Document:

EXECUTION COPY

                              AMENDED AND RESTATED
                                MASTER AGREEMENT

                                  by and among

                                GRIDAMERICA LLC,

                            GRIDAMERICA HOLDINGS INC.

                              GRIDAMERICA COMPANIES

                                       and

                                NATIONAL GRID USA

                                February 14, 2003

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                                TABLE OF CONTENTS

                                    ARTICLE I
                                   DEFINITIONS

Section 1.1   Definitions .....................................................2
Section 1.2   Rules of Construction...........................................13

                                   ARTICLE II
       CREATION OF GRIDAMERICA ITC, MANAGING MEMBER; TRANSMISSION SERVICE
                                      DATE

Section 2.1   Creation of Grid America ITC....................................14
Section 2.2   The Intial Member; Term and Removal.............................17

                                   ARTICLE III
                      PURCHASE OF UNITS BY NGUSA AFFILIATES

Section 3.1   Initial Purchase of Units and Purchase of Units to Fund
                Capital Expenditures and Working Capital Needs................20
Section 3.2   Purchase of Units by Affiliated Investors Upon Contributions
                of GridAmerica Transmission Facilities........................21
Section 3.3   Additional Limitations on Commitment............................22
Section 3.4   Failure to Achieve Transmission Service Date....................22

                                   ARTICLE IV
                                   EXCLUSIVITY

Section 4.1   Exclusivity Period..............................................23

                                    ARTICLE V
                         PUT OF TRANSMISSION FACILITIES

Section 5.1   Put Right in Favor of GridAmerica Companies.....................24
Section 5.2   Put Rights of NGUSA Affiliates..................................26
Section 5.3   Put Closing.....................................................27
Section 5.4   Put Units Unregistered..........................................27
Section 5.5   Put Rights Transferable.........................................27
Section 5.6   Publicly Traded Partnership.....................................28
Section 5.7   Certain Resignation and Withdrawal Rights.......................28

                                   ARTICLE VI
                               REGISTRATION RIGHTS

Section 6.1   Demand Registration Rights......................................29
Section 6.2   Incidental Registration.........................................31
Section 6.3   Cutback; Withdrawal Rights......................................32
Section 6.4   Blockage Periods................................................33
Section 6.5   Restrictions on Public Sale.....................................33
Section 6.6   Registration Procedures.........................................33

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Section 6.7   Registration Expenses...........................................38
Section 6.8   Indemnification.................................................38
Section 6.9   Preparation; Reasonable Investigation...........................41
Section 6.10  Rule 144 and Rule 144A..........................................42
Section 6.11  Other Registration Rights Agreements............................42
Section 6.12  Specific Performance for Registration Rights....................42
Section 6.13  Exchange of Units for Shares....................................42

                                   ARTICLE VII
                                FAIR MARKET VALUE

Section 7.1   Fair Market Value...............................................43
Section 7.2   General Principles of Application...............................44
Section 7.3   General Principles of Application...............................45

                                  ARTICLE VIII
                             ADMISSION REQUIREMENTS

Section 8.1   Admission Requirements..........................................45

                                   ARTICLE IX
                         REPRESENTATIONS AND WARRANTIES

Section 9.1   Representations and Warranties Concerning the Company...........45
Section 9.2   Representations and Warranties Concerning the Initial Member....47
Section 9.3   Representations and Warranties of GridAmerica Companies.........48
Section 9.4   Representations and Warranties of NGUSA.........................49

                                    ARTICLE X
                                    COVENANTS

Section 10.1  NGUSA Covenants.................................................50
Section 10.2  GridAmerica Company Covenants...................................52
Section 10.3  Rights of Transmission Owners Under the Operation Agreement.....52
Section 10.4  Party Covenants.................................................52

                                   ARTICLE XI
                     TERMINATION, CERTAIN WITHDRAWAL RIGHTS

Section 11.1  Termination of Agreement; Effect of Termination.................53

                                   ARTICLE XII
                               DISPUTE RESOLUTION

Section 12.1  Negotiations....................................................53
Section 12.2  Arbitration.....................................................53
Section 12.3  Arbitration of Certain Claims Regarding Removal of Managing
                Member........................................................57

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                                  ARTICLE XIII
                                  MISCELLANEOUS

Section 13.1  Notices.........................................................59
Section 13.2  Entire Agreement; Amendments....................................59
Section 13.3  Effect of Waiver................................................59
Section 13.4  Not for the Benefit of Third Parties; No Partnership............59
Section 13.5  No Assignment; Binding Effect...................................60
Section 13.6  Severability....................................................60
Section 13.7  Governing Law; Waiver of Jury Trial.............................60
Section 13.8  Counterparts....................................................60
Section 13.9  Confidentiality.................................................62
Section 13.10 Attorneys' Fees.................................................62
Section 13.11 Time is of Essence..............................................62
Section 13.12 Further Assistances.............................................62
Section 13.13 Late Payments...................................................62
Section 13.14 Remedies........................................................62

SCHEDULES

A        Certain Excluded Employees
B        Addresses for Notices

                                      iii

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                      AMENDED AND RESTATED MASTER AGREEMENT

     THIS AMENDED AND RESTATED  MASTER  AGREEMENT is made and entered into as of
February 14, 2002, by and among  GridAmerica LLC, a Delaware  limited  liability
company (the "Company"),  GridAmerica Holdings Inc., a Delaware corporation (the
"Initial  Member"),  the  Persons  signing  this  Agreement  as the  GridAmerica
Companies (the "Original  GridAmerica  Companies")  and any other Person who may
become a party hereto as a  GridAmerica  Company  pursuant to Section 8.1 hereof
(collectively,   with  the  Original  GridAmerica  Companies,  the  "GridAmerica
Companies") and National Grid USA ("NGUSA").

                                    RECITALS

     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;

     The Midwest  Transmission  System  Operator,  Inc. (the "Midwest ISO") is a
Commission approved regional transmission organization.

     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 ISO.

     The Midwest ISO has an open architecture that accommodates various forms of
ITC in its operation.

     The  GridAmerica  Companies  wish to comply with Order No. 2000 through the
formation of an ITC within the Midwest ISO.

     NGUSA is  involved in the  ownership  and  operation  of  transmission  and
distribution  properties and seeks to further its overall  business  strategy by
acquiring,  owning and operating transmission and distribution  properties,  and
divesting or otherwise disposing of electric generation businesses and assets or
obligations relating thereto.

     On October 31,  2002,  (i) the  Original  GridAmerica  Companies  and NGUSA
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") for a transaction that involves: (x) the formation of the Company as
a for-profit  ITC under the Midwest ISO and thereby to achieve  compliance  with
Order No. 2000 and (y) NGUSA,  through one or more of its affiliates,  making an
investment in and,  through the Initial  Member,  serving as managing member of,
the Company (collectively, the "Original Transaction");

<PAGE>

     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")  conditionally  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.

     The GridAmerica  Companies,  NGUSA,  the Initial Member and the Company now
desire to enter into this  Agreement  in order to set out  certain  terms of the
transaction  as  modified  in  compliance  with the FERC  Approving  Order  (the
Original Transaction as so modified is herein referred to as the "Transaction").

     NOW, THEREFORE, in consideration of the mutual covenants,  representations,
warranties,  and agreements contained in this Agreement,  and for other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged,  the Parties hereby agree to amend and restate the Original Master
Agreement in its entirety as follows:

                                    ARTICLE I

                                   DEFINITIONS

     Section 1.1  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 12.2(a).

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

     "Additional Claim" shall have the meaning given in Section 12.2(i).

     "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.

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     "Agreed Accounting Firm" shall mean  PricewaterhouseCoopers  LLP or another
accounting firm mutually  acceptable to NGUSA and the Company that is nationally
recognized in the United States.

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

     "Approval  Order" shall mean one or more Final  Orders that,  collectively,
approve the Transaction Agreements 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 the Transaction Agreements.

     "Approved  Underwriter"  shall have the  meaning  given in Section  6.1 (h)

     "Approved Uses" shall have the meaning given in Section 13.9(a)(2).

     "Arbitration" shall have the meaning given in Section 12.2.

     "Arbitration Notice" shall have the meaning given in Section 12.2(b).

     "Arbitration Rules" shall have the meaning given in Section 12.2(a).

     "Business Day" shall mean any day other than Saturday,  Sunday or other day
on which banks are authorized or required to be closed in New York, New York.

     "Capital Account" shall have the meaning given in the LLC Agreement.

     "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 3.2(a)(3).

     "Cause" shall have the meaning given in the LLC Agreement.

     "Claimant Party" shall have the meaning given in Section 12.2(b).

     "Claims" shall have the meaning given in Section 12.2(a).

     "Class  A Stock"  and  "Class B Stock"  shall  have the  meanings  given in
Section 6.13(a).

     "Class A Units" and "Class B Units"  shall have the  meanings  given in the
LLC Agreement.

     "Clear Notification" shall have the meaning given in Section 6.4.

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

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

     "Company's  Notification  of  Readiness"  shall have the  meaning  given in
Section 2.1(d).

     "Confidential   Information"   means  all   confidential  or  trade  secret
information  of a  Disclosing  Party  provided to a Recipient  pursuant to or in
connection  with any  Transaction  Agreement,  including  business  information;
strategies,  methods, technical information,  pricing techniques and strategies;
customer information;  investor information;  price curves; positions, plans and
strategies for expansion or acquisitions,  budgets,  customer lists,  studies of
information  and  data,  electronic  databases,   computer  programs,   bids  or
proposals,  organizational structure,  compensation of personnel and new product
information;  provided,  however,  "Confidential  Information" shall not include
information   that  (i)  was  already   known  by  (as   established   by  dated
documentation)  a Recipient  at the time of the receipt of such  information  by
such Recipient from the Disclosing  Party,  (ii) is in, or subsequently  enters,
the public  domain  other than as a result of a disclosure  by the  Recipient in
breach of an obligation of confidence, (iii) is received by the Recipient from a
third   party  if  such  third  party  was  not  known  to  be  subject  to  any
confidentiality  obligation, (iv) is independently developed by a Person without
access to the Confidential Information provided by the Disclosing Party, (v) was
or is  furnished  by a  Disclosing  Party  to  another  Person  without  written
confidentiality  restrictions,  or (vi)  is  approved  for  release  by  written
authorization of the Disclosing Party.

     "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.

     "Contributed  Transmission  Facilities"  shall  have the  meaning  given in
Section 5.1(a).

     "Damages" shall have the meaning given in Section 6.8(a).

     "Demand  Registration" shall mean an IPO Demand Registration or a Secondary
Demand Registration.

     "Disclosing Party" shall have the meaning given in Section 13.9.

     "Dispute Parties" shall have the meaning given in Section 12.2(b).

     "Distribution Rights" shall have the meaning given in Section 2.2(e).

     "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

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<PAGE>

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  Contribution  Agreement"  shall have the meaning  given in Section
10.1(h).

     "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 3.2,  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 3.2, 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.

     "Exchange Act" shall mean the  Securities  Exchange Act of 1934, as amended
from time to time, and the rules and regulations promulgated thereunder.

     "Excluded  Employees" shall mean (i) each of the individuals  identified on
Schedule A 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  Managing  Member or the Company to serve in a
senior executive or a senior or special technical position;  provided,  however,
that (x) NGUSA  shall  provide the Company  and each  GridAmerica  Company  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
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.

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<PAGE>

     "Exclusive  Period" shall mean the period  beginning on the Effective  Date
and ending on the  earliest of (i) the date of closing of an IPO,  (ii) the date
on which the Initial  Member ceases to be the Managing  Member of the Company or
(iii) the fifth anniversary of the Transmission Service Date.

     "Exclusivity  Transaction"  shall mean any transaction  (including an asset
sale, stock sale, merger, consolidation,  or other combination) by or in respect
of any GridAmerica  Company pursuant to which ownership or control of all or any
material portion of such GridAmerica Company's Transmission Facilities which are
subject to the  Functional  Control of the  Company  pursuant  to the  Operation
Agreement are  transferred  to another  Person,  but excluding any  transaction,
proposed transaction or negotiation (i) involving the transfer of such assets to
an Affiliate of such  GridAmerica  Company,  (ii) involving the ultimate  parent
entity of such GridAmerica  Company and  substantially  all of its subsidiaries,
provided  that  the  overall   business  of  such  ultimate  parent  entity  and
subsidiaries is not the ownership and/or  operation of GridAmerica  Transmission
Facilities,  (iii)  involving a lower level  operating  company  with respect to
which GridAmerica Transmission Facilities do not constitute all or substantially
all of its  assets,  (iv) in which the assets to be  transferred  are not all or
substantially all GridAmerica Transmission Facilities,  (v) involving a transfer
of  such  Transmission  Facilities  as  collateral  for a loan  or in a  similar
financing  transaction  and any transfer  thereof in lieu of foreclosure or (vi)
which is in progress as of the Effective Date; provided,  however,  that, in the
case of a transaction,  proposed transaction or negotiation  described in clause
(vi),  (x) the  GridAmerica  Company has  disclosed  the  transaction,  proposed
transaction  or  negotiation to NGUSA in writing on or before the Effective Date
(without being required to disclose the identity of any other Person involved in
such  transaction,  proposed  transaction or  negotiation)  and (y) a definitive
agreement  in respect  thereof  is  executed  within  six (6)  months  after the
Effective Date.

     "Fair Market Value" shall have the meaning given in Section 7.1.

     "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.

     "FERC Approving Order" shall have the meaning given in the recitals hereof.
"Final Order" shall mean an order issued by the Commission approving such of the
Transaction  Agreements as to which approval of the Commission is required under
applicable Law.

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

     "First Divestor Divestiture" shall mean either (i) the acquisition by NGUSA
or any NGUSA Affiliate of any GridCo East Transmission Facilities from the First
Divestor under

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<PAGE>

circumstances where the Company  contemporaneously  or subsequently issues Units
in exchange for some or all of such GridCo East 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 GridCo East Transmission  Facilities from the First Divestor,  in each case,
prior to the third  anniversary of the Transmission  Service Date but before any
other GridCo East Company exercises its Put Right.

     "Form S-3" shall mean such form under the  Securities  Act or any successor
registration  form under the  Securities  Act.  subsequently  adopted by the SEC
which permits inclusion or incorporation by reference of substantial information
by reference to other documents filed by GridAmerica HoldCo with the SEC.

     "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.

     "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 HoldCo" shall have the meaning given in Section 6.13.

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

     "GridAmerica   Transmission   Facilities"  shall  mean  those  Transmission
Facilities  owned by a  GridAmerica  Company,  over which the Company  exercises
Functional Control pursuant to the Operation Agreement.

     "Gross Negligence" shall have the meaning given in the LLC Agreement.

     "Incidental Registration" shall have the meaning given in Section 6.2.

     "Indemnity Cap" shall have the meaning given in the Operation Agreement.

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

     "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.

                                       7

<PAGE>

     "Interested  Parties"  shall mean (i) in the case of the  exercise of a Put
Right by NGUSA or any Affiliated Investor,  NGUSA (acting on behalf of itself or
any affected  Affiliated  Investors) and the Company and (ii) in the case of the
exercise  of a Put Right by any  other  Person,  such  Person  and the  Managing
Member; provided, however, that any determination by the Company in its capacity
as an "Interested  Party" shall be made by the Members (other than NGUSA and any
Affiliated  Investor),  acting  collectively  on the  basis of their  Percentage
Interests.

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

     "ITC  Agreements"  means (i) the LLC  Agreement,  (ii) the  Certificate  of
Formation of the Company under the Delaware Limited Liability Company Act, (iii)
the Operation Agreement and (iv) this Agreement.

     "IPO Demand Registration" shall have the meaning given in Section 6.1(a).

     "IPO Notice" shall have the meaning given in Section 6.1(b).

     "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.

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

     "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  the  managing  member  of the  Company  as
designated in accordance with Section 6.1 of the LLC Agreement.

     "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.

     "Maximum Section 3.1(a) Commitment" shall have the meaning given in Section
3.1(a).

     "Member"  shall mean any Person who is a member of the  Company,  including
the Managing Member.

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<PAGE>

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

     "Midwest ISO's  Notification of Readiness"  shall have the meaning given in
Section 2.1(e).

     "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.

     "Net Book Value" shall have the meaning given in Section 2.2(f)(2).

     "Net Plant" or "net  plant"  shall  mean,  as of any date of  determination
thereof and 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  (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 7.1(c).

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

     "NGUSA Affiliate" shall mean an Affiliate of NGUSA.

     "NGUSA Management Term" shall have the meaning given in Section 2.2(b).

     "NGUSA Termination Notice" shall have the meaning given in Section 2.2(b).

     "Non-Divesting  GridAmerica  Companies"  shall  have the  meaning  given in
Section 2.1(d).

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

     "Non-NGUSA  Termination  Notice"  shall have the  meaning  given in Section
2.2(b).

     "Notice  of  Removal  Dispute"  shall  have the  meaning  given in  Section
12.3(b).

     "Operation  Agreement"  shall  mean  the  Amended  and  Restated  Operation
Agreement dated as of February 14, 2003,  among the Company and each GridAmerica
Company

                                       9

<PAGE>

or its applicable Affiliate,  as the same may be amended,  modified or otherwise
supplemented and in effect from time to time.

     "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) 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.

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

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

     "Panel" shall have the meaning given in Section 12.2(d).

     "Party" shall mean any party from time to time to this Agreement.

     "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 at such time divided by the total number of outstanding  Units multiplied
by (ii) one hundred percent (100%).

     "Person" shall mean any natural person or Entity.

     "Pro-forma  Number of Put Units"  shall have the  meaning  given in Section
5.1(c).

     "Prospectus"  shall  mean  the  prospectus  included  in  any  Registration
Statement, as amended or supplemented by any prospectus supplement, with respect
to the  terms of the  offering  of any  portion  of the  Registrable  Securities
covered  by  any  Registration  Statement,  and  by  all  other  amendments  and
supplements  to such  prospectus,  including  post-effective  amendments and all
material incorporated by reference in such prospectus.

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

     "Put Agreement" shall have the meaning given in Section 5.1(b).

     "Put Closing" shall have the meaning given in Section 5.3.

     "Put Notice" shall have the meaning given in Section 5.1(a).

     "Put Right" shall have the meaning given in Section 5.1.

                                       10

<PAGE>

     "Putting  GridAmerica  Company"  shall  have the  meaning  given in Section
5.1(a).

     "Qualifying Offer" shall have the meaning given in Section 2.2(f)(3).

     "Recipient" shall have the meaning given in Section 13.9.

     "Register,"  "registered"  and  "registration"  shall  mean and refers to a
registration  effected by  preparing  and filing a  Registration  Statement  and
taking  all other  actions  that are  necessary  or  appropriate  in  connection
therewith, and the declaration or ordering of effectiveness of such Registration
Statement by the SEC.

     "Registrable Securities" shall mean, with respect to any Registration,  all
Shares held by Selling Shareholders participating in such Registration, provided
that such term  shall not  include  any such  Shares  after they are sold to the
public  pursuant to a Registration  Statement  under the Securities Act or after
they are sold in a private  transaction in which the registration rights granted
pursuant  to Article VI were not  assigned to the  purchasers  thereof or Shares
which are sold without  restriction  under Rule 144(k) of the  Securities Act or
any successor rule thereto.

     "Registration Expenses" shall have the meaning given in Section 6.7.

     "Registration   Statement"  shall  mean  any   registration   statement  of
GridAmerica  HoldCo that  complies  with  Section 5 of the  Securities  Act that
covers Registrable Securities or other Shares pursuant to the provisions of this
Agreement,  including the  Prospectus,  all amendments  and  supplements to such
registration statement,  including all post-effective  amendments,  all exhibits
and all material incorporated by reference in such registration statement.

     "Related Proceeding" shall have the meaning given in Section 12.2(c).

     "Removal Arbitration" shall have the meaning given in Section 12.3.

     "Removal Claim" shall have the meaning given in Section 12.3.

     "Removal Claimant" shall have the meaning given in Section 12.3(b).

     "Removal Dispute Parties" shall have the meaning given in Section 12.3(b).

     "Removal Notice" shall have the meaning given in Section 12.3(b).

     "Removal Respondent Party" shall have the meaning given in Section 12.3(b).

     "Representatives" shall have the meaning given in Section 13.9(a).

     "Request Period" shall have the meaning given in Section 6.4.

     "Required  Consent"  shall mean,  collectively,  each  Consent that must be
obtained,  satisfied  or made to permit  the  consummation  of the  transactions
contemplated  by this  Agreement and the other  Transaction  Agreements  and the
performance  by each of the  parties  to the  Transaction  Agreements  of  their
respective obligations hereunder and thereunder, but

                                       11

<PAGE>

excluding any Consent which may be required to perform an obligation  which,  by
the terms of the Transaction  Agreements,  will not arise and is not required to
be performed except upon the happening of one or more contingencies specified in
the Transaction Agreements.

     "Respondent Party" shall have the meaning given in Section 12.2(b).

     "SEC" shall mean the United States  Securities  and Exchange  Commission or
any successor agency.

     "Secondary  Demand  Registration"  shall have the meaning  given in Section
6.1(c)(1).

     "Section 3.1(a) Units" shall have the meaning given in Section 2.2(d).

     "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, the Exchange Act, and any
other applicable securities Laws.

     "Selling Shareholder" shall mean any holder of Shares who has exercised its
right to sell all or a portion  of those  Shares  pursuant  to the  registration
rights granted pursuant to Article VI.

     "SEOs" shall have the meaning given in Section 12.1.

     "Shares"  shall  mean  shares  of Class A Stock  or  Class B Stock.  "Super
Majority  of  Non-Managing  Members"  shall  have the  meaning  given in the LLC
Agreement.

     "Super Majority of Transmission Owners" shall mean (i) prior to the date on
which the Company  first issues Units in exchange for  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 owned by the Company. For purposes of the
above  vote,  the "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  an  Initial  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

                                       12

<PAGE>

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.

     "Third Party Recipient" shall have the meaning given in Section 13.9(c).

     "Transaction" shall have the meaning given in the Recitals hereof.

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

     "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 Section 2.1(e).

     "Underwritten   registration"  or  "underwritten  offering"  shall  mean  a
registration in which Shares of GridAmerica HoldCo are sold to an underwriter or
through an underwriter as agent for reoffering to the public.

     "Unit Exchange" shall have the meaning given in Section 6.13.

     "Unit Price" shall have the meaning given in Section 5.1(c).

     "Unit" shall have the meaning given in the LLC Agreement.

     "Willful Misconduct" shall have the meaning given in the LLC Agreement.

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

          (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;

                                       13

<PAGE>

          (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

           CREATION OF GRIDAMERICA ITC, MANAGING MEMBER; TRANSMISSION
                                  SERVICE DATE

     Section 2.1 Creation of Grid America ITC.

     (a)  Purpose  of  GridAmerica  ITC.  The  Company  shall,  on the terms and
subject to the conditions set forth in this Agreement,  the other ITC Agreements
and the MISO Agreements,  serve as an Independent  Transmission  Company for the
GridAmerica Transmission Facilities.

     (b)  Required  Consents.  From and after the  Effective  Date and until the
Transmission  Service Date, each Party shall: (1) take  commercially  reasonable
steps necessary and proceed  diligently and in good faith to obtain all Required
Consents   required  to  be  obtained  by  it  to  consummate  the  transactions
contemplated  hereby and by the other Transaction  Agreements which are intended
to be consummated  on the  Transmission  Service Date;  (2) provide  information
which may be requested by Governmental  Authorities in connection therewith; and
(3) cooperate with each other Party in obtaining all Required  Consents required
of such other Party to consummate the  transactions  contemplated  hereby and by
the other  Transaction  Documents  which are intended to be  consummated  on the
Transmission  Service Date. Each Party shall provide prompt notification to each
other  Party  when any  Required  Consent  referred  to in  clause  (1) above is
obtained, taken, made or given, as applicable, and shall advise each other Party
of any material, written, non-confidential communications (and, upon request and
unless  confidential  or precluded by Law,  provide  copies of any such material
communications  which are in writing) with any Governmental  Authority regarding
such Required Consents.

                                       14

<PAGE>

     (c)  Covenant. From and after the Effective Date and until the Transmission
Service Date,  each Party shall  exercise  commercially  reasonable  efforts and
proceed diligently and in good faith to satisfy the conditions to the occurrence
of the Transmission Service Date set forth in Section 2.1(d).

     (d)  Conditions  to  Transmission  Service  Date.  No later  than the fifth
Business Day following the  satisfaction or, in the case of clauses (1), (2) and
(3) below,  waiver by the Party  requiring  the  Required  Consents  referred to
therein, of each of the following conditions precedent, the Company shall notify
the  Midwest  ISO, in  writing,  of the  satisfaction  of all  applicable  legal
requirements, system readiness and systems integration necessary for the Midwest
ISO to assume  its  responsibilities  under the  Delineation  of  Functions  (as
defined in the MISO ITC  Agreement) as required by Section 4.1.3 of the MISO ITC
Agreement (the "Company's Notification of Readiness"):

          (1)  The  Commission  shall have issued one or more Final Orders which
     are no longer subject to possible rehearing and which, collectively, are an
     Approval Order.

          (2)  Each Party  requiring  the same shall have  received any Required
     Consent  under the  Public  Utility  Holding  Company  Act of 1935 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
     Final Orders 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 the Transaction  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.

          (3)  Each Party  requiring  the same shall have  received any Required
     Consent under any other  applicable  federal or state Law 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
     Final Orders 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 the Transaction  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.

          (4)  The  Make-Ready  Arrangements  shall be in place  and shall be in
     form and substance  reasonably  satisfactory to NGUSA and each  GridAmerica
     Company.

          (5)  The Midwest ISO and the Company shall have executed and delivered
     the MISO ITC Agreement,  which shall be reasonably satisfactory in form and
     substance to each GridAmerica Company.

                                       15

<PAGE>

          (6)  The Company shall have  delivered  evidence of a commitment  from
     one or more  insurance  companies to provide  insurance of the types and in
     the amounts as shall be agreed between NGUSA and the GridAmerica Companies,
     such coverages to be effective on and as of the Transmission Service Date.

          (7)  Each Party shall have delivered to each other Party a certificate
     of a  senior  officer,  such  certificate  to  be  in  form  and  substance
     satisfactory to each other Party,  certifying:  (i) that the Final Order of
     the Commission is acceptable as an Approval Order, (ii) that such Party has
     received  all  Required  Consents  required  of it and each  such  Required
     Consent is in form and substance  satisfactory to such Party,  (iii) in the
     case  of  each  GridAmerica  Company,  (x)  that  each  of  the  Make-Ready
     Arrangements   and  the  MISO  ITC  Agreement  is  in  form  and  substance
     satisfactory to such GridAmerica Company, (y) as to the satisfaction of all
     applicable legal  requirements,  system  readiness and systems  integration
     necessary  for the transfer to the Company of  Functional  Control over the
     Transmission Facilities of such GridAmerica Company and for the Midwest ISO
     to assume its  responsibilities  under the  Delineation  of  Functions  (as
     defined in the MISO ITC Agreement) as required by Section 4.1.3 of the MISO
     ITC  Agreement  and (z) such other  matters as the Company  may  reasonably
     request  to permit the  Company,  in  reliance  upon such  certificate,  to
     deliver the Company's Notification of Readiness to the Midwest ISO and (iv)
     in the case of the  Company,  that the  Company  and the  Midwest  ISO have
     agreed on procedures  for  implementing  the  Delineation  of Functions (as
     defined in the MISO ITC Agreement).

