  any court or other judicial body and any officer,  official or other
representative of any of the foregoing.

                                       8

<PAGE>

     "GridAmerica  Company"  shall  mean any  Person  that  from time to time is
designated as an "GridAmerica Company" under the Master Agreement.

     "GridAmerica HoldCo" shall have the meaning given in the Master Agreement.

     "GridAmerica  ITC" shall mean the ITC created by the GridAmerica  Companies
and NGUSA  pursuant to this  Agreement,  the Operation  Agreement and the Master
Agreement.

     "GridAmerica  Transmission  Facilities" shall have the meaning given in the
Master Agreement.

     "Gross  Negligence"  shall mean the gross  negligence of (i) in the case of
the Managing  Member (A) the Managing Member in the performance of its duties or
obligations  as  Managing  Member or (B) any  Affiliate  thereof  that  provides
services to or for the benefit of the Company in connection with the performance
of such  services  or (ii) in the case of any other  Member,  such Member in the
performance of its duties or obligations as Member.

     "Indemnified Parties" shall have the meaning given in Section 11.8(h)(ii).

     "Independent  Person"  shall mean a natural  Person who is not a  director,
agent,  officer or  employee of any Market  Participant  and who does not have a
direct  financial  interest  in,  or stand to be  financially  benefited  by any
transaction  involving,  a Market  Participant.  A Person may be an  Independent
Person  even  though such Person  directly  owns  securities  issued by a Market
Participant  if: (i) such  Person  disposes of those  securities  within six (6)
months of the time of such Person's  affiliation or employment  with the Company
or the Managing Member, (ii) such Person disposes of those securities within six
(6) months of the time a new Member is added, or a new Market  Participant first
becomes such, where such Person owns securities of such new Member or new Market
Participant or (iii) if such Person receives a gift or inheritance of securities
of a Market Participant,  such Person disposes of such securities within six (6)
months of the date of  receipt,  and in each such  case,  such  Person  shall be
deemed to be an  Independent  Person until the  expiration of the applicable six
(6) month period.  A Person who indirectly  owns  securities  issued by a Market
Participant  through a mutual fund or similar  arrangement (other than a fund or
arrangement  specifically targeted towards the electric industry or the electric
utility  industry,  or any segments  thereof) shall be an Independent  Person if
such  Person  does  not  control  the  purchase  or  sale  of  such  securities.
Participation in a pension plan of a Market  Participant  shall not be deemed to
be a direct  financial  benefit if the Market  Participant's  performance has no
material effect on such pension plan.

     "Independent Transmission Company" or "ITC" shall have the meaning given in
the recitals hereof.

     "Initial Management Fee" shall have the meaning given in Section 6.3(a)(i).

     "Initial Member" shall have the meaning given in the preamble hereof.

     "Initial  Public  Offering"  or "IPO"  shall  mean the  first  underwritten
primary  Public  Offering  of Shares  under a  registration  statement  filed by
GridAmerica HoldCo under the Securities Act.

                                       9

<PAGE>

     "Initial Term" shall have the meaning given in Section 6.1(b).

     "Interested  Party  Valuation Firm" shall have the meaning given in Section
11.15(a)(i).

     "ITC Agreements" means (i) this Agreement, (ii) the Certificate,  (iii) the
Operation Agreement and (iv) the Master Agreement.

     "Law" shall mean any applicable  constitutional  provision,  statute,  act,
code (including the Code), law,  regulation,  rule,  ordinance,  order,  decree,
ruling,   proclamation,   resolution,   judgment,   decision,   declaration,  or
interpretive or advisory opinion of a Governmental Authority.

     "Liability Cap Amount" shall mean, in any calendar year, an amount equal to
the Initial Management Fee for such calendar year.

     "Liquidator" shall have the meaning given in Section 9.2.

     "Majority  of  Class  A  Members"  shall  mean  one or more  Members  whose
aggregate Class A Percentage Interests are greater than fifty percent (50%).

     "Majority of  Non-Managing  Members"  shall mean one or more Members (other
than the Managing  Member and, where the Managing  Member is the Initial Member,
any Affiliated  Investor)  holding greater than fifty percent (50%) of all Units
(other than Units held by the Managing  Member and, where the Managing Member is
the Initial  Member,  any  Affiliated  Investor);  provided,  however,  that for
purposes of Section 6.2(b),  the term Managing Member as used in this definition
shall mean the Initial Member.

     "Make-Ready  Arrangements"  shall  mean the  arrangements,  contractual  or
otherwise, made by or entered into by or between the Company and the Midwest ISO
pursuant  to  which  each of the  Company  and the  Midwest  ISO  acquires  such
services, intellectual property and other assets as are required for the Company
to serve as an Independent  Transmission  Company within the Midwest ISO and for
each of the Company and the  Midwest ISO to perform its  respective  obligations
under the Delineation of Functions (as defined in the MISO ITC Agreement).

     "Managing  Member"  shall  mean,  initially,  the Initial  Member,  and any
successor designated in accordance with Section 6.1(b).

     "Managing Member Payments" shall have the meaning given in Section 11.8(f).

     "Management  Fee" shall mean, in any calendar year, the Initial  Management
Fee, as adjusted pursuant to Section 6.3(b) for such calendar year.

     "Market  Participant"  shall mean a Person  that is a "Market  Participant"
within the meaning of Order 2000, or any subsequent rule, regulation or order of
the  Commission  establishing  the  requirements  of  independence  for a Person
managing an ITC exercising the functions and  responsibilities  that GridAmerica
ITC will exercise under the MISO ITC Agreement.

                                       10

<PAGE>

     "Master  Agreement"  shall mean the Amended and Restated  Master  Agreement
dated as of February 14, 2003 among the Company,  NGUSA,  the Initial Member and
each  GridAmerica  Company  or its  applicable  Affiliate,  as the  same  may be
amended, modified or otherwise supplemented and in effect from time to time.

     "Material  Adverse Effect" means an effect that is or is reasonably  likely
to be  materially  adverse to the  business,  assets,  condition  (financial  or
otherwise)  or  operations  of (i) the  Transmission  Facilities  subject to the
Operation Agreement, taken as a whole or (ii) the Company.

     "Member"  shall mean any Person who is a member of the  Company,  including
the Managing  Member.  As of the Effective  Date, the sole Member is the Initial
Member.

     "Member  Nonrecourse  Debt"  shall have the  meaning  ascribed  to the term
"partner nonrecourse debt" in Treasury Regulation Section 1.704-2(b)(4).

     "Member  Nonrecourse  Debt Minimum Gain" shall have the meaning ascribed to
the  term  "partner  nonrecourse  debt  minimum  gain"  set  forth  in  Treasury
Regulation Section 1.704-2(i)(2).

     "Member Nonrecourse Deductions" shall have the meaning ascribed to the term
"partner nonrecourse deductions" in Treasury Regulation Section 1.704-2(i)(1).

     "Minimum Gain" shall have the meaning given in Treasury  Regulation Section
1.704-2(d).

     "Midwest ISO" shall have the meaning given in the recitals hereof.

     "MISO  Documents"  means the MISO ITC Agreement and such other  agreements,
instruments, certifications and other documents as may be necessary or desirable
to effectuate the transactions contemplated by the MISO ITC Agreement.

     "MISO ITC  Agreement"  shall mean the Amended and  Restated  Appendix I ITC
Agreement  by and between  the Midwest ISO and the Company  dated as of February
14, 2003, as the same may be amended,  modified or otherwise supplemented and in
effect from time to time.

     "MISO OATT" shall mean the Open Access  Transmission  Tariff of the Midwest
ISO on file with the  Commission,  as it may be amended,  modified or  otherwise
supplemented and in effect from time to time.

     "Net Book Value" shall have the meaning given in Section 6.2(d).

     "Net Plant" or "net plant"  shall mean,  with  respect to any  Transmission
Facilities, the net book value of such Transmission Facilities as computed using
the  information  shown in the  then  most  recent  FERC  Form 1 filed  with the
Commission with respect to such  Transmission  Facilities.  For the avoidance of
doubt,  for any and all  purposes of this  Agreement  and the other  Transaction
Agreements,  (i) "Net Plant"  shall be  calculated,  and if  required  adjusted,
annually on each anniversary of the Effective Date and (ii) the calculation made
and Form 1 information used shall be the difference  between (A) the information
on page 207, Electric Plant in Service

                                       11

<PAGE>

(Account 101, 102, 103 and 106), line 53, Total  Transmission  Plant,  Column G,
less (B) the information on page 219, Accumulated  Provision for Depreciation of
Electric  Utility  Plant  (Account  108),  Section  B.  Balances  at End of Year
According  to  Functional  Classification,  line  23,  Transmission,  Column  C;
provided,  however,  that if FERC Form 1 is  modified  or changed  such that the
foregoing  designations  no longer  apply,  the  information  used shall be that
information  in the  modified  or  changed  form  that  provides,  as  nearly as
practicable, the same substantive result as the foregoing.

     "Neutral   Valuation   Firm"  shall  have  the  meaning  given  in  Section
11.15(a)(iii).

     "NGUSA" shall have the meaning given in the recitals hereof.

     "NGUSA Affiliate" shall mean an Affiliate of NGUSA.

     "Non-Divesting  Transmission  Owner"  and  "NDTO"  shall  mean an  owner of
Transmission Facilities on whose behalf the Company exercises Functional Control
over  some or all of such  Transmission  Facilities  pursuant  to the  Operation
Agreement.  Such term shall  include,  but shall not be limited to,  independent
transmission  companies  with no  interest  in, or  affiliation  with,  a Market
Participant.

     "Non-Market  Participant"  shall  mean  a  Person  that  is  not  a  Market
Participant.

     "Non-Market  Participant  Certification"  shall mean,  with  respect to any
Person, an unqualified certification of such Person addressed to the Company and
signed by a senior  executive  officer  of such  Person to the  effect  that (i)
responsible  Persons  employed  or engaged  by such  Person  are  familiar  with
applicable Law, including without limitation,  rules,  regulations and orders of
the Commission and (ii) such Person is a Non-Market Participant thereunder.

     "Nonrecourse   Deductions"   shall  have  the  meaning  given  in  Treasury
Regulation Section 1.704-2(b)(1).

     "Notice  of  Removal  Dispute"  shall  have the  meaning  given in  Section
10.3(b).  "Operation  Agreement"  shall mean the Amended and Restated  Operation
Agreement dated as of February 14, 2003,  among the Company and each GridAmerica
Company or its  applicable  Affiliate,  as the same may be amended,  modified or
otherwise supplemented and in effect from time to time.

     "Operation  Agreement  Counted  Year" shall have the  meaning  given in the
Operation Agreement.

     "Operational  Segment"  shall mean  Transmission  Facilities  which are (i)
capable of being  operated  in the  ordinary  course of  business  as a coherent
transmission  system  and  (ii)  are  capable  of  having  revenues  that can be
separately accounted for under the then current revenue distribution methodology
and procedures of the Company after such facilities are acquired by the Company.

                                       12

<PAGE>

     "Order  2000"  shall mean the  Commission's  order  identified  as Regional
Transmission Organizations, Docket No. RM99-2-000, 89 FERC P. 61,285 (1999), all
subsequent orders of the Commission in such Docket,  and all other orders of the
Commission  pertaining to the rights and obligations of a regional  transmission
organization.

     "Original GridAmerica Company" shall mean any Person that is an GridAmerica
Company on the Effective Date.

     "Panel" shall have the meaning given in Section 10.2(d).

     "Parties" shall mean the Members, any former Member and the Company.

     "Percentage  Interest" shall mean as at any time of determination and, with
respect  to any  Member,  the  product  of (i) the  number of Units held by such
Member divided by the total number of outstanding  Units  multiplied by (ii) one
hundred percent (100%).  The Percentage  Interest of any Member  represents such
Member's limited liability company interest in the Company.

     "Permitted Purposes" shall have the meaning given in Section 2.4(a).

     "Person" shall mean any natural person or Entity.

     "Preemptive Notice" shall have the meaning given in Section 3.1(d)(i).

     "Preemptive  Notice of Acceptance"  shall have the meaning given in Section
3.1(d)(ii).

     "Preemptive Offer" shall have the meaning given in Section 3.1(d)(i).

     "Preemptive Units" shall have the meaning given in Section 3.1(d)(i).

     "Protected  Member"  shall mean any Member other than the  Managing  Member
and, as long as the Initial Member is Managing Member, any Tranche 2 Member with
respect  to, but only with  respect  to, any Units  issued  pursuant  to Section
4.1(b).

     "Profits" or "Losses" shall mean, for each taxable year, an amount equal to
the  Company's  taxable  income or loss for such  taxable  year,  determined  in
accordance  with Code  Section  703(a) (for this  purpose,  all items of income,
gain,  loss,  or  deduction  required to be stated  separately  pursuant to Code
Section  703(a)(1)  shall be  included  in  taxable  income or  loss),  with the
following adjustments (without duplication):

          (i)  Any income of the Company that is exempt from federal  income tax
               and not  otherwise  taken into account in  computing  Profits and
               Losses  pursuant to this  definition  of  "Profits"  and "Losses"
               shall be added to such taxable income or loss;

          (v)  Any  expenditures  of  the  Company  described  in  Code  Section
               705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
               pursuant to Treasury Regulation Section  1.704-1(b)(2)(iv)(i) and
               not otherwise  taken into account in computing  Profits or

                                       13

<PAGE>

     Losses  pursuant to this  definition  of "Profits"  and  "Losses"  shall be
     subtracted from such taxable income or loss;

        (vi)   In the event the Book Value of any asset is adjusted  pursuant to
               clause (ii) or clause (iv) of the  definition of Book Value,  the
               amount of such adjustment shall be treated as an item of gain (if
               the adjustment  increases the Book Value of the asset) or an item
               of loss (if the adjustment decreases the Book Value of the asset)
               from the  disposition  of such  asset  and  shall  be taken  into
               account for purposes of computing Profits or Losses;

        (vii)  Gain or loss  resulting  from any  disposition  of property  with
               respect to which gain or loss is  recognized  for federal  income
               tax purposes  shall be computed by reference to the Book Value of
               the property disposed of,  notwithstanding  that the adjusted tax
               basis of such property differs from its Book Value;

        (viii) In  lieu  of  the  depreciation,  amortization  and   other  cost
               recovery  deductions taken into account in computing such taxable
               income or loss,  there shall be taken into  account  Depreciation
               for such taxable year, computed in accordance with the definition
               of Depreciation;

          (ix) To the  extent an  adjustment  to the  adjusted  tax basis of any
               asset  pursuant to Code Section  734(b) is required,  pursuant to
               Treasury Regulation Section 1.704-1(b)(2)(iv)(m)(4),  to be taken
               into account in determining  Capital Account balances as a result
               of a  distribution  other  than  in  liquidation  of  a  Member's
               interest in the Company,  the amount of such adjustment  shall be
               treated as an item of gain (if the adjustment increases the basis
               of the  asset)  or an item of loss (if the  adjustment  decreases
               such basis) from the disposition of such asset and shall be taken
               into account for purposes of computing Profits or Losses; and

           (x) Any  items  that  are  allocated   pursuant  to  the   Regulatory
               Allocations  shall not be taken into account in computing Profits
               and Losses. The amount of the items of Company income, gain, loss
               or deduction available to be allocated pursuant to the Regulatory
               Allocations  shall be determined by applying  rules  analogous to
               those set forth in clauses (i) through (vi) hereof.

     "Public  Offering"  shall mean an underwritten  public offering  registered
pursuant to the Securities Act of Shares of GridAmerica  HoldCo as  contemplated
by Article VI of the Master Agreement.

     "Put Closing" shall have the meaning given in the Master Agreement.

     "Put Right" shall have the meaning given in the Master Agreement.

     "Putting  GridAmerica  Company"  shall have the meaning given in the Master
Agreement.

     "Qualified   Public  Offering"  shall  mean  a  Public  Offering  in  which
GridAmerica  HoldCo  raises,  or  in  the  opinion  of a  nationally  recognized
investment  banking firm selected by the Managing Member is reasonably  expected
to  raise,  gross  proceeds  of  at  least   $250,000,000   (before  payment  of
underwriting   discounts,   commissions   and  other  offering   expenses)  and,

                                       14

<PAGE>

immediately  following  which,  the Shares of GridAmerica  HoldCo are or will be
listed for trading on The New York Stock Exchange or another comparable national
securities exchange on which the securities of major U.S. issuers engaged in the
utility industry are actively traded.

     "Ratification  Agreement" shall mean, an agreement entered into between the
Company and a Person who is not a Member who acquires  Units that sets forth (i)
the notice address of such Person, (ii) customary representations and warranties
of such Person in form and  substance  reasonably  satisfactory  to the Managing
Member  including,  if applicable,  representations  and  warranties  confirming
satisfaction of applicable  Securities Laws, (iii) a ratification by such Person
of this Agreement,  its agreement to be bound by all of the terms and provisions
of this  Agreement  and its express  assumption of all  obligations  of a Member
under this  Agreement,  (iv) the Units acquired by such Person,  (v) the Capital
Contribution,  if any, to be received by the Company in exchange  for such Units
and (vi) the "Grant Date," which  corresponds  to the date such Person  acquired
such Units.

     "Regional  Transmission  Organization"  and "RTO" shall mean an Entity that
meets the  minimum  characteristics  and  functions  of a regional  transmission
organization in Order 2000.

     "Regulatory  Allocations"  shall mean the  allocations  pursuant to Section
5.2.

     "Related Proceeding" shall have the meaning given in Section 10.2(c).

     "Removal Arbitration" shall have the meaning given in Section 10.3.

     "Removal Claimant" shall have the meaning given in Section 10.3(b).

     "Removal Claim" shall have the meaning given in Section 10.3.

     "Removal Dispute Parties" shall have the meaning given in Section 10.3(b).

     "Removal Notice" shall have the meaning given in Section 10.3(b).

     "Respondent Party" shall have the meaning given in Section 10.2(b).

     "Removal Respondent Party" shall have the meaning given in Section 10.3(b).

     "Sale Notice" shall have the meaning given in Section 3.3(d).

     "Scheduled  Termination  Date"  shall  have the  meaning  given in  Section
6.1(b).

     "Securities  Act" shall mean the  Securities  Act of 1933,  as amended from
time to time and the rules and regulations promulgated thereunder.

     "Securities  Laws" shall mean the Securities Act, and any other  applicable
securities Laws.

     "Sell" shall mean, in connection with a sale of Units by any selling Member
(other than the Company),  a sale of such selling  Member's entire right,  title
and  interest  in and to such Units to another  Person for value,  but shall not
include any sale of such Units (i) to an Affiliate  of such

                                       15

<PAGE>

selling  Member (or, in the case of the Managing  Member,  any of its Affiliated
Investors),  (ii) to the holders of equity  securities of such selling Member or
any of such holder's Affiliates as a distribution in respect of such securities,
(iii) to a Person that is exempt from federal income  taxation under Section 501
(a) of the Code by virtue of being a Person  described  in Section  501(c)(3) of
the Code or (iv) in any transaction in which Units are not  substantially all of
the assets being sold.

     "Selling Member" shall have the meaning given in Section 3.3(d).

     "SEOs" shall have the meaning given in Section 10.1.

     "Shares" shall have the meaning given in the Master Agreement.

     "Subject Units" shall have the meaning given in Section 3.3(d).

     "Subsidiary" shall have the meaning given in Section 6.4(c).

     "Successor Initial Term" shall have the meaning given in Section 6.1(b).

     "Super  Majority of  Non-Managing  Members"  shall mean one or more Members
(other than the Managing Member) holding greater than 66.67% of all Units (other
than Units held by the Managing Member); provided, however, that for purposes of
Section 11.11(c), the term Managing Member as used in this definition shall mean
and include the Person who served as Managing Member immediately prior thereto.

     "Super Majority of Transmission Owners" shall mean (i) prior to the date on
which  the  Company  first  issues  Units  in  exchange  for  the   Transmission
Facilities, two-thirds or more of the GridAmerica Companies and (ii) thereafter,
one or more Owners of  Transmission  Facilities  who,  among them,  own (through
actual or deemed ownership as provided below)  Transmission  Facilities that are
subject to the  Functional  Control of the  Company  pursuant  to the  Operation
Agreement  or are owned by the Company  with a Net Plant  greater than 66.67% of
the Net Plant of all Transmission  Facilities subject to such Functional Control
of the Company pursuant to the Operation  Agreement or are owned by the Company.
For purposes of the above vote, "Owner of Transmission  Facilities" means (i) in
the case of Transmission  Facilities subject to the Company's Functional Control
pursuant  to the  Operation  Agreement,  the  Person  that  actually  owns  such
Transmission Facilities and (ii) in the case of Transmission Facilities actually
owned by the Company, the Members in accordance with their respective Percentage
Interests.  In the  event  that a  Public  Offering  shall  have  occurred,  the
independent board members of GridAmerica  HoldCo shall vote the deemed ownership
interest of GridAmerica HoldCo.

     "System-Wide  Assets"  shall  mean the assets of the  Company  that (i) are
intended,  or have the ability, to benefit primarily all or substantially all of
the GridAmerica  Transmission  Facilities  owned by or subject to the Functional
Control  of the  Company  or  (ii)  further  the  coordination,  management  and
operation of all or substantially all of the GridAmerica Transmission Facilities
owned by or subject to the Functional Control of the Company.

     "System-Wide  Capital  Expenditures" shall mean Capital Expenditures by the
Company in respect of System-Wide Assets.