     (e) Occurrence of Transmission  Service Date. On the first day of the month
following  the  receipt by the  Midwest  ISO of the  Company's  Notification  of
Readiness and the receipt by the Company of written  notice from the Midwest ISO
of the satisfaction of all applicable legal  requirements,  system readiness and
systems integration necessary for the Midwest ISO to assume its responsibilities
under the  Delineation  of Functions  (as defined in the MISO ITC  Agreement) as
required  by  Section  4.1.3 of the  MISO  ITC  Agreement  (the  "Midwest  ISO's
Notification  of  Readiness"),  but no earlier than the fifth day  following the
date of the Midwest ISO's Notification of Readiness (such day is herein referred
to as the "Transmission Service Date"), the GridAmerica Companies shall transfer
Functional Control over the GridAmerica  Transmission  Facilities to the Company
and  the   Company  and  the  Midwest   ISO  shall   assume   their   respective
responsibilities  under the Delineation of Functions (as defined in the MISO ITC
Agreement)  over the  GridAmerica  Transmission  Facilities as  contemplated  by
Section  4.1.3  of  the  MISO  ITC  Agreement;   provided,   however,  that  the
Transmission  Service Date shall be postponed and shall not occur (i) unless and
until the Midwest ISO shall, in  consideration  of the Make-Ready  Arrangements,
have  made (x) 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 (y) a one-time  payment to reimburse the GridAmerica  Companies
for their  actual  costs  (including  appropriately  allocated  internal  costs)
incurred  in the  development  of  Alliance  RTO,  such  payments  to be made as
directed  by the  Company,  (ii)  unless  and until the  Midwest  ISO shall have
refunded 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) and (iii) if there shall then be in effect any Order or
Law  restraining,  enjoining

                                       16

<PAGE>

or otherwise  prohibiting or making illegal the consummation of the transactions
contemplated by the Transaction  Agreements.  Anything in this Section 2.1(e) to
the contrary  notwithstanding,  the aggregate  amount required to be paid by the
Midwest ISO pursuant to clause (i) above shall not exceed $36,200,000.

     Section 2.2. The Initial Member; Term and Removal.

     (a)  The Initial Member.  The Parties  acknowledge  that the Initial Member
has been appointed  Managing  Member of the Company,  and agree that the Initial
Member shall serve in such capacity  pursuant to the terms of this Agreement and
the LLC Agreement.

     (b)  Term of Service.  Subject to  Sections  5.7 and  10.1(4),  the Initial
Member  shall  serve as the  Managing  Member  for the period  beginning  on the
Effective Date and ending on the fifth  anniversary of the Transmission  Service
Date (the "NGUSA  Management  Term").  The NGUSA  Management Term  automatically
shall be extended for successive  two-year  periods unless,  at least six months
before the last day of the then-current  NGUSA  Management Term,  either (i) the
Initial Member gives written  notice to the Company and each of the  GridAmerica
Companies  (an "NGUSA  Termination  Notice") or (ii) Members  holding at least a
majority of the  outstanding  Class A Units give  written  notice to the Initial
Member,  such other Persons as may be required  under the LLC Agreement and each
GridAmerica Company (a "Non-NGUSA  Termination  Notice"), to the effect that the
NGUSA Management Term shall not be so extended.

     (c)  Resignation.  The Initial  Member shall not resign as Managing  Member
and NGUSA shall not permit the Initial Member to resign as Managing Member other
than (i) by  causing  the  NGUSA  Management  Term to  expire  at the end of the
then-current term thereof through issuance of an NGUSA Termination  Notice, (ii)
as may be required by Section  10.1(d),  (iii) upon exercise of its  resignation
rights pursuant to Section 5.7, (iv) upon thirty (30) days prior written notice,
if as the result of a change in applicable  Law,  NGUSA or any of its Affiliates
is no  longer  able to meet  the  requirements  of the  Commission  for  being a
Non-Market  Participant or (v) upon sixty (60) days prior written notice, if, as
a result of a proposed transaction involving an acquisition of a company (or any
of its assets) which is not a member of the Midwest ISO or the  Southwest  Power
Pool  on the  date  of this  Agreement  by  NGUSA  or any of its  Affiliates  in
furtherance of NGUSA's transmission and distribution business strategy described
in Section  9.4(e),  NGUSA or the  Initial  Member is no longer able to meet the
requirements  of the  Commission  for  being a  Non-Market  Participant  and the
Commission does not accept such mitigation  measures as shall have been proposed
by NGUSA in  connection  with such  transaction  as is  contemplated  by Section
10.1(a),  provided,  however,  in the case of any  resignation  pursuant to this
clause  (v),  that  NGUSA  shall  have  paid  to  the  GridAmerica  Companies  a
resignation fee equal to (I) $7,000,000,  if such resignation  becomes effective
prior  to  the  first  anniversary  of  the  Transmission   Service  Date,  (II)
$5,250,000,  if  such  resignation  becomes  effective  on or  after  the  first
anniversary of the Transmission Service Date but prior to the second anniversary
of the Transmission Service Date and (III) $3,500,000 thereafter.

     (d)  Redemption  Rights Upon  Expiration  of NGUSA  Management  Term.  Upon

expiration of the NGUSA  Management  Term  following the delivery of a Non-NGUSA
Termination Notice with respect to which neither NGUSA or an Affiliated Investor
voted in favor,  NGUSA shall have the right, but not the obligation,  to require
the  Company  to  redeem

                                       17

<PAGE>

some or all of the Units which were purchased by Affiliated  Investors  pursuant
to Section  3.1(a)  ("Section  3.1(a)  Units")  (to the extent  still held by an
Affiliated  Investor)  at a price equal to the Fair Market Value of such Section
3.1(a) Units.  Notwithstanding the foregoing,  no Affiliated Investor shall have
the right to require the  redemption  of any 3.1(a)  Units which were  purchased
pursuant to Section  3.1(a)  after the second  anniversary  of the  Transmission
Service Date.

     (e)  Option In Respect of  Indemnity  Cap. If, in any  calendar  year,  the
GridAmerica  Companies  that are and/or were parties to the Operation  Agreement
(the  "Non-Divesting  GridAmerica  Companies")  have  paid  aggregate  indemnity
payments  pursuant to Section  4.2.4(c) of the Operation  Agreement  equal to or
greater  than  the  Indemnity  Cap,  and one or more  Non-Divesting  GridAmerica
Companies who, among them, own  Transmission  Facilities that are subject to the
Functional  Control of the Company  pursuant to the Operation  Agreement  having
aggregate  Net Plant of at least 66.67% of the aggregate Net Plant of all of the
Transmission  Facilities owned by the Non-Divesting  GridAmerica  Companies that
are subject to the Functional  Control of the Company do not, within twenty (20)
days of a written request from NGUSA,  agree to waive in writing the application
of the Indemnity Cap, then NGUSA shall have the right,  but not the  obligation,
upon  twenty (20) days prior  written  notice to the  Non-Divesting  GridAmerica
Companies  to  require  the  Non-Divesting  GridAmerica  Companies  jointly  and
severally  to  purchase  from the  holder  thereof,  the  right to  receive  any
distributions  in respect of the Section  3.1(a)  Units,  but not  including any
voting or other rights associated with such Units (the  "Distribution  Rights"),
for an aggregate  purchase  price  payable in cash equal to that portion of such
holder's  Capital  Account  represented by such Section 3.1(a) Units;  provided,
however,  that, with respect to any Non-Divesting  GridAmerica Company that is a
subsidiary  of a registered  holding  company under the Public  Utility  Holding
Company Act of 1935, the transfer of Distribution  Rights to such  Non-Divesting
GridAmerica  Company  (but not the  joint  and  several  obligation  to make the
payments as described above) shall be expressly  conditioned upon the receipt of
all required  consents and approvals of the SEC under that statute.  The written
request from NGUSA shall  specify the Capital  Account of each holder of Section
3.1(a)  Units and provide  reasonable  detail as to the changes in such  Capital
Account  since the purchase of the Section  3.1(a) Units.  If any  Non-Divesting
GridAmerica Company fails to purchase its share of the Distribution  Rights, the
other  Non-Divesting  GridAmerica  Companies  shall be required to purchase such
share and shall be  subrogated  to rights of the holders of the  Section  3.1(a)
Units  against  such  non-performing   Non-Divesting  GridAmerica  Company.  The
Distribution Rights purchased by the Non-Divesting  GridAmerica  Companies shall
be assigned to the  Non-Divesting  GridAmerica  Companies in proportion to their
payments therefor.

          (f)  Rights of the Company Upon Expiration of NGUSA Management Term.

               (1)  If the Initial  Member ceases to be the Managing  Member for
          any reason,  the Company shall have the right, but not the obligation,
          to either (i) acquire 100% of the outstanding  Equity Interests of the
          Initial  Member or 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 the
          Managing  Member or (ii) may 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 2.2 (f) by  delivering  written

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<PAGE>

          notice to NGUSA and the Initial  Member  within  sixty (60) days after
          the date on which the Initial Member ceases to be the Managing Member.

               (2)  If the  Company  elects to acquire the Equity  Interests  or
          assets and liabilities of the Initial  Member,  NGUSA 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 NGUSA and the seller of such Equity Interests shall
          be  required  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. If NGUSA and the
          Company do not agree on the Net Book Value of the Initial Member,  the
          Net Book Value shall be finally  determined  by the Agreed  Accounting
          Firm. The  acquisition of the Equity Interest 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.

               (3)  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 Interest in the Initial Member, 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  60-day  period  referred  to in  Section
          2.2(f)(1),   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  2.2(f)(1),  neither  NGUSA  nor  any  NGUSA
          Affiliate  (other  than the  Company)  shall  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 NGUSA shall not permit any NGUSA Affiliate 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 neither of
          NGUSA nor any NGUSA  Affiliate  (other than the  Company)  shall 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  Employees) who receives a Qualifying  Offer for a period
          of one year after the date such Qualifying  Offer is made. The Company
          shall provide NGUSA

                                       19

<PAGE>

          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 it
          ceases to be Managing Member.

               (4)  In the event that there are  holders of Class A Units  other
          than NGUSA and/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 this Section 2.2(f).  In the event
          that  there are no holders  of Class A Units  other than NGUSA  and/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 later than  fifteen  (15) days
          after the receipt by the GridAmerica Companies of an NGUSA Termination
          Notice,  a  Non-NGUSA  Termination  Notice or the  notice  of  removal
          delivered  pursuant to Section 6.1(b) of the LLC Agreement,  represent
          the  interests of the Company in  connection  with the exercise by the
          Company of the rights  contained in this Section  2.2(f) to the extent
          permitted by applicable Law.

                                   ARTICLE III

                      PURCHASE OF UNITS BY NGUSA AFFILIATES

     Section 3.1 Initial Purchase of Units and Purchase of Units to Fund Capital
Expenditures and Working Capital Needs.  Subject to the limitations set forth in
Section 3.3, NGUSA shall (or in the case of Section 3.1(b), may at its election)
cause the Initial  Member  and/or one or more  Affiliated  Investors to purchase
Units in the Company as follows:

     (a)  On the  Effective  Date,  NGUSA  shall  cause  the  Initial  Member to
purchase  1,000  Units for a total  purchase  price of  $50,000.  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 System-Wide Capital
Expenditures or for additional  working capital purposes,  NGUSA shall cause one
or more  Affiliated  Investors  to  purchase  additional  Units in the amount so
determined by the Initial Member; provided, however, that the maximum commitment
of NGUSA and of any Affiliated  Investors  pursuant to this Section 3.1 (a) (the
"Maximum Section 3.1 (a) Commitment")  shall be $25,000,000.  If, at the time of
the purchase of any Units pursuant to this Section 3.1(a), the Initial Member is
the only Member of the Company, the purchase price for Units shall be $50.00 per
Unit  and,  otherwise,  shall  be  equal  to the  Fair  Market  Value  of a Unit
determined pursuant to Article VII.

     (b)  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, NGUSA may, at its election cause one or more Affiliated Investors to
purchase  additional Units in the amount so determined by the

                                       20

<PAGE>

Initial Member. If at the time of purchase of any Units pursuant to this Section
3.1(b), the Initial Member is the only Member of the Company, the purchase price
for Units  shall be $50.00 per Unit and,  otherwise,  shall be equal to the Fair
Market Value of a Unit determined pursuant to Article VII.

     Section 3.2 Purchase of Units by Affiliated Investors Upon Contributions of
GridAmerica Transmission Facilities.

     (a)  Subject to the limitations set forth in Sections 3.2(c) and 3.3, NGUSA
shall cause one or more  Affiliated  Investors to purchase  Units in the Company
upon the exercise by a GridAmerica Company of a Put Right or the purchase by the
Company of Transmission Facilities from a GridAmerica Company as follows:

          (1)  At each  Put  Closing,  a  number  of  Units  equal  to 5% of the
     Pro-forma  Number of Put Units at a  purchase  price per Unit  equal to the
     Unit Price;

          (2)  At the closing of each purchase of Transmission Facilities from a
     GridAmerica Company other than NGUSA or an Affiliated Investor (whether for
     cash or Units or both),  Units  having a purchase  price equal to 5% of the
     Fair  Market  Value of the  Transmission  Facilities  so  purchased  by the
     Company; and

          (3)  At the option of either NGUSA or the Putting  GridAmerica Company
     (such option being referred to as the "Cash Option"),  a number of Units up
     to an additional  15% (or such higher  percentage as to which NGUSA and the
     Putting  GridAmerica  Company  may  agree) of the  Pro-forma  Number of Put
     Units,  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 such  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.

The per Unit price for any Units purchased pursuant this Section 3.2(a) shall be
equal to the Unit Price.

     (b)  If either the Putting GridAmerica Company or NGUSA 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 Pro-forma  Number of Put Units to which the
exercise  relates.  Notwithstanding  anything to the contrary  contained in this
Section 3.2(b),  if NGUSA 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
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  by  multiplying  the aggregate  tax basis of all such  Transmission
Facilities by the  percentage of the Pro-forma  Number of Put Units to which the
Cash Option relates), the Putting

                                       21

<PAGE>

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)  Notwithstanding  anything  in  this  Agreement  to  the  contrary,  no
Affiliated  Investor  shall have any  obligation to purchase  Units  pursuant to
Section  3.2(a)  (i) if (A) the sum of (x) the  aggregate  amount  of all  Units
purchased by any Affiliated Investor pursuant to Section 3.2(a) and (y) the Fair
Market Value (determined at the time the Transmission Facilities in question are
contributed  to the Company  pursuant to Article V of all capital  contributions
comprising  Transmission  Facilities  made by the  Initial  Member and any NGUSA
Affiliates would exceed (B) the difference  between (x) $500,000,000 and (y) the
amount of the  aggregate  Capital  Contributions  of the Initial  Member and any
Affiliated Investor made pursuant to Section 3.1; provided,  however, that there
shall be excluded from such  calculation the amount,  if any, of the Excess Cash
Amount or (ii) if all Affiliated  Investors  would have,  after giving effect to
the purchase of Units  pursuant to Section 3.2(a) and the issuance of Units to a
Putting  GridAmerica  Company in connection  with exercise of the Put Right,  an
aggregate  Percentage Interest in the Company in excess of twenty percent (20%);
provided,  further,  however, that there shall be excluded from such calculation
Section 3.1(a) Units and any Units issued in respect of the Excess Cash Amount.

     (d)  The  provisions of this Section 3.2 shall not apply to the exercise of
a Put Right by any NGUSA Affiliate.

     Section 3.3 Additional Limitations on Commitment.  Notwithstanding anything
contained in Sections 3.1 or 3.2 to the contrary, but subject to Section 3.2(c):

     (a)  NGUSA shall have no  obligation  to cause any  Affiliated  Investor to
purchase Units pursuant to this Agreement having an aggregate  purchase price in
excess of the sum of $500,000,000 and the Excess Cash Amount.

     (b)  NGUSA shall have no  obligation  to cause any  Affiliated  Investor to
purchase any Units in  connection  with the exercise of the Put Right (i) during
the  final  six (6)  months  of the  initial  NGUSA  Management  Term if a NGUSA
Termination Notice or a Non-NGUSA Termination Notice has been delivered pursuant
to Section 2.2(b),  (ii) if NGUSA  exercises its resignation  rights pursuant to
Section  5.7,  or (iii) at any time after the  Initial  Member  ceases to be the
Managing  Member;  provided,  however,  that the  obligation  to purchase  Units
pursuant to Section  3.2(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 (i) above,  the final six months of the initial NGUSA  Management
Term or (y) in the case of clause (iii) above,  the date that the Initial Member
ceases to be the Managing Member.

     Section 3.4 Failure to Achieve  Transmission  Service  Date. If the Initial
Member  resigns or is  removed  prior to the  Transmission  Service  Date,  each
GridAmerica Company shall, within thirty (30) days of receipt of notice from the
Initial Member, pay to the Company such GridAmerica  Company's pro rata share of
all capital  contributions made by the Initial Member or any Affiliated Investor
pursuant to Section 3.1(a).  The obligation of each

                                       22

<PAGE>

GridAmerica  Company to pay its pro rata share of such amounts  shall be several
and not joint and several,  and no GridAmerica Company shall be obligated to pay
to the Company any portion of the pro rata share of another  GridAmerica Company
of such amount.  The Initial Member,  as Managing  Member of the Company,  shall
cause the Company to redeem for their  original  purchase  price,  the number of
Units  purchased by the Initial  Member or any Affiliated  Investor  pursuant to
Section 3.1(a) (the proceeds from which were used for the purposes  contemplated
by Section  3.1(a)),  having an original  purchase  price equal to the aggregate
amount received by the Company from the GridAmerica  Companies  pursuant to this
Section  3.4.  For  purposes  of this  Section  3.4,  the pro  rata  share of an
GridAmerica Company shall be equal to the product of the total amount of capital
contributions  made pursuant to Section  3.1(a)  multiplied  by a fraction,  the
numerator of which is the Net Plant of such GridAmerica  Company's  Transmission
Facilities  which are to be subject  to the  Functional  Control of the  Company
pursuant  to the  Operation  Agreement  and  the  denominator  of  which  is the
aggregate Net Plant of all GridAmerica Companies'  Transmission Facilities which
are to be  subject to the  Functional  Control of the  Company  pursuant  to the
Operation Agreement.

                                   ARTICLE IV

                                   EXCLUSIVITY

     Section  4.1  Exclusivity  Period.  If a  GridAmerica  Company  proposes to
consider  soliciting  an  Exclusivity  Transaction  or is  approached by another
Person regarding an Exclusivity  Transaction during the Exclusive Period,  prior
to  engaging  in  substantive  negotiations  with  respect  to such  Exclusivity
Transaction with any other Person,  such GridAmerica  Company shall first notify
NGUSA of its intention to enter into  substantive  negotiations  regarding  such
transaction. Upon receipt of such notice, NGUSA shall have an exclusive right to
make a proposal to such GridAmerica  Company for the purchase of the GridAmerica
Transmission  Facilities which are the subject of such Exclusivity  Transaction,
subject only to NGUSA's execution and delivery to such GridAmerica  Company of a
commercially  reasonable  confidentiality  agreement  to  be  proposed  by  such
GridAmerica  Company (which shall not contain standstill  provisions).  Promptly
upon execution of such a  confidentiality  agreement,  such GridAmerica  Company
will provide  NGUSA with access to business,  financial,  and other  information
relating to such GridAmerica Transmission Facilities in the same form and to the
extent it intends to provide such information to other  prospective  buyers.  If
NGUSA does not execute or deliver  such a  confidentiality  agreement  within 10
days of receipt,  it will be deemed to have waived its rights under this Section
4.1.  During  the  60-day  period  following  the date on  which  NGUSA is first
provided access to such  information,  and in order to allow NGUSA the option to
make  an  offer  to such  GridAmerica  Company  to  purchase  such  Transmission
Facilities,  such  GridAmerica  Company  shall not further  discuss or negotiate
with, or otherwise  provide  information  regarding  any  potential  Exclusivity
Transaction  to, any Person other than NGUSA.  NGUSA shall have no obligation to
make an offer to purchase  such  Transmission  Facilities  and such  GridAmerica
Company  shall have no  obligation  to  consider,  negotiate  or accept any such
offer,  if made.  If NGUSA and the  GridAmerica  Company do not agree to such an
acquisition  by NGUSA or an NGUSA  Affiliate  during  such 60-day  period,  such
GridAmerica  Company shall have one (1) year thereafter to enter into definitive
agreements in respect of any Transfer of such Transmission  Facilities.  If such
GridAmerica Company has not

                                       23

<PAGE>

so entered into definitive  agreements,  during such one (1) year period,  NGUSA
shall  have the  rights  provided  under this  Section  4.1 with  respect to any
further Exclusivity Transaction.

                                    ARTICLE V

                         PUT OF TRANSMISSION FACILITIES

     Section 5.1 Put Right in Favor of GridAmerica  Companies.  Each GridAmerica
Company  shall  have the  right,  but not the  obligation  (a "Put  Right"),  to
contribute  to  the  Company   GridAmerica   Transmission   Facilities  of  such
GridAmerica Company in exchange for Units, and to the extent provided in Section
3.2(a)(2),  for cash,  with an  aggregate  Fair  Market  Value equal to the Fair
Market Value of the Transmission  Facilities being so contributed (determined as
of the date set forth below) on the following terms and subject to the following
conditions:

     (a)  A GridAmerica  Company  desiring to exercise its Put Right (a "Putting
GridAmerica  Company")  shall do so by providing at least 270 days prior written
notice (the "Put Notice") to NGUSA,  the Managing  Member,  the Company and each
other  GridAmerica  Company.   Such  notice  shall  designate  the  Transmission
Facilities which the Putting  GridAmerica  Company proposes to contribute to the
Company  through  exercise  of its  Put  Right  (the  "Contributed  Transmission
Facilities").  No Put  Notice may be given,  and no Put Right may be  exercised,
before the date eighteen (18) months after the  Transmission  Service Date.  The
exercise  by a Putting  GridAmerica  Company  of a Put  Right  (i) shall  become
irrevocable on the thirtieth  (30th) day after  determination  of the Unit Price
and the Fair Market Value of the Contributed Transmission Facilities and (ii) in
the  case  of the  exercise  of a Put  Right  following  an IPO  Notice,  may be
conditioned  upon the successful  completion of the IPO to which such IPO Notice
relates.

     (b)  Promptly  upon  exercise  by a Putting  GridAmerica  Company  of a Put
Right, the Managing Member and such Putting  GridAmerica Company shall negotiate
the terms and conditions upon which the Contributed Transmission Facilities will
be contributed to the Company,  including the scope of any  representations  and
warranties  that the  Putting  GridAmerica  Company  will make in respect of the
Contributed   Transmission   Facilities,   the  need  for  any   third-party  or
Governmental   consents   therefor,   and  the  scope  and  limitations  on  any
indemnification  obligations in respect thereof. In addition, if required by the
Public Utility  Holding Company Act of 1935 and the rules of the SEC promulgated
thereunder, the obligation of such Putting GridAmerica Company to contribute its
Contributed Transmission Facilities to the Company in exchange for Units and the
obligation  of the Company to issue  Units in  consideration  therefor  shall be
expressly  conditioned on the receipt of all required  consents and approvals of
the SEC under such Act. Such terms and conditions shall be set forth in an asset
contribution  agreement  (the "Put  Agreement")  which  shall be executed by the
Putting GridAmerica  Company and the Company.  Although the terms and conditions
of each Put Agreement are subject to  negotiation  between the parties  thereto,
the specific  terms and  conditions  of each Put  Agreement  shall,  pursuant to
Section 5.1(c), be taken into consideration for purposes of determining the Fair
Market Value of the Contributed Transmission Facilities. The Putting GridAmerica
Company shall be required to convey the Contributed Transmission Facilities free
and  clear  of  all  Encumbrances  securing  any  indebtedness  of  the  Putting

                                       24

<PAGE>

GridAmerica  Company or any  Affiliate  thereof,  except as the  Company and the
Putting GridAmerica Company may otherwise agree in the Put Agreement.

     (c)  Upon  completion of the  negotiations of the Put Agreement (or earlier
if the Company and the Putting  GridAmerica Company agree), the Company and such
Putting  GridAmerica Company immediately shall proceed to determine the per Unit
Fair Market  Value of the  outstanding  Units  (such per Unit Fair Market  Value
being  referred  to as the  "Unit  Price")  and the  Fair  Market  Value  of the
Contributed Transmission  Facilities,  both to be determined as of a common date
to be agreed to by the Company and such Putting GridAmerica  Company. The number
of Units that the Putting  GridAmerica Company shall be entitled to receive upon
exercise  of its Put  Right  assuming  that no Cash  Option  is  exercised  (the
"Pro-forma  Number of Put Units") shall be equal to the Fair Market Value of the
Contributed  Transmission  Facilities  divided by the Unit Price. In determining
the Fair Market Value of the Contributed Transmission Facilities,  the terms and
conditions  of  the  proposed  Put   Agreement,   including  the  scope  of  any
representations  and  warranties   contained  therein,  the  scope  of  and  any
limitations on any indemnity  obligations,  the presence of any  Encumbrances on
the Contributed  Transmission Facilities and matters described in Section 5.1(e)
shall be expressly  taken into account.  In  determining  the Unit Price and the
Pro-forma  Number of Put  Units,  the  Putting  GridAmerica  Company  shall have
diligence  rights  with  respect  to the  Company,  and the  Company  shall have
diligence rights with respect to the Contributed  Transmission Assets, customary
for merger and acquisition  transactions;  provided,  however,  that neither the
Putting  GridAmerica  Company nor the  Company  shall be  obligated  to disclose
information  subject to confidentiality  provisions in favor of third parties or
competitively  sensitive  commercial  information  of  a  kind  not  customarily
disclosed  in  due   diligence  in  connection   with  merger  and   acquisition
transactions.  The  Company  and  the  Putting  GridAmerica  Company  shall  use
commercially   reasonable   efforts  to  obtain  a  waiver  of  any   applicable
confidentiality  restrictions,  and in any event,  to the extent  feasible,  all
information described in the proviso to the immediately preceding sentence which
is not disclosed shall be disclosed in summary or redacted form.

     (d)  The Putting  GridAmerica  Company shall have the right to withdraw its
Put Notice  without  prejudice to its right to issue a subsequent Put Notice (i)
within thirty (30) days after  determination of the Unit Price and the Pro-forma
Number of Put Units or (ii) in the case of the exercise of a Put Right following
an IPO  Notice,  if  such  IPO is not  successfully  completed.  In the  case of
withdrawal of a Put Notice pursuant to clause (i) of the  immediately  preceding
sentence,  the Putting  GridAmerica  Company  shall,  within thirty (30) days of
receipt of a written  request  therefor from the Company,  reimburse the Company
for its reasonable,  out-of-pocket costs and expenses incurred in respect of the
withdrawn Put Notice, including,  without limitation,  the costs and expenses of
the Company's  Interested  Party  Valuation Firm and the Company's  share of the
costs and expenses of any Neutral  Valuation Firm. Any request for reimbursement
pursuant to this Section  5.1(d) shall itemize in reasonable  detail all amounts
for which reimbursement is requested,  and any disputes as to such amounts shall
be resolved by the dispute resolution procedures set forth in Article XII.