                                       16

<PAGE>

     "Third Party Claims" shall have the meaning given in Section 11.8(h)(ii).

     "Tranche 2 Member"  shall mean a Member  that has been  issued  Units under
Section 4.1(b).

     "Transaction  Agreements"  means  the  ITC  Agreements  and  the  MISO  ITC
Agreement.

     "Transfer,"  "Transferred" and other terms derivative  thereof shall mean a
sale, assignment, transfer, lease, contribution, distribution, conveyance, gift,
exchange,   Encumbrance,  or  other  disposition  whether  such  disposition  be
voluntary,  involuntary  or by operation  of Law;  provided,  however,  that the
pledge of a Unit or the  granting  of a  security  interest  in a Unit shall not
constitute a Transfer,  but a  foreclosure  or a transfer in lieu thereof  shall
constitute a Transfer.

     "Transmission  Facilities"  shall mean facilities used for the transmission
of  electric  power and energy of the kind  subject to the  jurisdiction  of the
Commission.

     "Transmission  Service  Date"  shall have the  meaning  given in the Master
Agreement.

     "Treasury Regulations" shall mean the regulations promulgated by the United
States  Department  of the Treasury  pursuant to and in respect of provisions of
the Code. All references  herein to Sections of the Treasury  Regulations  shall
include any  corresponding  provision  or  provisions  of  Treasury  Regulations
hereafter proposed or adopted.

     "Undersubscription   Amount"  shall  have  the  meaning  given  in  Section
3.1(d)(ii).

     "Unit" shall mean a fractional part of the aggregate  membership  interests
of all of the Members in the Company.

     "Unit Registry" shall have the meaning given in Section 3.2(b).

     "Willful  Misconduct"  shall mean (i) an act or omission by (A) in the case
of the Managing  Member (I) the Managing Member in the performance of its duties
or  obligations as Managing  Member or (II) any Affiliate  thereof that provides
services  to or for the  benefit  of the  Company,  in the  performance  of such
services or (B) in the case of any other Member,  such Member in the performance
of its duties or obligations as a Member,  in any case that is in disregard of a
known,  reasonably knowable or reasonably obvious risk that harm to the Company,
any if its other Members (as such) or any of the Transmission Facilities subject
to the Operation  Agreement and/or any of the Associate  Agreements is likely to
follow or (ii) an intentional breach of this Agreement by (A) in the case of the
Managing  Member (I) the  Managing  Member or (II) any  Affiliate  thereof  that
provides  services to or for the benefit of the Company,  in the  performance of
such services or (B) in the case of any other Member, such Member.

     Section 1.2.  Rules of  Construction.  The  following  provisions  shall be
applied wherever appropriate herein:

                                       17

<PAGE>

          (i)   "herein,"  "hereby," "hereunder,"  "hereof,"  "hereto" and other
                equivalent  words  shall  refer to this Agreement as an entirety
                and not solely  to the  particular  portion of this Agreement in
                which any such word is used;

          (ii)  "including" means "including without limitation" and  is a  term
                of illustration and not of limitation;

          (iii) all definitions  set forth  herein  shall be  deemed  applicable
                whether the words defined are used herein in the singular or the
                plural;

          (iv)  unless otherwise  expressly  provided,  any term defined in this
                Article I by reference to any other document  shall be deemed to
                be amended herein to the extent  that such term is  subsequently
                amended in such document;

          (v)   wherever used herein, any pronoun or pronouns shall be deemed to
                include both the singular and plural and to cover all genders;

          (vi)  neither this  Agreement  nor any other  agreement,  document  or
                instrument referred  to  herein or  executed  and  delivered  in
                connection herewith shall be construed against any Person as the
                principal draftsperson hereof or thereof;

          (vii) the Section headings  appearing in this  Agreement  are inserted
                only as a matter of  convenience  and in no way  define,  limit,
                construe or describe the scope or extent of such section,  or in
                any way affect this Agreement;

         (viii) any references  herein to a particular Section, Article, Exhibit
                or  Schedule means a Section  or  Article  of, or an  Exhibit or
                Schedule  to, this  Agreement   unless   another   agreement  is
                specified; and

          (ix)  the  Exhibits and  Schedules  attached  hereto are  incorporated
                herein  by reference  and  shall  be  considered  part  of  this
                Agreement.

                                   ARTICLE II
                                    FORMATION
                                    ---------

     Section  2.1.  Formation.  The  Company  has been  organized  as a Delaware
limited liability company by the filing of the Certificate under and pursuant to
the Act.

     Section 2.2.  Name. The name of the Company is  "GridAmerica  LLC," and all
Company  business must be conducted in that name or in the name of  "GridAmerica
ITC."

     Section 2.3.  Offices.  The registered  office and registered  agent of the
Company  required by the Act to be maintained in the State of Delaware  shall be
the registered office and registered agent identified in the Certificate or such
other  office  or agent as the  Managing  Member  may  designate  in the  manner
provided by Law. The  principal  office of the Company  shall be located at such
location as shall be determined by the Managing Member.

                                       18

<PAGE>

     Section 2.4. Company Purposes.

     (a)  Permitted  Purposes.  The  purpose of the  Company is to engage in any
          lawful act or activity for which  limited  liability  companies may be
          organized  under  the Act  reasonably  relating  to the  ownership  or
          operation of Transmission Facilities (the "Permitted Purposes"),  and,
          in furtherance thereof, the Company shall have the power:

          (i)  to  own  Transmission  Facilities  and  to  serve  as an  ITC  in
               accordance  with the rules and  regulations of the Commission and
               the MISO ITC Agreement;

          (ii) to operate Transmission Facilities owned by the Company;

          (iii)to  exercise  Functional  Control  over  Transmission  Facilities
               owned by other Persons pursuant to the Operation Agreement and to
               make use in connection with the provision of transmission service
               of certain  non-transferred  Transmission  Facilities pursuant to
               the Operation Agreement;

          (iv) to     provide      non-discriminatory      transmission      and
               transmission-related services consistent with Commission policies
               and the MISO ITC Agreement on non-discrimination;

          (v)  to assure planning, reliability, safety and maximization of value
               (consistent  with customer  service  obligations)  respecting the
               Transmission  Facilities it owns and Transmission Facilities over
               which it exercises Functional Control;

          (vi) to  distribute   revenues  received  from  transmission   related
               services  pursuant to the Operation  Agreement and the provisions
               of Article V;

          (vii)to  acquire,  develop,  construct,  improve,  operate,  maintain,
               finance, sell, lease, convey or otherwise dispose of Transmission
               Facilities  and other related  properties  and assets  necessary,
               convenient or desirable to accomplish the foregoing purposes;

         (viii)to  contract  with  others  in  furtherance  of  the  foregoing
               purposes and to perform its obligations  under such contracts and
               under this Agreement and the other Transaction Agreements; and

          (ix) to take any or all other actions which are not inconsistent  with
               Commission  policies  and  the  Transaction  Agreements  and  are
               otherwise  necessary,  convenient or desirable to accomplish  the
               foregoing.

     (b)  Prohibitions  on  Activities.  The Company  shall not be  permitted to
          engage in activities  other than activities  relating to the Permitted
          Purposes.  The Company shall not be permitted to acquire,  directly or
          indirectly,  an  ownership  interest in or control over assets used in
          the generation or marketing of electric power and energy, or undertake
          any other business or activity, that results in the Company becoming a
          Market Participant.

                                       19

<PAGE>

     Section 2.5. Foreign Qualification; Other Filings.

     (a) Prior to the  Company's  conducting  business the Company  shall comply
with all  requirements  necessary  to qualify the  Company as a foreign  limited
liability company in the States of Indiana, Illinois, Missouri, Pennsylvania and
Ohio and in such other  jurisdictions  in which the Managing  Member  determines
that such qualification is necessary or desirable.

     (b) At the  request of the  Managing  Member,  the Members  shall  execute,
acknowledge,  swear to,  and  deliver  all  certificates  and other  instruments
conforming  with this Agreement that are reasonably  necessary or appropriate in
connection  with the filings  contemplated  by this  Section  2.5.  The Managing
Member may utilize the power of attorney contained in Section 6.13 in connection
with any such filings.

     Section 2.6. Term.  The Company  commenced  upon the  effectiveness  of the
Certificate  and  shall  have a  perpetual  existence,  unless  and  until it is
dissolved and terminated in accordance with Article IX.

     Section 2.7. Certain Agreements and Arrangements.

     (a)  Master  Agreement.  The Company and the Initial  Member are parties to
the Master Agreement  pursuant to which,  among other things,  the Company,  the
Initial  Member  and  NGUSA  have  made  covenants  and  granted  rights  to the
GridAmerica   Companies,   including   covenants  and  rights  relating  to  the
contribution  of  Transmission  Facilities  to the  Company  by the  GridAmerica
Companies as provided therein.

     (b)  Operation   Agreement.   The  Company  and  the  Original  GridAmerica
Companies are parties to the Operation  Agreement  pursuant to which the Company
will,  commencing on the Transmission  Service Date, exercise Functional Control
over the Transmission Facilities of the Original GridAmerica Companies,  subject
to and in accordance  with the terms and provisions of the Operation  Agreement.
The Managing Member shall be entitled from time to time after the Effective Date
to cause the Company to amend,  modify or  otherwise  supplement  the  Operation
Agreement,  in accordance with Section 6.14 and in accordance with its terms, to
allow  the  Company  to  exercise   Functional  Control  over  the  Transmission
Facilities of NDTOs that are not Original GridAmerica Companies if the NDTO over
whose  assets  the  Company  would  acquire  Functional  Control  satisfies  the
requirements set forth in such Section 6.14.

     (c)  Make-Ready  Arrangements.  Prior to the Transmission Service Date, the
Company will enter into the Make-Ready Arrangements.

     Section 2.8. MISO Documents.  The Company shall (i) execute and deliver the
MISO ITC Agreement  and such of the MISO  Documents to be executed and delivered
to and by it and (ii)  comply  with the  terms  and  conditions  of the MISO ITC
Agreement.  The Managing  Member shall be entitled,  from time to time after the
Effective  Date, to cause the Company to amend,  modify or otherwise  supplement
any of the MISO ITC  Agreement  (x) to further  the  purposes of the Company and
GridAmerica  ITC as an ITC with the right and obligation to exercise  Functional
Control over the GridAmerica Transmission  Facilities,  (y) to allow the Company
to exercise Functional Control over the GridAmerica  Transmission Facilities and
(z) to allow the  Company  to  exercise  Functional  Control  over  Transmission
Facilities of any NDTO that is not

                                       20

<PAGE>

an Original  GridAmerica  Company if such NDTO becomes a party to the  Operation
Agreement;  provided,  however,  in the case of this clause  (z),  that any such
amendment,  modification or supplement  shall be made in accordance with Section
6.14. Anything in this Section 2.8 to the contrary notwithstanding,  the Company
shall not,  without the prior  consent of the  Original  GridAmerica  Companies,
amend, modify or otherwise supplement the MISO ITC Agreement as in effect on the
date hereof to relieve the Midwest ISO of its commitment to, on the Transmission
Service Date, (a) make (i) a one-time  payment equal to the amount of the actual
costs  (including  appropriately  allocated  internal  costs)  incurred by NGUSA
(and/or  its  Affiliates)  and  the  GridAmerica   Companies  to  establish  the
Make-Ready Arrangements and (ii) a one-time payment to reimburse the GridAmerica
Companies  for the actual  costs  (including  appropriately  allocated  internal
costs)  incurred in the development of Alliance RTO, such payments to be made as
directed  by the  Company  and (b)  refund  to  Ameren  Services  Company,  with
interest,  the $18,000,000  payment made by Ameren Services Company to leave the
Midwest ISO pursuant to the terms of settlement  approved in Illinois Power Co.,
95 FERC P. 61,183, order on reh'g., 96 FERC P. 61,206 (2001).

     Section 2.9. Company  Property.  No real or other property interest in real
or other property or licensed use of real or other property of the Company shall
be  deemed  to be owned by any  Member  individually,  but shall be owned by and
title shall be vested solely in the Company.

                                   ARTICLE III
                                 MEMBERS; UNITS
                                 --------------

     Section   3.1.   Members;    Additional    Members;    Preemptive   Rights.

     (a)  Initial Member. Upon the making of the Capital  Contribution  required
by Section 4.1 (b) on the Effective Date, the Company shall issue to the Initial
Member the number of Class A Units set forth next to the Initial  Member's  name
on Schedule A, and the Initial Member shall thereupon be admitted as a Member on
the Effective Date.

     (b)  Additional  Members  After  the  Effective  Date --  Contributions  of
Transmission Facilities.  The Managing Member (i) may, from time to time, in its
discretion  if  a  proposed  new  Member  desires  to  contribute   Transmission
Facilities  to the Company and (ii) shall,  from time to time, if a proposed new
Member is  exercising  its Put Right admit to the Company a proposed  new Member
meeting  the  requirements  of this  Section  3.1 (b)  upon the  making  by such
proposed  new  Member  of  a  Capital   Contribution   consisting  primarily  of
Transmission  Facilities.  Upon the making of such Capital  Contribution by such
proposed  new Member,  the Company  shall  issue to such  proposed  new Member a
number of Class A Units or Class B Units (as  appropriate)  and, if  applicable,
other  consideration,  having a Fair Market Value equal to the Fair Market Value
of such proposed new Member's  Capital  Contribution,  which, in the case of the
exercise of a Put Right, shall be determined in accordance with Article V of the
Master  Agreement.  To be eligible  to be admitted as a Member,  either (i) such
proposed new Member must contribute GridAmerica  Transmission Facilities or (ii)
the Company must determine,  in its reasonable  discretion,  that admitting such
proposed new Member and accepting the  Transmission  Facilities of such proposed
new  Member as a Capital  Contribution  (x) will not  result in any  significant
detriment to the existing Members in their capacity as such and (y) is likely to
result in long-term  benefits

                                       21

<PAGE>

to the Company;  provided,  however,  that if less than all of such proposed new
Member's Transmission Facilities are contributed,  such Transmission Facilities,
together  with such other  Transmission  Facilities  of such proposed new Member
that the Company is to acquire,  must  constitute an Operational  Segment,  (ii)
execute and deliver to the Company a  Ratification  Agreement,  (iii) if Class A
Units are to be issued to such  proposed  new Member,  deliver to the Company an
Non-Market Participant Certification,  (iv) deliver to the Company the Favorable
Opinion of Counsel and (v) in the case of a new Member being  admitted  upon the
exercise of a Put Right,  comply with the  provisions of Article V of the Master
Agreement  and the  terms  and  conditions  of the Put  Agreement  entered  into
pursuant thereto, and in the case of a new Member being admitted upon a Transfer
of Transmission  Facilities other than upon exercise of a Put Right, comply with
the terms and conditions of the agreement  pursuant to which such Transfer is to
occur. Any  Ratification  Agreement shall be attached to and become part of this
Agreement.  Upon the  execution  and delivery by the proposed new Member and the
Company of a Ratification  Agreement,  the making of the Capital Contribution by
such  proposed new Member,  the issuance to such proposed new Member of Units as
provided above and the satisfaction of the foregoing  conditions,  such proposed
new Member shall be a Member of the Company for all purposes hereof.

     (c)  Additional   Members  After  the  Effective   Date  --  Other  Capital
Contributions.  Subject to Section 3.1(d), the Managing Member may, from time to
time, in its  discretion,  admit to the Company any proposed new Member  meeting
the requirements of this Section 3.1(c),  in order to raise  additional  capital
for the Company for any Permitted Purpose,  upon the making by such proposed new
Member  of  a  Capital  Contribution  (other  than  a  Capital  Contribution  of
Transmission  Facilities which shall be made in accordance with Section 3.1(b)).
Upon the making of such Capital  Contribution  by such proposed new Member,  the
Company  shall issue and deliver to such proposed new Member a number of Class A
Units or Class B Units (as appropriate) and, if applicable, other consideration,
having a Fair Market Value equal to the Fair Market  Value of such  proposed new
Member's Capital  Contribution.  To be eligible to be admitted as a Member, such
proposed  new Member must (i) execute and deliver to the Company a  Ratification
Agreement,  (ii) if Class A Units are to be issued to such  proposed new Member,
deliver to the Company an Non-Market Participant Certification and (iii) deliver
to the Company a Favorable Opinion of Counsel. Any Ratification  Agreement shall
be  attached  to and  become  part of this  Agreement.  Upon the  execution  and
delivery by the proposed new Member and the Company of a Ratification Agreement,
the making of the Capital Contribution by such proposed new Member, the issuance
to such proposed new Member of Units as provided above and the  satisfaction  of
the  foregoing  conditions,  such  proposed  new Member shall be a Member of the
Company for all purposes hereof.

     (d)  Preemptive  Rights.  Any offering and issuance of Units by the Company
pursuant to Section 3.1(c), other than Units issued to the Initial Member or any
Affiliated  Investor  pursuant to  Sections  4.1 and 4.2 shall be subject to the
following terms and conditions:

          (i)  The Company shall give written notice (the  "Preemptive  Notice")
     of any offering or issuance of such Units (the "Preemptive  Units") to each
     of the Members, which notice shall (A) identify and describe the Preemptive
     Units,  (B)  describe the price (for cash,  as  described  below) and other
     terms upon which the  Preemptive  Units are to be offered or issued and the
     number or amount of the  Preemptive  Units to be  offered  or

                                       22

<PAGE>

     issued,  (C) identify the Persons (if known) to which the Preemptive  Units
     are to be offered or issued and (D) offer (the "Preemptive Offer") to issue
     and sell to each Member  whose  preemptive  rights have not been  suspended
     pursuant to Section  3.1(d)(iv) a pro rata portion of the Preemptive  Units
     determined by multiplying  the Preemptive  Units then being offered by such
     Member's  Percentage  Interest (the "Basic Amount").  The Preemptive Notice
     also shall provide that the Member shall have the right to purchase  either
     Class A Units if such Member is an Non-Market Participant, or Class B Units
     if such Member is a Market Participant, on the same terms and conditions as
     the Preemptive Units irrespective of whether the Preemptive Units are Class
     A Units or Class B Units. In the event that the Preemptive  Units are to be
     offered  and issued by the  Company  for any  non-cash  consideration,  the
     Members shall be entitled to participate  in such offering by  substituting
     consideration  in cash in an amount  equal to the Fair  Market  Value,  per
     Unit, of such non-cash consideration.

          (ii) To accept a Preemptive  Offer, in whole or in part, a Member must
     deliver a written notice (the  "Preemptive  Notice of  Acceptance")  to the
     Company  within ten (10) days after the date of delivery of the  Preemptive
     Notice,  setting  forth the portion of the  Member's  Basic  Amount that it
     elects to purchase  and, if such Member has elected to purchase  all of its
     Basic  Amount,  any  additional  Units (if any) that such Member  elects to
     purchase if one or more other Members elect to purchase less than all their
     full Basic Amounts (the "Undersubscription Amount"). If the aggregate Basic
     Amount  subscribed  for by all  Members  is  less  than  the  total  of all
     Preemptive Units then being offered,  then each Member who has set forth an
     Undersubscription  Amount in its Preemptive  Notice of Acceptance  shall be
     entitled   to   purchase,   in   addition   to  its   Basic   Amount,   the
     Undersubscription Amount it has subscribed for; provided,  however, that if
     the  aggregate  Undersubscription  Amounts  subscribed  for by the  Members
     exceed the difference between the total of all of the Preemptive Units then
     being  offered  and  the  aggregate  Basic  Amounts   subscribed  for  (the
     "Available  Undersubscription Amount"), then each Member who has subscribed
     for any  Undersubscription  Amount shall be entitled to purchase  only that
     portion of the Available  Undersubscription Amount as the Undersubscription
     Amount  subscribed for by such Member bears to the total  Undersubscription
     Amounts subscribed for by all Members,  subject to rounding by the Managing
     Member to the extent it deems reasonably necessary.

          (iii)The  Company  shall have one hundred  twenty  (120) days from the
     date of the  Preemptive  Notice  to issue  and sell all or any part of such
     Preemptive Units as to which a Preemptive Notice of Acceptance has not been
     given by the Members, but only upon terms and conditions (including prices)
     which are not, taken as a whole,  more favorable to the acquiring Person or
     Persons  or less  favorable  to the  Company  than  those  set forth in the
     Preemptive Offer, and, promptly following the closing of any such sale, the
     Managing  Member shall provide each Member with written notice of such sale
     which  identifies  the Units sold and the type and amount of  consideration
     received  therefor.  Any  Preemptive  Units not  acquired by the Members or
     other Persons in accordance with the immediately preceding sentence may not
     be offered or issued until they are again  offered to the Members under the
     procedures specified in this Section 3.1(d).

                                       23

<PAGE>

          (iv) All rights  under this  Section 3.1 (d) shall be  suspended  with
     respect to Units proposed to be sold by the Company to  GridAmerica  HoldCo
     in  connection  with a Qualified  Public  Offering,  upon the filing by the
     Company of a  registration  statement  relating  to such  Qualified  Public
     Offering  and  such  suspension  shall  continue  until  such  registration
     statement is  withdrawn,  at which time all rights shall be  reinstated  in
     full, or until the consummation of such Qualified Public Offering, at which
     time all rights of the Members  under this Section 3.1 (d) shall  terminate
     and expire.

     Section 3.2. Unit Classes; Automatic Conversion; Etc.