     (e)  Notwithstanding  anything contained in this Agreement to the contrary,
no Putting GridAmerica Company shall have any right to exercise a Put Right with
respect  to, and the Company  shall have no  obligation  to accept,  Contributed
Transmission Facilities which do not meet the following requirements:

                                       25

<PAGE>

          (1)  The Contributed  Transmission Facilities either constitute all of
     the Transmission  Facilities of the Putting  GridAmerica Company over which
     the  Company  exercises   Functional  Control  pursuant  to  the  Operation
     Agreement or constitute an Operational Segment thereof.

          (2)  The  Contributed  Transmission  Facilities  taken as a whole (and
     taking into account any  contractual  arrangements  between the Company and
     the  Putting  GridAmerica  Company),  include all of the  facilities,  real
     estate interests (including easements, rights of way and rights of access),
     equipment,  contract rights,  intellectual property rights and other assets
     (including  access to  services  and  personnel)  reasonably  necessary  to
     operate the  Contributed  Transmission  Facilities as part of an integrated
     system with the other GridAmerica Transmission  Facilities.  In furtherance
     thereof, the Company and the Putting GridAmerica Company shall negotiate in
     good  faith  as  to  (i)  the  identity  of  the  Contributed  Transmission
     Facilities,  (ii) the terms on which any necessary  services  provided on a
     contractual  basis  will be made  available,  and (iii) the  allocation  of
     employees  of the  Putting  GridAmerica  Company  and/or the  provision  of
     employees on a contract basis. In determining the assets and services to be
     included in the Contributed Transmission Facilities, the long term business
     and operational  plans of the Company and the Putting  GridAmerica  Company
     and the cost of providing  replacement  facilities  and  services  shall be
     considered.  All  services to be provided by contract  shall be provided on
     commercially  reasonable terms, but the Putting  GridAmerica  Company shall
     not be obligated to provide any services at less than cost.

     (f)  If the Company and the Putting GridAmerica Company are unable to agree
as to any matters relating to the exercise by a Putting  GridAmerica  Company of
its Put Right,  including,  without  limitation,  the  Contributed  Transmission
Facilities,  the terms of the Put  Agreement and the terms on which any services
are to be  provided,  such  matters  shall be  resolved  pursuant to the dispute
resolution  procedures  set  out  in  Article  XII;  provided,   however,  that,
notwithstanding  any  determination  of such matters  pursuant to Article XII, a
Putting GridAmerica Company may, even though the Unit Price and Pro-forma Number
of Put Units have not been  determined,  withdraw  its Put  Notice,  pursuant to
Section 5.1(d).

     (g)  All Put  Rights  shall  terminate  at 5:00  p.m.  New York time on the
earlier of (i) the fourth (4th)  anniversary of the Transmission  Services Date,
or (ii) if the IPO Notice is given  before the fourth (4th)  anniversary  of the
Transmission Service Date, the date which is 300 days after the date of such IPO
Notice;  provided,  however, that Put Rights shall be continued after the fourth
(4th) anniversary of the Transmission Services Date with respect to Transmission
Facilities  as to which a Put  Notice  has been  given on or prior to the fourth
(4th)  anniversary  of the  Transmission  Services  Date.  No Put  Right  may be
exercised unless, at the time of exercise,  the Putting  GridAmerica  Company is
party to the Operation Agreement.

     Section 5.2 Put Rights of NGUSA Affiliates. If any NGUSA Affiliate acquires
GridAmerica  Transmission  Facilities  or, while the Initial  Member is Managing
Member,  acquires  non-GridAmerica  Transmission Facilities which are capable of
being  operated  as part of a single  integrated  transmission  system  with the
GridAmerica Transmission Facilities, such NGUSA Affiliate shall have a Put Right
with respect to such Transmission  Facilities,  which Put Right shall be subject
to all of the terms and conditions of Article V.

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<PAGE>

     Section 5.3 Put Closing.  The closing of the  contribution  of  Contributed
Transmission  Facilities  pursuant  to the  exercise  of a Put Right  (each such
closing, a "Put Closing"),  shall occur on a Business Day, shall take place at a
location mutually agreed by the Putting  GridAmerica Company and the Company and
shall be  consistent  with the  requirements  set  forth in the  applicable  Put
Agreement,  including any conditions  precedent to closing contained in such Put
Agreement. No Put Closing shall occur less than 270 days after the date on which
the Put Right in respect  thereof  was  exercised,  unless the  Company  and the
Putting  GridAmerica  Company  otherwise agree. The deliveries by the parties at
the Put Closing  and the  conditions  precedent  to the Put  Closing,  including
necessary consents and approvals of third parties and Governmental  Authorities,
shall be set forth in the applicable Put Agreement; provided, however, that at a
minimum:

     (a)  At each Put Closing, the Putting GridAmerica Company shall execute and
deliver,  or cause to be executed and delivered,  to the Company,  the following
documents and agreements:

          (1)  assignments,  bills of sale,  warranty deeds, and other documents
     assigning the applicable  Transmission  Facilities to the Company, free and
     clear  of  all  Encumbrances  securing  any  indebtedness  of  the  Putting
     GridAmerica Company or any Affiliate thereof, except as the Company and the
     Putting GridAmerica Company may otherwise agree in the Put Agreement; and

          (2)  unless  such  Putting  GridAmerica  Company  or its  designee  is
     already a Member of the Company,  such  documentation as may be required by
     the LLC Agreement to become a Member of the Company.

     (b)  At  each  Put  Closing,  the  Company  shall  deliver  to the  Putting
GridAmerica Company the following documents:

          (1)  an assumption agreement;

          (2)  evidence  of  appropriate  entry of the Units to be issued to the
     Putting  GridAmerica  Company upon exercise on the Company's  Unit Registry
     (as defined in the LLC Agreement); and

          (3)  a Favorable Opinion of Counsel to the effect that such Units have
     been  duly  and  validly  issued  by the  Company  and are  fully  paid and
     non-assessable.

     Section 5.4 Put Units  Unregistered.  No Units delivered at the Put Closing
will have been registered under the Securities Act or under any state securities
laws,  and such units will be offered  and sold in reliance on federal and state
exemptions for transactions not involving a public offering of securities.

     Section 5.5 Put Rights Transferable. The Put Rights provided in Section 5.1
shall be freely  assignable to any Person that acquires all, or any  Operational
Segment of, GridAmerica Transmission Facilities from any GridAmerica Company, so
long  as  such  acquiring  party  executes  this  Agreement  and  the  Operation
Agreement.

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<PAGE>

     Section 5.6 Publicly Traded  Partnership.  Notwithstanding  anything to the
contrary  herein,  no issuance of Units may be made to any Person if as a result
of such  transfer  the Company  would have more then 100 Members  determined  in
accordance with Treasury Regulation Section 1.7704-1(h)(1) and (3).

     Section 5.7 Certain Resignation and Withdrawal Rights.

     (a)  Rights  Upon  Certain  Exercises  of Put  Rights.  If the first of the
GridAmerica  Companies and any NGUSA Affiliates to exercise a Put Right delivers
its Put  Notice  prior to April 30,  2005,  the  Initial  Member  may  resign as
Managing  Member (and upon the  effective  date of such  resignation,  the NGUSA
Management Term shall expire),  and each  GridAmerica  Company may withdraw from
the GridAmerica ITC and terminate its participation under this Agreement and the
Operation  Agreement (as provided in Section 5.1(a) of the Operation  Agreement)
by providing  all of the other Parties  written  notice of such  resignation  or
withdrawal within thirty (30) days of receipt of such Put Notice.

     (b)  Rights Upon Failure to Exercise Put Rights.  If no Put Notice has been
received  prior to March 31,  2005,  the  Initial  Member may resign as Managing
Member (and upon the effective date of such  resignation,  the NGUSA  Management
Term shall expire),  and each GridAmerica  Company may withdraw from GridAmerica
ITC and  terminate  its  participation  under this  Agreement  and the Operation
Agreement  (as  provided  in  Section  5.1(b)  of the  Operation  Agreement)  by
providing  all of the  other  Parties  written  notice  of such  resignation  or
withdrawal within the thirtieth (30th) month following the Effective Date.

     (c)  Effect of  Resignation or  Withdrawal.  Any  resignation or withdrawal
pursuant to this  Section 5.7 shall be effective on the first day of the seventh
month  following  the month in which  notice  thereof is  delivered  pursuant to
Section 13.1.  Upon receipt of any notice of resignation or withdrawal  pursuant
to this Section 5.7, the other Parties shall have the right,  exercisable within
thirty (30) days of receipt of such notice,  to resign or withdraw,  as the case
may be. Without the prior written  consent of NGUSA,  no part of the GridAmerica
Transmission  Facilities  of any  GridAmerica  Company that  withdraws  from the
GridAmerica  ITC shall be  included  in or be managed  by an ITC that  exercises
functions similar in scope to the function exercised by the Company with respect
to the GridAmerica Transmission Facilities (determined after taking into account
the functions  exercised by the Midwest ISO under the MISO ITC  Agreement) for a
period of one (1) year after the effective  date of such  GridAmerica  Company's
withdrawal,  provided,  however, that the foregoing prohibition shall not apply,
if the Initial  Member  exercised  its  resignation  rights  pursuant to Section
5.7(a)  or (b)  prior to the date of any such  withdrawal.  Notwithstanding  the
foregoing,  unless the Commission shall otherwise approve,  no withdrawal by any
GridAmerica  Company from  GridAmerica ITC pursuant to this Section 5.7 shall be
or become effective  unless and until such GridAmerica  Company becomes a member
of the Midwest ISO as contemplated by Section 2.3 of the MISO ITC Agreement.

                                       28

<PAGE>

                                   ARTICLE VI

                               REGISTRATION RIGHTS

                     Section 6.1 Demand Registration Rights.

     (a)  Demand  for IPO.  At any  time  after  the  third  anniversary  of the
Transmission  Service  Date,  NGUSA (on behalf of itself  and/or any  Affiliated
Investor) or GridAmerica  Companies holding not less than 30% of the outstanding
Units shall be entitled to request in writing,  that the Company effect the Unit
Exchange and effect the  registration  under the  Securities  Act of Registrable
Securities of  GridAmerica  HoldCo in accordance  with this Section 6.1 (an "IPO
Demand  Registration").  Any such request for an IPO Demand  Registration  shall
specify the Members desiring to participate  therein,  the amount of Registrable
Securities  proposed to be sold by each such Member,  and the intended method of
disposition  thereof.  Upon receiving a request for an IPO Demand  Registration,
the  Company  shall  cause  GridAmerica  HoldCo to  prepare  and file as soon as
practicable the documents  necessary to effect such IPO Demand  Registration and
shall use  commercially  reasonable  efforts  to cause  the same to be  declared
effective by the SEC as soon as  practicable.  Notwithstanding  anything in this
Section 6.1 to the contrary,  (i) the Company shall not be obligated to effect a
registration  under this  Section  6.1(a)  unless it is advised by a  nationally
recognized investment banking firm that the anticipated aggregate gross offering
price with respect thereto is expected to be equal to or exceed $250,000,000, or
despite  commercially  reasonable  efforts  to do so,  the  Company is unable to
obtain  the  listing  of the  Shares to be sold in the IPO on the New York Stock
Exchange or another comparable  national securities exchange on which securities
of major U.S.  issuers  engaged in the utility  industry  are  traded,  (ii) the
Company may delay the Unit Exchange and an IPO Demand Registration to a date not
later  than the fifth  anniversary  of the  Transmission  Service  Date if it is
advised by a nationally recognized investment banking firm that such delay would
be in the best interest of the Company and would  contribute to a successful IPO
and (iii) if all the Persons requesting the IPO Demand Registration determine to
attempt to qualify the Unit  Exchange  as a  tax-deferred  exchange  pursuant to
Section 351 of the Code, the Company and GridAmerica HoldCo may limit the number
of Shares to be sold by GridAmerica  Companies  participating  in the IPO if the
Company   determines   such   limitation   to  be  necessary  to  preserve  such
tax-treatment of the Unit Exchange.

     (b)  IPO Notice.  Upon receipt of an IPO Demand  Registration  request or a
determination  by the  Company  to effect an IPO,  the  Company  promptly  shall
provide NGUSA and all  GridAmerica  Companies with written notice of the request
or  determination  (the "IPO Notice") at least three hundred (300) days prior to
the filing of any  Registration  Statement  in respect of the IPO, and each such
notice shall inform NGUSA and each GridAmerica  Company that all outstanding Put
Rights will expire three hundred (300) days after the date of such notice unless
the IPO is not successfully completed.

     (c)  Demand Registration After IPO.

          (1)  At any time after the Initial Public  Offering,  NGUSA (on behalf
     of itself and/or any Affiliated Investor) and GridAmerica Companies holding
     among them not less than 15% of the aggregate Shares and Units  outstanding
     shall be entitled to

                                       29

<PAGE>

request in writing that  GridAmerica  HoldCo effect the  registration  under the
Securities  Act of  Registrable  Securities in accordance  with this Section 6.1
(each,  a  "Secondary  Demand  Registration").  Any such request for a Secondary
Demand  Registration  shall  specify  the  GridAmerica  Companies  and/or  NGUSA
Affiliates desiring to participate therein, the amount of Registrable Securities
proposed to be sold by each such Member,  and the intended method of disposition
thereof.   Upon  receiving  a  request  for  a  Secondary  Demand  Registration,
GridAmerica  HoldCo  shall  prepare  and file  within  forty-five  (45) days the
documents  necessary  to  effect  Secondary  Demand  Registration  and  will use
commercially  reasonable  efforts to cause the same to be declared  effective by
the SEC as soon  thereafter  as  practicable.  Notwithstanding  anything in this
Section 6.1 to the contrary, GridAmerica HoldCo shall not be obligated to effect
a Secondary Demand Registration unless it is advised by a nationally  recognized
investment banking firm that the anticipated aggregate gross offering price with
respect  thereto  would  equal or exceed  $75,000,000.  Any such  request  for a
Secondary  Demand  Registration  may be a request for a shelf  registration,  if
GridAmerica  HoldCo is eligible to use a shelf  registration at the time of such
request.

          (2)  Promptly  after  receipt  of a  request  for a  Secondary  Demand
     Registration,  GridAmerica  HoldCo shall provide NGUSA and each GridAmerica
     Company with written notice of such demand.

     (d)  Limitation on Demand  Registrations.  Notwithstanding  anything to the
contrary set forth in Section 6.1(c),  GridAmerica HoldCo shall not be obligated
to file a Registration Statement with respect to a Secondary Demand Registration
upon a request by a Person  under  Section  6.1(c),  if three  Secondary  Demand
Registrations  have become  effective  as specified  in Section  6.1(f)  (unless
GridAmerica  HoldCo is eligible to register the  Registrable  Securities on Form
S-3, in which case NGUSA and the  GridAmerica  Companies shall have an unlimited
right to require  such  registrations).  If, in  connection  with any  Secondary
Demand  Registration,  the Shares to be included by any Selling  Shareholder  in
such registration are reduced by the Approved  Underwriter by one-third (1/3) or
more of the amount of Shares such Selling  Shareholders  requested to include in
such registration, such registration shall not constitute a Demand Registration.

     (e)  Participation in Demand.  Each GridAmerica Company and each Affiliated
Investor  shall  have  thirty 30 days  after the  receipt  of notice of a Demand
Registration  to  elect  to  participate  in  the   registration  as  a  Selling
Shareholder by providing the Company and GridAmerica  HoldCo with written notice
of such  election,  which notice shall  indicate the number of Shares which such
Person  desires  to  include in the  registration.  The right of such  Person to
participate in the registration shall be subject to Section 6.3.

     (f)  Effective Demand  Registration.  A registration shall not constitute a
Demand  Registration  until the Registration  Statement has become effective and
remains continuously effective for the lesser of (i) the period during which all
Registrable  Securities  registered in the Demand Registration are sold and (ii)
one hundred eighty (180) days; provided,  however, that a registration shall not
constitute  a Demand  Registration  if (x) after such  Demand  Registration  has
become  effective,  such registration or the related offer, sale or distribution
of  Registrable  Securities  thereunder  is  interfered  with by any stop order,
injunction  or other  order  or

                                       30

<PAGE>

requirement  of the SEC or  other  Governmental  Authority  for any  reason  not
attributable to any Selling  Shareholder and such interference is not thereafter
eliminated  or (y) the  conditions  to  closing  specified  in the  underwriting
agreement,  if any, entered into in connection with such Demand Registration are
not  satisfied  or  waived,  other  than by reason of a failure  by any  Selling
Shareholder;  provided,  further,  that if a  registration  constitutes a Demand
Registration,  notwithstanding  the  operation  of  clause  (x) of this  Section
6.1(f),  then the period of effectiveness  provided for in the first sentence of
this  Section  6.1(f)  shall be  extended  for the same amount of time such stop
order, injunction or other order or requirement existed.

     (g)  Underwriting   Procedures.   If  the  Selling  Shareholders  demanding
registration so elect, the offering of Registrable  Securities pursuant to up to
a  maximum  of  three  Demand  Registrations  shall  be in  the  form  of a firm
commitment  underwritten  offering, and the managing underwriter or underwriters
selected  for  such  offering  shall be the  Approved  Underwriter  selected  in
accordance with Section 6.1(h). With respect to any firm commitment underwritten
offering,  GridAmerica  HoldCo  shall  enter  into a  reasonable  and  customary
underwriting   agreement  with  the  Approved   Underwriter.   If  the  Approved
Underwriter  advises  GridAmerica  HoldCo in  writing  that in its  opinion  the
aggregate  amount  of  Shares  requested  to be  included  in such  offering  is
sufficiently  large to have a  material  adverse  effect on the  success of such
offering,  including the price,  then  GridAmerica  HoldCo shall include in such
registration  only the  aggregate  amount of Shares  that in the  opinion of the
Approved  Underwriter  may be sold without any such material  adverse effect and
such Shares shall be allocated pro rata among the Selling Shareholders demanding
such registration on the basis of the number of Registrable  Shares requested to
be  included  in  such  registration  by  each  such  Selling  Shareholder,  and
thereafter  to the Company,  and finally to the holders of other  incidental  or
piggy-back registration rights, if any.

     (h)  Selection of Underwriters.  If any Demand  Registration is in the form
of an underwritten  offering,  the Selling  Shareholders shall select and engage
one or more  investment  banking  firms  of  national  reputation  to act as the
managing   underwriters   of   the   offering   (collectively,   the   "Approved
Underwriter");  provided,  however,  that the Approved Underwriter shall, in any
case, be acceptable to GridAmerica HoldCo in its reasonable judgment.

     Section 6.2 Incidental Registration.  If GridAmerica HoldCo shall determine
to register any Shares,  or any securities  convertible  into or exchangeable or
exercisable  for  Shares,  for  its  own  account  or  for  the  account  of any
stockholder (other than a registration on Forms S-4 or S-8 or any replacement or
successor form thereof),  any  GridAmerica  Company or NGUSA  Affiliate shall be
entitled to include  Registrable  Securities in such  registration  (and related
underwritten offering, if any) (each, an "Incidental Registration") on the terms
and conditions set forth in this Section 6.2.

     (a)  GridAmerica   HoldCo  promptly  shall  give  written  notice  of  such
determination to register such securities to NGUSA and each GridAmerica Company,
and NGUSA (on behalf of itself  and any NGUSA  Affiliate)  and each  GridAmerica
Company shall have the right to request,  by written notice given to GridAmerica
HoldCo  within  thirty  (30)  days of the  receipt  by them  of such  notice  of
determination, that a specific number of Registrable Securities held by an NGUSA
and/or an NGUSA  Affiliate  or such  GridAmerica  Company  be  included  in such
Registration Statement.

                                       31

<PAGE>

     (b)  If the proposed registration relates to an underwritten  offering, the
notice  required  by  Section  6.2(a)  shall  specify  the name of the  managing
underwriter for such offering, and if the proposed registration would constitute
an IPO,  the notice  required by Section  6.2(a)  shall comply with the terms of
Section 6.1(b).

     (c)  If the proposed registration relates to an underwritten  offering, any
Selling Shareholders  desiring to participate in such offering must (i) sell all
or a portion of its  Registrable  Securities  on the same basis  provided in the
underwriting  arrangements  approved by GridAmerica HoldCo and (ii) complete and
execute all  questionnaires,  powers of attorney,  underwriting  agreements  and
other  documents  on  the  same  basis  as  other  similarly   situated  Selling
Shareholders (or, if there are no other Selling Shareholders,  on the same basis
as other selling  stockholders or as would be customary in a transaction of this
type) reasonably  required under the terms of such underwriting  arrangements or
by the SEC.

     (d)  GridAmerica  HoldCo  shall have the right to terminate or withdraw any
registration statement filing under this Section 6.2 prior to the effective date
thereof  for any reason  without  liability  to any Member as a result  thereof,
whether or not such Member has elected to become a Selling Shareholder.  In such
event,  GridAmerica HoldCo or any Selling  Shareholder may elect to continue the
registration;  provided,  however, that if such termination or withdrawal occurs
prior to the filing of the initial registration  statement with the SEC, but not
otherwise,   then  such  election  shall  constitute  a  request  for  a  Demand
Registration and shall be subject to the limits on Demand Registration  requests
set forth in this Agreement.

     Section 6.3 Cutback; Withdrawal Rights.

     (a)  If the managing  underwriter for the  underwritten  offering under the
proposed registration to be made by GridAmerica HoldCo determines that inclusion
of all or any portion of the Shares  intended  to be  included in such  offering
would adversely  affect the ability of the underwriter for such offering to sell
all of the  securities  requested to be included for sale or the price per share
in such offering, the number of Shares that may be included in such registration
GridAmerica  HoldCo will be  obligated to include in such  offering,  as to each
Person  proposing to sell Shares in such offering,  only a portion of the Shares
such  Person  has  requested  to be  registered  equal to the ratio  which  such
Person's  requested  Shares bears to the total number of Shares  requested to be
included in such  registration  statement by all Persons (other than GridAmerica
HoldCo),  who have requested that their Shares be included in such registration,
it being  understood  that the  securities  to be included in such  registration
shall be allocated first to GridAmerica HoldCo and thereafter in accordance with
the  foregoing  ratio;  provided,  however,  that,  in  the  case  of  a  Demand
Registration, prior to any reduction in the number of Shares to be registered by
the Selling Shareholders demanding the Demand Registration, the aggregate amount
of Shares to be included in the offering by any other Selling  Shareholder shall
be reduced in its entirety.

     (b)  Each  Selling  Shareholder  shall  have  the  right  to  withdraw  its
Registrable  Securities from the Registration Statement at any time prior to the
effective date thereof, but if the same relates to an underwritten  offering and
the initial filing  thereof has been made, it may only withdraw its  Registrable
Securities  during  the time  period  and on  terms  deemed  appropriate  by the
underwriters for such underwritten offering.

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<PAGE>

     Section 6.4 Blockage Periods.  Notwithstanding  any other provision of this
Agreement,  GridAmerica  HoldCo  shall not be  obligated  to file (but  shall be
obligated to continue  the  preparation  of) any  Registration  Statement  under
Section 6.1 at any time that  GridAmerica  HoldCo or any of its subsidiaries are
engaged in confidential  negotiations or other confidential business activities,
disclosure of which would be required in such registration  statement (but would
not be required if such registration statement were not filed), and the Board of
Directors of  GridAmerica  HoldCo  determines in good faith (after  consultation
with  the  Selling  Shareholders  participating  in  such  offering)  that  such
disclosure  would be materially  detrimental to the Company and its Unit holders
or would have a material adverse effect on any such confidential negotiations or
other confidential  business activities.  GridAmerica HoldCo may decline to file
any Registration  Statement for this reason only once in any 12-month period and
only for a  maximum  period of 90 days at any one time.  If  GridAmerica  HoldCo
declines to file any  Registration  Statement  pursuant to this  Section 6.4, it
shall  notify the  affected  Selling  Shareholders  (the  "Clear  Notification")
promptly  after the  circumstances  preventing  the  filing of the  Registration
Statement  under Section 6.1 no longer  apply.  For a period of 20 Business Days
following  receipt of a Clear  Notification  (the "Request  Period") the Selling
Shareholders shall have the right to request a Demand  Registration  pursuant to
Section  6.1(a) or 6.1(c).  GridAmerica  HoldCo shall not be permitted to file a
registration  statement to register Shares for offering by GridAmerica HoldCo or
any  stockholder  other than a Selling  Shareholder  (except on Form S-4 or Form
S-8) until:

     (a)  If the Selling  Shareholders have not requested a Demand  Registration
within the Request Period, the day after the end of the Request Period, and

     (b)  If the  Selling  Shareholders  have  requested  a Demand  Registration
within  the  Request  Period,  completion  of the  offering  under  such  Demand
Registration  pursuant to Section 6.1(f);  provided,  however,  that GridAmerica
HoldCo may participate  simultaneously in such Demand  Registration  pursuant to
Section 6.1(g).

     Section 6.5  Restrictions  on Public Sale. If  Registrable  Securities  are
included (in whole or in part) in a Registration  Statement filed by GridAmerica
HoldCo  under  Section 6.1 for sale in an  underwritten  offering,  each Selling
Shareholder agrees, if requested by the managing underwriter(s) of such offering
and if each other Person  participating in such offering also so agrees,  not to
sell,  make any short  sale of,  loan,  grant any option  for the  purchase  of,
dispose of or effect any public sale or distribution of common equity securities
of the same series and class as (or securities  exchangeable  or exercisable for
or  convertible  into common equity  securities of the same series and class as)
its  Registrable  Securities,  including  a sale  pursuant to Rule 144 under the
Securities Act (except as part of such  underwritten  registration),  during the
five (5) day period  prior to, and during the ninety (90) day period  following,
any such  registration  (or  during  such  shorter  period  as is  requested  or
consented to by the managing  underwriter(s)  with respect to GridAmerica HoldCo
or any other  holder of common  stock of  GridAmerica  HoldCo)  beginning on the
closing date of such  underwritten  offering,  to the extent timely  notified in
writing by GridAmerica HoldCo or the managing underwriter(s).

     Section  6.6  Registration  Procedures.   In  connection  with  GridAmerica
HoldCo's  registration  obligations  pursuant  to  Sections  6.1 and 6.2 hereof,
GridAmerica HoldCo promptly will prepare such registration statement and use its
commercially  reasonable  efforts to

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<PAGE>

cause to be effective such  registration  to permit the sale of the  Registrable
Securities  covered thereby in accordance with the intended method or methods of
disposition   thereof,   and  pursuant  thereto,   GridAmerica  HoldCo  will  as
expeditiously as possible:

     (a)  with  respect to  registrations  made  pursuant  to Section  6.1 only,
prepare  and file with the SEC a  Registration  Statement  with  respect to such
Registrable Securities and use its commercially reasonable efforts to cause such
Registration Statement to become effective as soon as practicable, and, upon the
request of the Selling Shareholders,  keep such Registration Statement effective
for up to one hundred  twenty  (120) days or such lesser  period as is necessary
for  the  underwriters  in an  underwritten  offering  to sell  the  Registrable
Securities  registered  thereby,  provided,  however,  that,  before  filing any
Registration  Statement or Prospectus or any amendments or supplements  thereto,
the Company will furnish to the Selling Shareholders and their counsel for their
review and comments  copies of all such documents  proposed to be filed at least
five (5) days prior  thereto  and the  Company  shall not file any  registration
statement  or  amendment  or  post-effective  amendment  or  supplement  to such
registration  statement or Prospectus used in connection therewith to which such
counsel  shall have  reasonably  objected  in writing on the  grounds  that such
amendment  or  supplement  does  not  comply  (explaining  why) in all  material
respects  with  the  requirements  of the  Securities  Act or of  the  rules  or
regulations thereunder;

     (b)  prepare  and  file  with  the  SEC  such  amendments,   post-effective
amendments and supplements to the  Registration  Statement and the Prospectus as
may be necessary to comply with the  provisions  of the  Securities  Act and the
rules  and  regulations  thereunder  with  respect  to  the  disposition  of all
securities covered by such Registration Statement;

     (c)  promptly  notify the Selling  Shareholders  (i) when the Prospectus or
any Prospectus supplement or post-effective  amendment has been filed, and, with
respect to the Registration Statement or any post-effective  amendment, when the
same has become  effective,  (ii) of any  request by the SEC for  amendments  or
supplements  to the  Registration  Statement or the Prospectus or for additional
information,  (iii) of the issuance by the SEC of any stop order  suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose,  (iv) of the receipt by GridAmerica HoldCo of any notification
with  respect  to  the  suspension  of  the  qualification  of  the  Registrable
Securities for sale in any  jurisdiction or the initiation or threatening of any
proceeding  for such  purpose and (v) of the  happening of any event which makes
any statement made in the Registration Statement, the Prospectus or any document
incorporated  therein by  reference  untrue or which  requires the making of any
changes  in  the  Registration   Statement,   the  Prospectus  or  any  document
incorporated  therein by reference so that such  documents  will not contain any
untrue  statement of a material fact or omit to state any material fact required
to be stated  therein or necessary to make the statements  therein,  in light of
the circumstances under which they were made, not misleading;

     (d)  make commercially  reasonable  efforts to obtain the withdrawal of any
order suspending the effectiveness of the Registration Statement at the earliest
possible time;

     (e)  if requested by the Approved Underwriter or the Selling  Shareholders,
promptly incorporate in a Prospectus supplement or post-effective amendment such
information

                                       34

<PAGE>

as the Approved Underwriter or such Selling  Shareholders  reasonably request to
be included  therein as required by  applicable  Law and (ii) make all  required
filings of such Prospectus supplement or such post-effective  amendment promptly
after  GridAmerica  HoldCo  has  received  notification  of  the  matters  to be
incorporated in such  Prospectus  supplement or such  post-effective  amendment;
provided,  however, that GridAmerica HoldCo shall not be required to take any of
the actions of this Section 6.6(e) which it determines are not, on the advice of
counsel for GridAmerica HoldCo, required under applicable Law;

     (f)  furnish to each Selling Shareholder, without charge, at least one copy
of  the  Registration  Statement  and  any  post-effective   amendment  thereto,
including financial statements and schedules, all documents incorporated therein
by reference and all exhibits (including those incorporated by reference);

     (g)  deliver to each Selling  Shareholder,  without charge, such reasonable
number of conformed copies of the Registration Statement (and any post-effective
amendment  thereto) and such number of copies of the Prospectus  (including each
preliminary  prospectus)  and any  amendment  or  supplement  thereto  (and  any
documents  incorporated  by reference  therein) as such Selling  Shareholder may
reasonably  request,  all in  full  conformity  with  the  Securities  Act;  and
GridAmerica  HoldCo  consents to the use of the  Prospectus  or any amendment or
supplement thereto by such Selling  Shareholder in connection with the offer and
sale of the Registrable Securities covered by the Prospectus or any amendment or
supplement thereto;

     (h)  prior  to  any  offering  of  Registrable   Securities  covered  by  a
Registration  Statement,  register  or qualify or  cooperate  with each  Selling
Shareholder  in  connection  with  the  registration  or  qualification  of such
Registrable  Securities for offer and sale under the securities or blue sky laws
of such jurisdictions as the managing underwriter,  if applicable,  or each such
Selling Shareholder reasonably requests, and use commercially reasonable efforts
to keep  each  such  registration  or  qualification  (or  exemption  therefrom)
effective,  including through new filings, or amendments or renewals, during the
period such Registration  Statement is required to be kept effective pursuant to
the terms of this Agreement;  and do any and all other acts or things  necessary
or  advisable to enable the  disposition  in all such  jurisdictions  reasonably
requested  by  such  Selling  Shareholder;  provided,  however,  that  under  no
circumstances shall GridAmerica HoldCo be required in connection therewith or as
a condition thereof to qualify to do business,  to become subject to taxation or
to  file a  general  consent  to  service  of  process  in any  such  states  or
jurisdictions;

     (i)  cooperate with the Selling  Shareholders and the managing  underwriter
or   underwriters   to  facilitate  the  timely   preparation  and  delivery  of
certificates representing Registrable Securities to be sold, free of any and all
restrictive  legends,   such  certificates  to  be  in  such  denominations  and
registered in such names as the managing underwriter or underwriters, if any, or
such  Selling  Shareholders  may request  and make  available  to the  Company's
transfer agent prior to the restrictions of the Registrable  Securities a supply
of such certificates;

     (j)  upon the  occurrence of any event  contemplated  by Section  6.6(c)(v)
above,  prepare a supplement  or  post-effective  amendment to the  Registration
Statement or the Prospectus or any document incorporated therein by reference or
file any  other  required

                                       35

<PAGE>

document so that, as thereafter  delivered to the purchasers of the  Registrable
Securities,  the Prospectus  will not contain an untrue  statement of a material
fact or omit to state  any  material  fact  required  to be  stated  therein  or
necessary to make the statements therein not misleading;

     (k)  make  generally  available  to the  holders  of  GridAmerica  HoldCo's
outstanding  securities earnings statements satisfying the provisions of Section
11(a) of the Securities Act, no later than forty-five (45) days after the end of
any twelve (12) month  period (or ninety  (90) days,  if such period is a fiscal
year) (i)  commencing  at the end of any  fiscal  quarter  in which  Registrable
Securities  are  sold to  underwriters  in a firm or best  efforts  underwritten
offering,  or, if not sold to  underwriters  in such an offering (ii)  beginning
with the first month of GridAmerica  HoldCo's  first fiscal  quarter  commencing
after the effective date of the Registration  Statement,  which statements shall
cover said twelve (12) month period;

     (l)  provide and cause to be maintained a transfer  agent and registrar for
all Registrable Securities covered by each Registration Statement from and after
a date not later than the effective date of such Registration Statement;

     (m)  use   commercially   reasonable   efforts  to  cause  all  Registrable
Securities  covered by each  Registration  Statement  to be  listed,  subject to
notice  of  issuance,  prior to the date of the first  sale of such  Registrable
Securities pursuant to such Registration  Statement, on each securities exchange
on which the Shares issued by GridAmerica HoldCo are then listed,

     (n)  enter  into such  agreements  (including  underwriting  agreements  in
customary  form  containing,   among  other  things,  reasonable  and  customary
indemnities)  and take such other  actions  as the  Selling  Shareholders  shall
reasonably  request in order to expedite or facilitate  the  disposition of such
Registrable Securities;

     (o)  furnish, at the request of the Selling Shareholders,  on the date that
Registrable  Securities are delivered to an  underwriter  for sale in connection
with  an   underwritten   registration,   or,  in  connection   with  any  other
registration,  on the date that the Registration  Statement with respect to such
registration becomes effective,  (i) an opinion, dated such date, of the counsel
representing  GridAmerica HoldCo for the purpose of such  registration,  in form
and substance as is customarily given to underwriters in an underwritten  public
offering,   addressed  to  the   underwriters,   if  any,  and  to  the  Selling
Shareholders,  (ii) a letter  dated such date,  from the  independent  certified
public  accountants  of  GridAmerica   HoldCo,  in  form  and  substance  as  is
customarily given by independent certified public accountants to underwriters in
an underwritten public offering,  addressed to the underwriters,  if any, and to
such Selling Shareholders,  subject to such Selling  Shareholders'  provision of
information   reasonably   requested  by  such   independent   certified  public
accountants  to comply with the rules  governing  delivery  of such  letters and
(iii) cause the underwriting agreement to contain indemnification provisions and
procedures no less favorable than those set forth in Section 6.8 hereof (or such
other provisions and procedures  acceptable to such Selling  Shareholders)  with
respect to all parties to be indemnified pursuant to such Section;

     (p)  with  respect to not more than  three  Demand  Registrations  effected
pursuant to Section 6.1,  cause its senior  management  to  participate  in road
shows and other customary  marketing efforts in connection with the offering and
sale of Registrable Securities;

                                       36

<PAGE>

     (q)  as promptly as  practicable  after filing with the SEC of any document
which is incorporated by reference into a registration  statement filed pursuant
hereto (in the form in which it was  incorporated),  deliver a copy of each such
document to each seller of Registrable Securities;

     (r)  promptly make available for inspection by any Selling Shareholder, any
underwriter  participating  in any  disposition  pursuant  to  any  Registration
Statement filed pursuant hereto, and any attorney,  accountant or other agent or
representative  retained by any such seller or  underwriter  (collectively,  the
"Inspectors"),  all financial and other records,  pertinent  corporate documents
and properties of GridAmerica  HoldCo and its  subsidiaries  (collectively,  the
"Records"),  as shall be reasonably  necessary to enable them to exercise  their
due  diligence  responsibility,  and cause the  GridAmerica  HoldCo's  officers,
directors  and  employees  to  supply  all  information  requested  by any  such
Inspector in connection with such  registration  statement;  provided,  however,
that unless the  disclosure  of such  Records is necessary to avoid or correct a
misstatement  or omission in the  registration  statement or the release of such
Records  in  ordered  pursuant  to a  subpoena  or other  order  from a court of
competent jurisdiction,  GridAmerica HoldCo shall not be required to provide any
information  hereunder if (A) GridAmerica  HoldCo believes,  after  consultation
with  counsel for  GridAmerica  HoldCo,  that to do so would  cause  GridAmerica
HoldCo to forfeit  an  attorney-client  privilege  that was  applicable  to such
information or (B) either (1) GridAmerica  HoldCo has requested and been granted
from the SEC confidential  treatment of such information contained in any filing
with  the  SEC  or  documents  provided   supplementally  or  otherwise  or  (2)
GridAmerica  HoldCo  reasonably  determines  in good faith that such Records are
confidential  and so  notifies  that  Inspectors  in  writing  unless,  prior to
furnishing any such  information  agrees with respect to (A) or (B), such holder
of Registrable  Securities  requesting such  information  agrees to enter into a
confidentiality agreement in customary form and subject to customary exceptions;
and provided,  further that each holder of Registrable Securities agrees that it
will,  upon  learning  that  disclosure  of such Records is sought in a court of
competent jurisdiction,  give notice to GridAmerica HoldCo and allow GridAmerica
HoldCo at its expense, to undertake appropriate action and to prevent disclosure
of the Records deemed confidential;

     (s)  provide a CUSIP  number for  Registrable  Securities  included  in any
registration  statement  filed pursuant hereto not later than the effective date
of such registration statement;

     (t)  cooperate  with  each  Selling   Shareholder   and  each   underwriter
participating  in the  disposition  of such  Registrable  Securities  and  their
respective  counsel in connection with any filings  required to be made with the
National Association of Securities Dealers, Inc. ("NASD"); and

     (u)  use its  commercially  reasonable  efforts  to take  all  other  steps
necessary to effect the registration of such Registrable Securities contemplated
hereby.

Each  Selling   Shareholder  agrees  that,  upon  receipt  of  any  notice  from
GridAmerica  HoldCo  of the  happening  of any  event of the kind  described  in
Section 6.6(c)(v) hereof,  such Selling  Shareholder will forthwith  discontinue
disposition  of  Registrable  Securities  under the  Prospectus  related  to the
applicable  Registration  Statement until such Selling  Shareholders' receipt of
the

                                       37

<PAGE>

copies of the supplemented or amended Prospectus  contemplated by Section 6.6(j)
hereof, or until it is advised. in writing by GridAmerica HoldCo that the use of
the  Prospectus  may be  resumed.  It  shall  be a  condition  precedent  to the
obligations  of GridAmerica  HoldCo to take any action  pursuant to this Section
6.6 with respect to the Registrable  Securities of Selling Shareholder that such
Selling  Shareholder  shall  furnish  to  GridAmerica  HoldCo  such  information
regarding itself and the Registrable  Securities held by it as shall be required
by the Securities Act to effect the  registration of such Selling  Shareholder's
Registrable  Securities and as typically  provided by similarly situated selling
stockholders.

     Section  6.7   Registration   Expenses.   All  expenses   incident  to  any
registration to be effected hereunder (whether or not the Registration Statement
is filed or declared effective) and incident to GridAmerica HoldCo's performance
of or  compliance  with  this  Agreement,  including,  without  limitation,  all
registration and filing fees, fees and expenses of compliance with securities or
blue sky laws, printing expenses,  messenger and delivery expenses,  fees of the
National   Association  of  Securities   Dealers,   Inc.,   stock  exchange  and
qualification  fees, fees and disbursements of GridAmerica  HoldCo's counsel and
of independent certified public accountants of GridAmerica HoldCo (including the
expenses of any special audit required by or incident to such performance),  the
expenses  of  the  underwriters  that  are  customarily   requested  in  similar
circumstances by such underwriters (excluding discounts,  commissions or fees of
underwriters,   qualified  independent  underwriters,  selling  brokers,  dealer
managers  or  similar  securities   industry   professionals   relating  to  the
distribution  of the  Registrable  Securities),  all such expenses  being herein
called "Registration Expenses," will be borne by GridAmerica HoldCo. GridAmerica
HoldCo will also pay its  internal  expenses and the expense of any annual audit
and the fees and expenses of any person  retained by  GridAmerica  HoldCo.  Each
Selling Shareholder will pay its internal expenses, the fees and expenses of any
counsel,   advisor  or  other  person  retained  by  such  Selling  Shareholder.
Notwithstanding  the foregoing,  GridAmerica HoldCo will not be obligated to pay
Registration  Expenses  for more than Demand  Registrations  effected by Selling
Shareholders   pursuant  to  Section  6.1.  Registration  Expenses  incurred  in
connection with Registration Statements requested under Section 6.1 that are not
filed or declared  effective by the SEC will be paid by  GridAmerica  HoldCo and
will not count  against  such limit;  provided,  however,  if such  Registration
Statement not being filed or declared  effective is the result of the actions of
any  Selling   Shareholder,   then  such  Selling   Shareholder  will  bear  the
Registration   Expenses  of  such  Demand   Registration   in  which  case  such
registration shall not be counted as a Demand Registration under Section 6.1.

     Section 6.8 Indemnification.

     (a)  Indemnification by GridAmerica  HoldCo.  GridAmerica HoldCo agrees, to
the fullest extent permitted by Law, to indemnify and hold harmless each Selling
Shareholder,  its officers,  directors,  partners, employees and agents and each
person who controls such Selling  Shareholder  (within the meaning of Section 15
of the  Securities  Act or Section  20 of the  Exchange  Act) and the  officers,
directors,  partners,  employees and agents of any such controlling  person from
and against any and all losses,  claims,  damages and liabilities (including any
investigation,  legal or other expenses  reasonably incurred in connection with,
and any amount paid in  settlement  of, any action,  suit or  proceeding  or any
claim asserted) (collectively,  "Damages") to which such Selling Shareholder may
become  subject under the  Securities  Act, the Exchange Act or other federal or
state securities Law, at common Law or otherwise,  insofar as

                                       38

<PAGE>

such Damages arise out of or are based upon (i) any untrue  statement or alleged
untrue  statement of a material fact  contained in any  Registration  Statement,
Prospectus or  preliminary  prospectus  or any amendment or supplement  thereto,
(ii) the omission or alleged  omission to state therein a material fact required
to be stated  therein or necessary to make the statements  therein,  in light of
the  circumstances  under  which they were made,  not  misleading  and (iii) any
violation or alleged violation by GridAmerica  HoldCo of the Securities Act, the
Exchange Act or any state  securities  or blue sky Laws in  connection  with the
Registration Statement, Prospectus or preliminary prospectus or any amendment or
supplement  thereto;  provided,  however,  that  GridAmerica  HoldCo will not be
liable to any Selling  Shareholder to the extent that such Damages arise from or
are based upon any untrue  statement  or omission (x) made in reliance on and in
conformity  with written  information  furnished to  GridAmerica  HoldCo by such
Selling Shareholder expressly for the inclusion in such Registration  Statement,
(y) made in any  preliminary  prospectus if such Selling  Shareholder  failed to
deliver  a copy of the  Prospectus  with or prior  to the  delivery  of  written
confirmation of the sale by such Selling  Shareholder to the party asserting the
claim  underlying  such Damages and such  Prospectus  would have  corrected such
untrue  statement  or  omission  and (z) made in any  Prospectus  if such untrue
statement or omission  was  corrected  in an  amendment  or  supplement  to such
Prospectus,  and a sufficient  number of such  amendment or  supplement  to such
Prospectus  were  delivered  to such  Selling  Shareholder  prior to the sale of
Registrable  Securities  and such  Selling  Shareholder  failed to deliver  such
amendment or supplement  prior to or  concurrently  with the sale of Registrable
Securities to the party asserting the claim underlying such Damages. GridAmerica
HoldCo shall also indemnify  underwriters,  selling brokers, dealer managers and
similar  securities  industry  professionals  participating  in the distribution
customarily  indemnified  by issuers in  underwritten  public  offerings,  their
officers,  directors,  agents and  employees  and each Person who controls  such
Persons (within the meaning of Section 15 of the Securities Act or Section 20 of
the  Exchange  Act) to the same  extent as  provided  above with  respect to the
indemnification of the Selling Shareholders.

     (b)  Indemnification by Selling Shareholders. If Registrable Securities are
sold  under a  Prospectus  which  is a part of a  Registration  Statement,  each
Selling  Shareholder agrees to indemnify and hold harmless  GridAmerica  HoldCo,
its directors and each officer who signed such  Registration  Statement and each
person who controls  GridAmerica HoldCo (within the meaning of Section 15 of the
Securities  Act or Section 20 of the Exchange Act) and the officers,  directors,
partners,  employees  and agents of any such  controlling  person under the same
circumstances  as the foregoing  indemnity  from  GridAmerica  HoldCo to Selling
Shareholders,  to the extent that such losses, claims,  damages,  liabilities or
actions  arise out of or are based upon any untrue  statement of a material fact
or omission of a material fact that was made in the Prospectus, the Registration
Statement,  or any  amendment or  supplement  thereto,  in reliance  upon and in
conformity with information  relating to any Selling  Shareholder,  furnished in
writing to  GridAmerica  HoldCo by such Selling  Shareholder,  expressly for use
therein,  provided that in no event shall the aggregate liability of any Selling
Shareholder  exceed  the amount of the net  proceeds  received  by such  Selling
Shareholder  upon the sale of the  Registrable  Securities  giving  rise to such
indemnification   obligation.  Each  Selling  Shareholder  shall  indemnify  the
underwriters under terms customary to such underwritten  offerings as reasonably
requested by such underwriters.  GridAmerica HoldCo and each Selling Shareholder
shall be entitled to receive  indemnities  from  underwriters,  selling brokers,
dealer managers and similar securities

                                       39

<PAGE>

industry professionals participating in the distribution,  to the same extent as
customarily furnished by such persons in similar circumstances.

     (c)  Conduct  of  Indemnification   Proceedings.  Any  person  entitled  to
indemnification  hereunder will (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit such
indemnifying  party to assume the defense of such claim with counsel  reasonably
satisfactory  to the  indemnified  party,  provided,  however,  that any  person
entitled to  indemnification  hereunder  shall have the right to employ separate
counsel  and to  participate  in the  defense  of such  claim,  but the fees and
expenses of such  counsel  shall be at the expense of such person and not of the
indemnifying party unless (A) the indemnifying party has agreed to pay such fees
or expenses,  (B) the indemnifying party shall have failed to assume the defense
of such claim and employ counsel  reasonably  satisfactory to such person within
thirty  (30) days of receipt  of notice of such  claim or (C) in the  reasonable
judgment of such  indemnified  person based on advice of counsel,  a conflict of
interest may exist between such person and the  indemnifying  party with respect
to such claims (in which case, if the person notifies the indemnifying  party in
writing that such person elects to employ separate counsel at the expense of the
indemnifying  party, the  indemnifying  party shall not have the right to assume
the defense of such claim on behalf of such person). No settlement in respect of
any third  party claim may be effected  by the  indemnifying  party  without the
indemnified   party's  prior  written   consent  (which  consent  shall  not  be
unreasonably  withheld) unless the settlement involves only the payment of money
by the indemnifying party,  provides for a full and unconditional release of the
indemnified  party and does not include a statement as to, or any  admission of,
fault,  culpability  or a failure to act by, or on behalf  of,  the  indemnified
party. Any  indemnifying  party who is not entitled to, or elects not to, assume
the  defense of a claim will not be  obligated  to pay the fees and  expenses of
more than one counsel for all parties  indemnified  by such  indemnifying  party
with respect to such claim, unless, in the reasonable judgment of an indemnified
party based on advice of counsel,  a conflict of interest  exists  between  such
indemnified party and one or more other indemnified parties with respect to such
claim,  in which  case the  indemnifying  party  shall be  obligated  to pay the
reasonable fees and  disbursement,  of such additional  counsel or counsels.  As
used in this Section 6.8(c), the terms "indemnifying party," "indemnified party"
and other  terms of similar  import are  intended  to include  only  GridAmerica
HoldCo  (and its  officers,  directors  and control  persons  and the  officers,
directors,  partners,  employees and agents of such control persons as set forth
above) on the one hand, and one or more Selling  Shareholders  (and its or their
officers,  directors,  partners,  employees,  agents and control persons and the
officers,  directors,  partners, employees and agents of such control persons as
set forth above) on the other hand, as applicable.

     (d)  Contribution.   If  for  any  reason  the   foregoing   indemnity   is
unavailable,  then the indemnifying party shall contribute to the amount paid or
payable by the indemnified  party as a result of such losses,  claims,  damages,
liabilities  or expenses in such  proportion  as is  appropriate  to reflect the
relative fault of the indemnifying party or indemnifying parties on the one hand
and the  indemnified  party on the other in  connection  with the  statements or
omissions  which  resulted  in such  losses,  claims,  demands,  liabilities  or
expenses as well as any other relevant equitable considerations. With respect to
contribution  required pursuant to this Section 6.8(d), the relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to  information  supplied by the  indemnifying  party or
indemnifying  parties

                                       40

<PAGE>

on the  one  hand or the  indemnified  party  on the  other,  and  the  parties'
relative, intent, knowledge, access to information and opportunity to correct or
prevent such untrue  statement or omission.  Notwithstanding  the  provisions of
this Section 6.8(d), an indemnified  holder of Registrable  Securities shall not
be  required to  contribute  any amount in excess of the amount by which the net
proceeds to such holder of Registrable  Securities  from the sale thereof exceed
the amount of damages which such indemnified  holder has otherwise been required
to pay  pursuant  to Section  6.8(b) by reason of any  untrue or alleged  untrue
statement  or  omission  or alleged  omission.  No person  guilty of  fraudulent
misrepresentation (within the meaning of Section 11 of the Securities Act) shall
be  entitled  to  contribution  from  any  person  who  was not  guilty  of such
fraudulent misrepresentation.

     (e)  Timing of Payments.  An indemnifying  party shall make payments of all
amounts required to be made pursuant to the foregoing provisions of this Section
6.8 to or for the account of the  indemnified  party from time to time  promptly
upon  receipt of bills or invoices  relating  thereto or when  otherwise  due or
payable.

     (f)  Survival. The indemnity and contribution  agreements contained in this
Section  6.8  shall  remain  in  full  force  and  effect,   regardless  of  any
investigation  made by or on behalf of any Selling  Shareholder,  its  officers,
directors,  partners,  attorneys, agents or any person, if any, who controls any
Selling  Shareholder  as  aforesaid,  and shall  survive  the  transfer  of such
Registrable Securities by any Selling Shareholder.

     Section 6.9 Preparation;  Reasonable Investigation.  In connection with the
preparation and filing of a Registration Statement pursuant to the terms of this
Agreement:

     (a)  GridAmerica  HoldCo shall,  with respect to a  Registration  Statement
filed by GridAmerica HoldCo, give each Selling Shareholder, the underwriters, if
any, and their respective counsel and accountants the opportunity to participate
in the preparation of such Registration  Statement (other than reports and proxy
statements  incorporated  therein by reference  and lawfully and properly  filed
with the SEC) and each  Prospectus  included  therein or filed with the SEC, and
each amendment thereof or supplement thereto;

     (b)  GridAmerica HoldCo shall give the participating GridAmerica Companies,
the  underwriters,  if any, and their  respective  counsel and accountants  such
reasonable access to its books and records and such opportunities to discuss the
business of  GridAmerica  HoldCo with its  officers and the  independent  public
accountants  who have certified its financial  statements as shall be necessary,
in the opinion of the Selling  Shareholders or such  underwriters,  to conduct a
reasonable   investigation  within  the  meaning  of  Section  11(b)(3)  of  the
Securities Act; and

     (c) the  Selling  Shareholders  shall,  to the  fullest  extent  reasonably
necessary,  cooperate with GridAmerica  HoldCo,  the  underwriters,  if any, and
their respective counsel and accountants in order to complete the preparation of
a Registration  Statement (other than reports and proxy statements  incorporated
therein by reference)  and each  Prospectus  included  therein or filed with the
SEC, and each amendment thereof or supplement thereto.

                                       41

<PAGE>

     Section 6.10 Rule 144 and Rule 144A. At all times during which  GridAmerica
HoldCo is subject to the periodic  reporting  requirements  of the Exchange Act,
GridAmerica  HoldCo  covenants that it will file, on a timely basis, the reports
required to be filed by it under the Securities Act and the Exchange Act and the
rules  and  regulations  adopted  by the SEC  thereunder,  and it will take such
further  action as NGUSA or the  GridAmerica  Companies may  reasonably  request
(including,  without limitation,  compliance with the current public information
requirements of Rule 144(c) and Rule 144A under the Securities  Act), all to the
extent required from time to time to enable such  GridAmerica  Companies to sell
Registrable  Securities without registration under the Securities Act within the
limitation of the conditions  provided by (a) Rule 144 under the Securities Act,
as such  Rule  may be  amended  from  time to  time,  (b) Rule  144A  under  the
Securities  Act,  as such  rule may be  amended  from  time to time,  or (c) any
similar rule or  regulation  hereafter  adopted by the SEC.  Upon the request of
NGUSA or any GridAmerica Company, GridAmerica HoldCo will provide reasonable and
customary assistance to facilitate such Person's sale of Registrable  Securities
in block trades or other similar  transactions.  Notwithstanding  the foregoing,
nothing in this  Section 6.10 shall be deemed to require  GridAmerica  HoldCo to
register any of its securities pursuant to the Exchange Act.

     Section 6.11 Other Registration Rights Agreements.  Neither the Company nor
GridAmerica HoldCo will enter into any agreement offering registration rights to
any  person  which  are more  favorable  than  those  granted  to NGUSA  and the
GridAmerica  Companies under this Agreement unless,  prior to entering into such
agreement,  it shall offer registration rights on substantially similar terms to
the GridAmerica Companies.