     (a)  Unit Classes. Membership in the Company shall be represented by Units.
There  shall be two  classes  of Units:  the  "Class A Units"  and the  "Class B
Units," each of which shall have identical rights (including the identical right
to the Profits (or Losses),  distributions and other economic  attributes of the
Company as set forth in Articles V and IX), preferences and designations, except
as hereinafter provided below in this Section 3.2(a):

          (i)  Class A Units:  Except as otherwise provided herein,  each holder
     of Class A Units shall be entitled to vote on all matters  presented to the
     Members for their action or consideration. Class A Units shall be held only
     by Non-Market Participants.

          (ii) Class B Units:  Holders  of Class B Units  shall  have no  voting
     rights,  except (A) as set forth in Section  6.6(b) and (B) on those  other
     matters  that  require  the  approval  of the  holders  of Class B Units as
     specifically set forth elsewhere in this Agreement.

     (b)  Registration  of Units.  The Company  shall  maintain a registry  (the
"Unit Registry") upon which all Units issued pursuant to this Agreement shall be
registered in the name of the Member which is the registered holder thereof. The
Unit Registry shall  establish,  as of any time, the owners of Units,  and Units
may not be  Transferred  except  by  notation  of such  Transfer  upon  the Unit
Registry.  The Company and the  Managing  Member shall treat the Person in whose
name a Unit is  registered  in the  Unit  Registry  as the  owner  of the  Units
represented  thereby  for all  purposes.  No Transfer of Units shall be valid as
against the Company unless  registered in the name of the transferee on the Unit
Registry.

     (c)  Automatic  Conversion  of Class A Units.  In the  event  that a Member
holding Class A Units (i) is or becomes a Market  Participant  or (ii) Transfers
Class A Units to a Market Participant, then either (A) all such Member's Class A
Units in the case of clause  (i) above or (B) the Class A Units  Transferred  in
the case of clause  (ii) above,  automatically,  without  the  necessity  of any
action on the part of such Member or the Company  shall be converted  (effective
as of such time that such Member becomes a Market Participant or Transfers Class
A Units to a Market  Participant)  into the same  number of Class B Units,  such
that  the  Percentage  Interest  of any  Member  (other  than,  in the case of a
Transfer,  the transferor  Member) shall remain unchanged.  Promptly,  but in no
event  more than ten (10)  days  after  the date  such  Member  becomes a Market
Participant and no fewer than fifteen (15) days prior to the proposed  effective
date of a Transfer of such Member's Class A Units to a Market Participant,  such
Member (and, in the case of a Transfer, the transferee) will deliver or cause to
be  delivered  to the  Company  notification  of the  foregoing  and the Company
promptly shall make the  appropriate  notation in

                                       24

the Unit Registry and promptly  shall notify such Member and/or such  transferee
and all other Members that such notation has been made.

     (d)  Conversion of Class B Units.  In the event that a Member holding Class
B Units (i) is or becomes a Non-Market Participant or (ii) Transfers its Class B
Units to an  Non-Market  Participant,  then  either  (A) all or any part of such
Member's Class B Units in the case of clause (i) above or (B) all or any part of
the Class B Units  Transferred  in the case of clause (ii) above  shall,  at the
written  request of the holder  thereof,  be  converted  into the same number of
Class A Units,  such that the Percentage  Interest of any Member (other than, in
the case of a Transfer,  the  transferor  Member)  shall remain  unchanged.  Any
written  request  pursuant to this Section  3.2(d),  shall  include a Non-Market
Participation Certification. Upon receipt by the Company of such written request
and Non-Market  Participant  Certification,  the Company promptly shall make the
appropriate  notation in the Unit Registry and promptly shall notify such Member
or such transferee that such notation has been made.

     (e)  Optional  Conversion.  Any Member that acquires Class A Units (whether
from the Company  pursuant to Section  3.1,  by  conversion  pursuant to Section
3.2(d),  or by Transfer from another Member pursuant to Section 3.3) and that is
a Non-Market Participant, shall have the right at any time and from time to time
to elect to have some or all of its Class A Units converted into the same number
of Class B Units by delivering to the Company such Member's  written election to
convert  some or all of its Class A Units for the same  number of Class B Units.
Upon receipt of such election,  the Company  promptly shall make the appropriate
notation in the Unit  Registry and  promptly  shall notify such Member that such
notation has been made.

     (f)  Votes/Approvals  of Members  Holding  Class A Units.  Each time that a
Member  holding  Class A Units votes its Class A Units on any matter  under this
Agreement,  such  Member  automatically,  without the  necessity  of any further
action,  shall be deemed to have represented and warranted to the Company and to
the other  Members that such Member is an Non-Market  Participant  and, upon the
reasonable  request of the  Managing  Member,  as a condition  precedent to such
Member's  right to vote its Class A Units,  such  Member  shall  deliver  to the
Company an Non-Market  Participant  Certification.  Not later than January 15 of
each  year,  each  holder  of Class A Units  shall  deliver  to the  Company  an
Non-Market  Participant  Certification  that  certifies that such holder is and,
during the immediately preceding calendar year, was, a Non-Market Participant.

     (g)  Contest of Holder's Non-Market Participant Status. The Company and any
Member  may at any time  contest  in  accordance  with  Article  X a  Non-market
Participant  Certification delivered by any Person or such Person's status as an
Non-Market  Participant;  provided,  however, that if the Managing Member causes
the Company to  challenge a Person's  Non-Market  Participant  Certification  or
Non-Market  Participant  status,  such challenge (i) shall be made in good faith
and must not involve an  unreasonable  expenditure of Company funds and (ii) the
Company, promptly after the commencement of such a challenge,  shall give notice
of  such  challenge  to all  other  Members,  which  notice  shall  set  forth a
reasonably  detailed  description  of the  basis  for such  challenge  and shall
include copies of any legal opinions or other documentation in the possession of
the Managing Member describing the basis for such challenge.

                                       25

<PAGE>

     (h)  Reliance on Non-Market Participant Certification.  The Managing Member
may rely  without  investigation  on any  Non-Market  Participant  Certification
delivered pursuant hereto.

     Nothing in this  Section 3.2 shall be  construed  to limit the right of the
Commission  to review  Non-Market  Participant  Certifications  and  declare the
Person delivering such Non-Market  Participant  Certification to be a Non-Market
Participant or a Market  Participant,  as the case may be. Any  determination of
the  Commission  to the  effect  that a  Person  is a Market  Participant  shall
supersede and override the  Non-Market  Certification  with respect to which the
determination is made.

     Section 3.3. Transfers of Units; Exclusivity Period.

     (a)  Transferability  of Units.  Subject  to  Sections  3.3(b),  3.3(d) and
3.3(e), Units may be Transferred at any time and from time to time by any Person
to any other Person,  including the Company, without the consent of the Company,
the other  Members  or,  except in the case of a Transfer  to the  Company,  the
Managing Member.  Except as otherwise  provided in this Section 3.3, if a Member
Transfers all or a portion of its Units, the transferee shall be admitted to the
Company as a Member of the Company  without the need for any  additional  act or
consent of the Company or any Member.  Immediately following such admission, the
transferor  shall,  either (i) if such transferor  Transferred all of its Units,
cease to be a Member of the Company or (ii) if such transferor  Transferred less
than all of its Units, have its Percentage  Interest  appropriately  adjusted to
reflect the Transfer to the transferee of such Units.  Any successor to a Member
by  merger  or  consolidation   shall,   subject  to  the  satisfaction  of  the
requirements of Section 3.3(b), be admitted as a Member.

     (b)  Conditions to  Effectiveness  of a Transfer.  In  connection  with any
Transfer of Units,  the  transferor  and its  transferee  shall,  as  conditions
precedent to the  effectiveness  of any such  Transfer,  (i) give prior  written
notice to the Company and to all Members no fewer than  fifteen  (15) days prior
to the proposed effective date of such Transfer, which notice shall identify the
transferee  and  specify  the number and class of the  transferor's  Units to be
Transferred,  (ii) furnish a copy of the Transfer  instrument to the Company and
to all  Members,  (iii)  execute  and  deliver  to the  Company  a  Ratification
Agreement,  (iv) if Class A Units are being  Transferred,  either (A) deliver to
the Company a Non-Market Participant Certification or (B) deliver to the Company
a  written  acknowledgement  of the  transferor  and  the  transferee  that  the
transferred  Units  shall  be,  effective  upon  such  Transfer,   automatically
converted  into the same  number of Class B Units,  (v) deliver to the Company a
Favorable  Opinion of Counsel and (vi) pay, or  reimburse  the Company  for, all
reasonable  costs  and  expenses  of the  Company  incurred  by the  Company  in
connection  with such Transfer or otherwise  make  provision for the same.  Upon
receipt by the Company of the foregoing  documents,  the Company shall  promptly
make the appropriate notations reflecting the Transfer in the Unit Registry.

     (c)  Transfers Not in Compliance.  Any attempted  Transfer of a Unit, other
than in  strict  accordance  with this  Section  3.3,  shall  be,  and is hereby
declared,  null and void ab  initio.  The  Members  agree  that a breach  of the
provisions of this Section 3.3 may cause  irreparable  injury to the Company and
to the  Members  for  which  monetary  damages  (or  other  remedy  at law)  are
inadequate in view of (i) the  complexities  and  uncertainties in measuring the
actual  damages that would be sustained by reason of the failure of a transferor
to comply with such

                                       26

<PAGE>

provisions  and  (ii)  the   uniqueness  of  the  Company's   business  and  the
relationship among the Members.  Accordingly, the provisions of this Section 3.3
may be enforced by specific performance.

     (d)  Exclusivity  Period.  If a Member  proposes to consider  soliciting an
offer to Sell  any  Units or is  approached  by  another  Person  regarding  any
proposed  transaction  in which  such  Member  would  Sell its  Units,  prior to
entering  into  substantive  negotiations  to Sell such Units,  such Member (the
"Selling  Member") shall first submit a written notice to each other Member (the
"Sale  Notice")  that the  Selling  Member  may Sell such  Units  (the  "Subject
Units"),  which notice shall specify whether the Selling Member has received any
third party offer for such Subject Units which it intends to accept. In order to
give the other  Members  the  option to make an offer to  purchase  the  Subject
Units,  the Selling  Member (i) shall not Sell the Subject  Units and (ii) shall
not discuss, negotiate or otherwise provide information concerning such Units to
any other Person,  except in connection  with a transaction in which the Selling
Member does not propose to Sell such  Subject  Units,  for thirty (30) days from
the date of the delivery of the Sale Notice. No Member shall have any obligation
to make an offer to purchase  such  Subject  Units and the Selling  Member shall
have no  obligation to consider,  negotiate or accept any such offer.  After the
expiration of such thirty (30) day period, the Selling Member shall have one (1)
year thereafter to enter into definitive agreements to Sell the Subject Units to
a third party.  If at the end of such period the Selling  Member has not entered
into definitive  agreements to Sell such Subject Units,  the Selling Member will
be obligated to comply with this Section 3.3(d). The rights of the Members under
this Section  3.3(d) shall not apply to any sale of Units in a Qualified  Public
Offering and shall terminate upon the closing of a Qualified Public Offering.

     (e)  Publicly Traded Partnership.  Notwithstanding anything to the contrary
herein,  no  transfer  of Units may be made to any Person if as a result of such
transfer the Company would have more than one hundred  (100) Members  determined
in accordance with Treasury Regulation Section 1.7704-1(h)(1) and (3).

     Section  3.4.  Resignation.  A Member  has no right or power to  resign  or
withdraw from the Company except as specifically provided for in this Agreement.

                                   ARTICLE IV
                              CAPITAL CONTRIBUTIONS
                              ---------------------

     Section 4.1. Capital Contributions to Fund Capital Expenditures and Working
Capital Needs.  Subject to the limitations set forth in Section 4.3, the Initial
Member and/or one or more Affiliated  Investors shall (or in the case of Section
4.1(c),  may at its  election)  make  Capital  Contributions  to the  Company as
follows:

     (a)  Capital  Contributions  on  the  Transmission  Service  Date.  On  the
Effective Date, the Initial Member shall make a cash Capital Contribution in the
amount of $50,000 in exchange for 1000 Units.

     (b)  Capital   Contributions  to  Fund  Capital  Expenditures  and  Working
Capital.  Following the Effective Date,  when and as the Initial Member,  in the
performance of its duties or obligations as Managing Member, determines that the
Company is in need of additional funds to

                                       27

<PAGE>

pay for Capital Expenditures relating to System-Wide Capital Expenditures or for
additional  working capital  purposes,  the Initial  Member,  shall and/or shall
cause one or more Affiliated  Investors to, make cash Capital  Contributions  in
exchange for Units in the amount so determined by the Initial Member;  provided,
however,  that the maximum commitment of Initial Member pursuant to this Section
4.1 (b) shall be $25,000,000.

     (c)  Capital   Contributions  to  Fund  Capital  Expenditures  Relating  to
GridAmerica Transmission  Facilities.  Following the Effective Date, when and as
the Initial Member,  in the performance of its duties or obligations as Managing
Member,  determines  that the Company is in need of additional  funds to pay for
Capital  Expenditures  relating to  GridAmerica  Transmission  Facilities  or to
acquire  GridAmerica  Transmission  Facilities,  the Initial  Member may, at its
election  make,  or cause  one or more  Affiliated  Investors  to make,  Capital
Contributions  in exchange for Units in the amount so  determined by the Initial
Member.

     Section  4.2  Capital   Contributions   Upon  Contribution  of  GridAmerica
Transmission Facilities.

     (a)  Subject to the  limitations  set forth in Sections 4.2(c) and 4.3, the
Initial Member shall cause one or more Affiliated Investors to make cash Capital
Contributions  to the  Company in  exchange  for Units upon the  exercise  by an
GridAmerica  Company  of  a  Put  Right  or  the  purchase  by  the  Company  of
Transmission Facilities from a GridAmerica Company as follows:

          (i)  At each Put Closing,  a cash Capital  Contribution equal to 5% of
     the Fair Market Value of the  Transmission  Facilities  in respect of which
     the Put Right has been exercised;

          (ii) At the closing of each purchase of Transmission Facilities from a
     GridAmerica  Company  other than NGUSA or an  Affiliated  Investor,  a cash
     Capital  Contribution  equal  to  5%  of  the  Fair  Market  Value  of  the
     Transmission Facilities to be purchased by the Company; and

          (iii)At the  option  of  either  the  Initial  Member  or the  Putting
     GridAmerica Company (such option being referred to as the "Cash Option"), a
     cash  Capital  Contribution  up  to  an  additional  15%  (or  such  higher
     percentage  as to which the  Initial  Member  and the  Putting  GridAmerica
     Company may agree) of the Fair Market Value of the Transmission  Facilities
     in respect of which the Put Right has been  exercised,  in which  event (i)
     the number of Units received by the Putting  GridAmerica Company at the Put
     Closing shall be reduced by the number of additional Units purchased by the
     Affiliated  Investors and (ii) such Putting  GridAmerica  Company shall, at
     the Put  Closing,  receive a cash  distribution  in an amount  equal to the
     aggregate amount paid to the Company for such additional Units.

     (b)  Exercise of Cash Option. If either the Putting  GridAmerica Company or
the Initial  Member  desires to exercise its Cash Option,  it shall  provide the
other and the Company with written  notice of such  exercise at least sixty (60)
days prior to the Put Closing,  which notice shall specify the percentage of the
Fair Market Value of contributed  Transmission  Facilities to which the exercise
relates.  Notwithstanding  anything to the  contrary  contained  in this

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<PAGE>

Section 4.2(b),  if the Initial Member exercises the Cash Option and the Putting
GridAmerica Company determines in good faith that the corresponding distribution
of cash by the Company to such Putting  GridAmerica  Company in connection  with
the exercise of the Cash Option would result in the Putting  GridAmerica Company
being required to recognize  income as a result of such  distribution of cash in
the  calendar  year in which  such  cash  distribution  is made in excess of the
difference between the amount of such cash payment and such Putting  GridAmerica
Company's pro rata tax basis in the Transmission Facilities which are subject to
the Put Notice  (determined  pursuant  to the  Master  Agreement),  the  Putting
GridAmerica Company may, at its election,  upon written notice to NGUSA received
at least thirty (30) days prior to the Put Closing, require NGUSA to rescind the
exercise of the Cash Option. Such notice shall provide a detailed explanation of
the income effect of the exercise by NGUSA of the Cash Option.

     (c)  Limitation  on  Capital   Contribution   Commitment.   Notwithstanding
anything in this  Agreement to the contrary,  no Affiliated  Investor shall have
any obligation to make or cause to be made any cash Capital  Contribution to the
Company pursuant to Section 4.2(a) if either:

          (i)  (A) the sum of (I)  the  aggregate  amount  of all  cash  Capital
     Contributions  by any  Affiliated  Investor  pursuant to Section 4.2(a) and
     (II) the  Fair  Market  Value  (determined  at the  time  the  Transmission
     Facilities in question are contributed to the Company pursuant to Article V
     of  the  Master   Agreement)  of  all  Capital   Contributions   comprising
     Transmission  Facilities  made  by the  Initial  Member  and/or  any  NGUSA
     Affiliates  would exceed (B) the difference  between (I)  $500,000,000  and
     (II) the  amount of the  aggregate  Capital  Contributions  of the  Initial
     Member  and/or any  Affiliated  Investor  made  pursuant  to  Section  4.1;
     provided,  however,  that there shall be excluded from such calculation the
     amount, if any, of the Excess Cash Amount; or

          (ii) all Affiliated  Investors would have,  after giving effect to the
     purchase of Units  pursuant to Section 4.2(a) and the issuance to a Putting
     GridAmerica  Company of Units in connection with exercise of the Put Right,
     an aggregate Percentage Interest in the Company in excess of twenty percent
     (20%);   provided,   however,  that  there  shall  be  excluded  from  such
     calculation  all Units  issued to such  Affiliated  Investors  pursuant  to
     Sections  4.1 (a) and 4.1 (b) and any Units issued in respect of the Excess
     Cash Amount.

     (d)  Not Applicable to NGUSA Put Right.  The provisions of Sections  4.2(a)
and  4.2(b)  shall  not  apply  to the  exercise  of a Put  Right  by any  NGUSA
Affiliate.

     Section 4.3. Additional Limitations on Commitment. Notwithstanding anything
contained in Sections 4.1 or 4.2 to the contrary, but subject to Section 4.2(c):

          (i)  The Initial Member and/or any  Affiliated  Investor shall have no
     obligation to make Capital  Contributions  pursuant to Sections 4.1 and 4.2
     in excess of the sum of (A) $500,000,000, plus (B) the Excess Cash Amount.

          (ii) The Initial Member and/or any  Affiliated  Investor shall have no
     obligation to make Capital Contributions in connection with the exercise of
     the Put Right (A) during the final six (6) months of the Initial Term if an
     MM  Termination  Notice or a Non-MM  Termination  Notice has been delivered
     pursuant  to  Section  6.1 (c) or (B) if NGUSA

                                       29

<PAGE>

     exercises its resignation  rights pursuant to clause (D) of Section 6.1(d),
     or (C) at any time  after the  Initial  Member  ceases  to be the  Managing
     Member;   provided,   however,   that  the   obligation   to  make  Capital
     Contributions pursuant to Section 4.2(a) shall continue with respect to the
     exercise of the Put Right if the Put Notice relating  thereto was delivered
     prior to (x) in the case of clause (A)  above,  the final six (6) months of
     the Initial Term or (y) in the case of clause (C) above,  the date that the
     Initial Member ceases to be the Managing Member.

     Section 4.4.  Capital  Contributions  After the Effective Date.  Subject to
Section  3.1(d),  the  Managing  Member  (i)  may,  from  time  to  time  in its
discretion,  accept from an existing  Member or a proposed  new Member a Capital
Contribution in exchange for Units consisting of cash,  Transmission  Facilities
and/or other assets and (ii) if a Capital Contribution is being made pursuant to
the Put Right contained in Article V of the Master  Agreement,  shall, from time
to time,  accept  from an  existing  Member or a  proposed  new Member a Capital
Contribution  consisting  primarily of  Transmission  Facilities  over which the
Company exercises  Functional Control. Any such Capital Contribution must have a
Fair Market Value not less than the Fair Market Value of any consideration to be
paid by the  Company to such  Person,  including  the Units to be issued to such
Person. In connection with Capital  Contributions of Transmission  Facilities by
the Managing Member or any Affiliate of the Managing Member (and, in the case of
the Initial Member,  by any Affiliated  Investor),  the Members,  other than the
Managing  Member  and its  Affiliates,  shall  represent  the  interests  of the
Company.

     Section  4.5. No Other  Required  Capital  Contributions.  Unless it agrees
otherwise  and except as set forth in Sections  4.1 and 4.2, no Member  shall be
obligated to make any additional Capital Contributions to the Company.

     Section 4.6. Return of Capital  Contributions.  No Member shall be entitled
to the return of any part of its Capital Contributions or to be paid interest in
respect of either its Capital Account or its Capital Contributions.  An unrepaid
Capital  Contribution  is not a liability  of the  Company or of any  Member.  A
Member is not  required  to  contribute  or to lend any cash or  property to the
Company to enable the Company to return any Member's Capital Contributions.

     Section 4.7. Capital Accounts.

     (a)  A Capital Account shall be established and maintained for each Member.
Each Member's  Capital Account (i) shall be increased by (A) the amount of money
contributed  by that  Member  to the  Company,  (B) the Book  Value of  property
contributed  by that Member to the Company (net of  liabilities  secured by such
contributed property that the Company is considered to assume or take subject to
under Code  Section 752) and (C)  allocations  to that Member of Profits and any
items of income or gain  allocated  to such Member  pursuant  to the  Regulatory
Allocations  and (ii) shall be decreased by (A) the amount of money  distributed
to that Member by the  Company,  (B) the Book Value of property  distributed  to
that  Member by the  Company  (net of  liabilities  secured by such  distributed
property  that such Member is considered to assume or take subject to under Code
Section 752) and (C)  allocations to that Member of Losses and any items of loss
or deduction allocated to such Member pursuant to the Regulatory Allocations.  A
Member  that has more than one Unit shall  have a single  Capital  Account  that
reflects all such Units,  regardless  of the class of Units owned by such Member
and regardless of the time or

                                       30

<PAGE>

manner in which such Units were acquired. Upon the disposition of any Units, the
Capital Account of the disposing Member that is attributable to such Units shall
carry  over to the  assignee  in  accordance  with the  provisions  of  Treasury
Regulation Section 1.704-1(b)(2)(iv)(1).

     (b)  The foregoing  provisions  and the other  provisions of this Agreement
relating to the  maintenance  of Capital  Accounts  are  intended to comply with
Treasury Regulations Section 1.704-1(b), and shall be interpreted and applied in
a manner  consistent with such Treasury  Regulations.  In the event the Managing
Member  shall  determine  that it is necessary to modify the manner in which the
Capital  Accounts,  or any debits or credits  thereto,  are computed in order to
comply  with  such  Treasury  Regulations,  the  Managing  Member  may make such
modification;  provided,  however,  that (i) it is not likely to have a material
effect on the amounts  distributed to any Member pursuant to Section 5.6(d) upon
the  liquidation  of the Company and (ii) prior to making any such  modification
(A) the Managing  Member obtains the written  consent of all Members that may be
reasonably  likely to be adversely  affected by such modification or (B) if such
consent or  consents  cannot be  obtained,  the  Managing  Member  obtains a tax
opinion from a nationally  recognized  tax counsel with expertise in partnership
tax matters,  which  counsel is reasonably  acceptable to the Members  holding a
majority  in  interest  of the  Percentage  Interests,  to the  effect  that the
proposed  modifications  of the Managing Member are necessary to comply with the
Treasury  Regulations.  The  Managing  Member  also shall be  entitled  to make,
subject to the  foregoing  proviso,  (i) any  adjustments  that are necessary or
appropriate to maintain equality between the Capital Accounts of the Members and
the amount of Company  capital  reflected on the  Company's  balance  sheet,  as
computed for book  purposes,  in accordance  with Treasury  Regulations  Section
1.704-1(b)(2)(iv)(q),  and  (ii)  any  appropriate  modifications  in the  event
unanticipated  events (for example, the acquisition by the Company of oil or gas
properties)  might  otherwise  cause this  Agreement not to comply with Treasury
Regulations Section 1.704-1(b).

     Section  4.8.  Units Issued In Respect of Capital  Contributions.  A Member
that makes Capital  Contributions shall receive Units having a Fair Market Value
equal to the amount of cash or the Fair  Market  Value of any other  property so
contributed as a Capital Contribution.

                                    ARTICLE V
                          ALLOCATIONS AND DISTRIBUTIONS

     Section 5.1. Allocations of Profits and Losses. Profits and Losses shall be
allocated  among the Members in accordance with their Percentage Interests.

     Section 5.2.  Regulatory  Allocations.  The following  allocations shall be
made in the following order:

          (i)  Nonrecourse  Deductions  shall be  allocated  to the  Members  in
     accordance with their Percentage Interests.

          (ii) Member Nonrecourse Deductions  attributable to Member Nonrecourse
     Debt shall be  allocated to the Members  bearing the Economic  Risk of Loss
     for such Member  Nonrecourse Debt as determined  under Treasury  Regulation
     Sections  1.704-2(b)(4)  and  1.752-2.  If more than one  Member  bears the
     Economic  Risk of  Loss  for  such

                                       31

<PAGE>

     Member Nonrecourse Debt, the Member Nonrecourse Deductions  attributable to
     such Member Nonrecourse Debt shall be allocated among the Members according
     to the ratio in which they bear the  Economic  Risk of Loss.  This  Section
     5.2(ii) is intended to comply with the  provisions  of Treasury  Regulation
     Section  1.704-2(i)  and  shall be  interpreted  and  applied  consistently
     therewith.

          (iii)Notwithstanding  any other provision  hereof to the contrary,  if
     there is a net decrease in Minimum Gain for a taxable year (or if there was
     a net decrease in Minimum Gain for a prior taxable year and the Company did
     not have  sufficient  amounts  of income  and gain  during  prior  years to
     allocate  among the Members under this Section  5.2(iii)),  items of income
     and gain  shall be  allocated  to each  Member in an  amount  equal to such
     Member's  share of the net  decrease in such  Minimum  Gain (as  determined
     pursuant  to  Treasury  Regulation  Section  1.704-2(g)(2)).  This  Section
     5.2(iii) is intended to constitute a minimum gain chargeback under Treasury
     Regulation   Section  1.704-2(f)  and  shall  be  interpreted  and  applied
     consistently therewith.

          (iv) Notwithstanding  any  provision  hereof  to the  contrary  except
     Section 5.2(iii) (dealing with Minimum Gain), if there is a net decrease in
     Member  Nonrecourse Debt Minimum Gain for a taxable year (or if there was a
     net decrease in Member  Nonrecourse  Debt Minimum Gain for a prior  taxable
     year and the  Company  did not have  sufficient  amounts of income and gain
     during  prior  years to  allocate  among the  Members  under  this  Section
     5.2(iv),  items of income and gain shall be  allocated to each Member in an
     amount  equal  to  such  Member's  share  of the  net  decrease  in  Member
     Nonrecourse   Debt  Minimum  Gain  (as  determined   pursuant  to  Treasury
     Regulation  Section  1.704-2(i)(4)).  This  Section  5.2(iv) is intended to
     constitute  a  partner  nonrecourse  debt  minimum  gain  chargeback  under
     Treasury  Regulation  Section  1.704-2(i)(4)  and shall be interpreted  and
     applied consistently therewith.

          (v)  Notwithstanding  any  provision  hereof  to the  contrary  except
     Sections   5.2(iii)  and  (iv)   (dealing  with  Minimum  Gain  and  Member
     Nonrecourse  Debt  Minimum  Gain),  a Member who  unexpectedly  receives an
     adjustment,  allocation or  distribution  described in Treasury  Regulation
     Section  1.704-1(b)(2)(ii)(d)(4),  (5) or (6) shall be  allocated  items of
     income and gain  (consisting  of a pro rata portion of each item of income,
     including  gross  income,  and gain for the taxable  year) in an amount and
     manner  sufficient  to  eliminate  any  deficit  balance  in such  Member's
     Adjusted  Capital  Account as quickly as possible.  This Section  5.2(v) is
     intended to constitute a qualified income offset under Treasury  Regulation
     Section   1.704-1(b)(2)(ii)(d)   and  shall  be  interpreted   consistently
     therewith.

          (vi) In the event  that any Member  has a  negative  Adjusted  Capital
     Account at the end of any  taxable  year,  such Member  shall be  allocated
     items of  income  and gain in the  amount of such  deficit  as  quickly  as
     possible;  provided,  however,  that an allocation pursuant to this Section
     5.2(vi) shall be made only if and to the extent that such Member would have
     a negative  Adjusted Capital Account after all other  allocations  provided
     for in this Article V have been  tentatively  made as if Section 5.2(v) and
     this Section 5.2(vi) were not in this Agreement.

          (vii)To the  extent an  adjustment  to the  adjusted  tax basis of any
     asset  pursuant to Code Section  734(b) or Code Section  743(b) is required
     pursuant  to  Treasury   Regulation  Section   1.704-1(b)(2)(iv)(m)(2)   or
     1.704-1(b)(2)(iv)(m)(4)  to be taken into  account in  determining  Capital
     Accounts  as the  result  of a  distribution  to  any  Member  in  complete
     liquidation  of such  Member's  Units,  the  amount of such  adjustment  to
     Capital  Accounts  shall be treated  as an item of gain (if the  adjustment
     increases the basis of the asset) or loss (if the adjustment decreases such
     basis)  and  such  gain  or loss  shall  be  allocated  to the  Members  in
     accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(m)(2) if such
     Section  applies,  or to the Member to whom such  distribution  was made if
     Treasury Regulation Section 1.704-1(b)(2)(iv)(m)(4) applies.

          (viii)  If  the  Treasury  Regulations  incorporating  the  Regulatory
     Allocations  are  hereafter  changed  or if new  Treasury  Regulations  are
     hereafter  adopted,  and such changed or new Treasury  Regulations,  in the
     opinion of tax counsel for the  Company,  make it  necessary  to revise the
     Regulatory Allocations or provide further special allocation rules in order
     to avoid a significant  risk that a material  portion of any allocation set
     forth in this  Article V would not be  respected  for  federal  income  tax
     purposes,  the  Members  shall  make  such  reasonable  amendments  to this
     Agreement as, in the opinion of such  counsel,  are necessary or desirable,
     taking into  account the  interests of the Members as a whole and all other
     relevant factors, to avoid or reduce  significantly such risk to the extent
     possible   without   materially   changing   the  amounts   allocable   and
     distributable to any Member pursuant to this Agreement.

     Section 5.3. Curative Allocations.  The Regulatory Allocations are intended
to comply with  certain  requirements  of the  Treasury  Regulations.  It is the
intent of the Members that, to the extent possible,  all Regulatory  Allocations
shall be  offset  either  with  other  Regulatory  Allocations  or with  special
allocations of other items of Company income,  gain, loss or deduction  pursuant
to this  Section 5.3.  Therefore,  notwithstanding  any other  provision of this
Article V (other than the  Regulatory  Allocations),  the Managing  Member shall
make such  offsetting  special  allocations  of Company  income,  gain,  loss or
deduction in whatever manner it determines to be appropriate so that, after such
offsetting  allocations are made,  each Member's  Capital Account balance is, to
the extent possible, equal to the Capital Account balance such Member would have
had if the  Regulatory  Allocations  were  not  part  of the  Agreement  and all
Partnership  items were  allocated  pursuant to Section 5.1. In  exercising  its
discretion  under this Section 5.3, the Managing  Member shall take into account
future Regulatory Allocations under Sections 5.2(iii) and 5.2(iv) that, although
not yet made, are likely to offset other Regulatory  Allocations previously made
under Sections 5.2(i) and 5.2(ii).

     Section 5.4. Income Tax Allocations.

     (a)  All items of income,  gain,  loss and deduction for federal income tax
purposes  shall be  allocated  in the same manner as the  corresponding  item of
Profits and Losses is allocated, except as provided in Section 5.4(b).

     (b)  In accordance  with Code Section  704(c) and the  applicable  Treasury
Regulations  thereunder,  income,  gain, loss, and deduction with respect to any
property contributed to the Company shall, solely for tax purposes, be allocated
among the Members so as to take  account of

                                       33

<PAGE>

any  variation  between the adjusted  basis of such  property to the Company for
federal  income tax purposes  and its initial Book Value.  In the event that any
property is adjusted  pursuant to clause (ii) or (iv) of the  definition of Book
Value,  subsequent  allocations of income, gain, loss and deduction with respect
to such property shall take account of any variation  between the adjusted basis
of such property for federal  income tax purposes and its Book Value in the same
manner as under Code Section 704(c) and the applicable  Regulations  thereunder.
For  purposes  of such  allocations,  the  Company  shall  elect the  Designated
Allocation  Method,  and  in  applying  the  Designated   Allocation  Method  to
depreciable property, the Company shall compute allocations using the method set
forth on Schedule B. Subject to the provisions of Treasury  Regulations  Section
1.704-3,  the Company may use different  methods with respect to different items
of property.

     (c)  Any (i) recapture of depreciation  deductions  shall be allocated,  in
accordance with Treasury  Regulations  Section  1.1245-1(e),  to the Members who
received the benefit of such  deductions  (taking into account the effect of the
Designated  Allocation  Method) and (ii) recapture of credits shall be allocated
to the Members in accordance with Treasury Regulation Section  1.704-1(b)(4)(ii)
unless the applicable Code section shall otherwise require.

     (d)  Allocations  pursuant to this  Section 5.4 are solely for  purposes of
federal,  state,  and local taxes and shall not  affect,  or in any way be taken
into account in  computing,  any Member's  Capital  Account or share of Profits,
Losses,  other  items  or  distributions  pursuant  to  any  provision  of  this
Agreement.

     Section 5.5. Other Allocation Rules.

     (a)  All items of income,  gain, loss, deduction and credit allocable to an
interest  in the  Company  that may have  been  transferred  shall be  allocated
between the transferor and the transferee in accordance with the interim closing
of the books method as provided in the Treasury  Regulations  under Code Section
706(d).

     (b)  The  Members'   proportionate   shares  of  the  "excess   nonrecourse
liabilities" of the Company,  within the meaning of Treasury  Regulation Section
1.752-3(a)(3),   shall  be  determined  in  accordance  with  their   Percentage
Interests.

     Section 5.6. Distributions.

     (a)  Distributions   Upon   Contributions   of   GridAmerica   Transmission
Facilities.   The   Managing   Member  shall  cause  the  Company  to  make  the
distributions required by Section 4.2(a)(iii).

     (b)  Regular Distributions.  The Managing Member shall cause the Company to
distribute  simultaneously  to  each  Member  in  proportion  to its  respective
Percentage Interest, not less frequently than each calendar month, not less than
eighty percent (80%) of Available Cash and (ii) the Managing  Member may, in its
discretion make additional  distributions  of Available Cash, but any such other
distributions  must be made  simultaneously  to each Member in proportion to its
respective Percentage Interest.

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<PAGE>

     (c)  Tax Distribution.  As soon as practicable  following the close of each
taxable period, the Company shall, to the extent it has Available Cash therefor,
distribute  to each  Member the  excess,  if any,  of (i) the product of (A) the
Cumulative Net Profits  allocated to such Member,  multiplied by (B) the highest
marginal federal ordinary income tax rate applicable to corporations,  over (ii)
the amount of any  distributions  previously made pursuant to Section 5.6(b) and
this Section  5.6(c) to such Member.  In the event that adequate  Available Cash
does not exist to make the  distributions  required by this Section 5.6(b),  the
Company shall use commercially  reasonable efforts to incur Debt in at least the
amount necessary to make such distributions.

     (d)  Distributions  on Dissolution and Winding Up. Upon the dissolution and
winding  up of the  Company,  after  adjusting  the  Capital  Accounts  for  all
distributions made under Sections 5.6(a), 5.6(b) and 5.6(c), and all allocations
under this  Article V, all  available  assets  distributable  to the  Members as
determined  under  Section  9.2(v)  shall  be  distributed  to  the  Members  in
accordance with their positive Capital Account balances.

                                   ARTICLE VI
                                   MANAGEMENT
                                   ----------

     Section 6.1. Management of the Company.

     (a)  Managing Member.  The management of the Company shall be vested in the
Member that is designated as the "Managing  Member" in accordance  with Sections
6.1(b) and 6.1(e). Except as otherwise expressly provided in this Agreement, the
Managing  Member shall have full power and  authority to manage the business and
affairs of the Company to the extent  provided in the Act,  and no other  Member
shall have any such  management  power and authority.  The Managing Member shall
use commercially  reasonable  efforts to employ or otherwise secure the services
of Persons  responsible  for the  management  and  system-wide  operation of the
Transmission  Facilities owned and/or Functionally Controlled by the Company and
to  appoint  any of  such  Persons  as  officers  of  the  Company  having  such
responsibilities and obligations as the Managing Member shall specify; provided,
however, that except for Excluded Employees,  such Persons shall be employees of
the Managing  Member or the Company and not  employees  of any  Affiliate of the
Managing Member (other than the Company or any subsidiary of the Managing Member
or the  Company).  Initially  (x)  Nick  Winser  of  NGUSA  will  serve as chief
executive officer of the Company and will devote  significant time and attention
to the  business  and  affairs of the  Company  and (y) Paul Halas of NGUSA will
serve as general  counsel of the Company and will  devote  significant  time and
attention to the business and affairs of the Company, provided, that Nick Winser
and Paul  Halas  may each  also  serve  in a  similar  or  different  roles  and
capacities  for other ITCs as well as for NGUSA and its  Affiliates.  Subject to
the right of the Initial  Member to resign as Managing  Member as  permitted  by
Section 6.1(d),  for so long as the Initial Member is the Managing  Member,  the
Initial Member and its Affiliates will maintain Non-Market Participant status.

     (b)  Designation and Removal of Managing  Member.  The Initial Member shall

be the initial Managing  Member.  It shall serve for a term (the "Initial Term")
that commences on the Effective Date and shall end upon the fifth anniversary of
the  Transmission  Service Date (the "Scheduled  Termination  Date");  provided,
however, that the Initial Member's term as Managing

                                       35

<PAGE>

Member shall terminate prior to the Scheduled  Termination  Date or prior to the
end of any Additional Term (i) if it (or any of its Affiliates that are required
to  maintain  Non-Market  Participant  status)  shall  have  been  found  by the
Commission,  in a final  order of the  Commission  that is no longer  subject to
rehearing,  to be a Market  Participant or (ii) for Cause if a Super Majority of
Transmission  Owners shall have delivered  written notice that they have elected
to remove the Managing  Member for Cause  pursuant to this  Agreement or a Super
Majority of  Transmission  Owners shall have delivered  written notice that they
have  elected to cause the  Company to remove the  Managing  Member for  "cause"
pursuant to Section 4.4.3 of the Operation Agreement, which removal shall become
effective  on the date  specified  in, but no sooner than sixty (60) days after,
delivery to the Managing  Member,  each  GridAmerica  Company and each NDTO of a
written notice of such election to remove (each, an "Early Termination  Event").
Notwithstanding  anything in clause (ii) of the immediately  proceeding sentence
to the contrary,  (x) if the Managing  Member  disputes  whether the grounds for
removal  exist by  written  notice  to each  GridAmerica  Company  and each NDTO
delivered  within  thirty  (30) days of  receipt by the  Managing  Member of the
election to remove the  Managing  Member,  no Early  Termination  Event shall be
deemed to occur until sixty (60) days after receipt of a final arbitration award
pursuant to Section 10.3 finding that such grounds for removal  exist and (y) no
removal of the Managing  Member shall be effective  unless and until approved by
the Commission.  The initial term of any successor Managing Member (a "Successor
Initial Term") shall be as set forth in the instrument appointing such successor
Managing Member,  but, in any event,  shall terminate upon an Early  Termination
Event.

     (c)  Automatic  Extension of Managing  Member's Term.  Notwithstanding  the
expiration of the Initial Term on the Scheduled  Termination  Date,  the Initial
Term and,  unless  otherwise  provided in the instrument  appointing a successor
Managing Member,  the Successor  Initial Term of any successor  Managing Member,
automatically  shall be extended for an additional  term of two (2) years at the
end of the Initial  Term or  Successor  Initial Term (as the case may be) unless
written notice of  termination of the Managing  Member is given to all the other
Members  at least  six  months  prior to the  last  day of the  Initial  Term or
Successor  Initial  Term  (as the  case may be) by the  Managing  Member  (a "MM
Termination  Notice")  or a Majority  of Class A Members (a "Non-MM  Termination
Notice").  Following  any such  additional  term,  the  Managing  Member's  term
automatically shall be extended for successive additional terms of two (2) years
each (any  additional  term,  whether  following  the Initial  Term, a Successor
Initial Term or an additional term,  being an "Additional  Term") unless written
notice of termination  of the Managing  Member is given to all the other Members
at least six months prior to the end of the then existing Additional Term by the
Managing Member or a Majority of Class A Members.

     (d)  Resignation.  The  Managing  Member shall not be entitled to resign or
withdraw  from its  position as Managing  Member prior to the end of the Initial
Term or any Successor  Initial Term or any Additional Term;  provided,  however,
that (i) the  Initial  Member may (x) upon thirty  (30) days  notice,  resign as
Managing Member after March 31, 2003 if, as of the date of such resignation, the
Transmission Service Date has not occurred and (y) may resign as Managing Member
as permitted  by Section  2.2(c) of the Master  Agreement  and (ii) the Managing
Member  shall  resign as  Managing  Member  (A) if  required  by the  Company in
accordance  with the  Operation  Agreement,  (B) if  required  under the  Master
Agreement,  (C) effective as of the time set forth in Section 6.1 (b) if removed
pursuant to such  Section  6.1(b)

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<PAGE>

unless,  in the case of either  clause (A) or clause (C),  the  Managing  Member
contests  its removal  under  Article X of this  Agreement or Article XII of the
Master  Agreement or Article VI of the  Operation  Agreement,  in which case the
Managing  Member shall  resign at the time  directed in any order or judgment of
the  arbitrator  issued  pursuant to such Article X of this Agreement or Article
XII of the Master  Agreement  or Article VI of the  Operation  Agreement,  if so
directed, or (D) as permitted pursuant to Section 5.7 of the Master Agreement.