     Section 6.12  Specific  Performance  for  Registration  Rights.  Each party
hereto   shall  be  entitled  to  enforce  its  rights  under  this  Article  VI
specifically to recover damages by reason of any breach of any provision of this
Article VI and to exercise all other rights  existing in its favor.  The parties
hereto agree and  acknowledge  that money damages may not be an adequate  remedy
for any breach of the  provisions  of this Article VI and that each party may in
its  sole  discretion  apply  to  any  court  of  law  or  equity  of  competent
jurisdiction for specific  performance and/or injunctive relief (without posting
a bond or other  security)  in order to enforce or prevent any  violation of the
provisions of this Article VI.

     Section 6.13 Exchange of Units for Shares.  In order to effectuate the IPO,
NGUSA and the  GridAmerica  Companies  have  determined  that it is desirable to
create a Delaware corporation  ("GridAmerica HoldCo") and, to the extent desired
by any Member,  to exchange issued and outstanding  Units of Members desiring to
participate in such an exchange for Shares of  GridAmerica  HoldCo in accordance
with this Section 6.13 (the "Unit Exchange").

     (a)  In connection with any IPO, the Company shall cause GridAmerica HoldCo
to be incorporated as a Delaware  corporation.  The Certificate of Incorporation
and Bylaws of GridAmerica HoldCo shall be in such form as the Company determines
shall best facilitate the IPO; provided, however, that the charter shall provide
for two classes of common stock of GridAmerica HoldCo which shall have identical
rights and privileges,  except that "Class A Stock" shall have voting rights and
"Class B Stock"  shall have no voting  rights,  and shall  further  provide that
Class A Stock may be held only by a Person who is a Non-Market  Participant  and
Class A Shares shall be  convertible  to Class B Shares and Class B Shares shall
be

                                       42

<PAGE>

convertible  to Class A Shares  in the same  manner  as is  provided  in the LLC
Agreement with respect to Class A Units and Class B Units.

     (b)  In connection  with any IPO, (i) Shares issued by  GridAmerica  HoldCo
may be issued for cash,  in which case the cash  proceeds of the IPO may be used
to acquire Units of the Company or (ii) Shares may be issued in exchange for all
or any  portion  of the  issued and  outstanding  Units held by any  GridAmerica
Company  that is a Member  that  desires  to  participate  in the Unit  Exchange
occurring  in  connection  with the IPO.  Following  an IPO  (whether  or not in
connection with a Secondary Demand Registration), an GridAmerica Company that is
a Member may  request  that  Shares be issued to it in  exchange  for all or any
portion of the issued and outstanding  Units held by such  GridAmerica  Company,
and, upon such a request,  GridAmerica HoldCo will effectuate a Unit Exchange in
accordance with such request within thirty (30) days.

     (c)  Immediately  prior to the closing of the IPO, the Company  shall cause
GridAmerica  HoldCo  to  become  a  party  to this  Agreement  for  purposes  of
effectuating the provisions of this Article VI and to exchange each Class A Unit
held by an GridAmerica  Company desiring to participate in the Unit Exchange and
offered for exchange for one share of Class A Stock and to exchange each Class B
Unit  held by such  GridAmerica  Company  desiring  to  participate  in the Unit
Exchange  and offered  for  exchange  for one share of Class B Stock.  After the
initial Unit Exchange, any GridAmerica Company shall have the right, but not the
obligation,  to  exchange  Units for  Shares  upon ten (10) days  prior  written
request.

     (d)  The  Company  and each  GridAmerica  Company  shall  use  commercially
reasonable efforts to obtain all approvals of Governmental Authorities necessary
to effectuate the Unit Exchange,  the IPO and any  subsequent  Public  Offering.

                                  ARTICLE VII

                                FAIR MARKET VALUE

     Section 7.1 Fair  Market  Value.  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 (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:

     (a)  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 Section
7.2.  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").  Subject to Section 13.9, 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.

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<PAGE>

     (b)  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.

     (c)  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:

          (1)  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;

          (2)  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

          (3)  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.

     (d)  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.

     Section 7.2 General  Principles of  Application.  The following  principles
shall apply generally to any  determination of "fair market value" under Section
7.1,  whether  such  determination  is made by the  Interested  Parties or by an
investment banking firm:

     (a)  "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.

     (b)  Any  expected  tax  benefits  of  either  Interested  Party  shall  be
considered in determining "fair market value."

     (c)  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.

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<PAGE>

     (d)  Except as otherwise expressly provided in this Agreement, 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.

     Section 7.3 General Principles of Application. 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.

                                  ARTICLE VIII

                             ADMISSION REQUIREMENTS

     Section 8.1 Admission  Requirements.  Any  successor  owner (other than the
Company and its subsidiaries) of any of the GridAmerica  Transmission Facilities
(whether by  assignment,  operation  of law or  otherwise)  shall be entitled to
become a GridAmerica  Company by becoming a party to the Operation  Agreement in
accordance  with its  terms  and by  agreeing  to be bound by the  terms of this
Agreement.  Any  Person  that  acquires  any Units  from a  GridAmerica  Company
(whether by  assignment,  operation  of law or  otherwise)  shall be entitled to
become a  GridAmerica  Company  by  agreeing  to be  bound by the  terms of this
Agreement.  The  Company  may  permit,  in its  discretion,  any  owner of other
Transmission  Facilities  that  becomes  party  to the  Operation  Agreement  in
accordance therewith to become a GridAmerica Company, and the Company shall, and
the Initial Member,  in its capacity as the Managing Member shall, in any event,
cause each such  Person,  as a condition  to  becoming a party to the  Operation
Agreement,  to  agree  to be  bound  by the  terms  of  Section  2.2(e)  of this
Agreement, in each case, by complying with any terms and conditions for becoming
a participant in the  GridAmerica  ITC approved by Commission and by agreeing to
be bound by the  terms  of this  Agreement  and  such  Section  2.2(e).  For the
avoidance of doubt, a Person that becomes an GridAmerica Company pursuant hereto
that is not also a party to the  Operation  Agreement  shall  have no  rights or
obligations under Section 2.2(e).

                                   ARTICLE IX

                         REPRESENTATIONS AND WARRANTIES

     Section 9.1 Representations and Warranties Concerning the Company. In order
to induce the GridAmerica  Companies to enter into this Agreement,  the Company,
the Initial

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<PAGE>

Member and NGUSA hereby  jointly and  severally  represent  and warrant that the
statements contained in this Section 9.1 are true and correct.

     (a)  Organization and Standing. The Company is a Delaware limited liability
company, duly organized, validly existing and in good standing under the laws of
the  jurisdiction  of its  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)  Corporate Power and Authority.  Subject to the receipt by the Company,
the  Initial  Member  and NGUSA of any  Required  Consents  required  by it, the
Company 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 the
Company. This Agreement has been duly executed and delivered by the Company and,
subject  to the  receipt by the  Company,  the  Initial  Member and NGUSA of any
Required  Consents  required  by it,  constitutes  the legal,  valid and binding
obligation of the Company,  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)  Conflicts;  Consents.  Neither  the  execution  and  delivery  of this
Agreement by the Company 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 the LLC 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 the
     Company,  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 the Company 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 the Company.

     (d)  Approvals.  Subject to the receipt by the Company,  the Initial Member
and NGUSA of any Required  Consents  required by it, 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 the  Company,  the  Initial  Member  and/or  NGUSA,  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.

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<PAGE>

     Section 9.2 Representations  and Warranties  Concerning the Initial Member.
In order to induce the GridAmerica Companies to enter into this Agreement, NGUSA
and the Initial Member hereby  jointly and severally  represent and warrant that
the statements contained in this Section 9.2 are true and correct.

     (a)  Organization and Standing.  The Initial Member is a limited  liability
company, duly organized, validly existing and in good standing under the laws of
the  jurisdiction  of its  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)  Corporate Power and Authority.  Subject to the receipt by the Company,
the  Initial  Member  and NGUSA of any  Required  Consents  required  by it, the
Initial  Member  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 the Initial Member.  This Agreement has been duly executed
and delivered by the Initial Member and,  subject to the receipt by the Company,
the  Initial  Member  and  NGUSA  of  any  Required  Consents  required  by  it,
constitutes  the legal,  valid and binding  obligation  of the  Initial  Member,
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)  Conflicts;  Consents.  Neither  the  execution  and  delivery  of this
Agreement  by the  Initial  Member  nor  the  consummation  of the  transactions
contemplated hereby:

          (1)  will  violate,  conflict  with,  or  result  in a  breach  of any
     provision of its organizational documents; 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 the
     Initial  Member,  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
     the  Initial  Member  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
     the Initial Member.

     (d)  Approvals.  Subject to the receipt by the Company,  the Initial Member
and NGUSA of any Required  Consents  required by it, 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 the  Company,  the  Initial  Member  and/or  NGUSA,  as the case  may be,  in
connection  with the execution and delivery of this Agreement have been

                                       47

<PAGE>

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.

     Section 9.3  Representations  and Warranties of GridAmerica  Companies.  In
order to induce the  Company,  the  Initial  Member and NGUSA to enter into this
Agreement,  each GridAmerica Company hereby represents and warrants severally as
to itself,  and not jointly and severally as to any other  GridAmerica  Company,
that the statements contained in this Section 9.3 are true and correct.

     (a)  Organization and Standing.  Such GridAmerica Company is a corporation,
duly  organized,  validly  existing and in good  standing  under the laws of the
jurisdiction of its  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)  Corporate  Power  and  Authority.  Subject  to  the  receipt  by  such
GridAmerica  Company of any Required  Consents  required by it, such GridAmerica
Company 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 such
GridAmerica Company. This Agreement has been duly executed and delivered by such
GridAmerica  Company and, subject to the receipt by such GridAmerica  Company of
any Required Consents required by it,  constitutes the legal,  valid and binding
obligation of such  GridAmerica  Company,  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)  Conflicts;  Consents.  Neither  the  execution  and  delivery  of this
Agreement by such  GridAmerica  Company nor the consummation of the transactions
contemplated hereby:

          (1)  will  violate,  conflict  with,  or  result  in a  breach  of any
     provision of its organizational documents; 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
     such GridAmerica Company, 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
     such  GridAmerica  Company 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
     such GridAmerica Company.

                                       48

<PAGE>

     (d)  Approvals.  Subject to the receipt by such GridAmerica  Company of any
Required Consents required by it, 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 such  GridAmerica
Company 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.

     Section 9.4 Representations and Warranties of NGUSA. In order to induce the
GridAmerica Companies to enter into this Agreement,  NGUSA hereby represents and
warrants that the statements contained in this Section 9.4 are true and correct.

     (a)  Organization  and Standing.  NGUSA is a corporation,  duly  organized,
validly  existing and in good standing under the laws of the jurisdiction of its
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)  Corporate Power and Authority.  Subject to the receipt by the Company,
the Initial Member and NGUSA of any Required  Consents required by it, NGUSA 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  NGUSA.  This
Agreement  has been duly  executed and  delivered  by NGUSA and,  subject to the
receipt by the Company,  the Initial  Member and NGUSA of any Required  Consents
required by it,  constitutes the legal,  valid and binding  obligation of NGUSA,
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)  Conflicts;  Consents.  Neither  the  execution  and  delivery  of this
Agreement by NGUSA nor the consummation of the transactions contemplated hereby:

          (1)  will  violate,  conflict  with,  or  result  in a  breach  of any
     provision of its organizational documents; 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
     NGUSA, 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 NGUSA 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 NGUSA.

                                       49

<PAGE>

     (d)  Approvals.  Subject to the receipt by the Company,  the Initial Member
and NGUSA of any Required  Consents  required by it, 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 the Company,  the Initial  Member and/or NGUSA,  as the case may be, NGUSA 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.

     (e)  NGUSA  Business  Strategy.  NGUSA is  involved  in the  ownership  and
operation of transmission and  distribution  properties and seeks to further its
overall business  strategy by acquiring,  owning and operating  transmission and
distribution  properties,  and  divesting  or  otherwise  disposing  of electric
generation businesses and assets or obligations relating thereto.

                                    ARTICLE X

                                    COVENANTS

     Section 10.1 NGUSA  Covenants.  NGUSA hereby  agrees for the benefit of the
GridAmerica  Companies,  that for so long as the Initial  Member is the Managing
Member, NGUSA will:

     (a)  Maintain,  and  cause  the  Initial  Member  to  maintain,  Non-Market
Participant status except to the extent that the failure of NGUSA or the Initial
Member to maintain Non-Market  Participant status occurs as a result of a change
in  applicable  Law,  in which case NGUSA  shall take or shall cause the Initial
Member to take commercially  reasonable steps to regain  Non-Market  Participant
status so long as the cost  thereof  is not  material.  To the  extent  that the
pursuit by NGUSA of its transmission and distribution  strategy could reasonably
be expected to result in the loss by NGUSA or the Initial  Member of  Non-Market
Participant status,  NGUSA shall (i) propose to the Commission to take, or cause
to be taken,  commercially reasonable mitigation measures to maintain Non-Market
Participant status, (ii) if NGUSA reasonably believes that the Commission is not
likely to accept such mitigation measures, so notify the GridAmerica  Companies,
such  notice to be given at least one  hundred and fifty (150) days prior to the
date that NGUSA or the Initial Member  expects NGUSA and/or the Initial  Member,
as the case may be, to lose Non-Market Participant status and, if after delivery
of such notice, the GridAmerica Companies so request, undertake, at its expense,
to identify a new Managing Member which is willing to replace the Initial Member
on  substantially  the same  terms as are set  forth  in the ITC  Agreements  or
otherwise propose  alternate means of maintaining the independent  management of
GridAmerica  ITC and (iii) shall not deliver any notice of resignation  pursuant
to Section  2.2(c)(v)  prior to the date that is ninety (90) days after the date
of the  delivery of any notice given as required by the  foregoing  clause (ii).
Anything in this  Section  10.1(a) to the contrary  notwithstanding,  nothing in
this Section 10.1(a) shall be deemed to prohibit the right of the Initial Member
to resign as permitted by Section 2.2(c).

     (b)  Neither (i) permit the Initial Member, legally or beneficially, to own
any assets or incur any liabilities, or to engage in any business, other than as
may  relate  to or arise out of the  ownership  of Units,  the  business  of the
Company and the fulfillment by the Initial

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Member of its  obligations  as Managing  Member nor (ii) permit any Affiliate of
the Initial  Member (other than the Company or any subsidiary of the Company) to
own any assets  necessary or desirable  for, or  otherwise  appropriate  to, the
operation  of  the  Company,   including  any  System-Wide  Assets.   Except  as
contemplated  by the  proviso  in the  immediately  preceding  sentence,  if the
Initial Member or any NGUSA Affiliate  (other than the Company or any subsidiary
of the Company)  acquires  any assets of the type  referred to in clause (ii) of
the proceeding sentence, NGUSA shall cause such Person to promptly transfer such
assets to the Company.

     (c)  Not enter into, or permit any NGUSA  Affiliate or the Company to enter
into any agreement  which prohibits or restricts the right to remove the Initial
Member  for  Cause  pursuant  to  Section  6.1 (b) of the LLC  Agreement  or the
purchase of the Equity  Interests or asset and liabilities of the Initial Member
pursuant to Section 2.1(e),  except in compliance with Section 6.2(g) of the LLC
Agreement.

     (c)  Promptly cause the Initial Member to resign as Managing  Member,  such
resignation  to  be  deemed  "removal"  for  all  purposes  of  the  Transaction
Agreements,  if (i) a Super  Majority  of  Transmission  Owners  delivers to the
Initial Member and NGUSA written  notice for the removal of the Managing  Member
in accordance  with Section  6.1(b)(ii) of the LLC Agreement or Section 4.4.3 of
the  Operation  Agreement  and (ii) either  NGUSA does not contest  such removal
within thirty (30) days or a binding determination that grounds for such removal
exist has been made  pursuant to Article XII,  Article X of the LLC Agreement or
Article VI of the Operation Agreement.

     (e)  Cause (i) the Initial  Member to be a direct or indirect  wholly-owned
subsidiary of NGUSA,  (ii) all Units purchased  pursuant to Section 3.1(a) to be
held  by  one  or  more  NGUSA  Affiliates  which  are  directly  or  indirectly
wholly-owned by NGUSA, and (iii) all Units purchased, pursuant to Section 3.2 to
be held by an  Affiliated  Investor  until the date two years  after the date of
purchase thereof, or the date of the IPO, whichever is earlier.

     (f)  Prior to the Transmission  Service Date, use  commercially  reasonable
efforts to cause the Initial Member to satisfy all of the  conditions  necessary
to allow the Transmission  Service Date to occur as soon as is practicable,  but
in all  events  prior  to  June  30,  2003;  and in  furtherance  thereof,  each
GridAmerica  Company,  severally  as to itself and not  jointly  and  severally,
agrees to use commercially  reasonable efforts to cause the Transmission Service
Date to occur as soon as practicable, but in all events, prior to such date.

     (g)  Not amend, or permit the Initial Member or any Affiliated  Investor to
amend,  the LLC Agreement to amend the  definitions of  Transaction  Agreements,
Cause,  Gross  Negligence,  Super  Majority of  Non-Managing  Members or Willful
Misconduct  or Sections  11.8(e)  through (h) of the LLC  Agreement  without the
approval of a Super Majority of  Transmission  Owners,  and until such time as a
Super Majority of Non-Managing  Members shall have the approval rights contained
in Section  6.6(b) of the LLC Agreement,  not permit any Affiliated  Investor to
amend,  modify  or  otherwise  supplement  or  waive  any  provision  of the LLC
Agreement  in a manner  that would alter or change the  powers,  preferences  or
rights of a Member (other than the Initial  Member) or any other Person that has
the right to become a Member  pursuant to this Agreement  (assuming for purposes
of this Subsection  10.1(8) that such other

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<PAGE>

Person has become a Member) so as to  adversely  affect  such  Member's  or such
other  Person's  powers,  preferences  or rights as a Member  thereunder  or the
effect  of which is (A) that the  Company  is able to enter  into or engage in a
transaction,  contract, agreement or arrangement that would have contravened the
LLC  Agreement  prior to such  amendment  or (B) would impair the ability of the
Company to carry out its Permitted Purposes.

     (h)  Not permit the Initial Member to make any  distribution to the holders
of, or  redemption  of, the Equity  Interests of the Initial  Member or make any
loans to NGUSA or any Affiliated  Investor unless,  prior to such distributions,
redemptions or loans, NGUSA notifies each GridAmerica Company and each Member of
such  distribution,  redemption  or loan and agrees in an  agreement  reasonably
satisfactory   to  a  Super  Majority  of   Transmission   Owners  (the  "Equity
Contribution  Agreement")  to cause the Person(s) who own the Initial  Member to
make,  at the written  request of the Company,  any  GridAmerica  Company or any
Member,  a capital  contribution  or other  equity  contribution  to the Initial
Member in an amount equal to the lesser of (i)  $25,000,000,  (ii) the aggregate
amount of such  distributions,  redemptions  and loans and (iii) any unsatisfied
liability  of the  Initial  Member to the  Company  or any  GridAmerica  Company
incurred as a result of the indemnity  obligation of the Initial Member pursuant
to Section  11.8(e) of the LLC Agreement or as a result of the Gross  Negligence
or Willful Misconduct of the Initial Member. The Equity  Contribution  Agreement
shall provide that NGUSA shall cause such capital  contribution  or other equity
contribution  to be (A) made to the  Initial  Member and (B) used by the Initial
Member solely for purposes of satisfying such liabilities of the Initial Member.

     Section 10.2  GridAmerica  Company  Covenants.  Each  GridAmerica  Company,
severally as to itself and not jointly and severally,  hereby  covenants for the
benefit of NGUSA that:  (a) it will not, and will not permit any of its majority
owned  subsidiaries  to,  purchase or hold any  securities  of The National Grid
Group,  PLC for so long as any Affiliate of NGUSA is the Managing Member and (b)
no later than 35 days after the Commission  issues one or more Final Orders,  it
shall notify the Company in writing whether or not such Final Orders  constitute
an Approval Order.

     Section 10.3 Rights of Transmission  Owners Under the Operation  Agreement.
The Parties  agree that the  Non-Divesting  GridAmerica  Companies  (i) shall be
parties in  interest  in respect of any  dispute  concerning  the removal of the
Managing  Member  pursuant to Sections  6.1(b)(ii) and 10.3 of the LLC Agreement
and (ii) shall have the right to cause the  Company  to  enforce  the  indemnity
obligation  of the  Initial  Member  pursuant  to  Section  11.8(e)  of the  LLC
Agreement or the liability of the Initial  Member based on its Gross  Negligence
or  Willful  Misconduct  to the  extent  necessary  to allow  the  Non-Divesting
GridAmerica  Companies to enforce and collect on their indemnity  claims against
the  Company  under the  Operation  Agreement  and to enforce  the rights of the
Company in any Equity  Contribution  Agreement  (including  the right to require
National  Grid USA to cause  the  Persons  who own the  Initial  Member  to make
capital or equity  contributions  to the Initial Member pursuant to such Section
10.1(h)).

     Section 10.4 Party Covenants.  Each Party that is or becomes a Member shall
not,  and shall cause its  Affiliates  that are  Members  not to,  amend the LLC
Agreement to amend the definitions of ITC Agreements,  Cause,  Gross Negligence,
Super Majority of Non-Managing

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Members  or  Willful  Misconduct  or  Sections  11.8(e)  through  (h) of the LLC
Agreement without the approval of a Super Majority of Transmission Owners.

                                   ARTICLE XI

                     TERMINATION, CERTAIN WITHDRAWAL RIGHTS

     Section 11.1 Termination of Agreement; Effect of Termination.

     (a)  If the  Transmission  Service  Date has not occurred on or before June
30, 2003, any Party may, upon thirty (30) days prior written notice to the other
Parties, cause the GridAmerica ITC to terminate.

     (b)  This  Agreement may be terminated  as to any  GridAmerica  Company (i)
pursuant  to  Section  5.7 or  (ii)  at any  time  by  mutual  consent  of  such
GridAmerica  Company and the Initial Member.  In the event of the termination of
this Agreement as to any GridAmerica  Company  pursuant to this Section 11.1(b),
this  Agreement  shall  become void as to such  GridAmerica  Company and have no
further effect, without any liability on the part of any party or its directors,
officers or stockholders;  provided,  however,  that no such  termination  shall
release any GridAmerica Company from any liabilities  pursuant to Section 2.2(d)
or Section 3.4.

     (c)  Notwithstanding the foregoing,  nothing contained in this Section 11.1
shall  relieve  any party to this  Agreement  of  liability  for a breach of any
provision of this Agreement.

                                   ARTICLE XII

                               DISPUTE RESOLUTION

     Section  12.1  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  within thirty (30) days
of such notice being sent, any Party to the dispute or  controversy  may declare
the  consultation  procedure set forth in this Section 12.1 terminated and refer
the dispute to arbitration pursuant to Section 12.2.

     Section  12.2  Arbitration.  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  12.1,  then such dispute shall be
resolved  according  to this  Section  12.2.  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

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<PAGE>

Section 12.1,  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  12.1,  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  Section  7.1  and  12.2(1),  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  12.1,  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.

     (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   12.2  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

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<PAGE>

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
12.2(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
13.7.

     (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 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 XII. 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 13.14(b). The arbitrators shall 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  orders 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,  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

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<PAGE>

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,  except that the  confidentiality  obligations  of the Parties
shall be governed by Section 13.9.

     (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  12.1,  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  12.2(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  independently  and under
this Section 12.2 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 12.2.

     (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

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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 12.2 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 12.2.

     Section 12.3  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 the LLC
Agreement,  and the Managing Member disputes whether Cause for removal exists (a
"Removal  Claim"),  Section  10.1(d) of this  Agreement or Section  4.4.3 of the
Operation Agreement, then the issue of whether Cause exists immediately shall be
referred  to  and  resolved  by  binding  arbitration  ("Removal   Arbitration")
according to this Section 12.3.  The Removal Claim shall be finally  resolved by
one  arbitrator   appointed  in  accordance  with  this  Section  12.3  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 12.2. 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 12.2.

     (b)  Referral of Claims to  Arbitration.  A Managing  Member who receives a
written  notice of removal as  contemplated  in  Section  6.1(b)(ii)  of the LLC
Agreement,  Section  10.1(d) of this Agreement or Section 4.4.3 of the Operation
Agreement (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

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<PAGE>

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 12.3. An arbitrator
appointed  pursuant  to this  Section  12.3(c) may not also be  appointed  as an
arbitrator pursuant to Section 12.2.

     (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 13.7.

     (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 13.10),
costs and expenses of the Removal  Arbitration  (including the arbitrators' fees
and  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.

                                       58

<PAGE>

                                  ARTICLE XIII

                                  MISCELLANEOUS

     Section 13.1 Notices. Every notice,  request, or other statement to be made
or delivered  to a Party  pursuant to this  Agreement  shall be directed to such
Party's  representative  at the address or  facsimile  number for such Party set
forth on Schedule B or to such other  address or  facsimile  number as the Party
may  designate  by  written  notice to each other  Party 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 13.2 Entire Agreement;  Amendments.  This Agreement constitutes the
entire  agreement among the Parties  pertaining to the subject matter hereof and
supersedes all prior agreements,  representations and understandings, written or
oral,  pertaining  thereto,  including that certain letter of intent dated as of
June 20, 2002 among NGUSA and the Original GridAmerica  Companies.  No amendment
to or  modification,  termination  or waiver of or under any  provision  of this
Agreement  shall be valid  unless the same shall be in writing and signed by the
Company,  NGUSA, the Initial Member and one or more GridAmerica Companies owning
Transmission  Facilities subject to the Functional Control of the Company with a
Net Plant of at least  66.67%  of the  aggregate  Net  Plant of all  GridAmerica
Companies'  Transmission  Facilities  subject to the  Functional  Control of the
Company (for  purposes of this Section 13.2,  an  GridAmerica  Company that is a
Member shall be deemed to own Transmission  Facilities equal to the Transmission
Facilities  owned  by  the  Company  multiplied  by  such  Member's   Percentage
Interest); provided, however, that (i) any amendment, modification,  termination
or waiver  that  adversely  affects a specific  Party must also be  approved  in
writing  by such Party and (ii) a waiver by a Party as to only its rights may be
granted by such Party;  provided,  further,  that any  amendment to Section 6.13
which does not deprive a Party of the essential benefits of Article VI shall not
be deemed to adversely affect such Party.

     Section  13.3  Effect  of  Waiver.  No waiver by a Party of any one or more
defaults by another Party 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 13.4 Not for the Benefit of Third  Parties;  No  Partnership.  This
Agreement  is  intended  to be solely  for the  benefit  of the  Parties,  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.  This Agreement is
not intended,  and shall not be construed,  interpreted or applied,  to create a
partnership or joint venture, among the Parties.

                                       59

<PAGE>

     Section 13.5 No Assignment;  Binding Effect. Except as provided in Sections
5.5 and 8.1 or in  connection  with  an  assignment  to  lenders,  neither  this
Agreement nor any right, interest or obligation hereunder may be assigned by any
Party hereto  without the prior  written  consent of each other Party hereto and
any  attempt to do so will be void,  except for  assignments  and  transfers  by
operation of law. Subject to the preceding  sentence,  this Agreement is binding
upon,  inures to the benefit of and is  enforceable  by the  Parties  hereto and
their respective successors and assigns.

     Section  13.6  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  13.7  Governing  Law;  Waiver  of Jury  Trial.  THE  VALIDITY  AND
INTERPRETATION  OF THIS AGREEMENT  SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK,  WITHOUT  REFERENCE TO THE CHOICE OF LAW PRINCIPLES THAT WOULD REQUIRE
THE LAW OF ANOTHER JURISDICTION TO APPLY. EACH OF THE PARTIES HERETO IRREVOCABLY
WAIVES,  TO THE FULLEST  EXTEND  PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY  PROCEEDING  ARISING OUT OF OR RELATING TO THIS  AGREEMENT OR ANY OF
THE TRANSACTIONS CONTEMPLATED HEREBY.

     Section 13.8 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 Parties
are not signatories to the original or to the same counterpart.

     Section  13.9  Confidentiality.  The  following  provisions  set  forth the
obligations arising out of the disclosure of Confidential Information by a Party
(the  "Disclosing  Party") to another Party (the  "Recipient"  or  "Recipients")
under this Agreement.

     (a)  Agreement of Non  Disclosure  and  Non-Use.  In  consideration  of the
disclosure by a Disclosing Party to a Recipient of Confidential Information, the
Recipient and its officers, directors, partners, employees,  Affiliates, agents,
representatives,  outside auditors, attorneys, and any Third Party Recipient who
have access to the Confidential Information (collectively, "Representatives"):

          (1)  shall keep  Confidential  information  confidential and will not,
     without the prior written consent of such Disclosing Party or as allowed by
     this Agreement, disclose Confidential Information to other Persons; and

          (2)  shall not use  Confidential  Information  other than for purposes
     legitimately related to the operation of the business of the Company and/or
     GridAmerica ITC,  including  ("Approved  Uses");  provided,  however,  that
     subject  to  any  applicable  copyright  rights  of  the  Company,  nothing
     contained herein shall limit the right of the Managing Member or any of its
     Representatives  from using any Confidential  Information of the Company or
     disclosed to the Company by any GridAmerica  Company consisting

                                       60

<PAGE>

     of  methods,   techniques,  rate  design  and  other  similar  Confidential
     Information that relates to the electric  transmission  industry generally,
     and not to the business of a particular  GridAmerica Company (but excluding
     any  software  developed  by the Company or any  GridAmerica  Company,  and
     excluding any  Confidential  Information of an  GridAmerica  Company marked
     "proprietary" by such GridAmerica  Company),  for other than Approved Users
     which are not in competition  with the Company.  Each  Recipient  agrees to
     transmit the Confidential Information of a Disclosing Party only to such of
     the  Recipient's   Representatives   who  need  to  know  the  Confidential
     Information  for the purpose of assisting the  Recipient in Approved  Uses,
     and who are informed of the  provisions  of this Section  13.9. A Recipient
     shall  be  fully   liable  for  any  breach  of  this   Agreement   by  its
     Representatives  and  agrees,  at its  sole  expense,  to  take  reasonable
     measures to restrain its  Representatives  from  prohibited or unauthorized
     disclosure or use of the Confidential Information.

     (b)  Disclosure Required by Subpoena,  Law, Litigation or Legal Process. If
any portion of Confidential Information is required to be disclosed by subpoena,
Law,  litigation,  arbitration  or similar legal  process,  or to a Governmental
Authority,  the  Recipient  will  promptly  inform the  Disclosing  Party of the
existence,  terms and  circumstances  surrounding  such request  before any such
disclosure  is  required  so as to allow the  Disclosing  Party to  protect  the
Confidential  Information.  The Recipient will consult with the Disclosing Party
on the advisability of taking  legally-available  steps to resist or narrow such
request.  The Disclosing Party may thereafter seek to obtain a protective order,
and the Recipient  shall  cooperate with the Disclosing  Party in its efforts to
obtain a protective  order, to restrict access to, and any use or disclosure of,
the  Confidential   Information,   at  the  expense  of  the  Disclosing  Party.
Notwithstanding  anything else to the contrary  contained  herein,  Confidential
Information  that is  required to be  disclosed  in the  ordinary  course of the
Company's business to MISO or to the Commission or other Governmental  Authority
pursuant to Law or the MISO  Agreement  may be so disclosed  without  compliance
with this Section 13.9(b).

     (c)  Disclosure In Connection  with Financing  Transactions  or Transfer of
Units.  In  the  event  that  a  Recipient  desires  to  disclose   Confidential
Information  in  connection  with a  financing  or  other  similar  transaction,
including as part of the due diligence  requested by a proposed  counterparty (a
"Third  Party  Recipient"),   such  Recipient  may  disclose  such  Confidential
Information  to such Third Party  Recipient only after receipt by such Recipient
from  such  Third-Party  Recipient  of a  confidentiality  agreement  containing
substantially the terms and conditions set forth in this Section 13.9; provided,
however, that no competitively sensitive Confidential  Information concerning an
GridAmerica  Company may be disclosed to any Person that is a direct  competitor
of such  GridAmerica  Company without such  GridAmerica  Company's prior written
consent.

     (d)  Disclosure  in  Connection  with  Dispute.  A Recipient  may  disclose
Confidential  Information  to (i) the Panel in  connection  with an  Arbitration
pursuant to Section 12.2,  (ii) to the  Commission  in  connection  with a Claim
being heard by the Commission and (iii) to a court in connection  with a dispute
being heard by such court;  provided,  however,  that the  Recipient  shall take
reasonable steps to protect the confidentiality of such Confidential Information
and,  where the  Recipient  would not be  materially  adversely  affected by its
disclosure to the Disclosing  Party of its intent to disclose such  Confidential
Information in

                                       61

<PAGE>

connection with a dispute as provided above,  the Recipient shall so disclose to
the Disclosing  Party the  Recipient's  intent to so disclose such  Confidential
Information so as to allow the Disclosing  Party the opportunity to protect such
Confidential  Information.  In such case, the Recipient shall cooperate with the
Disclosing Party in its efforts to obtain a protective order, to restrict access
to, and any other use or disclosure of, the Confidential Information.

     (e)  Survival of Obligations.  The obligations with respect to Confidential
Information set forth herein shall survive the termination of this Agreement for
five (5) years.  Upon the  termination of the obligations of this Agreement with
respect to an item of Confidential  Information,  the Recipient shall be free to
use and disclose such item of  information  freely and without any obligation to
the Disclosing Party.

     (f)  Ownership of Confidential Information.  Each Disclosing Party reserves
its  (and,  if  applicable,  its  licensor's)  ownership  rights  in  and to its
Confidential  Information  disclosed to a Recipient and only grants a license to
use such  Confidential  Information  for the Approved  Uses.  In addition,  each
Recipient  agrees  that  it does  not  acquire  any  ownership  interest  in the
Confidential Information of any Disclosing Party by virtue of the combination of
such Confidential  Information with other  Confidential  Information,  including
that of the Company.

     Section 13.10 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  13.11  Time  is of the  Essence.  Time is of the  essence  of each
provision of this Agreement.

     Section 13.12 Further Assurances. Each Party agrees that it shall hereafter
execute and deliver such further instruments,  provide all information, and take
or forbear such further acts and things as may be reasonably required and useful
to  carry  out  the  intent  and  purpose  of  this  Agreement  and as  are  not
inconsistent with the provisions of this Agreement.

     Section 13.13 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.

     Section 13.14 Remedies.

     (a)  The Parties  agree that a breach of this  Agreement  by any Party will
result in  irreparable  damage to the other  Parties for which no money  damages
could  adequately  compensate.  In addition to all other  remedies to which such
other  Parties may be entitled at law

                                       62

<PAGE>

or in equity,  any Party shall be entitled to seek injunctive relief or specific
performance to restrain or compel the breaching  Party, and each Party expressly
waives any claim that an adequate remedy at law exists for such a breach.

     (b)  Notwithstanding  anything contained in this Agreement to the contrary,
no Party shall be liable to any other Party for indirect, consequential, special
or punitive damages on account of any action or proceeding  brought hereunder or
related hereto.

                                       63

<PAGE>

     IN WITNESS WHEREOF,  this Agreement has been duly executed and delivered by
the duly authorized officer of each party as of the date first above written.

                                      GRIDAMERICA LLC
                                      BY GRIDAMERICA HOLDINGS INC., ITS
                                      MANAGING MEMBER

                                      By:      \s\Nicholas P. Winser
                                         ---------------------------------------
                                      Name:       Nicholas P. Winser
                                      Title:      Chief Executive Officer
                                      Date:       February 14, 2003

                                      GRIDAMERICA HOLDINGS, INC.

                                      By:      \s\Nicholas P. Winser
                                         ---------------------------------------
                                      Name:       Nicholas P. Winser
                                      Title:      Chief Executive Officer
                                      Date:       February 14, 2003

                                       64

<PAGE>

                                      AMEREN SERVICES COMPANY as agent for
                                      Union Electric Company d/b/a AmerenUE and
                                      Central Illinois Public Service Company
                                      d/b/a AmerenCIPS

                                      By:      \s\David A. Whiteley
                                         ---------------------------------------
                                      Name:       David A. Whiteley
                                      Title:      Senior Vice President
                                      Date:       February 14, 2003

                                      AMERICAN TRANSMISSION SYSTEMS,
                                      INCORPORATED

                                      By:      \s\Stanley F. Szwed
                                         ---------------------------------------
                                      Name:       Stanley F. Szwed
                                      Title:      Vice President
                                      Date:       February 14, 2003

                                      NORTHERN INDIANA PUBLIC SERVICE
                                      COMPANY

                                      By:      \s\ Jerry L. Godwin
                                         ---------------------------------------
                                      Name:        Jerry L. Godwin
                                      Title:       Chief Operating Officer
                                      Date:        February 14, 2003

                                      NATIONAL GRID USA

                                      By:   \s\ Richard P. Sergel by Nick Winser
                                         ---------------------------------------
                                      Name:     Richard P. Sergel
                                      Title:    President and CEO
                                      Date:     February 14, 2003

                                       65

<PAGE>

                                                  Schedule A to Master Agreement

                           CERTAIN EXCLUDED EMPLOYEES

Paul Halas

Philip Johnson

Roger Kenyon

Nigel Williams

Nick Winser

                                       66

<PAGE>

                                                  Schedule B to Master Agreement

                              ADDRESSES FOR NOTICE

GridAmerica LLC

GridAmerica LLC
c/o National Grid USA
25 Research Drive
Westborough, MA 01582
Attn:    Nick Winser
         Senior Vice President
Fax:     508-366-5498
with a copy to:
Lawrence J. Reilly, Esq.
Senior Vice President and General Counsel
Fax:     508-389-2605

GridAmerica Holdings Inc.

c/o National Grid USA
25 Research Drive
Westborough, MA 01582
Attn:    Nick Winser
         Senior Vice President
Fax:     508-366-5498
with a copy to:
Lawrence J. Reilly, Esq.
Senior Vice President and General Counsel
Fax:     508-389-2605

Ameren Services Company

Ameren Services Company
One Ameren Plaza
1901 Chouteau Avenue
St. Louis, MO 63103
Attn:    David A. Whiteley
         Senior Vice President
Fax:     314-554-3066

                                       67

<PAGE>

Ameren Services Company
One Ameren Plaza
1901 Chouteau Avenue
St. Louis, MO 63103
Attn:    Steven R. Sullivan
         General Counsel
Fax:     314-554-4014

American Transmission Systems, Incorporated

c/o FirstEnergy Service Company
76 South Main Street
Akron, OH 44308
Attn: Stanley F. Szwed
Fax: 330-384-4988

Northern Indiana Public Service Company

Northern Indiana Public Service Company
801 E. 86th Avenue
Merrillville, IN 46410
Attn:    Frank A. Venhuizen
Fax:     219-647-5630

National Grid USA

National Grid USA
25 Research Drive
Westborough, MA 01582
Attn:    Nick Winser
         Senior Vice President
Fax:     508-366-5498
with a copy to:
Lawrence J. Reilly, Esq.
Senior Vice President and General Counsel
Fax:     508-389-2605

                                       68EXECUTION COPY

                    AMENDED AND RESTATED OPERATION AGREEMENT

                                  by and among

                      UNION ELECTRIC COMPANY d/b/a AmerenUE

                                CENTRAL ILLINOIS
                     PUBLIC SERVICE COMPANY d/b/a AmerenCIPS

                   AMERICAN TRANSMISSION SYSTEMS, INCORPORATED

                     Northern indiana public service company

                                       and

                                 GRIDAMERICA LLC

                                February 14, 2003

<PAGE>

                                TABLE OF CONTENTS

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

     1.1.        Definitions................................................   2
     1.2.        Rules of Construction......................................  11

ARTICLE II       AUTHORIZATIONS BY THE TRANSMISSION OWNERS..................  12

     2.1.        Functional Control Authorization...........................  12
     2.2.        Non-transferred Facilities.................................  13
     2.3.        Interconnection Agreements.................................  13
     2.4.        Network Upgrades...........................................  14
     2.5.        Revenue Collection and Distribution........................  15
     2.6.        The Company as Owner of Transmission Facilities;
                     Non-Discrimination.....................................  15

ARTICLE III      RIGHTS, POWERS, AND OBLIGATIONS OF THE GridAmerica
                     ITC......................................................16

     3.1.        Operation And Planning.....................................  16
     3.2         Other Matters..............................................  18
     3.3.        Responsibilities To The Transmission Owner.................  18
     3.4.        Additional Obligations.....................................  21
     3.5.        Information................................................  24

ARTICLE IV       RIGHTS, POWERS, AND OBLIGATIONS OF THE
                     TRANSMISSIONS OWNERS...................................  24

     4.1.        Operation and Planning.....................................  24
     4.2.        Additional Obligations.....................................  24
     4.3.        Payments to the Company....................................  24
     4.4.        Transmission Owners' Remedies..............................  35

ARTICLE V        TERM AND TERMINATION.......................................  36

     5.1.        Term.......................................................  36
     5.2.        Termination................................................  38
     5.3.        Effect of Termination Pursuant to Sections 5.1 or 5.2.3....  39
     5.4.        Effect of Termination Pursuant to Section 5.2.2............  40
     5.5.        Regulatory And Other Approvals Or Procedures...............  41

ARTICLE VI       DISPUTE RESOLUTION.........................................  41

     6.1.        Negotiations...............................................  41
     6.2.        Arbitration................................................  41
     6.3.        Arbitration of Certain Claims Regarding Removal of
                     Managing Member........................................  46

i

<PAGE>

ARTICLE VII      TAX MATTERS................................................  48

     7.1.        Responsibility for Transmission Owner Taxes................  48
     7.2.        Responsibility for the Company Taxes.......................  48

ARTICLE VIII     FORCE MAJEURE..............................................  49

ARTICLE IX       BREACH, CURE AND DEFAULT...................................  49

     9.1.        Continued Operation........................................  49
     9.2.        Remedies...................................................  49
     9.3.        No Joint Liability.........................................  50

ARTICLE X        MISCELLANEOUS PROVISIONS...................................  50

    10.1.        Not for Benefit of Third Parties...........................  50
    10.2.        Governing Law..............................................  50
    10.3         Successors And Assigns.....................................  50
    10.4         Effect of Waiver...........................................  51
    10.5         Severability...............................................  51
    10.6         Renegotiation..............................................  51
    10.7         Representation And Warranties..............................  51
    10.8         Further Assistance.........................................  52
    10.9         Notices....................................................  53
    10.10        Regulatory Proceedings.....................................  53
    10.11        Entire Agreement; Amendments...............................  53
    10.12        Efforts of the Parties.....................................  53
    10.13        Third-Party Joint Agreements...............................  54
    10.14        Confidentiality............................................  54
    10.15        No Partnership.............................................  57
    10.16        Current Documents..........................................  57
    10.17        Late Payments..............................................  57
    10.18        Counterparts...............................................  57
    10.19        Attorneys' Fees............................................  57
    10.20        Time is of the Essence.....................................  57
    10.21        Representatives............................................  57

APPENDICES

APPENDIX A DESCRIPTION OF TRANSFERRED FACILITIES

APPENDIX B THIRD-PARTY JOINT AGREEMENTS

APPENDIX C NOTICES

APPENDIX D - SCHEDULE 5A - DELINEATION OF FUNCTIONS BETWEEN MIDWEST
                     ISO, GRIDAMERICA AND GRIDAMERICA THREE

ii

<PAGE>

                    AMENDED AND RESTATED OPERATION AGREEMENT

     THIS AMENDED AND RESTATED  OPERATION  AGREEMENT is made and entered into as
of the 14th day of February,  2003 by and among (i) UNION ELECTRIC COMPANY d/b/a
AmerenUE  and  CENTRAL   ILLINOIS  PUBLIC  SERVICE   COMPANY  d/b/a   AmerenCIPS
(collectively,  "Ameren,"  and for all  purposes  of this  Agreement,  a  single
Transmission Owner),  AMERICAN TRANSMISSION SYSTEMS,  INCORPORATED ("ATSI"), and
NORTHERN  INDIANA PUBLIC SERVICE COMPANY  ("NIPSCO"),  (ii)  GRIDAMERICA  LLC, a
Delaware  limited  liability  company  (the  "Company"),  each of  which  may be
referred to as a "Party", or collectively as the "Parties."

                                    RECITALS

     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, the Midwest Transmission System Operator,  Inc. ("Midwest ISO") is
a Commission-approved regional transmission organization.

     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 within the Midwest ISO.

     WHEREAS, Ameren, ATSI and NIPSCO wish to comply with Order No. 2000 through
the formation of an Independent Transmission Company within the Midwest ISO.

     WHEREAS,  on  October  31,  2002,  (i)  Ameren,  ATSI and  NIPSCO (or their
applicable affiliates),  National Grid USA ("NGUSA"), the Initial Member and the
Company  entered  into a Master  Agreement  dated as of  October  31,  2002 (the
"Original Master  Agreement"),  (ii) the Initial Member 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")  conditionally  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;

     WHEREAS, each Transmission Owner agrees to transfer Functional Control over
its  Transmission  Facilities to the Company and desires the Company to exercise
Functional Control

<PAGE>

over its Transferred Facilities on the terms and conditions set forth herein and
in the MISO ITC Agreement;

     WHEREAS,   the  Company  agrees  to  accept  Functional  Control  over  the
Transferred  Facilities of the  Transmission  Owners on the terms and conditions
set forth  herein and in the MISO ITC  Agreement,  in each case as  modified  in
compliance with the FERC Approving Order.

     NOW  THEREFORE,   in  consideration   of  the  premises,   and  the  mutual
representations,  warranties,  covenants,  and agreements hereinafter set forth,
and for other good and valuable  consideration,  the receipt and  sufficiency of
which  are  hereby  acknowledged,  and  intending  to  be  legally  bound,  each
Transmission  Owner,  each acting in its  individual  capacity,  and the Company
agree to amend and restate the Original  Operation  Agreement in its entirety as
follows:

                                    ARTICLE I
                                   DEFINITIONS

     1.1  Definitions.  Terms with initial capitalization used in this Agreement
without other definition shall have the meanings specified in this Article I.

     "AAA" shall have the meaning given in Section 6.2(a).

     "Acceptable  Credit  Bank"  shall mean a bank that (i) is subject to review
and examination by a federal  Governmental  Authority,  (ii) is in good standing
with such authority,  (iii) has combined capital,  surplus and undivided profits
aggregating  not less than $500 million and (iv) has  unsecured  long-term  debt
rated at least "A-" by  Standard  and Poor's  Ratings  Group and "A3" by Moody's
Investors Service.

     "Accounting  Failure"  shall mean a material  deficiency  in the  Company's
accounting  practices or systems as identified in an audit conducted pursuant to
the terms of this Agreement.

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

     "Additional Claim" shall have the meaning given in Section 6.2(i).

     "Additional Term" shall have the meaning given in Section 5.1.

     "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.

                                       2

<PAGE>

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

     "Ameren" shall have the meaning given in the preamble.

     "Ancillary Services" shall have the meaning given in the MISO OATT.

     "Applicable Laws and Regulations" shall mean all applicable federal,  state
and local Laws,  ordinances,  rules and  regulations,  and all duly  promulgated
orders and other duly authorized  actions of any  Governmental  Authority having
jurisdiction over a Party, its facilities and/or the services it provides.

     "Approved Uses" shall have the meaning given in Section 10.14(a)(ii).

     "Arbitration" shall have the meaning given in Section 6.2.

     "Arbitration Notice" shall have the meaning given in Section 6.2(b).

     "Arbitration Rules" shall have the meaning given in Section 6.2(a).

     "ATSI" shall have the meaning given in the preamble.

     "Business Day" shall mean any day other than Saturday, Sunday, or other day
on which banks are authorized or required to be closed in New York, New York.

     "Cause"  shall mean (i) Gross  Negligence  that  causes,  or is  reasonably
likely  in the  future  to  cause,  a  Material  Adverse  Effect,  (ii)  Willful
Misconduct  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 any two Counted Years during any five calendar year
period,  or (B) the failure of 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.

     "Claimant Party" shall have the meaning given in Section 6.2(b).

     "Claims" shall have the meaning given in Section 6.2(a).

     "Collection Account" shall have the meaning given in Section 3.3.4(a).

     "Commission" or "FERC" shall mean the Federal Energy Regulatory  Commission
or any successor agency.

     "Company Payments" shall have the meaning given in Section 3.4.1(b).

     "Company"  shall mean  GridAmerica  LLC and any  wholly-owned  subsidiaries
created for the purpose of satisfying state domestication requirements.

     "Confidential  Information"  shall mean all  confidential  or trade  secret
information  of a  Disclosing  Party  provided to a Recipient  pursuant to or in
connection  with any  Transaction

                                       3

<PAGE>

Agreement,  including  business  information;   strategies;  methods;  technical
information;  pricing techniques and strategies; customer information;  investor
information;  price curves;  positions,  plans and  strategies  for expansion or
acquisitions,   budgets,  customer  lists,  studies  of  information  and  data,
electronic  databases,  computer  programs,  bids or  proposals,  organizational
structure,  compensation of personnel,  and new product  information;  provided,
however,  "Confidential  Information" shall not include information that (i) was
already known by (as established by dated documentation) a Recipient at the time
of the receipt of such information by such Recipient from the Disclosing  Party,
(ii) is in, or subsequently  enters, the public domain other than as a result of
a disclosure by the Recipient in breach of an obligation of confidence, (iii) is
received by the  Recipient  from a third party if such third party was not known
to be subject to any confidentiality obligation, (iv) is independently developed
by a Person  without  access to the  Confidential  Information  provided  by the
Disclosing  Party,  (v) was or is  furnished  by a  Disclosing  Party to another
Person  without  written  confidentiality  restrictions  or (vi) is approved for
release by written authorization of the Disclosing Party.

     "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.

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

     "Disclosing Party" shall have the meaning given in Section 10.14.

     "Dispute Parties" shall have the meaning given in Section 6.2(b).

     "Early  Termination  Event"  shall  have  the  meaning  given  in  the  LLC
Agreement.

     "Effective Date" shall mean October 31, 2002.

     "Emergency" shall mean an event or situation which poses an imminent threat
of material  damage to property or injury  (including  death) to persons,  or is
imminently  likely to cause a material  adverse  effect on the  security  of the
Transmission  System or the  electrical  or  transmission  systems  of any other
Person interconnected to the Transmission System.

     "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.

     "Fair Market Value" shall have the meaning given in the Master Agreement.

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

     "Force Majeure" shall have the meaning given in the MISO OATT.

                                       4

<PAGE>

     "Functional Control" shall mean the exercise by the Company of control over
the  operation  of  the  Transmission  System  and  performance  of  all  of the
activities contemplated by Order 2000.  Notwithstanding anything to the contrary
in this  Agreement,  Functional  Control  shall  include all  activities  now or
hereafter  required  under  Applicable  Laws and  Regulations to be performed by
RTOs.

     "Generator"  shall mean an Entity  that owns or  controls  and  operates an
electric power generation facility which produces electrical energy.

     "Good  Business   Practice"  shall  mean  (i)  the  Company's  exercise  of
Functional  Control  over the  Transferred  Facilities,  except  as ceded to the
Midwest  ISO under  the MISO ITC  Agreement,  in  accordance  with Good  Utility
Practice and (ii) the Company's fulfillment in a commercially  reasonable manner
and,  where  applicable,  in  accordance  with  Good  Utility  Practice,  of its
obligations hereunder and under the other Transaction Agreements, all Applicable
Laws and Regulations and all other agreements to which the Company is a party.

     "Good  Business  Practice  Breach"  shall have the meaning given in Section
3.4.1(a).

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

     "Governmental  Authority"  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 HoldCo" shall have the meaning given in the Master Agreement.

     "GridAmerica  ITC" shall mean the ITC created by the  Transmission  Owners,
the Company and NGUSA  pursuant to the Master  Agreement,  the LLC Agreement and
this Agreement.

     "Gross  Negligence"  shall mean the gross  negligence of (i) the Company in
the performance of its duties or obligations  under this Agreement other than in
its capacity as an owner of facilities  that  comprise part of the  Transmission
System or (ii) any Affiliate of the Company that provides services to or for the
benefit of the  Company in the  performance  of those  services,  other than any
Affiliate which owns facilities that are part of the Transmission  System in its
capacity as such.

     "Indemnified Owners" shall have the meaning given in Section 4.2.4(a).

     "Indemnified Party" shall have the meaning given in Section 4.2.5(a).

     "Indemnifying Owner" shall have the meaning given in Section 4.2.4(a).

     "Indemnity Cap" shall have the meaning given in Section 4.2.4(c).

                                       5

<PAGE>

     "Indemnifying Party" shall have the meaning given in Section 4.2.5(a).

     "Independent  Transmission  Company"  or "ITC"  shall  mean an  independent
transmission company approved pursuant to Commission order or regulation.

     "Initial Management Fee" shall have the meaning given on the LLC Agreement.

     "Initial Member" shall have the meaning given in the LLC Agreement.

     "Initial  Public  Offering"  shall  have  the  meaning  given  in  the  LLC
Agreement.

     "Initial  Term" shall mean the period  commencing on the Effective Date and
ending on the fifth anniversary of the Transmission Service Date.

     "Interconnection Agreement" shall mean an agreement between the Company and
either (i) a Generator governing the terms and conditions of the interconnection
of a generation facility to the Transmission System or (ii) a local distribution
entity governing the terms and conditions of the interconnection of distribution
facilities to the Transmission System.

     "Interconnection  Customer"  shall mean a Generator  or local  distribution
entity which has entered into an Interconnection Agreement.

     "Interconnection  Procedures"  shall  mean  those  procedures  and  form of
agreement  governing the  interconnection  of the facilities of a Generator or a
local distribution entity with the Transferred  Facilities which are established
by the Company and effective  pursuant to Applicable  Laws and  Regulations  or,
prior to such effectiveness,  the MISO OATT and the interconnection protocols of
the Midwest ISO, as each may be amended, modified or otherwise supplemented from
time to time.

     "Interconnection  Service"  shall,  with respect to a  Generator,  have the
meaning  given in the MISO  OATT,  and,  with  respect  to a local  distribution
entity,  have the meaning  given in the  Interconnection  Agreement  between the
Company and such local distribution entity.

     "ITC Order" shall mean the order issued by the Commission  authorizing  the
Company to operate as an ITC within the Midwest ISO pursuant to the terms of the
MISO ITC  Agreement  and any other  order of the  Commission  pertaining  to the
Company's rights or responsibilities with respect to the Transferred Facilities.

     "Law" shall mean any applicable  constitutional  provision,  statute,  act,
code (including the United States Internal Revenue Code of 1986, as amended from
time  to  time),  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.