     (e)  Replacement  of Managing  Member.  If a Member's  term as the Managing
Member ends (i) at the expiration of the Initial Term or Successor  Initial Term
because the Initial Term or Successor Initial Term is not automatically extended
to an  Additional  Term or (ii) at the end of any  Additional  Term because such
Additional Term is not automatically  extended to a subsequent  Additional Term,
then a Majority of Class A Members shall select the replacement  Managing Member
who may not be such Member or an Affiliate  thereof.  If the  Managing  Member's
Initial Term or Successor  Initial Term or any Additional  Term ends pursuant to
an Early Termination Event, a Super Majority of Transmission Owners shall select
the replacement Managing Member.

     (f)  Transitional  Provisions.  If a Person's term as Managing Member ends,
such Person  shall,  at the request of the  Company,  negotiate in good faith to
provide  transition  services on  commercially  reasonable  terms and conditions
(including  compensation) to facilitate a smooth transition of the management of
the Company.

     Section 6.2.  Redemption  of Units Upon  Termination  of Initial  Member as
Managing Member; Rights of the Company.

     (a)  Redemption  of  Units  Upon  Non-Renewal  of Term by  Members.  If the
Initial  Member's term as Managing  Member ends at the expiration of the Initial
Term because a Majority of Class A Members elect not to extend  automatically to
an Additional  Term or at the end of any  Additional  Term because a Majority of
Class A Members  elect not to extend  automatically  to a subsequent  Additional
Term, then the Initial Member may, by written notice delivered within sixty (60)
days after the end of the Initial Member's term as Managing Member,  require the
Company to redeem any Units  issued to and held by any  Affiliated  Investor  in
respect of Capital  Contributions  made pursuant to Sections 4.1 (a) and 4.1 (b)
(to the  extent  such  Units are still  held by an  Affiliated  Investor)  for a
redemption  price  equal to the Fair  Market  Value of such Units on the date of
delivery of the notice referred to above. Subject to Section 6.2(b), on the date
set forth in the  request for  redemption,  which date must be not more than one
hundred  eighty (180) days but not less than one hundred twenty (120) days after
the date of such  notice,  the  Company  shall  purchase  such  Units  from such
Affiliated  Investors and such Affiliated  Investors shall sell such Units, free
and clear of all  Encumbrances  for cash for their Fair  Market  Value,  and the
Managing  Member  shall  make  the  appropriate  notation  thereof  in the  Unit
Registry.  The right of  redemption  described in this Section  6.2(a) shall not
apply (i) to Units issued under any other provision of this Agreement other than
Sections 4.1(a) or 4.1(b), (ii) to Units held by any other Person other than the
Initial  Member and/or such  Affiliated  Investors,  (iii) upon a removal of the
Managing Member upon an Early Termination Event or if the Initial Member resigns
pursuant to Section 5.7 of the Master  Agreement or (iv) if the Initial  Member,
any  Affiliated  Investor  and/or any  Affiliate  thereof voted any of the Units
owned by them in favor of not  extending  the Initial  Member's term as Managing
Member.

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<PAGE>

     (b)  Conditions to Closing Redemption. In connection with any redemption of
Units by the Company  from any Person  pursuant to this  Agreement,  such Person
must deliver such Units to the Company on the date set for  redemption  free and
clear  of any  Encumbrances,  and  the  closing  of  such  redemption  shall  be
conditioned upon the satisfaction of customary closing conditions, including (i)
execution  and  delivery  to the  Company  by such  Person of an  instrument  or
agreement  of  transfer  in form and  substance  reasonably,  satisfactory  to a
Majority of Non-Managing  Members and which contains  customary  representations
and warranties in respect of due  authorization,  title,  enforceability  and no
conflicts with agreements or applicable Laws and the need for any third-party or
Governmental  consents,  (ii) delivery to the Company of a Favorable  Opinion of
Counsel,  (iii) the redemption not violating any Laws or agreements to which the
Company or such Person is a party and (iv) receipt of any necessary  consents or
approvals of any Governmental Authorities.

     (c)  Acquisition of Managing Member's Assets and Employees.  If the Initial
Member  ceases  to be  the  Managing  Member  for  any  reason  (including  upon
resignation or removal if the Transmission  Service Date shall not have occurred
on or before  March 31,  2003),  the Company  shall have the right,  but not the
obligation,  to either (i) acquire one hundred percent (100%) of the outstanding
Equity  Interests  of the Initial  Member or one hundred  percent  (100%) of the
assets and  liabilities  of the Initial Member for a price equal to the Net Book
Value of the  Initial  Member  determined  as of the date on which  the  Initial
Member ceases to be Managing  Member or (ii) offer (or a designee of the Company
may offer) employment to any employee of the Initial Member, other than Excluded
Employees. The Company may exercise the rights granted by this Section 6.2(c) by
delivering notice within sixty (60) days of the date on which the Initial Member
ceases to be Managing Member.

     (d)  Closing of  Acquisition.  If the Company  elects to acquire the Equity
Interests or assets and  liabilities of the Initial  Member,  the Initial Member
shall cause such Equity Interests or assets and liabilities to be transferred to
the  Company  free and  clear of all  Encumbrances  (except,  in the case of the
assets of the  Initial  Member,  Encumbrances  that have been  disclosed  to the
Company), and the Initial Member shall cause NGUSA and the seller of such Equity
Interests to make  customary  representations  and  warranties in respect of due
authorization, title, enforceability, no conflicts with agreements or applicable
Laws,  the need for any third  party or  Governmental  consents  and  disclosing
material assets, contracts and liabilities.  The "Net Book Value" of the Initial
Member shall be the  difference,  but not less than zero,  between the aggregate
assets of the  Initial  Member  less the  aggregate  liabilities  of the Initial
Member,  both determined in accordance with GAAP. Any dispute  regarding the Net
Book  Value of the  Initial  Member  shall be finally  determined  by the Agreed
Accounting  Firm  designated  in  accordance  with  the  Master  Agreement.  The
acquisition  of the Equity  Interests  of the  Initial  Member or the assets and
liabilities  of the  Initial  Member by the  Company or its  designee  shall not
include any Units or Shares or any indebtedness incurred to acquire any Units or
Shares,  and (i)  immediately  prior to the  closing  of such  acquisition,  the
Initial Member shall  distribute or otherwise  transfer any Units or Shares held
by it to its  member(s)  or  shareholder(s)  (as the case may be) and  cause the
Initial  Member to be  released  from any  indebtedness  incurred to acquire any
Units or  Shares,  and shall  cause any  Encumbrances  on assets of the  Company
securing  acquisition  indebtedness  for such Units or Shares to be released and
(ii) any such Units or Shares and any such indebtedness shall not be included in
determining the Net Book Value of the Initial Member.

                                       38

<PAGE>

         (e) Hiring of Employees. If the Company or its designee elects to offer
employment to any employees of the Initial Member (or, in the case of a purchase
of the Equity  Interests of the Initial  Member,  if the Company or its designee
elects to retain the  services  of any such  employees),  it shall do so on such
terms  and  subject  to such  conditions  as it may  from  time  to time  elect;
provided, however, that no such offer shall be deemed to be a "Qualifying Offer"
with  respect to any such  employee  unless  such offer is made during the sixty
(60) day period referred to in Section 6.2(c),  and such offer offers employment
in a position  of  comparable  authority  with an overall  compensation  package
which, taken as a whole, is comparable to the overall  compensation package then
provided by the Initial Member.  During the sixty (60) day period referred to in
Section  6.2(c),  the Initial  Member  shall not,  and shall cause NGUSA and the
NGUSA  Affiliates  (other  than the  Company)  not to,  offer  employment  to or
otherwise  directly or  indirectly  retain or seek to retain the services of any
employee  of the  Initial  Member,  other than any  Excluded  Employee,  and the
Initial Member shall not, and shall cause NGUSA and the NGUSA Affiliates  (other
than the Company) not to, engage in any such activities. After the expiration of
such sixty (60) day period,  NGUSA and any NGUSA Affiliate may offer  employment
to any  employee  of the Initial  Member;  provided,  however,  that the Initial
Member shall not, and shall cause NGUSA and the NGUSA Affiliates (other than the
Company) not to, offer employment to or otherwise  directly or indirectly retain
or seek to retain the services of any employee of the Initial  Member other than
any Excluded  Employee who receives a Qualifying  Offer for a period of one year
after the date such  Qualifying  Offer is made.  The Company shall provide NGUSA
with copies of all  Qualifying  Offers of  employment  made to  employees of the
Initial  Member.  The  Initial  Member  shall have no  obligation  to retain any
employee  of the  Initial  Member as an  employee  after the  expiration  of the
Initial Member's term as Managing Member or the removal of the Initial Member as
Managing Member.

     (f)  Exercise of Rights of Company.  In the event that there are holders of
Class A Units other than NGUSA or  Affiliated  Investors at the time the Initial
Member ceases to be the Managing  Member,  then such holders shall represent the
interests of the Company in  connection  with the exercise by the Company of the
rights contained in Sections 6.2(c) through 6.2(e).  In the event that there are
no holders of Class A Units other than NGUSA or Affiliated  Investors,  then (i)
if the  Company  has  issued at least  $250,000,000  in Class B Units to Persons
other than the Initial  Member and/or its  Affiliates,  then the holders of such
Units shall  represent the  interests of the Company and (ii)  otherwise a Super
Majority of Transmission Owners may, if they so elect, by giving notice to NGUSA
and the Initial  Member  delivered  not fewer than  fifteen  (15) days after the
receipt of a MM Termination Notice, a Non-MM Termination Notice or the notice of
removal  delivered  pursuant to Section  6.1(b),  represent the interests of the
Company in connection  with the exercise by the Company of the rights  contained
in Sections 6.2(c) through 6.2(e) to the extent permitted by applicable Law.

     (g)  Consents and Approvals.  The Initial Member shall, and shall cause its
Affiliates  to, use  commercially  reasonable  efforts  to obtain any  necessary
consents or approvals of any  Governmental  Authorities and of any third parties
in connection  with an acquisition  pursuant to Sections  6.2(c) through 6.2(e).
The Initial Member shall not, and shall not permit its Affiliates to, enter into
or suffer to exist any agreement  that would  prohibit,  hinder or frustrate the
Company's rights under Sections 6.2(c) through 6.2(e); provided,  however, that,
the Company may enter into one or more  agreements in respect of financings  for
the Company that provide for aggregate  borrowings of not more than $100,000,000
prior to the date the Company first owns

                                       39

<PAGE>

GridAmerica  Transmission  Facilities  and  $250,000,000  thereafter,  unless  a
Majority  of  Non-Managing  Members  shall  have  approved  a greater  amount of
borrowings,  that  contain a covenant  prohibiting  a  change-in-control  of the
Managing  Member if the Initial  Member,  in the good faith  performance  of its
duties and  obligations as Managing  Member  determines that such provisions are
necessary in order to obtain financing on commercially reasonable terms.

     Section 6.3.  Compensation of Managing Member; Expenses.

     (a)  General.  The Initial  Member,  commencing on the  Effective  Date and
continuing  until the end of the Initial Term,  shall be entitled to receive the
following as compensation for serving as Managing Member:

          (i)  subject  to  Sections  6.3(b),  6.3(c)  and  11.8(b),  an  annual
     management  fee of $3.5  million  for each of the first  three years of the
     Initial Term and $2.5 million for each  subsequent year of the Initial Term
     and each  year of any  Additional  Term  (the  "Initial  Management  Fee"),
     payable monthly in arrears on the last Business Day of each calendar month,
     subject to adjustment as provided in Section 6.3(b); and

          (ii) subject to Section  11.8(b),  reimbursement  of compensation  and
     benefits  expenses for the employees of the Managing Member incurred by the
     Managing  Member in  connection  with  serving  as  Managing  Member of the
     Company, such reimbursement payments to be made no more often than monthly.

     (b)  Adjustment  of Initial  Management  Fee. As of January 1 following the
fifth  anniversary  of the  Effective  Date and each January 1  thereafter,  the
Initial  Management  Fee for the calendar year beginning on such January 1 shall
be adjusted to equal the sum of the following:

          (i)  the Initial Management Fee; plus

          (ii) the product of (A) the Initial Management Fee,  multiplied by the
     percentage  change,  if any,  in the CPI Index for  December of the year in
     which the fourth  anniversary of the Effective Date occurs to the CPI Index
     value for the December immediately proceeding such January 1.

The annual management fee, if adjusted as aforesaid, shall remain unchanged
until it is adjusted again pursuant to the terms of this Section 6.3(b) or is
subject to adjustment pursuant to Section 6.3(c) or Section 6.3(d).

     (c)  Adjustment of Initial  Management Fee Upon Admission of New Members or
Additions  of New  Parties to  Operation  Agreement.  The amount of the  Initial
Management Fee, as adjusted as provided in Section 6.3(b), may be increased upon
and in  connection  with the  admission  of new  Members or the  addition of new
Transmission  Owners as parties to the Operation Agreement as agreed between the
Managing  Member  and such new  Member  or  party  to the  Operation  Agreement;
provided, however, that (i) no such increase in the Initial Management Fee shall
result in an increase in the  aggregate  amount of the  Initial  Management  Fee
payable by the Original GridAmerica Companies under Section 4.3 of the Operation
Agreement  without the consent of the Original  GridAmerica  Companies  and (ii)
after giving

                                       40

<PAGE>

effect to such increase in the Initial Management Fee, the several obligation of
each Transmission Owner (under and as defined in the Operation Agreement) to pay
its pro rata share of the Initial  Management Fee pursuant to Section 4.3 of the
Operation  Agreement  shall not exceed a  percentage  of the  increased  Initial
Management Fee equal to the percentage that such Transmission  Owner's Net Plant
bears to the aggregate Net Plant in such year, adjusted to include the Net Plant
of the additional  Transmission  Owner as of the effective date of such increase
in the Initial Management Fee.

     (d)  Incentive Compensation. In addition to the amounts payable pursuant to
Sections  6.3(a),  (b) and (c),  the  Initial  Member  shall  receive  incentive
compensation pursuant to such incentive compensation  arrangements as are agreed
from time to time between the Initial Member and such of the other  participants
in GridAmerica ITC as shall agree thereto. Notwithstanding the generality of the
foregoing,  any incentive  compensation  arrangements agreed between the Initial
Member and the other participants in GridAmerica ITC shall provide that not less
than  25% of net  incentives  earned  through  or as a result  of the  Company's
exercise of  Functional  Control over the  GridAmerica  Transmission  Facilities
pursuant to the Operation  Agreement  shall be payable to the Initial  Member as
incentive  compensation  and  the  balance  of  such  net  incentives  shall  be
distributed to the participants in GridAmerica ITC as set forth in Section 4.3.2
of the Operation Agreement.

     (e)  Prorated  Payments.  Any amounts  payable to the  Managing  Member for
serving as Managing  Member for periods of less than a full calendar month shall
be prorated  for the period in which the  Managing  Member  served  based on the
actual number of days elapsed.

     (f)  Compensation of Successor  Managing  Member.  The  compensation of any
Managing  Member (other than the Initial Member as Managing  Member) shall be as
set forth in the instrument appointing such successor Managing Member.

     Section 6.4. Obligations of the Company.

     (a)  General. The Company and each of its Subsidiaries shall:

          (i)  comply with the Permitted Purposes;

          (ii) comply  with and  perform  all of its  obligations  under  and in
     accordance  with this  Agreement and the other  Transaction  Agreements and
     such other contracts and agreements as the Company may enter into from time
     to time;

          (iii)comply  with  and  perform  all  of  its  obligations  under  all
     applicable Laws;

          (iv) at all times  hold  itself  out to the  public as a legal  entity
     separate from any Member and any NDTO;

          (v)  have a commercially reasonable capital structure;

          (vi) file  its  own  tax  returns  and  tax  information  returns  and
     schedules,  if any, as may be required under  applicable Law, to the extent
     not part of a consolidated  group

                                       41

<PAGE>

     filing a consolidated  return or returns,  and pay any taxes required to be
     paid by the Company under applicable Law;

          (vii) maintain its own separate books and records and bank accounts;

          (viii) conduct its business in its own name;

          (ix) maintain separate financial statements;

          (x)  pay its own liabilities only out of its own funds; and

          (xi) correct  any  known   misunderstanding   regarding  its  separate
     identity.

     (b)  Non-Market Participant  Certifications.  Promptly after the receipt by
the Company of any Non-Market Participant Certification of a Member, the Company
shall deliver a copy thereof to each other Member.

     (c)  Subsidiaries.  The Company shall not have any subsidiaries  other than
wholly owned  subsidiaries  formed to own or hold  Transmission  Facilities  and
related assets where such separate ownership or possession is necessary in order
to comply with applicable Laws (each, a "Subsidiary"). The Managing Member shall
cause any such  Subsidiary to not take any action that, if taken by the Company,
would not be permitted  under this Agreement or would require the consent of the
Members.

     (d)  Insurance. At all times during the effectiveness of this Agreement and
the Operation  Agreement,  the Company shall maintain insurance of the types and
in the  amounts as shall be agreed  between  the  Company  and the  Transmission
Owners (under and as defined in the Operation  Agreement),  provided,  that such
coverages are available at  commercially  reasonable  rates.  If a  Transmission
Owner (under and as defined in the Operation  Agreement) requests the Company to
obtain  insurance in addition to such types or amounts as shall have been agreed
as aforesaid, the Company shall obtain such insurance provided such Transmission
Owner pays the cost thereof.

     (e)  Debt Securities.  Subject to Section  6.4(a)(v),  the Company may from
time to time,  on such terms and  conditions  as may be approved by the Managing
Member  in its sole  discretion,  incur  Debt in  furtherance  of the  Company's
business and, in connection  therewith,  issue Debt securities of the Company to
evidence  such  Debt.  In the  event of the  incurrence  of any such Debt by the
Company,  the  Company  shall use  commercially  reasonable  efforts  to recover
through the  rate-making  process the principal and interest (and  transactional
costs) associated with such Debt.

     (f)  Incentive  Compensation.  The Managing Member shall, from time to time
but no less frequently within thirty (30) days of the Transmission  Service Date
and each anniversary  thereof,  propose to the other participants in GridAmerica
ITC incentive compensation  arrangements designed to encourage the efficient and
enhanced operation of the GridAmerica Transmission Facilities. Such arrangements
shall  not  take  into  account  the  other  businesses  and  activities  of the
GridAmerica ITC  participants,  including,  without  limitation,  their electric
generation businesses and activities.

                                       42

<PAGE>

     Section 6.5.  Obligations and Duties of the Managing  Member.  The Managing
Member shall:

          (i)  Cause  the  Company  to  exercise  Functional  Control  over  the
     GridAmerica   Transmission  Facilities  and  to  operate  the  Transmission
     Facilities  owned by the Company in accordance with Good Utility  Practice;
     provided,  however,  in recognition of the fact that  GridAmerica  ITC will
     operate  as an ITC under the  Midwest  ISO in  compliance  with  applicable
     Commission  orders and policies,  the Company shall execute and deliver and
     perform its obligations  under the MISO ITC Agreement  which  contemplates,
     among other  things,  that the Company will transfer  certain  functions in
     respect of the GridAmerica  Transmission  Facilities to the Midwest ISO and
     it is expressly  understood and agreed that the Initial Member shall not be
     deemed to have  violated its duties under this Section by entering into any
     or all of the MISO ITC Agreement,  any amendments or modifications thereto,
     or any  similar  agreements  in  which  one or more  Regional  Transmission
     Organizations  assumes  responsibility for any aspect of Functional Control
     of any Transmission  Facilities or for the operation thereof,  and it shall
     be an absolute  defense to any allegation of a breach by the Initial Member
     of its duties  under this Section that the Midwest ISO (or another RTO) had
     responsibility for the performance  thereof under the MISO ITC Agreement or
     any similar agreement or under applicable Law.

          (ii) Cause the Company to fulfill in a commercially  reasonable manner
     and,  where  applicable,  in  accordance  with Good Utility  Practice,  its
     obligations  hereunder  and  under the other  Transaction  Agreements,  all
     applicable  Laws and all other  agreements to which the Company is a party;
     provided,  however,  that this covenant is not a guaranty of performance by
     the Company of any of its obligations;

          (iii) Comply with its obligations under Sections 4.1, 4.2 and 11.8(e);

          (iv) Have a fiduciary  duty of loyalty and care to the Members and the
     Company  which shall be the same as that owed by directors  and officers of
     business corporations organized under the DGCL; provided, however, that the
     fiduciary duties owed by the Managing Member to the Members shall not allow
     the  Managing  Member to consider  the present or future  interests  of the
     Members or any Affiliate thereof outside of the Company's business; and

          (v)  Use  commercially   reasonable   efforts  to  fulfill  its  other
     obligations under this Agreement.

          Section 6.6.  Limitations on Managing Member Activities.

     (a)  Restrictions.  Notwithstanding  any other provision of this Agreement,
the Managing Member shall not have the right or power to:

          (i)  do, or cause the Company to do, any act in  contravention of this
     Agreement or any other Transaction  Agreement to which it or the Company is
     a party;

                                       43

<PAGE>

          (ii) perform,  or cause the  Company  to  perform,  any act that would
     subject a Member to liability for the debts of the Company;

          (iii)do, or cause the Company to do, any acts,  perform,  or cause the
     Company to perform,  any actions or effect, or cause the Company to effect,
     any matters requiring the approval of the Members or any other Person under
     this  Agreement,  any other Basic Agreement or applicable Law without first
     having obtained such approval; or

          (iv) except as  provided  in  Sections  6.2(a) and  6.2(b),  cause the
     Company  to  purchase  or redeem  any Units of the  Managing  Member or any
     Affiliated Investors.

     (b)  Actions  Requiring  Member Consent.  Anything in this Agreement to the
contrary  notwithstanding,  the Company shall not, and the Managing Member shall
cause the Company not to, take the  following  actions  without the  affirmative
written  approval  of a Super  Majority  of  Non-Managing  Members in their sole
discretion:

          (i)  engage  in  a  merger,   reorganization   or   similar   business
     combination  transaction between the Company and any Person (other than (A)
     a  holding  company  reorganization  effected  by merger  or  otherwise,  a
     reorganization  to change  the  state of  formation  effected  by merger or
     otherwise  or a similar  transaction  that  does not  alter the  beneficial
     ownership  of the Units or (B) a merger  or  similar  business  combination
     transaction  following  which the  beneficial  owners of Units  immediately
     prior to the effective time of such  transaction  continue to  beneficially
     own no less  than  66.67%  of the Units or other  equity  interests  in the
     resulting  entity   immediately   following  the  effective  time  of  such
     transaction)  unless  the  Commission  finds that the  merger,  conversion,
     reorganization   or  other   transaction  will  not  adversely  impact  the
     investment of members other than the Managing Member in the Company;

          (ii) sell, lease, transfer, convey or otherwise dispose of (other than
     by merger or  consolidation),  in one or a series of related  transactions,
     all or substantially all of the assets of the Company;

          (iii)dissolve or  liquidate  the Company or take any action in respect
     thereof;

          (iv) (A) make a general  assignment for the benefit of creditors,  (B)
     file a voluntary  bankruptcy  petition,  (C) become the subject of an order
     for relief or be declared  insolvent in any federal or state  bankruptcy or
     insolvency   proceedings,   (D)  file  a  petition  or  answer   seeking  a
     reorganization,   arrangement,  composition,   readjustment,   liquidation,
     dissolution,  or similar  relief under any Law, (E) file an answer or other
     pleading  admitting  or failing to contest the  material  allegations  of a
     petition  filed in a proceeding  of the type  described in  subclauses  (A)
     through (D); or (F) seek,  consent to, or acquiesce in the appointment of a
     trustee,  receiver,  or  liquidator of all or any  substantial  part of its
     properties;

          (v)  except  in  connection   with  the  Initial  Public  Offering  as
     contemplated  by Article VI of the Master  Agreement,  cause the Company to
     convert into any other form of Entity;

                                       44

<PAGE>

          (vi) take any action not within the Company's Permitted Purposes; and

          (vii)grant rights  superior to those contained in Articles V and VI of
     the  Master  Agreement  to any  Person  that is not a party  thereto on the
     Effective Date and their permitted assignees thereunder;

provided,  however,  that  anything  to the  contrary  in  this  Section  6.6(b)
notwithstanding,  the  approval  of a Super  Majority  of  Non-Managing  Members
referenced above shall not be required until such time as the Company has issued
an aggregate of  $250,000,000 in Units to Persons other than the Managing Member
and any Affiliated  Investors and such Units represent not less than twenty-five
percent (25%) of the total  outstanding Units of the Company,  and,  thereafter,
such  rights  may only be  exercised  at a time when the number of Units held by
Persons other than the Managing  Member and any Affiliated  Investors is greater
than twenty-five  percent (25%) of the total  outstanding  Units of the Company.
The rights of a Super Majority of Non-Managing Members set forth in this Section
6.6(b)  shall  (i)  not  be  required  in  connection   with  the   transactions
contemplated  by Article VI of the Master  Agreement and (ii) terminate upon the
closing of the Initial Public Offering.

     Section  6.7.  No  Duties of  Non-Managing  Members.  Except  as  otherwise
provided herein, the Members (other than the Managing Member) shall not have any
duties to the Company or to any other Member.

     Section 6.8. Contracts with Members and Affiliates.

     (a)  Competitive Bidding. The Company may contract with Members,  NDTOs and
their  respective  Affiliates for the provision of goods and/or  services to the
Company.  In so  contracting,  where  required to do so by the  Commission,  the
Company shall employ  competitive  bidding.  In connection  with any competitive
bidding process, the Managing Member shall select the lowest responsive bid from
a responsible bidder;  provided,  however, that the Managing Member may, in good
faith,  select a different bid if it determines that selection of such different
bid is in the best interests of the Company.

     (b)  Other Limitations on Contracts. Except for the Basic Agreements and as
provided in Section  6.8(c),  the Company  shall not enter into any agreement or
contract  with a Member,  an NDTO or any  Affiliate  thereof  providing  for the
provision of goods and/or  services to the Company  unless any such agreement or
contract  contains  in all  respects  terms  and  conditions  that  are no  less
favorable to the Company than could be obtained from a comparable,  unaffiliated
disinterested third party in a similar agreement or contract entered into by the
Company as the result of arm's-length negotiations with such third party.

     (c)  Contracts for Transitional Services.  Notwithstanding  Sections 6.8(a)
and 6.8(b), in connection with the acquisition of Transmission Facilities from a
DTO, the Company  may, to the extent  permitted by  applicable  Law,  enter into
contracts with such DTO for operation and maintenance and other services.

                                       45

<PAGE>

     Section 6.9. Agency of Members; Members' Businesses.

     (a)  Except as expressly  provided  herein,  no provision of this Agreement
shall be construed  to limit in any manner the Members  (other than the Managing
Member) in the carrying on of their own  respective  businesses  or  activities.
Except as  otherwise  set forth  herein  with  respect to the  Managing  Member,
nothing  herein  shall be  construed  to  constitute  a Member,  in the Member's
capacity as such, the agent of any other Member.

     (b)  Any Member or Affiliate  thereof (but  excluding  the Managing  Member
(but including its  Affiliates  other than its  subsidiaries))  may engage in or
possess an interest in any other business  venture of any nature or description,
independently  or with other  Persons,  similar or dissimilar to the business of
the  Company,  and neither  the  Company  nor any of the Members  shall have any
rights by virtue of this  Agreement in and to such  independent  ventures or the
income or profits derived therefrom,  and the pursuit of any such venture,  even
if competitive with the business of the Company, shall not be deemed wrongful or
improper.  Except as expressly  provided herein,  no Member or Affiliate thereof
(other than the Managing  Member (but  including its  Affiliates  other than its
subsidiaries))   shall  be  obligated  to  present  any  particular   investment
opportunity to the Company even if such  opportunity is of a character which, if
presented  to the  Company,  could be taken by the  Company,  and any  Member or
Affiliate  thereof (other than the Managing Member (but including its Affiliates
other than its subsidiaries)),  shall have the right to take for its own account
(individually  or as a partner or  fiduciary) or to recommend to others any such
particular investment opportunity.

     Section 6.10. Power of Attorney.

     (a)  Power of Attorney.  Each Member  hereby  irrevocably  constitutes  and
appoints the Managing Member as its true and lawful  attorney-in-fact  and agent
of such Member, to execute,  acknowledge,  verify, swear to, deliver, record and
file, in its or its assignee's name, place and stead, all in accordance with the
terms of this Agreement,  all instruments,  documents and certificates that may,
from time to time be required by  applicable  Law to  effectuate,  implement and
continue the valid existence and affairs of the Company.

     (b)  Other  Provisions.  The power of attorney  granted pursuant to Section
6.10(a)  shall  terminate  upon the  bankruptcy or  dissolution  of the Managing
Member.  The power of  attorney  granted  pursuant to Section  6.10(a)  shall be
deemed to be coupled with an interest,  shall be irrevocable,  shall survive and
not be affected by the liquidation,  dissolution, bankruptcy or legal disability
of the Member or the transfer of all or any part of the Member's interest in the
Company and shall extend to its successors  and assigns;  and may be exercisable
by such  attorney-in-fact  and agent for the Member by listing the Member's name
on any such instrument and executing such instrument acting as attorney-in-fact.
Any person dealing with the Company may  conclusively  presume and rely upon the
fact that any instrument  referred to above,  executed by such  attorney-in-fact
and agent,  is authorized,  regular and binding,  without  further  inquiry.  If
required,  a Member shall  execute and deliver to the Managing  Member  promptly
after the receipt of a request therefor,  such further  designations,  powers of
attorney or other  instruments  as the  Managing  Member shall  reasonably  deem
necessary to accomplish the purposes of this Section 6.10.

                                       46

<PAGE>

     Section 6.11.  Reliance by Third Parties.  Persons dealing with the Company
are entitled to rely  conclusively  upon the power and authority of the Managing
Member set forth in this Agreement.

     Section 6.12. Reliance on Certificates. Any Person dealing with the Company
may rely on a certificate signed by any officer of the Managing Member:

          (i)  as to who are the Members;

          (ii) as to the  existence or  nonexistence  of any fact or facts which
     constitute  conditions  precedent  to acts by the  Members  or in any other
     manner germane to the affairs of the Company;

          (iii)as to who is authorized to execute and deliver any  instrument or
     document on behalf of the Company;

          (iv) as to  the  authenticity  of  any  copy  of  this  Agreement  and
     amendments hereto; or

          (v)  as to any act or failure to act by the Company or as to any other
     matter whatsoever involving the Company or any Member.

     Section  6.13.  Limitations  on  Employees,  Officers and  Directors.  Each
employee,  officer and director of the Company  and/or the  Managing  Member and
their  respective  spouses and minor children shall be Independent  Persons.  No
employee,  officer or director of the Company or the  Managing  Member may be in
the employ of any NDTO,  Member or  Affiliate  thereof  (other than the Managing
Member).

     Section 6.14. New Parties to Operation  Agreement.  The Managing Member may
from time to time, in its  discretion,  cause the Company to amend the Operation
Agreement  in  accordance  with its  terms  to allow  the  Company  to  exercise
Functional  Control over the  Transmission  Facilities  of any other Person that
meets the requirements of this Section 6.14; provided,  however,  that the terms
of such  amendment  must  either (i) not be  materially  more  favorable  to the
counterparty  thereto  than the terms  applicable  to the  Original  GridAmerica
Companies  or (ii) the  Company  must  offer to make such more  favorable  terms
available  to all parties to the  Operation  Agreement  on a  non-discriminatory
basis;  provided,  further,  that, so long as it does not  adversely  affect the
Company or any Member,  the Company may enter into an amendment to the Operation
Agreement  with  an  owner  of  Transmission  Facilities  that  is a  Non-Market
Participant on terms different than those set forth in the Operation  Agreement.
For any Person  other than a  GridAmerica  Company to be eligible to subject its
Transmission  Facilities to the Functional Control of the Company pursuant to an
Operation  Agreement,   (i)  the  Company  must  determine,  in  its  reasonable
discretion,  that subjecting the  Transmission  Facilities of such Person to the
Functional  Control  of the  Company  (x) will  not  result  in any  significant
detriment to the other parties to the Operation  Agreement in their  capacity as
such and (y) is likely to result in  long-term  benefits to the Company and (ii)
such Person must enter into an amendment  to the  Operation  Agreement  with the
Company in form and substance  satisfactory to the Managing Member.  Such Person
shall not be a Member of the Company and shall not be issued  Units

                                       47

<PAGE>

unless such Person otherwise makes a Capital Contribution and is admitted to the
Company as a Member pursuant to Section 3.1(b), 3.1 (c) or 3.3.

                                   ARTICLE VII
                             RECORDS AND INFORMATION
                             -----------------------

     Section 7.1.  Maintenance  of Records.  The Company  shall  maintain at its
principal office complete and accurate books, records, files and accounts of the
business,  affairs and  finances of the Company,  including  books of account in
which full,  true and correct  entries in conformity  with GAAP shall be made of
all transactions relating to the Company's business and affairs.

     Section 7.2. Reports. The Company shall engage a nationally recognized firm
of  independent  certified  public  accountants  who  shall  audit the books and
records of the  Company.  Within  ninety  (90) days after the end of each fiscal
year, the Managing Member shall cause to be delivered to each Member  statements
of income,  changes in Members' capital and changes in financial position of the
Company for such fiscal year,  and a balance  sheet of the Company as at the end
of such fiscal year,  each of which shall have been prepared in accordance  with
GAAP and audited by such firm. Within forty-five (45) days after the end of each
calendar quarter (except the fourth calendar quarter), the Managing Member shall
cause to be delivered to each Member unaudited statements of income,  changes in
Members'  capital  and  changes in  financial  position  of the  Company for the
quarter then ended and on a year-to-date  basis, and an unaudited  balance sheet
of the Company as of the end of such quarter.

     Section 7.3.  Inspection  Rights.  Each Member and such Member's  officers,
directors,  partners, employees, agents,  representatives,  outside auditors and
attorneys  and any lender or  potential  lender to,  counterparty  or  potential
counterparty to a financing  transaction with or proposed transferee of Units of
any Member, and such Person's officers, directors,  partners, employees, agents,
representatives, outside auditors and attorneys, shall have the right to examine
the books, records and accounts of the Company, and to make photocopies thereof,
and shall have the right to discuss the  business,  affairs and  finances of the
Company with the Managing Member and its officers, agents and employees, at such
reasonable times during regular business hours as there may reasonably  request;
provided, however, that (i) no information of the Company may be provided to the
extent that providing such information would violate  applicable Law and (ii) no
Person  shall  have  access  to (A)  information  subject  to a  confidentiality
obligation in favor of a third-party or (B) competitively  sensitive  commercial
information  of a kind not disclosed in due diligence in connection  with merger
and acquisition  transactions;  provided,  further, that, in the case of clauses
(i)  and  (ii),  to the  extent  feasible,  a  waiver  of  such  confidentiality
obligations  shall be sought and, in any event,  to the extent feasible all such
information  shall be disclosed in summary or redacted form and such information
may not be provided to any other Person.

     Section 7.4. Bank Accounts. The Managing Member shall establish one or more
separate bank and investment  accounts and arrangements  for the Company,  which
shall be maintained in the Company's name with such financial  institutions  and
firms as the Managing  Member may  determine.  The Company may not commingle (or
permit to be commingled)  the Company's  funds with the funds of a Member or any
other Person.

                                       48

<PAGE>

                                  ARTICLE VIII
                                      TAXES
                                      -----

     Section 8.1. Tax  Returns.  The Managing  Member shall cause the Company to
prepare and timely file all federal,  state and local tax returns required to be
filed by the  Company.  Each  Member  shall  furnish to the  Company in a timely
manner all pertinent  information  in its  possession  relating to the Company's
operations  that is necessary to enable the  Company's  tax returns to be timely
prepared and filed. The Managing Member shall deliver a copy of each such return
to the  Members  on or before  ten (10)  days  prior to the due date of any such
return,  together  with such  additional  information  as may be required by the
Members in order for the Members to file their individual returns reflecting the
Company's operations.

     Section  8.2. Tax  Partnership.  The Members  acknowledge  that the Company
shall be treated as a partnership  for federal  income tax purposes and will not
elect to otherwise characterize the Company for such purposes.

     Section 8.3. Tax Elections. The Company shall and the Managing Member shall
cause  the  Company  to make the  following  elections  on the  appropriate  tax
returns:

          (i)  to adopt a fiscal year in accordance with applicable Law;

          (ii) to  adopt  the  accrual  method  of  accounting  and to keep  the
     Company's books and records on the income tax method;

          (iii)to elect,  pursuant to Code  Section  754, to adjust the basis of
     Company's  properties,  if a  distribution  of the  Company's  property  as
     described in Code Section 734 occurs or a transfer of Membership  Interests
     as  described  in Code  Section 743  occurs,  on request by notice from any
     Member;

          (iv) to elect to amortize the  organizational  expenses of the Company
     ratably over a period of 60 months as permitted by Code Section 709(b);

          (v)  to elect, pursuant to Code Section 6231(a)(1)(B)(ii) of the Code,
     to be  subject  to the  unified  audit and  litigation  procedures  of Code
     Sections 6221 through 6233 (and each Member agrees to execute the statement
     evidencing such election); and

          (vi) any other election the Managing Member may deem appropriate.

     Neither  the  Company  nor any Member may make an  election  (i) under Code
Section  761  for  the  Company  to be  excluded  from  the  application  of the
provisions of subchapter K of chapter 1 of subtitle A of the Code or any similar
provisions of applicable  state law or (ii) under  Treasury  Regulation  Section
301.7701-3 to be classified as an association taxable as a corporation.

     Section 8.4. Tax Matters.

     (a)  Tax Matters  Partner.  The  Managing  Member shall be the "tax matters
partner" of the Company pursuant to Code Section 6231(a)(7).

                                       49

<PAGE>

     (b)  Member  Requests/Petitions.  Any  Member  that  intends  to file (i) a
request  under  Code  Section  6227  for  an  administrative  adjustment  of any
"partnership  item" (as defined in Code  Section  6231(a)(3))  of the Company (a
"Company  Item") or (ii) a petition under Code Sections 6226, 6228 or other Code
Section with respect to any Company Item, shall provide  reasonable prior notice
(not less than thirty (30) days to the Managing  Member and to the other Members
of such intent and the nature of the  requested  adjustment  or  proceeding.  By
notice to all  Members,  the  Managing  Member may elect to file such request or
petition on behalf of the Company.  If the  Managing  Member does not notify the
other Members of such election  within thirty (30) days of the Member's  initial
notice (or within the period required to timely file the request or petition, if
shorter), any Member may file such request or petition on its own behalf.

     (c)  Notice of  Inconsistent  Treatment.  Any Member that intends to file a
notice of inconsistent  treatment under Code Section 6222(b) with respect to any
Company Item shall  provide  reasonable  prior notice (not less than thirty (30)
days) to the Managing Member and the other Members of such intent and the manner
in which the  Member's  intended  treatment  of such Company Item is (or may be)
inconsistent with the treatment of that Company Item by the other Members.

     (d)  Settlement  Agreements.  Any Member  that  enters  into a  "settlement
agreement"  (as such term is used in Code  Section  6224)  with  respect  to any
Company  Item shall  notify the  Managing  Member and the other  Members of such
settlement  agreement  and  its  terms  within  90  days  from  the  date of the
settlement.

                                   ARTICLE IX
                     DISSOLUTION, WINDING-UP AND TERMINATION
                     ---------------------------------------

     Section 9.1. Dissolution.  The Company shall dissolve and its affairs shall
be wound, only upon the -----------  approval of the Managing Member and a Super
Majority of the Non-Managing Members.

     Section 9.2.  Winding-Up  and  Termination.  On the  occurrence of an event
described in Section 9.1, the Managing Member shall appoint a Person,  which may
be the Managing Member, to act as liquidator (the "Liquidator").  The Liquidator
shall  proceed  diligently  to wind up the affairs of the Company in  accordance
with this Section 9.2 and to make the final distributions described herein, with
the costs of winding up being borne as a Company  expense.  The Liquidator shall
have a  reasonable  period of time in which to conduct such winding up, in order
to facilitate an orderly liquidation of the Company's assets and to minimize any
losses  that may be caused by the sale of such  assets in  connection  with such
liquidation. The steps to be accomplished by the Liquidator are as follows:

          (i)  as  promptly as possible  after the  dissolution  and again after
     final winding up, the Liquidator shall cause a proper accounting to be made
     by a  recognized  firm of certified  public  accountants  of the  Company's
     assets,  liabilities  and  operations  through the last calendar day of the
     month in which the dissolution occurs or the final winding up is completed,
     as applicable;

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<PAGE>

          (ii) the Liquidator shall pay or discharge from Company funds, or make
     adequate  provisions  for the future  payment or  discharge  of, the debts,
     liabilities and obligations of the Company;

          (iii)the  Liquidator may sell any or all Company  property,  including
     to Members, and any resulting gain or loss from each sale shall be computed
     and  allocated to the Capital  Accounts of Members in  accordance  with the
     provisions of Section 5.1;

          (iv) with respect to all Company  property that has not been sold, the
     fair market  value of that  property  shall be  determined  and the Capital
     Accounts  of Members  shall be  adjusted to reflect the manner in which the
     unrealized income,  gain, loss, and deduction inherent in property that has
     not been reflected in the Capital  Accounts  previously  would be allocated
     among Members under Section 5.1 if there were a taxable disposition of that
     property  for the  fair  market  value  of  that  property  on the  date of
     distribution; and

          (v)  all remaining  assets of the Company shall be  distributed to the
     Members in accordance with Section 5.6(d). Such distributions shall be made
     by the end of the taxable year of the Company during which the  liquidation
     of the Company occurs (or, if later, ninety (90) days after the date of the
     liquidation);  provided,  however, that, in selling Transmission Facilities
     pursuant to Section  9.2(iii) and in distributing  Transmission  Facilities
     pursuant to this Section 9.2(v), in the event that the Liquidator  receives
     written  notice  from  a  Member  of  such  Member's  desire  to  reacquire
     Transmission  Facilities  previously  contributed  to the  Company  by such
     Member,  the Liquidator,  consistent with its other obligations  hereunder,
     shall endeavor to sell or distribute (as the case may be) such Transmission
     Facilities to such Member.

     All distributions in kind to Members shall be made subject to the liability
of each distributee for costs, expenses, and liabilities theretofore incurred or
for which the Company has committed  prior to the date of termination  and those
costs,  expenses, and liabilities shall be allocated to the distributee pursuant
to this  Section 9.2. The  distribution  of cash and/or  property to a Member in
accordance with the provisions of this Section 9.2 constitutes a complete return
to the Members of their Capital Contributions and a complete distribution to the
Members in respect of their Units and all the Company's property and constitutes
a compromise to which all Members have  consented  within the meaning of Section
18-502(b) of the Act. To the extent that a Member  returns funds to the Company,
it has no claim against any other Member for those funds.