                                       6

<PAGE>

     "LLC  Agreement"  shall mean the Amended  and  Restated  Limited  Liability
Company  Agreement of 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.

     "Lockbox Account" shall have the meaning given in Section 3.3.4(a).

     "Lockbox Bank" shall have the meaning given in Section 3.3.4(a).

     "Lockbox Subaccount" shall have the meaning given in Section 3.3.4(a)(ii).

     "Losses" 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.

     "Majority of Indemnifying Transmission Owners" shall have the meaning given
in Section 4.2.5(b).

     "Management Fee" shall have the meaning given in the LLC Agreement.

     "Managing  Member"  shall  mean  the  managing  member  of the  Company  as
designated in accordance with Section 6.1 of the LLC Agreement.

     "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 the Company
will exercise under the MISO ITC Agreement.

     "Master  Agreement"  shall mean the Amended and Restated  Master  Agreement
dated as of February  14, 2003 among the  Company,  NGUSA and each  Transmission
Owner  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 the Transmission System taken as a whole.

     "Member"  shall mean any Person who is a member of the  Company,  including
the Managing Member.

     "Midwest  ISO"  shall  mean the  Midwest  Independent  Transmission  System
Operator, Inc.

     "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
Independent  Transmission System Operator, Inc. on file with the Commission,  as
it may be amended, modified or otherwise supplemented and in effect from time to
time.

                                       7

<PAGE>

     "NERC"  shall  mean the  North  American  Reliability  Council,  applicable
regional electric reliability councils, or successor organizations.

     "Net Plant" or "net  plant"  shall  mean,  as of the date of  determination
thereof and 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 FERC Form 1 information  used
shall be the difference  between (A) the information on page 207, Electric Plant
in Service (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.

     "Network Upgrades" shall have the meaning given in the MISO OATT.

     "NGUSA" shall mean National Grid USA.

     "NIPSCO" shall have the meaning given in the preamble.

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

     "Non-transferred  Facilities"  shall mean, with respect to any Transmission
Owner,  such  Transmission  Owner's  transmission  facilities  and  distribution
facilities (i) which are not Transferred Facilities, but which are necessary for
the  provision  of  Transmission  Service or Wholesale  Distribution  Service to
Eligible  Customers  pursuant  to the MISO OATT and which may be  subject  to an
agency  agreement;   and  that  are  disclosed  to  the  Company  prior  to  the
Transmission  Service  Date or (ii) as a  Transmission  Owner  may  subsequently
include as "Non-transferred Facilities" for purposes of this Agreement.

     "Notice of Removal Dispute" shall have the meaning given in Section 6.3.2.

     "Operation  Agreement Counted Year" shall mean a calendar year with respect
to which either (i) any Transmission  Owner shall have any indemnity  obligation
to the Company  pursuant to Section  4.2.4(c)  with respect to any Good Business
Practice  Breach  or (ii) any  Transmission  Owner  would  have had a claim  for
indemnification against the Company pursuant to Section 3.4.1(a) with respect to
any claim occurring in such year and involving any Good Business Practice Breach
but for the fact  that  the  amount  of  Losses  suffered  or  incurred  by such
Transmission  Owner with  respect to such claim  plus the  Company  Payments  in
respect of Losses  occurring in such year  exceeded the Liability Cap Amount for
such year.

     "Operational  Failure"  shall mean in any calendar  year (a) the failure of
the Company to perform the  functions it is permitted to perform  under the MISO
ITC  Agreement  with respect to the delivery of more than (i) 0.01% of the total
megawatt hours of Transmission  Transactions

                                       8

<PAGE>

within  the  Transmission  System or (ii) 0.4% of the  total  megawatt  hours of
approved  Transmission  Transactions  for a particular  contract path within the
Transmission  System or (b) any damage to  facilities  that comprise part of any
Transmission Owner's Transferred Facilities caused solely by the approval by the
Company  to the extent  permitted  under the MISO ITC  Agreement  of a volume of
Transmission  Transactions that exceed the capacity of the affected  facilities;
provided,  however, that failures caused by (i) Force Majeure occurrences,  (ii)
the failure of a  Transmission  Owner to follow Good  Utility  Practice or (iii)
circumstances  arising on an  interconnected  transmission  system  shall not be
considered in determining whether an Operational Failure has occurred.

     "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 an RTO.

     "Overpaid Party" shall have the meaning given in Section 3.3.4(c).

     "Overpayment" shall have the meaning given in Section 3.3.4(c).

     "Panel" shall have the meaning given in Section 6.2(d).

     "Party" shall have the meaning given in the preamble.

     "Pass-Through  Basis"  shall mean that the  obligation  of a Party making a
payment to another Party under this  Agreement  shall be only to pay that amount
which  such  Party  receives  from a third  party  in  respect  of such  payment
obligation to such Person.

     "Payment Event" shall have the meaning given in Section 4.2.4(c).

     "Percentage Interests" shall have the meaning given in the LLC Agreement.

     "Person" shall mean any natural person or Entity.

     "Recipient" shall have the meaning given in Section 10.14.

     "Regional Transmission  Organization" or "RTO" shall have the meaning given
in 18 C.F.R ss.  35.34(b)(1) of the  Commission's  regulations or such successor
definition approved by the Commission.

     "Related Proceeding" shall have the meaning given in Section 6.2(c).

     "Removal Arbitration" shall have the meaning given in Section 6.3.

     "Removal Claim" shall have the meaning given in Section 6.3.

     "Removal Claimant" shall have the meaning given in Section 6.3.2.

     "Removal Dispute Parties" shall have the meaning given in Section 6.3.2.

                                       9

<PAGE>

     "Removal Notice " shall have the meaning given in Section 6.3.2.

     "Removal Respondent Party" shall have the meaning given in Section 6.3.2.

     "Representatives" shall have the meaning given in Section 10.14(a).

     "Respondent Party" shall have the meaning given in Section 6.2(b).

     "SEOs" shall have the meaning given in Section 6.1.

     "Super Majority of Transmission Owners" shall mean (i) prior to the date on
which the Company  first issues Units in exchange for  Transmission  Facilities,
two-thirds or more of the Transmission  Owners 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 this Agreement or are owned by the
Company with a Net Plant  greater than 66.67% of the  aggregate Net Plant of all
Transmission  Facilities  subject  to such  Functional  Control  of the  Company
pursuant to this  Agreement  or are owned by the  Company.  For  purposes of the
above  vote,  the "owner of  transmission  facilities"  means (i) in the case of
Transmission  Facilities subject to the Company's Functional Control pursuant to
this 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 (as defined in
the LLC  Agreement).  In the event that an Initial  Public  Offering  shall have
occurred,  the  independent  board members of GridAmerica  HoldCo shall vote the
deemed ownership interest of GridAmerica HoldCo.

     "Taxes" shall mean all taxes,  charges,  fees, levies,  penalties,  and all
other  assessments  imposed by any Governmental  Authority,  including,  but not
limited to,  income,  excise,  property  sales,  transfer,  franchise,  payroll,
withholding, social security, or other taxes, including any interest, penalties,
or additional charges attributable thereto.

     "Tax Return"  shall mean any return,  report,  information  return or other
document (including any related or supporting  information) required to be filed
with or supplied to any Governmental Authority with respect to Taxes.

     "Third Party Claims" shall have the meaning given in Section 4.2.4(c).

     "Third Party Recipient" shall have the meaning given in Section 10.14(c).

     "Transaction Agreements" shall have the meaning given in the LLC Agreement.

     "Transferred  Facilities"  shall  mean,  with  respect to any  Transmission
Owner, the Transmission  Facilities owned by such Transmission  Owner, for which
Functional  Control  has  been  transferred  to the  Company  pursuant  to  this
Agreement and in compliance with Applicable Laws and Regulations,  and which are
described on such Transmission  Owner's subappendix to Appendix A, as Appendix A
may be  amended,  modified  or  otherwise  supplemented  from  time  to  time in
compliance with Applicable Laws and Regulations.

                                       10

<PAGE>

     "Transmission  Business" shall mean, with respect to a Party, its business,
assets,  and activities  relating to the  transmission  of  electricity  through
Transferred Facilities.

     "Transmission Customer" shall have the meaning given in the MISO OATT.

     "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  Owner" shall mean a Person who is a Party to this  Agreement
and transfers Functional Control of Transmission  Facilities to the Company. The
initial Transmission Owners are Ameren, ATSI, NIPSCO.

     "Transmission  Service" shall mean "Transmission Service" as defined in the
MISO OATT and "Network Integration  Transmission Service" as defined in the MISO
OATT but shall not include Interconnection Service.

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

     "Transmission System" shall mean Transferred Facilities and Non-transferred
Facilities taken as a whole.

     "Transmission Transaction" shall mean Transmission Service scheduled by the
Company to the extent permitted by the MISO ITC Agreement.

     "Transmission User" shall have the meaning given to the term "Users" in the
MISO OATT.

     "Underpaid Party" shall have the meaning given in Section 3.3.4(c).

     "Underpayment" shall have the meaning given in Section 3.3.4(c).

     "Willful  Misconduct"  shall mean (i) an act or omission by (A) the Company
in the performance of its duties or obligations  under this Agreement or (B) any
Affiliate thereof that provides services to or for the benefit of the Company in
the  performance  of such  services,  in either case,  that is in disregard of a
known,  reasonably knowable or reasonably obvious risk that harm to the Company,
any  Transmission  Owner, or any of the facilities  included in the Transmission
System is likely to follow or (ii) a deliberate  breach of this Agreement by (A)
the Company in respect of any of its duties or obligations  hereunder or (B) any
Affiliate  thereof that provides  services to or for the benefit of the Company,
in either case, in the performance of such services;  provided, however, that an
act by the Company in its capacity as an owner of facilities  that comprise part
of the  Transmission  System or any act or omission of an  Affiliate  which owns
facilities  that are part of the  Transmission  System in its  capacity  as such
shall not be considered Willful Misconduct.

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

                                       11

<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 or Appendix
          means a Section or  Article  of, or an  Appendix  to,  this  Agreement
          unless another agreement is specified; and

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

                                   ARTICLE II
                    AUTHORIZATIONS BY THE TRANSMISSION OWNERS

     2.1  Functional  Control  Authorization.  Each  Transmission  Owner  hereby
agrees that on and as of the  Transmission  Service Date the Company shall,  and
the  Company  hereby  agrees  to,  (i)  assume  Functional   Control  over  such
Transmission  Owner's Transferred  Facilities,  and (ii) cede to the Midwest ISO
those  functions  set forth in the MISO ITC Agreement to be ceded to the Midwest
ISO,  in each case for the Initial  Term and any  Additional  Term.  The Company
shall not  exercise  direct  physical  control over the  Transferred  Facilities
except  as set  forth  in  this  Agreement  or in a  separate  agreement  with a
Transmission Owner.  Notwithstanding  the foregoing,  the Parties shall not have
any rights,  duties,  or obligations under this Agreement until the Transmission
Service  Date has  occurred,  except  with  respect to the  Parties'  respective
rights,  duties, and obligations under Articles V, VI, VII, IX and X hereof, and
so much of Article I hereof as is applicable. If a Person becomes a Transmission
Owner pursuant to Section  3.4.3,  the Company shall assume  Functional  Control
over the Transferred  Facilities of such Transmission  Owner on the later of (i)
the date set forth in the amendment  hereto entered into

                                       12

<PAGE>

between the Company and such  Transmission  Owner  pursuant to Section 3.4.3 and
(ii) the Transmission Service Date.

     2.2  Non-transferred  Facilities.  Each Transmission  Owner hereby appoints
the Company as its agent (and the Company  hereby agrees to serve as such agent)
to exercise  Functional  Control over  Non-transferred  Facilities to the extent
necessary for the Company to perform its  obligations  under this  Agreement and
the MISO ITC Agreement.  Upon the Company's  request,  each  Transmission  Owner
further  agrees to provide  the  Company  with all  information  relating to its
Non-transferred  Facilities  that is necessary or appropriate for the Company to
perform its obligations  under this Agreement and the functions set forth in the
MISO ITC Agreement. The agency authorization set forth in this Section 2.2 shall
not be construed as  authorizing  the Company to enter into any  agreement  that
creates  any  liability,   costs,  or  other  obligation  to  be  borne  by  any
Transmission  Owner that is not expressly set forth in the MISO OATT or to enter
into  any  agreement  providing  for  Interconnection  Service  with  regard  to
Non-transferred Facilities.

     2.3  Interconnection  Agreements.  Each Transmission Owner acknowledges and
agrees  that the  Company  is  obligated  under  the MISO  ITC  Agreement  to be
responsible for Interconnection Service on the Transferred  Facilities.  Whether
or not  the  Transmission  Owner  also is a party  to any  such  Interconnection
Agreement,  each  Transmission  Owner  authorizes  the  Company  to  enter  into
Interconnection  Agreements  and related  agreements  involving its  Transferred
Facilities (but not its Non-transferred  Facilities) in accordance with the MISO
ITC Agreement and the Interconnection Procedures. Each Transmission Owner shall,
upon the  reasonable  request of the Company,  cooperate in the  performance  of
activities   necessary  to  implement   requests  for   interconnection  to  its
Transferred  Facilities and necessary to implement the terms of  Interconnection
Agreements  and  other  agreements  related  thereto.  To the  extent  that such
Interconnection  Agreements require the Company to design,  procure,  construct,
install,   and/or  maintain  upgrades  to  a  Transmission  Owner's  Transferred
Facilities or  interconnection  facilities  between the point of interconnection
and a Transmission Owner's Transferred Facilities, such Transmission Owner shall
perform such  activities  (including  providing for the design,  procurement and
construction  of the necessary  facilities) to the extent directed by, and under
the supervision of, the Company. Such Transmission Owner shall timely provide to
the Company an estimate of the costs such Transmission Owner expects to incur in
the performance of such  activities.  To the maximum extent  permitted under the
MISO ITC Agreement and the Interconnection Procedures, the Company shall require
an interconnecting  Generator or local distribution  entity, as the case may be,
to provide funds in advance of construction in amounts  sufficient to compensate
the  affected  Transmission  Owner  for the  amount  estimated  by the  affected
Transmission  Owner  as  the  cost  to  be  incurred  in  connection  with  such
interconnection  facilities and any associated  interconnection  system upgrades
and  the  Company  shall  remit  such  funds  to  the  Transmission  Owner  on a
Pass-Through   Basis.   If  the   Company  is  not   permitted   to  require  an
interconnecting  Generator or local  distribution  entity to provide  funding in
advance,  the Company shall,  to the extent  permitted by the MISO ITC Agreement
and the  Interconnection  Procedures,  assist the Transmission Owners to recover
their verifiable  costs of performing  interconnection  activities.  In no event
shall the Company be responsible  for payments to the  Transmission  Owner other
than on a  Pass-Through  Basis  except as  follows:  (i) to the extent  that the
Company fails to require  advance  funds and/or  credit  support in an amount no
less  than the  amount  estimated  by the  Transmission  Owner  or as  otherwise
determined in an appropriate

                                       13

<PAGE>

proceeding  as the cost to be incurred in connection  with such  interconnection
facilities and any associated interconnection system upgrades, provided that the
Company is  permitted  to require  such amount of advance  funds  and/or  credit
support  under  the MISO  ITC  Agreement,  the  Interconnection  Procedures  and
Applicable  Laws and  Regulations or (ii) if the Company  initiates a proceeding
(except as is necessary or appropriate  to comply with a Commission  requirement
or Commission policy) to reduce the credit support  requirements with respect to
interconnection  customers  generally or that  customer in  particular  from the
levels  permitted  under the  Interconnection  Procedures  without  the  written
consent of the  Transmission  Owners and such credit approval  requirements  are
reduced as a result of such  proceeding.  Any  interconnection  system  upgrades
and/or  interconnection  facilities constructed or installed on the Transmission
System side of the point of interconnection  and such other facilities as may be
identified  in  regard  to  the  interconnection   shall  become  part  of  such
Transmission  Owner's Transferred  Facilities subject to this Agreement.  To the
extent  the  Company  possesses  property  rights  in any  such  interconnection
facilities,  the Company shall execute  appropriate and customary bills of sale,
easements, deeds, assignments, and other documents as may be necessary from time
to time to convey to such  Transmission  Owner any  property  interest  that the
Company  may have in such  assets  free and clear of all liens and  encumbrances
created by the Company.

     2.4  Network Upgrades. Each Transmission Owner acknowledges and agrees that
the  Company  is  obligated  under the MISO ITC  Agreement  to use  commercially
reasonable  efforts to  construct  Transmission  Facilities  as  directed by the
Midwest ISO in order to enable the Midwest ISO to provide  Transmission  Service
pursuant to the MISO OATT.  Each  Transmission  Owner  authorizes the Company to
enter into agreements with Transmission  Customers involving Network Upgrades to
its  Transferred  Facilities  which are  necessary  or  desirable  to enable the
Company  to  perform  its  obligations  under  this  Agreement  and the MISO ITC
Agreement, provided that all such agreements shall be entered into in accordance
with the MISO OATT. Each Transmission  Owner shall, upon the reasonable  request
of the Company,  cooperate in the performance of activities necessary to fulfill
the terms of any agreement  involving  such Network  Upgrades and any agreements
related  thereto.  To the extent  that such  agreements  require  the Company to
design, procure, construct,  install, and/or maintain upgrades or additions to a
Transmission  Owner's  Transferred  Facilities,  such  Transmission  Owner shall
perform such  activities  (including  providing for the design,  procurement and
construction  of the necessary  facilities) to the extent directed by, and under
the supervision of, the Company. Such Transmission Owner shall timely provide to
the Company an estimate of the costs such Transmission Owner expects to incur in
the performance of such  activities.  To the maximum extent  permitted under the
MISO ITC Agreement and the MISO OATT,  the Company shall require a  Transmission
Customer to provide funds in advance of  construction  in amounts  sufficient to
compensate  the  affected  Transmission  Owner for the amount  estimated  by the
affected  Transmission  Owner as the cost to be incurred in connection with such
Network Upgrades and shall remit such funds to the affected  Transmission  Owner
or Transmission  Owners on a Pass-Through Basis. If the Company is not permitted
to require a Transmission  Customer to provide  funding in advance,  the Company
shall,  to the extent  permitted  by the MISO ITC  Agreement  and the MISO OATT,
assist  each  affected  Transmission  Owner to recover its  verifiable  costs of
performing  the  Network  Upgrade  activities.  In no event shall the Company be
responsible for payments to the Transmission  Owner other than on a Pass-Through
Basis,  except as follows:  (i) to the extent that the Company  fails to require
advance  funds  and/or  credit  support  in an amount  no less  than the  amount
estimated by the Transmission Owner or as

                                       14

<PAGE>

otherwise determined in an appropriate  proceeding as the cost to be incurred in
connection with such Network Upgrades, provided that the Company is permitted to
require such amount of advance  funds and/or  credit  support under the MISO ITC
Agreement,  the MISO OATT and  Applicable  Laws and  Regulations  or (ii) if the
Company initiates a proceeding  (except as is necessary or appropriate to comply
with the MISO  ITC  Agreement,  the MISO  OATT or a  Commission  requirement  or
Commission  policy) to reduce the credit  support  requirements  with respect to
Transmission  Customers  generally or that  Transmission  Customer in particular
from the levels permitted under the MISO ITC Agreement and the MISO OATT without
the  written  consent  of the  Transmission  Owners  and  such  credit  approval
requirements  are reduced as a result of such  proceeding.  Any Network Upgrades
constructed or installed on the Transmission System and such other facilities as
may be  identified  shall  become part of the  applicable  Transmission  Owner's
Transferred  Facilities  subject to this  Agreement.  To the extent the  Company
possesses  property  rights in any such  Network  Upgrades,  the  Company  shall
execute appropriate and customary bills of sale, easements,  deeds, assignments,
and  other  documents  as may be  necessary  from time to time to convey to such
Transmission Owner any property interest that the Company may have in such asset
free and clear of all liens and encumbrances created by the Company.

     2.5  Revenue Collection and Distribution. Prior to the Transmission Service
Date the Transmission  Owners shall provide to the Company written  instructions
specifying  the  manner in which all  revenues  received  for the  provision  of
Transmission  Services  and other  services  provided  pursuant to the MISO OATT
shall be distributed among the Transmission Owners, and the Company shall comply
with such  instructions  unless and until such  instructions  are revised by the
Transmission Owners;  provided,  however, that all revenues comprising incentive
revenues,  whether  received by the  Transmission  Owners directly or indirectly
through the Company,  shall be  determined  and  allocated to the Company and to
each  Transmission  Owner as set forth in Section 4.3.2.  To the extent that the
proper  distribution  of  revenues  requires  a  Transmission  Owner to  provide
information and/or instructions to the Company, the Company shall be entitled to
rely upon such  information  and/or  instructions  provided by the  Transmission
Owner  and  shall  not  have  any  obligation  to   independently   verify  such
information.

     2.6  The Company as Owner of Transmission Facilities; Non-Discrimination.

          2.6.1The Company as Owner of Transmission  Facilities.  If the Company
               acquires any facilities  included in the Transmission  System, it
               shall operate such  facilities  as part of an  integrated  system
               together with the other  facilities  included in the Transmission
               System,  but, except as specifically  provided in this Agreement,
               shall not be deemed to be a  Transmission  Owner pursuant to this
               Agreement; provided, however, that if an Affiliate of the Company
               acquires  facilities  that  comprise  part  of  the  Transmission
               System,  such  Affiliate  shall execute an  assumption  agreement
               assuming  the  rights,  duties  and  obligations  of the  selling
               Transmission  Owner hereunder with respect to such facilities and
               shall be treated as a  Transmission  Owner for all purposes under
               this  Agreement.  Such  Affiliate  shall  assume the same rights,
               duties,  and obligations under this Agreement as the Transmission
               Owner from whom such Affiliate purchased the facilities.

                                       15

<PAGE>

          2.6.2Nondiscrimination.  The Company  shall  perform  its  obligations
               under this  Agreement in a manner that does not  discriminate  in
               favor  of  or  against   the   Transferred   Facilities   of  any
               Transmission  Owner or of the Company or its  Affiliates,  and in
               furtherance  thereof,  shall not engage in activities intended to
               enhance  the  revenue of the  Company or any  Transmission  Owner
               relative  to  another  Transmission  Owner  or the  Company.  The
               Company  shall  treat  the   Transmission   Facilities  that  are
               Transferred  Facilities  but are not owned by the Company and the
               Transmission  Facilities the Company owns as a single  integrated
               business  with  respect  to  operations,  rate  design  and other
               matters  affecting the  financial  return on such assets to their
               owners and, in that  connection,  shall not give undue preference
               to  any  particular   Transmission   Facilities.   The  Company's
               compliance  with this Section  2.6.2 shall be  determined  taking
               into  consideration  the  totality of the  circumstances,  and it
               shall have an absolute  defense to any claim of violation of this
               Section that the action or inaction  complained of was within the
               authority   ceded  to  the  Midwest  ISO  or  undertaken  or  not
               undertaken  at the  direction  of the Midwest ISO pursuant to the
               MISO  ITC  Agreement.  The  fact  that a  Transmission  Owner  is
               disadvantaged  vis-a-vis  any  other  Transmission  Owner  or the
               Company  shall  not  in  itself  constitute  a  violation  of the
               Company's  obligations under this Section.  A Transmission  Owner
               shall  not be  required  to  provide  evidence  of the  Company's
               express intent to disadvantage such  Transmission  Owner in order
               to  demonstrate  that the Company has violated this Section.  The
               Parties   agree  to  submit  all   disputes   relating   to  this
               anti-discrimination  provision to the Commission for  resolution;
               provided,  however,  that a Party may institute an Arbitration if
               the Commission disclaims jurisdiction over a dispute.

                                   ARTICLE III
             RIGHTS, POWERS, AND OBLIGATIONS OF THE GridAmerica ITC

     3.1  Operation And Planning.

          3.1.1 Standards.

               (a)  The  Company  shall  participate  in the  Midwest ISO to the
                    extent  set  forth in the MISO ITC  Agreement.  The  Company
                    shall  perform  its  obligations  under this  Agreement,  in
                    accordance with Good Business Practice.  Notwithstanding the
                    foregoing,  in  recognition of the fact that the Company has
                    ceded  certain  functions  with respect to the  Transmission
                    Facilities  to the  Midwest  ISO  pursuant  to the  MISO ITC
                    Agreement,  the Company shall not be deemed to have violated
                    Good  Business  Practice  by  entering  into  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
                    part of Functional Control of any Transmission Facilities or
                    the operation thereof, and

                                       16

<PAGE>

                    it shall be  absolute  defense to any claim that the Company
                    did not  adhere  to Good  Business  Practices  that  (i) the
                    Midwest  ISO (or  another  RTO) had  responsibility  for the
                    performance  of the function in question  under the MISO ITC
                    Agreement or any similar  agreement or under Applicable Laws
                    and  Regulations  or (ii) that the Company was acting  under
                    instruction  of the  Midwest  ISO  (or  another  RTO)  given
                    pursuant to the MISO ITC Agreement or any similar agreement,
                    provided that the Company shall have  exercised Good Utility
                    Practice in its actions implementing such instructions.

               (b)  The  Company  shall  adhere  to all  applicable  reliability
                    guidelines, policies, standards, rules, regulations, orders,
                    license  requirements  and  all  other  requirements  of the
                    Midwest  ISO,  NERC or the regional  reliability  council of
                    NERC in  which  Transferred  Facilities  are  located,  each
                    Transmission Owner's specific  reliability  requirements and
                    operating guidelines  applicable on the Transmission Service
                    Date and as thereafter  modified by the  Transmission  Owner
                    with the  agreement  of the Company to the extent  permitted
                    under the MISO ITC Agreement,  and all  Applicable  Laws and
                    Regulations.   Disputes  regarding  a  Transmission  Owner's
                    specific  reliability  requirements and operating guidelines
                    shall  be  submitted  to the  Midwest  ISO  for  resolution.
                    Pending resolution of such disputes, to the extent permitted
                    under  the  MISO  ITC  Agreement,   a  Transmission  Owner's
                    specific  reliability  requirements and operating guidelines
                    applicable on the  Transmission  Service Date (or thereafter
                    modified by the  Transmission  Owner with the consent of the
                    Company)  shall be used by the Company  with  respect to the
                    Transmission Owner's facilities until the issue is resolved.

          3.1.2Reliability.   The   Company   hereby   assumes  and  shall  have
               responsibility for the reliability of the Transferred  Facilities
               to the extent permitted under the MISO ITC Agreement,  subject to
               Applicable Laws and Regulations.

          3.1.3Planning  and  Operating  Activities.  The  Company  shall  adopt
               detailed  procedures  for planning and operating the  Transferred
               Facilities,  including  procedures for  developing  plans for the
               expansion and utilization of the  Transferred  Facilities and the
               implementation   of  the   Company's   planning   and   operating
               responsibilities  under the MISO ITC  Agreement.  The  procedures
               adopted  by  the  Company  shall  become   effective  as  of  the
               Transmission  Service Date for all purposes under this Agreement.
               If,  as  of  the   Transmission   Service  Date,  more  than  one
               Transmission  Owner  disagrees  with a  procedure  adopted by the
               Company, then those Transmission Owners which so disagree jointly
               shall  have the right to submit  the  dispute  to an  independent
               engineer  who  is a  Non-Market  Participant  and  is  reasonably
               acceptable to the Company; provided,

                                       17

<PAGE>

               however,  that no such disagreement or dispute resolution process
               shall delay the occurrence of the Transmission  Service Date; and
               provided  further,  that the  procedures  adopted by the  Company
               shall remain in effect pending receipt of the  recommendation  of
               the  independent  engineer.  The  Company  shall  adopt  and make
               effective,   prospectively,  the  procedure  recommended  by  the
               independent  engineer  to the extent such  recommended  procedure
               does not  adversely  affect the ability of the Company to perform
               its  obligations  under the MISO ITC  Agreement or to comply with
               Applicable  Laws and  Regulations.  The  planning  and  operating
               procedures  shall set forth the process by which such  procedures
               may be amended, modified and supplemented from time to time after
               the Transmission Service Date.