     Section 9.3. Deficit Capital Accounts. No Member will be required to pay to
the  Company,  to any other  Member or to any other  Person any deficit  balance
which may exist from time to time in the Member's Capital Account.

     Section 9.4.  Certificate of  Cancellation.  On completion of the preceding
actions,  the  Managing  Member  shall  cause  to  be  filed  a  Certificate  of
Cancellation  with the Secretary of State of Delaware,  cancel any other filings
made pursuant to Section 2.5, and take such other actions as may be necessary to
terminate the existence of the Company.

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<PAGE>

                                    ARTICLE X
                               DISPUTE RESOLUTION
                               ------------------

     Section 10.1.  Negotiations.  If a dispute  between any two or more Parties
arises out of or relates to this Agreement, any such Party may notify each other
Party that it intends to initiate the dispute  resolution  procedures  set forth
herein.  Immediately  upon the  receipt of such  notice,  the Party  sending the
notice and each other Party  receiving  the notice shall refer such dispute to a
senior  executive  officer (the "SEOs") of each such Party for  consultation and
advice prior to the commencement of the arbitration proceedings.  The SEOs shall
meet in person or by teleconference as soon as mutually  practicable to consider
such  matters.  If the SEOs fail to resolve such dispute or  controversy  within
thirty (30) days of such notice being sent, any Party to the dispute may declare
the consultation procedure set forth in this Section 10.1 terminated,  whereupon
this dispute or controversy shall be referred to arbitration pursuant to Section
10.2.

     Section 10.2. Arbitration. Except as provided in Section 10.3, if a dispute
between any two or more Parties arises out of or relates to this Agreement or to
the relationship between the Parties created by this Agreement, and such Parties
have not successfully resolved such dispute through negotiation on or before the
thirtieth (30th) day following the notice referred to in Section 10.1, then such
dispute  shall be resolved  according to this Section  10.2.  If such dispute is
subject to the  jurisdiction  of the  Commission,  then any Party to the dispute
may,  within sixty (60) days of the notice  referred to in Section  10.1,  bring
such  dispute  before the  Commission  for  resolution.  If no Party  brings the
dispute before the Commission  within sixty (60) days of the notice  referred to
in Section  10.1,  or if the dispute is not subject to the  jurisdiction  of the
Commission,   then  such  dispute  shall  be  resolved  by  binding  arbitration
("Arbitration") under the following provisions.

     (a)  All Claims To Be  Arbitrated.  Except as provided  in the  immediately
preceding  sentence and in Sections 10.2(1),  11.8(a) and 11.15(a),  any and all
claims,  counterclaims,  demands, causes of action, disputes,  controversies and
other  matters in question  arising out of or  relating to this  Agreement,  any
provision  hereof,  the alleged  breach  hereof,  or in any way  relating to the
subject matter hereof or the  relationship  between the Parties  created hereby,
involving  the  Parties  ("Claims"),   shall  be  finally  resolved  by  binding
arbitration by a panel of arbitrators  under the  Commercial  Arbitration  Rules
(the "Arbitration Rules") of the American Arbitration Association (the "AAA") to
the extent not inconsistent with the provisions of this Agreement, regardless of
whether  some or all of such  Claims  allegedly  (i)  are  extra-contractual  in
nature,  (ii) sound in  contract,  tort,  or  otherwise,  (iii) are  provided by
federal or state  statute,  common law or  otherwise or (iv) seek damages or any
other relief, whether at law, in equity or otherwise.

     (b)  Referral of Claims to  Arbitration.  Subject to Section  10.1,  one or
more  Parties  may  refer a Claim  to  arbitration  (the  "Claimant  Party")  by
providing  notice  (an  "Arbitration  Notice")  to each  other  Party or Parties
against  which  the  Claim  is  asserted  (whether  one  or  more  parties,  the
"Respondent  Party")  in the  manner  set forth in the  Arbitration  Rules.  The
Arbitration  Notice must  include a general  description  of the Claim and shall
identify all Respondent  Parties and the reasons for asserting the Claim against
each Respondent  Party. The Arbitration is commenced  between the Claimant Party
and the Respondent Party ("Dispute  Parties") by sending the Arbitration  Notice
to the Respondent Party.

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<PAGE>

     (c)  Stay  for  Commission   Proceedings;   Effect  of  Commission  Orders.
Following commencement of the Arbitration, if a Party other than a Dispute Party
institutes a proceeding  before the Commission  that involves one or more of the
Dispute  Parties  and the relief  sought in that  proceeding  would  require the
Commission  to  resolve  one or more  issues  presented  in the  Arbitration  (a
"Related Proceeding"), then the Dispute Parties agree that the Arbitration shall
be stayed during the pendency of such Related  Proceedings.  The Dispute Parties
further agree that the  Commission's  resolution in Related  Proceedings  of any
issue  that is also  presented  in the  Arbitration  shall be and is  final  and
binding as to that issue in the Arbitration.

     (d)  Number and Qualification of Arbitrators. The panel of arbitrators (the
"Panel") shall consist of three  arbitrators  appointed in accordance  with this
Section   10.2  and  the   Arbitration   Rules.   Arbitrators   shall  meet  the
qualifications  for arbitrators  established by the AAA and, in addition,  shall
have  significant   experience  in  the  electric  industry  and/or  significant
experience as an arbitrator in complex commercial matters. The arbitrators shall
each take an oath of neutrality.

     (e)  Appointment of Arbitrators.  By the fifteenth (15th) day following the
day on  which  the  Arbitration  Notice  is sent to the  Respondent  Party,  the
Claimant  Party shall  submit its  appointment  of the first  arbitrator  to the
Respondent  Party and the AAA. If the Claimant  Party  consists of more than one
Party,  then those Parties shall jointly  appoint the first  arbitrator.  By the
fifteenth  (15th) day following the  appointment  of the first  arbitrator,  the
Respondent  Party shall submit its  appointment of the second  arbitrator to the
Claimant  Party and the AAA. If the  Respondent  Party consists of more than one
Party, then those Parties shall jointly appoint the second  arbitrator.  The two
arbitrators  appointed by the Dispute Parties shall appoint a third  arbitrator,
who shall be the chairperson of the Panel, by the fifteenth (15th) day following
the appointment of the second arbitrator.  If the second arbitrator has not been
appointed by the fifteenth  (15th) day following  the  appointment  of the first
arbitrator,  or if the  first  two  arbitrators  have not  appointed  the  third
arbitrator by the fifteenth  (15th) day following the  appointment of the second
arbitrator,  any Dispute Party may request the AAA to appoint the  arbitrator(s)
in question.  If any arbitrator  resigns,  becomes  incapacitated,  or otherwise
refuses or fails to serve or to continue to serve as an arbitrator,  the Dispute
Party or  arbitrators  entitled to  designate  that  arbitrator  shall  promptly
designate a  successor.  In the event that either of the  Claimant  Party or the
Respondent  Party consist of more than one Party and those Parties are unable to
agree on the appointment of an arbitrator,  then all three  arbitrators shall be
appointed by the AAA; provided, however, that the arbitrators so appointed shall
meet the qualifications set forth in Section 10.2(d).

     (f)  Governing Law. In deciding the substance of the Parties'  Claims,  the
arbitrators  shall first rely upon the  provisions  of this  Agreement and shall
then apply the  substantive  laws governing  this Agreement  pursuant to Section
11.2.

     (g)  Powers of the  Arbitrators;  Limitations  On Remedies.  The  validity,
construction  and  interpretation  of  this  agreement  to  arbitrate,  and  all
procedural  aspects of the arbitration  conducted  pursuant to this agreement to
arbitrate,  including  the  determination  of the  issues  that are  subject  to
arbitration  (i.e.,   arbitrability),   the  scope  of  the  arbitrable  issues,
allegations  of "fraud in the  inducement"  to enter into this Agreement or this
arbitration provision, allegations of waiver, laches, delay or other defenses to
arbitrability, and the rules governing the conduct of the

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<PAGE>

arbitration (including the time for filing an answer, the time for the filing of
counterclaims,  the times for amending the  pleadings,  the  specificity  of the
pleadings,  the extent and scope of discovery,  the issuance of  subpoenas,  the
times for the  designation of experts,  whether the  arbitration is to be stayed
pending  resolution of related  litigation  involving third parties not bound by
this  arbitration  agreement,  the receipt of evidence  and the like),  shall be
decided by the arbitrators to the extent not provided for in this Article X. The
arbitrators  shall decide the Claims based on this  Agreement,  the  Arbitration
Rules, and the governing law, and not ex aqueo et bono, as amiable compositeurs,
or in  equity.  The  arbitrators  shall not have the power to award any of those
remedies  which are precluded by Section 11.8. The  arbitrators  shall also have
the power to enter such interim orders as they deem necessary,  including orders
to preserve the subject  matter of the Claim or to preserve or adjust the status
of  the  Parties  pending  resolution  of the  Claim  in  the  Arbitration.  The
chairperson  is  empowered  to  issue  interim  order  on his own  authority  in
emergency situations and where necessary to ensure the efficient  administration
of the  Arbitration  on  application  from a Dispute  Party,  which orders shall
remain in effect until a meeting of all  arbitrators may be convened to consider
the application.  The arbitrators  shall have the power to assess the attorneys'
fees (in accordance  with Section 11.9),  costs and expenses of the  Arbitration
(including  the  arbitrators'  fees  and  expenses)  against  one or more of the
Parties in whatever manner or allocation the arbitrators deem appropriate.

     (h)  Venue;  Procedural  Issues.  The seat of the Arbitration  shall be New
York,  New York,  or such other  place as the  Dispute  Parties  may agree.  The
arbitrators  shall set the date,  the time and the place of the  hearing,  which
must commence on or before the one hundred  twentieth  (120th) day following the
designation  of the third  arbitrator.  All  decisions of the three  arbitrators
shall be made by majority  vote. In  determining  the extent of  discovery,  the
number  and  length  of  depositions  and all  other  pre-hearing  matters,  the
arbitrators  shall  endeavor,   to  the  extent  possible,   to  streamline  the
proceedings and minimize the time and cost of the proceedings. There shall be no
transcript of the hearing.  The final hearing shall not exceed ten (10) business
days, with the Claimant Party and Respondent  Party each granted one-half of the
allocated time to present its case to the arbitrators. All proceedings conducted
hereunder and the decision of the arbitrators  shall be kept confidential by the
arbitrators, the AAA and any Persons participating in the Arbitration.

     (i)  Additional  Claims.  After the Arbitration has commenced and the Panel
has been  appointed,  if a further Claim arises under this Agreement that is not
successfully  settled  pursuant  to  Section  10.1,  and the  further  Claim (an
"Additional  Claim") is related to the Claim in the  Arbitration or involves the
same Dispute  Parties,  then any Party to the Additional Claim may ask the Panel
to  accept  jurisdiction  over  the  Additional  Claim  and  include  it in  the
Arbitration  by  submitting  an  Arbitration  Notice in the  manner set forth in
Section  10.2(b)  (an  "Additional   Arbitration   Request")  and  submitting  a
concurrent  request to the Panel to accept the  Additional  Claim.  The  Parties
agree that the Panel should accept  jurisdiction over an Additional Claim if the
resolution  of the Claim  before the Panel will  involve some or all of the same
legal and factual  issues  presented  by the  Additional  Claim or if  accepting
jurisdiction  over the  Additional  Claim would  facilitate or help minimize the
costs of resolving  the disputes at issue and not unduly delay the  Arbitration.
The Parties  agree,  however,  that the Panel alone shall  determine  whether it
should accept  jurisdiction  over an Additional Claim and that its determination
shall be final and  unappealable.  If the Panel  refuses  jurisdiction  over the
Additional  Claim,  then the Additional  Arbitration  Request shall constitute a
separate request for arbitration, which shall proceed

                                       54

<PAGE>

independently  and  under  this  Section  10.2 as if filed on the date the Panel
denied  the  request  to  accept  jurisdiction.  So long as there is no  pending
Additional Arbitration Request to the Panel to accept jurisdiction, any Party to
an Additional Claim may commence a separate arbitration proceeding in the manner
set forth in this Section 10.2.

     (j)  Arbitration  Awards.  The  arbitrators  shall render their award on or
before the thirtieth  (30th) day following the last session of the hearing fully
resolving all Claims that are the subject of the Arbitration. The award shall be
in writing,  shall give reasons for the  decision(s)  reached by the arbitrators
and shall be signed and dated by the arbitrators,  and a copy of the award shall
be delivered to each of the Dispute  Parties.  A Party  against  which the award
assesses a monetary  obligation  or enters an  injunctive  order  shall pay that
obligation or comply with that order on or before the thirtieth  (30th) calendar
day  following  the  receipt of the award or by such other date as the award may
provide.  Any award of the arbitrators  shall be consistent with the limitations
and terms of this  Agreement.  The  arbitrators'  award may be confirmed in, and
judgment  upon the award  entered  by, any court  having  jurisdiction  over the
Parties.

     (k)  Binding Nature.  The decisions of the  arbitrators  shall be final and
binding on the Parties and  non-appealable  to the maximum  extent  permitted by
Law.

     (l)  Assistance  of  Courts.  It is the  intent  of the  Parties  that  the
Arbitration  shall be conducted  expeditiously,  without initial recourse to the
courts and without  interlocutory  appeals of the arbitrators'  decisions to the
courts.  Notwithstanding any other provision of this Agreement, however, a Party
may seek court assistance in the following circumstances: (i) if a Party refuses
to honor its obligations under this agreement to arbitrate,  any other Party may
obtain   appropriate   relief   compelling   arbitration  in  any  court  having
jurisdiction over the refusing Party, and the order compelling arbitration shall
require that the arbitration proceedings take place in Washington,  D.C., and in
the  manner  specified  herein,  (ii) a Dispute  Party may apply to any state or
federal court having relevant  jurisdiction  for orders  requiring  witnesses to
obey subpoenas issued by the arbitrators,  including  requests for documents and
(iii) a Party may apply at any time  before or  during  the  Arbitration  to any
court having relevant  jurisdiction  for an order preserving the status quo ante
and/or  evidence  in  anticipation  of  arbitration  (for  avoidance  of  doubt,
preservation  of the status quo ante  includes  an order  compelling  a Party to
continue to fulfill an obligation under this Agreement or to refrain from taking
an action that would  constitute  a default  under this  Agreement;  for further
avoidance  of doubt,  such an  application  to the courts is not intended to and
does not constitute waiver of the right to arbitrate  Claims,  nor does it refer
any Claim to court for  decision).  The Parties agree to comply with any interim
order  issued  by the  arbitrators  or by the  chairperson.  Any  and all of the
arbitrators' orders and decisions,  including interim orders, may be enforced by
any  state  or  federal  court  having  jurisdiction.  Each  Party  agrees  that
arbitration  pursuant to this  Section  10.2 shall be the  exclusive  method for
resolving  all Claims  and that it will not  commence  an action or  proceeding,
except as provided in this Section 10.2.

     Section 10.3.  Arbitration of Certain Claims Regarding  Removal of Managing
Member.  If a Super  Majority of  Transmission  Owners  shall have  attempted to
remove the  Managing  Member for Cause  pursuant to Section  6.1(b)(ii)  of this
Agreement,  and the Managing Member disputes whether Cause for removal exists (a
"Removal  Claim"),  then the issue of whether Cause exists  immediately shall be
referred  to  and  resolved  by  binding  arbitration  ("Removal

                                       55

<PAGE>

Arbitration") according to this Section 10.3. The Removal Claim shall be finally
resolved by one  arbitrator  appointed in accordance  with this Section 10.3 and
the Arbitration Rules to the extent not inconsistent with the provisions of this
Agreement.  The  Expedited  Procedures  of the  Arbitration  Rules shall be used
unless  the  arbitrator  determines  that  they  would  be  inappropriate.   The
arbitrator shall take an oath of neutrality.

     (a)  Application  to Removal Claim;  Relation to Other Claims.  Any dispute
other than a Removal Claim must be resolved in a separate  Arbitration  pursuant
to Section 10.2. A Removal Arbitration may not be joined to or consolidated with
an Arbitration without the consent of all parties in the Removal Arbitration and
the  Arbitration(s).  The decision of the arbitrator on a Removal Claim shall be
final and conclusive and bind any arbitrators in an Arbitration  commenced under
Section 10.2.

     (b)  Referral of Claims to  Arbitration.  A Managing  Member who receives a
written  notice of removal as  contemplated  in Section  6.1(b)(ii)  (a "Removal
Notice"),  and who  disputes  that Cause for removal  exists or a Member or NDTO
upon  receipt of notice from the  Managing  Member  that it disputes  that Cause
exists  (the  "Removal  Claimant"),   may  refer  a  Removal  Claim  to  Removal
Arbitration by providing notice (a "Notice of Removal  Dispute") to the Managing
Member, all Members and all NDTOs that are not the Removal Claimant (whether one
or more parties, the "Removal Respondent Party"), in the manner set forth in the
Arbitration  Rules.  The Notice of Removal  Dispute  also must contain a list of
five (5) proposed arbitrators.  The Removal Arbitration is commenced between the
Removal Claimant and the Removal Respondent Party ("Removal Dispute Parties") by
sending the Notice of Removal Dispute to the Removal Respondent Party.

     (c)  Appointment  of  Arbitrator.  Within ten (10) days of  delivery of the
Notice of Removal  Dispute,  the Removal  Respondent  Party shall deliver to the
Removal  Claimant  and the AAA a list of five (5) proposed  arbitrators.  If the
lists  provided by the Removal  Claimant and the Removal  Respondent  Party both
contain  a  common  proposed  arbitrator,  such  person  shall  be  selected  as
arbitrator;  otherwise,  the AAA shall appoint the  arbitrator  according to the
procedures  contained  in the  Arbitration  Rules.  If the  arbitrator  resigns,
becomes incapacitated,  or otherwise refuses or fails to serve or to continue to
serve as an arbitrator,  the Removal Dispute Parties shall promptly  designate a
successor  using the procedures  established in this Section 10.3. An arbitrator
appointed  pursuant  to this  Section  10.3(c) may not also be  appointed  as an
arbitrator pursuant to Section 10.2.

     (d)  Governing  Law. In deciding the substance of the Removal  Claims,  the
arbitrator shall first rely upon the provisions of this Agreement and shall then
apply the substantive laws governing this Agreement pursuant to Section 11.3.

     (e)  Powers of the Arbitrators;  Limitations On Remedies. The arbitrator in
a Removal  Arbitration  shall decide solely the Removal Claim, and shall have no
power to decide any other Claim.  The arbitrator  shall decide the Removal Claim
based on this Agreement,  the Arbitration  Rules, and the governing law, and not
ex aqueo et bono, as amiable  compositeur,  or in equity.  The arbitrator  shall
have the power to assess the attorneys' fees (in accordance with Section 11.11),
costs and expenses of the Removal  Arbitration  (including the arbitrators' fees
and

                                       56

<PAGE>

expenses)  against one or more of the Parties in whatever  manner or  allocation
the arbitrator deems appropriate.

     (f)  Venue; Procedural Issues. The seat of the Removal Arbitration shall be
New York,  New York,  or such other  place as the  Removal  Dispute  Parties may
agree. The arbitrator shall set the date, the time and the place of the hearing,
which  must  commence  on or before  the  thirtieth  (30th)  day  following  the
appointment of the arbitrator.  There shall be no transcript of the hearing. The
final hearing shall not exceed ten (10) business days, with the Removal Claimant
and Removal  Respondent  Party each granted  one-half of the  allocated  time to
present its case to the arbitrator.  All proceedings conducted hereunder and the
decision of the arbitrator shall be kept confidential by the arbitrator, the AAA
and any Persons participating in the Removal Arbitration.

     (g)  Arbitration Awards. The arbitrator shall render his award on or before
the tenth (10th) day following the  hearing(s) on the Removal  Claim.  The award
shall be in writing, shall give a reasonably detailed description of the reasons
for the  decision(s)  reached by the arbitrator and shall be signed and dated by
the  arbitrator,  and a copy of the  award  shall  be  delivered  to each of the
Removal Dispute  Parties.  Any award of the arbitrator  shall be consistent with
the  limitations  and terms of this  Agreement.  The  arbitrator's  award may be
confirmed  in,  and  judgment  upon the  award  entered  by,  any  court  having
jurisdiction over the Parties.

                                   ARTICLE XI
                                     GENERAL
                                     -------

     Section 11.1. Not for Benefit of Third Parties.  This Agreement is intended
to be solely for the benefit of the  Members,  their  successors  and  permitted
assignees, and is not intended to and shall not confer any rights or benefits on
any Person not a signatory hereto.

     Section  11.2.  GOVERNING  LAW.  THE VALIDITY  AND  INTERPRETATION  OF THIS
AGREEMENT  SHALL BE  GOVERNED  BY THE LAWS OF THE  STATE  OF  DELAWARE,  WITHOUT
REFERENCE TO THE CHOICE OF LAW PRINCIPLES  THEREOF,  EXCEPT THAT THE TERMS GROSS
NEGLIGENCE AND WILLFUL  MISCONDUCT  SHALL BE INTERPRETED IN ACCORDANCE  WITH THE
LAWS OF THE STATE OF NEW YORK.

     Section  11.3.  Effect of Waiver.  No waiver by a Member of any one or more
defaults  by another  party  hereto or the  Company in the  performance  of this
Agreement  shall  operate or be construed  as a waiver of any future  default or
defaults, whether of alike or different character.

     Section 11.4. 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,  notwithstanding that all of the Members
are not signatories to the original or to the same counterpart.

     Section 11.5.  Entire  Agreement.  This  Agreement  constitutes  the entire
agreement  between the Members and the Company  pertaining to the subject matter
hereof and supersedes all prior agreements,  representations and understandings,
written or oral,  pertaining  thereto,

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<PAGE>

including  that  certain  letter of intent dated as of June 20, 2002 among NGUSA
and the Original GridAmerica Companies.

     Section  11.6.  Severability.  Any  provision  of  this  Agreement  that is
prohibited or unenforceable in any jurisdiction  shall, as to that jurisdiction,
be ineffective to the extent of that  prohibition  or  unenforceability  without
invalidating  the  remaining  provisions  hereof or  affecting  the  validity or
enforceability of that provision in any other jurisdiction.

     Section 11.7. Notices. Every notice, request, or other statement to be made
or  delivered  to a Member or the Company  pursuant to this  Agreement  shall be
directed to such Member's  representative at the address or facsimile number for
such Member set forth on Schedule A or to such other address or facsimile number
as the Member may  designate  by written  notice to the  Company  and each other
Member  from time to time.  All  notices  or other  communications  required  or
permitted to be given  pursuant to this Agreement must be in writing and will be
considered  as  properly   given  if  sent  by  facsimile   transmission   (with
confirmation  notice sent by first class mail,  postage  prepaid),  by reputable
nationwide   overnight  delivery  service  that  guarantees  next  business  day
delivery, by personal delivery,  or, if mailed from within the United States, by
first class United States mail,  postage  prepaid,  registered or certified with
return receipt requested.  Any notice hereunder will be deemed to have been duly
given  (i) on the date  personally  delivered,  (ii) when  received,  if sent by
certified or registered mail,  postage prepaid,  return receipt  requested or if
sent by overnight delivery service; and (iii) if sent by facsimile transmission,
on the date sent,  provided  confirmation  notice is sent by  first-class  mail,
postage prepaid promptly thereafter.

     Section 11.8. Remedies; Limitation on Damages; Indemnification.

     (a)  Specific  Performance.  The  Members  agree that a default  under this
Agreement will result in irreparable  damage to the  non-defaulting  Members for
which no money damages  could  adequately  compensate.  In addition to all other
remedies  to  which  the  non-defaulting  Members  may  be  entitled,  including
reasonable  attorneys'  fees and  expenses  pursuant  to Section  11.9 and court
costs, any non-defaulting  Member shall be entitled to seek injunctive relief or
specific performance to restrain or compel the defaulting Member or the Company.
Each of the Members and the Company  expressly waives any claim that an adequate
remedy at law exists for such a breach.

     (b)  Remedies Upon Early Termination  Event. If a Managing Member ceases to
serve as Managing  Member,  the Managing  Member shall forfeit,  and the Company
shall not be obligated to pay, the unearned  amount of the Management Fee or any
incentive compensation.

     (c)  All Other Remedies. No right or remedy herein conferred is intended to
be exclusive  of any other  available  right or remedy,  but each and every such
right or remedy  shall be  cumulative  and shall be in  addition  to every other
right or remedy given  hereunder or hereafter  existing  under law or in equity.
The  exercise of any one right or remedy shall not be deemed an election of such
right or remedy or  preclude  the  exercise  of any other  right or remedy.  The
resort to any right or remedy  provided  for herein or provided for by law or in
equity shall not prevent the  concurrent or  subsequent  employment of any other
right or remedy.

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     (d)  Limitation on Damages.  Notwithstanding  anything in this Agreement to
the contrary:

          (i)  No  Person  shall be liable  under  this  Agreement  to any other
     Person for indirect, consequential,  special or punitive damages on account
     of any action or proceeding brought hereunder or related hereto; and

          (ii) The Managing  Member shall be liable under this Agreement only as
     provided  in  Section  11.8(e)  or in the case of the Gross  Negligence  or
     Willful Misconduct of the Managing Member.

     (e)  Indemnification by Managing Member.

          (i)  The Managing Member shall indemnify and hold harmless each Member
     from all Damages  suffered or incurred by such Member and arising out of or
     caused by any  breach by the  Managing  Member of  Section  6.5;  provided,
     however,  that,  except as  hereinafter  provided,  the Initial  Member (as
     Managing  Member)  shall not be liable for Damages from any claim or series
     of related claims involving a breach of Section 6.5 (i) unless such Damages
     exceed  $150,000  in the  aggregate,  and then only to the extent that such
     Damages  exceed  $150,000  or (ii) if and to the  extent  that the  Damages
     arising  from any  claim or  series  of  related  claims  occurring  in any
     calendar year plus all Managing  Member  Payments with respect to all other
     claims  occurring in such  calendar year are greater than the Liability Cap
     Amount for such calendar year.  Notwithstanding the foregoing,  none of the
     limitations on liability  contained in this Section  11.8(e)(i) shall apply
     in  respect  of any  Damages  arising  out of Gross  Negligence  or Willful
     Misconduct (and the Managing Member shall be fully liable for any breach of
     any  provision  of  this  Agreement  arising  out  of or  caused  by  Gross
     Negligence or Willful  Misconduct or breaches by the Managing Member of its
     obligations  under Section 4.1 or 4.2). To the extent that a claim asserted
     against the Managing  Member  relates to Damages  suffered by more than one
     Member,  then the Member that  asserted  such claim and such other  Members
     shall share the  indemnification  payments  made by the Managing  Member in
     respect thereof in proportion to the Damages suffered by each.

          (ii) For the  avoidance of doubt,  the  Managing  Member shall have no
     indemnification obligation under Section 11.8(e)(i) with respect to Damages
     arising out of any claim  occurring in any calendar year involving any Good
     Business  Practice  Breach to the extent that the amount of such Damages in
     respect of such claim plus all Managing Member Payments with respect to all
     other claims  occurring in such calendar year is greater than the Liability
     Cap Amount for such calendar year.

     (f)  "Managing Member  Payments" means,  with respect to any calendar year,
the sum of the following determined as of the time in question:

          (i)  the aggregate  amount of all  indemnification  payments  actually
     made by the Managing Member under Section  11.8(e)(i)  (excluding  payments
     made out of insurance  proceeds)  with respect to claims  occurring in such
     calendar year with respect to breaches of Sections  6.5(i),  (ii), (iv) and
     (v) ("Good Business Practice Breaches"); plus

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          (ii) the  aggregate  amount of all  Damages  actually  paid or due and
     payable by the Managing  Member  (excluding  payments made out of insurance
     proceeds and excluding the application of any indemnification payments from
     the Company  pursuant to Section  11.8(h)(ii))  with respect to Third Party
     Claims  (other than claims by the Members  pursuant to Section  11.8(e)(i))
     occurring  in such  calendar  year to the extent such claims  involve  Good
     Business Practice Breaches;

provided,  however,  that no amount paid by the  Managing  Member as a result of
Gross  Negligence  or Willful  Misconduct  shall  constitute  a Managing  Member
Payment and no amount paid to any Person, other than amounts paid to a Protected
Member in its capacity as Protected  Member,  shall constitute a Managing Member
Payment.  For purposes of determining the amount of the Managing Member Payments
in respect of any  calendar  year,  a claim shall be deemed to have  occurred in
such calendar year if the facts,  circumstances  or events which first gave rise
to Damages occurred during such calendar year,  regardless of when the claim was
asserted or when any particular element of such Damages was incurred.

     (g)  Notice,  Joinder of Claims.  Any Member  asserting a claim for damages
against the Company or the Managing Member shall,  promptly after the initiation
of  such  claim,   give  notice  thereof  to  the  other  Members  and  to  each
Non-Divesting  Transmission  Owner,  which  notice  must  include  a  reasonably
detailed  description  of the basis for such claim.  The Company and each Member
agree that if any NDTO  asserts a claim  against the Company  arising out of the
same  facts and  circumstances  that  give  rise to the  claim by the  Member or
Members  asserting  a claim  against  the  Managing  Member  pursuant to Section
11.8(e),  such claim may,  at the written  request of such NDTO  received by the
Company  within thirty (30) days of the date on which such NDTO received  notice
of the  initiation of such claim,  be  consolidated  with, and determined in the
same proceeding as the claim for indemnity  asserted against the Managing Member
pursuant to Section 11.8(e).

     (h)  Indemnification by the Company.

          (i)  Except as otherwise  provided with respect to the Managing Member
     pursuant to Section 11.8(e)(i), no Member or former Member shall be liable,
     accountable or  responsible  for Damages or otherwise to the Company or the
     other  Members  for any action  taken or failure to act to the extent  such
     action  is taken or such  failure  to act was made by such  Member  in good
     faith on behalf  of the  Company  and  within  the  scope of the  authority
     conferred on the Member by this  Agreement or by Law unless any such action
     or omission,  was  performed or omitted in bad faith or  constituted  Gross
     Negligence or Willful Misconduct.

          (ii) The  Company  shall,  but  only  to the  extent  of  its  assets,
     indemnify and hold harmless each Member (including the Managing Member) and
     each officer,  director,  employee,  partner or controlling  person of each
     Member  (collectively,  the  "Indemnified  Parties")  from and  against any
     Damages paid or due and payable to a third-party  and reasonable  costs and
     expenses of  defending  any claim by any  third-party  that are suffered or
     sustained  by such  Indemnified  Party  and  resulting  from any claim by a
     third-party  by reason of any acts,  omissions or alleged acts or omissions
     arising out of such Member's activities as a Member ("Third Party Claims"),
     including as Managing Member;

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     provided, however, such indemnity does not extend to Damages arising out of
     any action or inaction of the Member or Indemnified  Party (i) taken in bad
     faith or (ii) that constitutes Gross Negligence or Willful  Misconduct or a
     breach of Section 4.1 or 4.2. Additionally, and notwithstanding anything to
     the  contrary,  the  Company  shall have no  obligation  to  indemnify  the
     Managing Member with respect to any Third Party Claim occurring in any year
     involving any Good Business  Practice Breach to the extent the Damages paid
     or due and  payable by the  Managing  Member in respect of such Third Party
     Claim plus all  Managing  Member  Payments  with  respect  to other  claims
     occurring in such  calendar year are less than the Liability Cap Amount for
     such calendar year.

          (iii)The  Company  shall have the right to assume  the  defense in any
     action or claim with  respect to which it is  indemnifying  an  Indemnified
     Party hereunder.

     (j)  Survival. The obligations of a Person who ceases to be Managing Member
shall  survive such Person's  resignation  or removal with respect to any claims
arising prior to such Person's resignation or removal.

     Section 11.9. Attorneys' Fees. In any dispute arising hereunder,  the party
prevailing at final  judgment  shall be entitled to recover from the other party
all of its reasonable  attorneys'  fees and costs incurred in such a proceeding,
in addition to any affirmative or injunctive relief that it may receive.

     Section  11.10.  Time is of the  Essence.  Time is of the  essence  of each
provision of this Agreement.

     Section 11.11. Amendments to this Agreement.

     (a)  General.  This  Agreement  may  be  amended,   modified  or  otherwise
supplemented  upon the  affirmative  approval  of a Majority of Class A Members;
provided,  however, that the foregoing  notwithstanding,  in no event shall this
Agreement  (i) be amended,  modified or  otherwise  supplemented  to require any
Member to make any additional  Capital  Contribution to the Company without that
Member's  prior  written  consent,  (ii)  be  amended,   modified  or  otherwise
supplemented  (or any  provision  hereof  be  waived)  in a  manner  that  would
adversely  affect a Member's  preferences  or rights as a Member in any material
respect (including any rights to  indemnification) or the effect of which (A) is
that the  Company  is able to enter into or engage in a  transaction,  contract,
agreement or arrangement  that would have  contravened  this Agreement  prior to
such  amendment or (B) impairs the ability to carry out the Permitted  Purposes,
unless, in each such case, the affirmative  written approval of a Super Majority
of  Non-Managing  Members is obtained prior to such amendment or waiver or (iii)
be amended,  modified or  otherwise  supplemented  (or any  provision  hereof be
waived) that would alter the rights or obligations of the Managing Member solely
in its capacity as Managing  Member without the  affirmative  written consent of
the Managing Member.

     (b)  Amendments Admitting New Members. The Managing Member is authorized to
amend  this  Agreement  without  the  consent  or  joinder of any Member for the
purpose of admitting new Members and/or recognizing transferees of Units and for
providing  for the  issuance  thereto  of new Units or the  Transfer  thereto of
Transferred  Units,  as the  case  may  be,  in

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all cases,  subject to and in accordance  with Sections 3.1(b) and 3.1(c) in the
case of new  Members  and  Section  3.3 in the  case of  transferees  (including
amending  Schedule A to reflect the admission of such new Member,  the number of
Units issued or transferred  and the Capital  Contribution,  if any, being made)
and  adding a  Ratification  Agreement  to this  Agreement  in  accordance  with
Sections 3.1(b), 3.1(c) or 3.3, as the case may be.

     (c)  Amendments Upon Removal of Managing Member.  In the event the Managing
Member is  removed  as a result of an Early  Termination  Event and a  successor
Managing  Member  is not  admitted  to the  Company  within  fifteen  (15)  days
following such removal,  a Super Majority of  Non-Managing  Members (or if there
are no holders of Units other than the  Managing  Member and its  Affiliates,  a
Super Majority of Transmission Owners) may amend Article VI and other provisions
relating to the  management  of the Company for the purpose of  providing  for a
management  structure for the Company that is consistent  with  applicable  Law,
including Order 2000.

     (d)  Notice of Amendments. Written copies of any agreement that proposes to
amend this Agreement (other than pursuant to Section 11.11(b)), accompanied by a
notice that  describes  the approval  process that is proposed to be observed in
adopting such amendment,  must be delivered to each Member promptly,  and in any
event, no fewer than ten (10) days prior to the proposed  effectiveness  of such
amendment.  Notice of an amendment to this Agreement that describes a new Member
or transferee of Units (as the case may be), any Capital  Contribution  received
by the Company and any Units  issued by the Company  must be  delivered  to each
Member promptly after an amendment pursuant to Section 11.11(b).

     Section 11.12. Waiver of Partition.  Each of the Members hereby irrevocably
waives any and all rights that such  Member may have to maintain  any action for
partition of any of the Company's property.

     Section  11.13.  Successors and Assigns.  Except as otherwise  specifically
provided herein,  this Agreement shall be binding upon, and inure to the benefit
of,  the  Members  and  their  legal  representatives,   heirs,  administrators,
executors, successors and assigns.

     Section  11.14.  Additional  Documents.  Subject to the  provisions of this
Agreement,  each Member agrees to execute, with acknowledgment or affidavit,  if
necessary,  any and all documents and writings that may be reasonably  required,
necessary or expedient  in  connection  with the creation of the Company and the
achievement of its purposes,  including all such  certificates,  tax statements,
tax  returns,  and other  documents  as may be  required  of the  Company or its
Members  by the Laws of the  United  States  or any  jurisdiction  in which  the
Company plans to conduct business.

     Section 11.15. Fair Market Value.

     (a)  Valuation  Procedure.  Whenever used in this  Agreement,  "Fair Market
Value" means,  with respect to the valuation of any property,  the value of such
property at the time in question as determined  in good faith by the  interested
parties;  provided,  however, that if such parties fail to agree in writing upon
the value of such property  before the earlier of (i) twenty

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(20) days after the first request to make such a determination  or (ii) the date
sixty (60) days prior to the  transaction in question,  then the following shall
apply:

          (i)  Each  interested  party  shall  select  a  nationally  recognized
     investment  banking  firm to make  such  determination  on such  interested
     party's behalf in accordance with the standards, procedures and assumptions
     set forth in this Section 11.15. Each interested party shall pay all of the
     fees and expenses of the investment  banking firm selected by it (each such
     firm being  referred to as an  "Interested  Party  Valuation  Firm").  Each
     interested  party  promptly  shall  make  available  to each  other and any
     investment  banking firms  involved in such process such  information as is
     reasonably  necessary  to reach a Fair  Market  Value  determination.  Each
     Interested  Party  Valuation Firm shall  determine its proposed fair market
     value of the property being valued.

          (ii) If the proposed fair market values  determined by the  Interested
     Party  Valuation  Firms are within  10% of each  other,  then "Fair  Market
     Value" shall mean the average of such proposed fair market values.

          (iii)If the proposed fair market values  determined by the  Interested
     Party Valuation Firms are not within 10% of each other, then the Interested
     Party Valuation Firms shall select a third nationally recognized investment
     banking  firm  (the  "Neutral  Valuation  Firm"),  which  shall be paid for
     equally by both  interested  parties.  (If the Interested  Party  Valuation
     Firms fail to appoint a Neutral  Valuation  Firm within twenty (20) days of
     the date the last of the  Interested  Party  Valuation  Firms  rendered its
     opinion of fair market value, then either interested party may apply to any
     court or arbitration panel having  jurisdiction to make such  appointment.)
     The Neutral  Valuation  Firm shall also propose a fair market value for the
     property being valued. If:

               (a)  the fair market value proposed by the Neutral Valuation Firm
          is higher than the fair  market  values  proposed  by both  Interested
          Party Valuation Firms,  then "Fair Market Value" shall mean the higher
          of the  two  fair  market  values  proposed  by the  Interested  Party
          Valuation Firms;

               (b)  the  proposed  fair market value  determined  by the Neutral
          Valuation  Firm is lower than the fair market values  proposed by both
          Interested Party Valuation Firms,  then "Fair Market Value" shall mean
          the lower of the two fair market  values  proposed  by the  Interested
          Party Valuation Firms; and

               (c)  the fair market value proposed by the Neutral Valuation Firm
          is between the fair market values  proposed by both  Interested  Party
          Valuation  Firms,  then "Fair Market Value" shall mean the fair market
          value proposed by the Neutral Valuation Firm.

          (iv) In any case  where an  investment  banking  firm is  required  to
     render an opinion of fair  market  value,  such  opinion  shall be rendered
     within 30 days of being engaged.

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<PAGE>

     (b)  General  Principles of  Application.  The following  principles  shall
apply  generally  to any  determination  of "fair market  value"  under  Section
11.15(a),  whether such determination is made by the interested parties or by an
investment banking firm:

          (i)  Fair market  value shall mean the price at which the  property in
     question  would change hands between a willing buyer and a willing  seller,
     neither being under any compulsion and both having reasonable  knowledge of
     the relevant facts,  including the relevant  regulatory policies and, where
     the item in  question  is an  interest,  or a group of  assets  used,  in a
     business, such item shall be valued based on its going-concern value.

          (ii) Any  expected tax  benefits of either  interested  party shall be
     considered in determining fair market value.

          (iii)In  computing  the fair market value of a Unit or group of Units,
     such values  shall be  determined  by reference to the fair market value of
     the Company and the  presence or absence of voting or control  rights shall
     be ignored.

          (iv) All property will be valued on a stand-alone basis without regard
     to any expected cost savings or other synergies resulting from any proposed
     transaction.  Notwithstanding  the  foregoing,  (i) if as a  result  of the
     failure of a Putting  GridAmerica  Company  to  include in its  Contributed
     Transmission Facilities all Transmission Facilities necessary or reasonably
     appropriate  to operate  the  Contributed  Transmission  Facilities  in the
     manner in which such  Transmission  Facilities  were  operated  immediately
     prior to the  determination  of the fair market value of such  Transmission
     Facilities, the cost to the Company of replacing those omitted Transmission
     Facilities shall be taken into account in determining Fair Market Value and
     (ii) the  economic  and  operational  effect of any  assets or  contractual
     arrangements for the provision of services offered by a Putting GridAmerica
     Company in  connection  with the  exercise  of any Put Right shall be taken
     into  account  in  determining  the fair  market  value of any  Contributed
     Transmission Facilities.

     (c)  Participation  by Managing  Member.  When the Fair Market  Value to be
determined is in connection  with a contribution of assets to the Company by the
Managing  Member or one of its  Affiliates,  the Members other than the Managing
Member and its Affiliates  acting  collectively  will represent the interests of
the Company in such valuation process.

     Section 11.16. Late Payments.  If a Party does not pay within ten (10) days
of the date  required  hereunder,  all or any portion of an amount such Party is
required  to pay as provided  in this  Agreement  then (i) the amount such owing
Party is  required  to pay shall bear  interest  at (A) the sum of (I) a varying
rate per annum that is equal to the interest  rate  publicly  quoted by The Wall
Street Journal,  from time to time as the prime commercial or similar  reference
interest rate with  adjustments in that varying rate to be made on the same date
as any  change  in that  rate  plus  (II) 2% per  annum or (B) such  lower  rate
required under  applicable  law,  compounded  annually and (ii) a Party to which
payment is due may take any  action,  at the cost and expense of the owing Party
to obtain  payment by such  owing  Party of the  portion  of such owing  Party's
payment that is in default, together with interest thereon as provided above.

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                        [signatures appear on next page]

                                       65

<PAGE>

     IN WITNESS  WHEREOF the Initial  Member has executed  this  Agreement as of
February 14, 2003.

                                     GRIDAMERICA HOLDINGS INC.

                                      By:      \s\Nicholas P. Winser
                                         -----------------------------------
                                         Name:    Nicholas P. Winser
                                         Title:   Chief Executive Officer

                                       66

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