          3.1.4Performance of Regulatory Obligations.  The Company shall comply,
               and shall provide such information to each Transmission  Owner as
               each  such  Transmission  Owner  requires  to  comply,  and shall
               otherwise assist each such Transmission Owner in complying,  with
               existing transmission, reporting, operating, filing, and planning
               obligations of each such  Transmission  Owner that are imposed by
               Applicable  Laws and  Regulations  and  which  can no  longer  be
               performed  solely  by  such  Transmission   Owner  following  the
               Transmission Service Date.

     3.2  Other Matters.

          3.2.1Pricing.  The  Company  or one or more  Transmission  Owners  may
               propose  to  the  Commission   such   transmission   pricing  for
               Transmission  Service provided on the Transmission  System to the
               extent permitted under Applicable Laws and Regulations.

          3.2.2Ancillary  Services.  The Company may offer Ancillary Services to
               the  extent  permitted  by the MISO  ITC  Agreement,  subject  to
               Applicable Laws and Regulations.

     3.3  Responsibilities To The Transmission Owner.

          3.3.1Relationship.  Except to the extent that (a) a Transmission Owner
               has divested  some or all of its  Transferred  Facilities  to the
               Company or an  Affiliate  of the Company or (b) the Company and a
               Transmission Owner have, by separate  agreement,  agreed to joint
               ownership of certain  Transferred  Facilities,  the Company shall
               not by reason of this Agreement,  have any ownership  interest in
               the Transferred  Facilities or in any revenues or other monies to
               which a Transmission Owner is entitled hereunder.

          3.3.2Avoidance  of Damage.  If the  Company  undertakes  any action or
               avoidance of any action in compliance  with  instructions  of the
               Midwest ISO issued to the Company  pursuant to the Midwest  ISO's
               functional

                                       18

<PAGE>

               responsibilities under the MISO ITC Agreement, and a Transmission
               Owner reasonably believes that such action or avoidance of action
               would cause damage to the  Transferred  Facilities or any portion
               thereof or any property of the Transmission Owner affected by the
               Company's action or avoidance of action,  such Transmission Owner
               shall promptly advise the Company of the expected consequences of
               the Company's action or inaction and the Company after receipt of
               such  notice  shall  promptly  advise  the  Midwest  ISO of  such
               expected consequences.  Notwithstanding the foregoing, any action
               or avoidance of action by the Company  undertaken  in  compliance
               with an  instruction  issued to the  Company by the  Midwest  ISO
               (after advising the Midwest ISO of the expected consequences) and
               in accordance  with the exercise of Good Business  Practice shall
               not constitute a breach of the Company's  obligations  under this
               Agreement.

          3.3.3 Duty to Maximize  Transmission  System Value.  The Company shall
          use commercially  reasonable  efforts to maximize the long-term value,
          including net  revenues,  of the  Transmission  System so long as such
          efforts are consistent with its reliability responsibilities, customer
          service  obligations and other obligations  under this Agreement,  the
          MISO ITC Agreement and Applicable Laws and Regulations.

          3.3.4 Lockbox Account.

               (a)  The Company  shall  establish  promptly  after the execution
                    hereof  and shall  maintain  at all times a lockbox  account
                    (together with any subaccounts) (the "Lockbox Account") with
                    an  Acceptable  Credit Bank  selected  by the  Company  (the
                    "Lockbox  Bank").  All  payments  for  Transmission  Service
                    received by the Company  shall be  deposited  in the Lockbox
                    Account  to  be   allocated   among  the   Company  and  the
                    Transmission Owners in a manner agreed to by the Parties.

                    The  Company shall:

                    (i)  establish  a  collection   account   (the   "Collection
                         Account")  which  shall be  expressly  designated  as a
                         custodial account  established for the joint benefit of
                         the  Company  and each  Transmission  Owner  into which
                         payments  will be made by the Midwest ISO and any other
                         Person making payments to the Company;

                    (ii) establish a separate  subaccount for each  Transmission
                         Owner and the Company to facilitate the distribution of
                         funds to which each Transmission  Owner and the Company
                         is entitled  on a  Pass-Through  Basis or as  otherwise
                         agreed

                                     19
<PAGE>

                         to  by  the  Parties   (with  respect  to  each
                         Transmission  Owner  and  the  Company,   its  "Lockbox
                         Subaccount"); And

                    (iii)the grant of a security  interest to each  Transmission
                         Owner  in (a)  its  Lockbox  Subaccount  and (b) to the
                         extent of its interests therein, the Collection Account
                         and all amounts deposited therein;

                    (iv) instruct the Lockbox Bank that funds deposited into the
                         Collection  Account may be  transferred  by the Company
                         only  into  the  Lockbox  Subaccounts  referred  to  in
                         Section 3.3.4(a)(ii) pursuant to Section 3.3.4(b).

                    (v)  instruct the Lockbox Bank that each Transmission  Owner
                         and the  Company  shall  have the  right,  without  the
                         consent of any other  Person,  to  withdraw  amounts on
                         deposit in such  Transmission  Owner's or the Company's
                         Lockbox   Subaccount   as  and  when  desired  by  such
                         Transmission Owner and/or the Company.

               (b)  As soon as practical after receipt of collected funds in the
                    Collection Account, the Company shall cause the Lockbox Bank
                    to transfer the share of such funds belonging to each of the
                    Company  and  the  Transmission  Owners  to  its  respective
                    Lockbox Subaccount.  The Company and the Transmission Owners
                    acknowledge  and agree that the Lockbox  Subaccounts and all
                    amounts  deposited  therein are to  constitute  the sole and
                    exclusive  property of the Transmission Owner or the Company
                    in whose name such Lockbox Subaccount is opened.

               (c)  Any  Party  that  acquires  actual  knowledge  that  it  has
                    received  from the Lockbox  Bank funds in excess of those to
                    which such Party is entitled  hereunder  (an  "Overpayment")
                    promptly  shall  provide the Company with written  notice of
                    such overpayment. If within one (1) year of receipt of funds
                    by a Party from the Lockbox Bank such Party  determines that
                    it has received funds less than those to which such Party is
                    entitled hereunder (an "Underpayment"),  such Party promptly
                    shall  provide  the  Company  with  written  notice  of such
                    Underpayment.  If  the  Company  receives  a  notice  of  an
                    Overpayment  or an  Underpayment  pursuant  to this  Section
                    3.3.4(c), the Company immediately shall (i) notify any other
                    Party that may be affected thereby and (ii) review the books
                    and records of the Company  relating  to the  payment(s)  in
                    question  to  ascertain   whether  an  Underpayment   and/or
                    Overpayment  occurred.  Any disputes regarding the existence
                    of an Overpayment or Underpayment and corrective  actions to
                    be taken shall be resolved in accordance with Article VI. If
                    an Overpaid  Party seeks

                                       20

<PAGE>

                    to  terminate  this  Agreement  for any  reason,  then  such
                    Overpaid  Party,  shall,  as a  condition  precedent  to its
                    termination of this Agreement,  pay to the Company, as agent
                    for and for remittance to each Underpaid Party the amount of
                    any Overpayment such Overpaid Party has received.

          3.3.5The  Company  shall  pay any fees of the  Lockbox  Bank and shall
               cooperate  with  each   Transmission   Owner  in  effecting  such
               Transmission Owner's rights under this Section 3.3.5. The Company
               shall also take such further actions,  as such Transmission Owner
               deems  reasonably  appropriate  or  advisable to  effectuate  the
               purposes of this Section  3.3.5,  to enable any Party to exercise
               and enforce its rights and remedies under this Section 3.3.5, and
               to perfect, preserve or protect the interest of such Party in the
               Lockbox Account contemplated by this Section 3.3.5.

     3.4 Additional Obligations.

          3.4.1 Indemnification by the Company.

               (a)  The Company shall indemnify each Transmission Owner from all
                    Losses suffered or incurred by such  Transmission  Owner and
                    arising  out of or caused by any  failure of the  Company to
                    meet  its  obligation  to use  Good  Business  Practices  in
                    connection with the performance of the Company's  duties and
                    obligations  under this  Agreement  (any such failure  being
                    hereinafter   referred  to  as  a  "Good  Business  Practice
                    Breach");  provided,  however,  that,  except as hereinafter
                    provided,  the  Company  shall not be liable for Losses from
                    any claim or series of  related  claims  involving  any Good
                    Business  Practice  Breach (i)  unless  such  Losses  exceed
                    $150,000 in the aggregate,  and then only to the extent that
                    such  Losses  exceed  $150,000  or (ii) if and to the extent
                    that such Losses arising from any claim or series of related
                    claims  occurring  in any  calendar  year  plus all  Company
                    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
                    3.4.1(a) shall apply in respect of any Losses arising out of
                    Gross  Negligence  or Willful  Misconduct  (and the  Company
                    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  Company of its
                    obligations  under  Sections 10.7 and 10.14).  To the extent
                    that a claim asserted  against the Company relates to Losses
                    suffered  by more  than  one  Transmission  Owner,  then the
                    Transmission  Owner that  asserted such claim and such other
                    Transmission Owners shall share the indemnification payments
                    made by the Company in respect  thereof in proportion to the
                    Losses suffered by each.

                                       21

<PAGE>

               (b)  The term  "Company  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 Company  under  Section  3.4.1(a)
                         with respect to claims  occurring in such calendar year
                         with  respect  to  Good  Business   Practice   Breaches
                         (excluding  payments  made out of insurance  proceeds);
                         plus

                    (ii) the aggregate amount of all Losses actually paid or due
                         and payable by the Company (excluding payments made out
                         of insurance  proceeds and excluding the application of
                         any  indemnification  payments  from  the  Transmission
                         Owners  pursuant to Section  4.2.4(c))  with respect to
                         Third   Party   Claims   (other   than  claims  by  the
                         Transmission  Owners  pursuant  to Section  3.4.1(a) of
                         this Agreement)  occurring in such calendar year to the
                         extent  such  claims  involve  Good  Business  Practice
                         Breaches; plus

                    (iii)the aggregate  amount of all "Managing Member Payments"
                         referred to in Section  11.8(f)(i) of the LLC Agreement
                         that are paid by the  Managing  Member  in  respect  of
                         claims occurring in such year;

                    provided,  however,  that no amount paid by the Company as a
                    result  of Gross  Negligence  or  Willful  Misconduct  shall
                    constitute a Company  Payment.  For purposes of  determining
                    the  amount  of  the  Company  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 a  Loss  occurred  during  such
                    calendar year,  regardless of when the claim was asserted or
                    when any particular element of Loss was incurred.

               (c)  For the  avoidance  of  doubt,  the  Company  shall  have no
                    indemnification   obligation  under  Section  3.4.1(a)  with
                    respect to Losses arising out of any claim  occurring in any
                    calendar  year  and  which  arises  out of a  Good  Business
                    Practice  Breach to the extent the amount of such  Losses in
                    respect of such claim plus all Company Payments with respect
                    to all other claims in such  calendar  year are greater than
                    the Liability Cap Amount for such calendar year.

               (d)  Any Transmission Owner asserting a claim for damages against
                    the Company  shall,  promptly  after the  initiation of such
                    claim, give notice thereof to the other Transmission  Owners
                    and the  Members,  which  notice must  include a  reasonably
                    detailed description of the

                                       22

<PAGE>

                    basis  for such  claim.  The  Company  and the  Transmission
                    Owners agree that if any Member  asserts a claim against the
                    Managing   Member   arising   out  of  the  same  facts  and
                    circumstances   that   give   rise  to  the   claim  by  the
                    Transmission Owner or Transmission  owners asserting a claim
                    against the Company pursuant to Section 3.4.1(a), such claim
                    may, at the written  request of such Member  received by the
                    Managing Member within thirty (30) days of the date on which
                    such Member 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  Company
                    pursuant to Section 3.4.1(a).

          3.4.2Inspection and Auditing Procedures.  The Company hereby grants to
               each Transmission  Owner and its outside auditors and consultants
               such access to the Company's books and records as is necessary to
               verify and audit  compliance by the Company with the requirements
               of this Agreement.  Such access shall be at reasonable  times and
               under reasonable  conditions.  The Transmission  Owners shall use
               reasonable  efforts to  conduct  any such  audits in concert  but
               shall not be prohibited from  exercising  their rights under this
               Section  3.4.2  individually.  The Company shall also comply with
               the  accounting  and  reporting   requirements   of  Governmental
               Authorities having  jurisdiction over the Company with respect to
               the business aspects of its business operations.

          3.4.3Agreements with Additional  Transmission Owners. The Company may,
               from time to time, in its discretion,  enter into an amendment to
               this  Agreement  for the purpose of adding as a Party  hereto any
               Person,  including a Person that is an  Affiliate of the Company,
               that has  Transmission  Facilities that it proposes to subject to
               this  Agreement  upon  a  determination  by the  Company,  in its
               reasonable   discretion,   that  subjecting   such   Transmission
               Facilities  to  this   Agreement  (x)  will  not  result  in  any
               significant  detriment to existing  Transmission  Owners in their
               capacity  as such and (y) is  likely  to  result in long term net
               benefits to the Company;  provided,  however, that either (i) the
               terms of such amendment must not be materially  more favorable to
               the  counterparty  thereto than the terms applicable to the other
               Transmission  Owners  contained  herein or (ii) the Company  must
               offer to make any such  more  favorable  terms  available  to all
               Transmission  Owners  on a  non-discriminatory  basis;  provided,
               further,  that,  so long as it does not  significantly  adversely
               affect any other  Transmission  Owner,  such an amendment to this
               Agreement that is with an owner of  Transmission  Facilities that
               is a  Non-Market  Participant  may be  made  on  terms  that  are
               different  than  those  set forth  herein.  The  Company  may not
               exercise  Functional  Control  over any  Transmission  Facilities
               (other than those it owns) except pursuant to this Agreement.

                                       23

<PAGE>

          3.4.4Insurance.   At  all  times  during  the  effectiveness  of  this
               Agreement,  the Company shall maintain insurance of the types and
               in the  amounts  agreed to by the  Company  and the  Transmission
               Owners.  If a  Transmission  Owner requests the Company to obtain
               insurance  in addition to the types or amount of coverage  agreed
               to, the Company shall obtain such  insurance,  provided that such
               Transmission  Owner  shall  pay  all of the  costs  thereof.  The
               insurers or reinsurers and the Company, to the extent that it has
               a right of  subrogation,  shall  waive all rights of  subrogation
               against the Transmission Owners.

          3.4.5Coordination with State Securitization  Obligations.  The Parties
               acknowledge that a portion of the revenues payable under the MISO
               OATT  in  respect  of  Transmission   Service   provided  over  a
               particular  Transmission  Owner's  Transferred  Facilities may be
               securitized,  pledged, or otherwise subject to superior rights of
               third parties  ("securitized").  The Company shall cooperate with
               such  Transmission  Owner  with  respect  to such  securitization
               obligations.

     3.5  Information.  Subject to the  confidentiality  provisions set forth in
          Section  10.14,   the  Company  shall  provide  such   information  to
          Transmission   Owners  as  is   necessary  or   appropriate   for  the
          Transmission Owners to perform their obligations under this Agreement.

                                   ARTICLE IV
                       RIGHTS, POWERS, AND OBLIGATIONS OF
                             THE TRANSMISSION OWNERS

     4.1  Operation and Planning.

          4.1.1 Standards.

               (a)  Each  Transmission   Owner  shall  physically   operate  its
                    Transferred Facilities in accordance with this Agreement and
                    the MISO OATT and shall comply with the procedures, manuals,
                    and directions of the Company issued in compliance with this
                    Agreement  and the  MISO  ITC  Agreement.  The  Transmission
                    Owners   shall   provide  the   services  to  be   performed
                    individually by Transmission Owners as set forth on Schedule
                    5A  attached  hereto as Appendix  D. No  Transmission  Owner
                    shall take any action that intentionally interferes with the
                    performance of any function by the Company other than to the
                    extent   necessary  to  avoid  an  Emergency  or  during  an
                    Emergency.  This  Section  4.1.1  (a)  shall  apply  to  the
                    Company if the Company  owns  facilities  that comprise part
                    of the Transmission System.

               (b)  Each  Transmission   Owner  shall  operate  its  Transferred
                    Facilities in  accordance  with Good Utility  Practice,  and
                    shall  adhere  to  all  applicable  reliability  guidelines,
                    policies,  standards, rules,

                                       24

<PAGE>

                    regulations, orders, licensing requirements and requirements
                    of NERC or the regional reliability council of NERC in which
                    a facility owned by it is located.  If a Transmission  Owner
                    believes  that  a  direction  given  by  the  Company  is in
                    contravention  of the  requirements  of NERC  or a  regional
                    reliability council of NERC, it shall immediately advise the
                    Company. If a Transmission Owner and the Company disagree as
                    to  whether  such  direction  is  in  contravention  of  the
                    requirements  of NERC or a regional  reliability  council of
                    NERC,  the Company  shall submit such dispute to the Midwest
                    ISO for resolution.  No  Transmission  Owner shall engage in
                    behavior which manipulates  available transfer capability to
                    the detriment of Transmission Users. The Transmission Owners
                    shall  perform all duties and  functions  specified  for the
                    Transmission Owners in this Agreement. This Section 4.1.1(b)
                    shall  apply to the  Company  if the  Company  or any of its
                    Affiliates becomes an owner of facilities that comprise part
                    of the Transmission System.

          4.1.2 Transmission Maintenance.

               (a)  Unless  otherwise  mutually and  expressly  agreed to by the
                    Company and a Transmission  Owner, each  Transmission  Owner
                    (including  the Company if it owns  Transmission  Facilities
                    that comprise part of the Transmission System) shall repair,
                    maintain,  and replace its Transferred Facilities consistent
                    with  Good  Utility  Practice;  provided,  however,  that no
                    Transmission  Owner shall exercise  Functional  Control over
                    the  Transferred  Facilities.  Except as may be  required to
                    exercise  Functional  Control,  the  Company  shall  have no
                    obligation  or any right to repair,  maintain,  or replace a
                    Transmission     Owner's    Transferred     Facilities    or
                    Non-transferred Facilities.

               (b)  The Transmission  Owner shall obtain the Company's  approval
                    for all planned  maintenance  of such  Transmission  Owner's
                    Transferred Facilities. Each Transmission Owner shall submit
                    its  planned  maintenance  schedules  to  the  Company.  All
                    proposed planned maintenance schedules shall be evaluated by
                    the Company on a non-discriminatory  basis. The Company will
                    coordinate  with both the operations and planning  personnel
                    of  the  Transmission   Owners  for  analysis  and  planning
                    purposes  when  a   transmission   maintenance   request  is
                    received.  If requested by the Company, a Transmission Owner
                    will  provide  to the  Company  an  estimate  of  the  costs
                    associated with potential changes to an approved maintenance
                    schedule or any part thereof.

               (c)  After   receiving   a  planned   maintenance   request   for
                    non-critical  Transmission  Facilities (as such term is used
                    in the MISO ITC  Agreement),  the Company shall, in a timely
                    manner,  either

                                       25

<PAGE>

                    approve  the  request  or deny the  request  and  provide an
                    alternative  time  frame in  which  the  maintenance  can be
                    performed;  provided  that any such  approval  shall  not be
                    final and shall be  subject to  further  modification  after
                    receipt by the Company of the Midwest ISO's  approval of the
                    schedule for critical Transmission  Facilities (as such term
                    is  used in the  MISO  ITC  Agreement).  The  Company  shall
                    determine in a nondiscriminatory  manner and with the use of
                    appropriate  analytical  detail  whether,  and,  if so,  the
                    extent to which, a planned transmission  maintenance request
                    for non-critical  Transmission  Facilities affects available
                    transfer capability, Ancillary Services, the security of the
                    Transmission  System,  and any other relevant  matters.  The
                    Company shall submit the  maintenance  schedule for critical
                    Transmission  Facilities  to the Midwest ISO for approval in
                    accordance  with the MISO ITC  Agreement.  The Company shall
                    promptly notify the Transmission  Owner of the Midwest ISO's
                    approval,  disapproval or modification  and shall modify the
                    schedule  for  maintenance  on   non-critical   Transmission
                    Facilities if appropriate. The Company shall communicate the
                    final  planned  maintenance  schedule for  non-critical  and
                    critical   Transmission   Facilities   to  the   appropriate
                    Transmission Owner in a timely manner.

               (d)  If the Company  revokes a planned  transmission  maintenance
                    outage schedule for non-critical  Transmission Facilities of
                    a Transmission  Owner after it has become final, the Company
                    shall  notify  such  Transmission  Owner of the  decision to
                    revoke  approval  of the  maintenance  schedule  as  soon as
                    possible after the circumstances  arise that create the need
                    for the revocation.  If such  Transmission  Owner incurs any
                    additional costs  associated with the deferred  transmission
                    maintenance,  the Company shall compensate on a Pass-Through
                    Basis such Transmission  Owner for all such verifiable costs
                    collected  by the  Midwest  ISO in rates  or other  charges.
                    Revocation of previously approved maintenance  schedules and
                    compensation  for  related  costs  shall  be  applied  in  a
                    non-discriminatory basis.

               (e)  The  Company   shall   document  all  planned   transmission
                    maintenance requests,  the disposition of those requests and
                    all data supporting the disposition of each request.

               (f)  A  Transmission  Owner shall  notify the  Company  when such
                    Transmission  Owner is performing  maintenance on a facility
                    that could  reasonably  be expected  to result in  unplanned
                    outages within the  Transmission  System.  The Company shall
                    coordinate  with  the   Transmission   Owners  to  implement
                    unplanned transmission maintenance as the need may arise. In
                    an  Emergency,   the  applicable  Transmission  Owner  shall
                    immediately  notify the

                                       26

<PAGE>

                    Company of any necessary Emergency transmission  maintenance
                    and the  Transmission  Owner  shall  document  all events of
                    unplanned  transmission  maintenance and all data related to
                    the Emergency necessitating such maintenance. Prior approval
                    by the Company for such Emergency  transmission  maintenance
                    will not be required.

          4.1.3 Construction of New Facilities.

               (a)  The  Transmission  Owners  acknowledge  and  agree  that the
                    Company  may  require  a  Transmission  Owner  to  construct
                    planned Transmission Facilities, whether the construction is
                    required  pursuant to a direction  by the Midwest ISO to the
                    Company or at the  initiative  of the  Company to the extent
                    permitted by the MISO ITC Agreement. Each Transmission Owner
                    and  the  Company  if it is an  owner  of  facilities  which
                    comprise part of the Transmission  System shall construct at
                    its  sole  cost  and  expense  new  Transmission  Facilities
                    reviewed,  approved,  and ordered to be built by the Company
                    in  accordance   with   planning   processes  and  protocols
                    established  by the Company and the Midwest ISO  pursuant to
                    the MISO ITC Agreement and the planning  procedures  adopted
                    by the Company. The Company will develop  non-discriminatory
                    criteria  consistent  with this  Section  4.1.3 to determine
                    which  Party  (including  the  Company  if it is an owner of
                    facilities  comprising part of the Transmission System) will
                    be  obligated to construct  the new  facilities.  If the new
                    Transmission  Facilities  will be directly  connected to the
                    existing facilities of one Transmission Owner or the Company
                    if it is an  owner  of  facilities  comprising  part  of the
                    Transmission  System, that Transmission Owner or the Company
                    will  be  obligated  to  construct  the  new  facilities  if
                    required by the Company.  If two or more Transmission Owners
                    or the  Company  as an owner of  facilities  comprising  the
                    Transmission  System will be interconnected  directly to the
                    new  facilities,   the  Company  will  assign   construction
                    responsibilities  in accordance with the  non-discriminatory
                    criteria  stated in the planning  procedures  adopted by the
                    Company.  Prior  to  the  acceptance  by the  Commission  of
                    coordinated  planning  processes and protocols  developed by
                    the  Midwest  ISO  and  the   Company,   the   planning  and
                    construction  of new  facilities  shall be  governed  by the
                    planning  processes and protocols of the Midwest ISO and the
                    planning  procedures  adopted by the Company,  to the extent
                    such  procedures  are not  inconsistent  with  the  planning
                    processes and protocols of the Midwest ISO.

               (b)  The   non-discriminatory   criteria   shall   include   cost
                    allocation  methods  for  achieving  equity  among  affected
                    Transmission Owners and the Company in circumstances where a

                                       27

<PAGE>

                    disproportionate,   but  otherwise  unavoidable,  burden  is
                    placed on one or more Transmission Owners or the Company for
                    the  construction  of  new  Transmission   Facilities.   Any
                    Transmission  Owner  may  propose  its own  cost  allocation
                    methodology  to the  Commission for the purpose of achieving
                    equity in particular instances.

               (c)  If a  Transmission  Owner that is obligated to construct new
                    Transmission  Facilities requests that the Company construct
                    such  facilities,  the Company  shall have the right but not
                    the  obligation  to  do  so.  If  the  Company  declines  to
                    construct such facilities,  the Transmission Owner initially
                    obligated to construct the facilities shall remain obligated
                    to do so.

               (d)  A  Transmission  Owner,  or  the  Company  as  an  owner  of
                    facilities  comprising part of the Transmission  System, may
                    satisfy its construction  responsibilities by arranging that
                    another party will  construct,  finance,  and/or own the new
                    Transmission Facilities. If the third party fails to perform
                    within  the  period of time  specified  by the  Company  for
                    construction of such new facilities,  the Transmission Owner
                    or the  Company,  in the case of  facilities  for  which the
                    Company has  accepted the  obligation  to  construct,  shall
                    remain obligated to undertake the construction.  The Company
                    shall determine in a non-discriminatory  manner whether such
                    third party can meet all  necessary  criteria for  financing
                    and/or owning Transmission Facilities  interconnected to the
                    Transmission  System.  A  determination  by the Company that
                    such third party fails to meet all necessary  criteria shall
                    not  relieve the  Transmission  Owner of the  obligation  to
                    construct  the  facilities.  Any  such  third  party  owning
                    Transmission  Facilities shall be required to become a Party
                    to this Agreement pursuant to Section 3.4.3.

               (e)  The  cost  of new  Transmission  Facilities  constructed  by
                    Transmission  Owners pursuant to this Section 4.1.3 shall be
                    recovered in accordance  with the MISO OATT and the revenues
                    associated with such cost recovery  received by the Company,
                    shall be distributed in accordance with this Agreement.

          4.1.4Acquisition.   If  a  Transmission  Owner  acquires  Transmission
               Facilities  that are not part of the  Transmission  System,  such
               facilities  shall become subject to this Agreement  provided that
               (i) such  Transmission  Facilities are physically  interconnected
               with any of the  Transmission  Facilities  owned or  Functionally
               Controlled by the Company or, if such Transmission Facilities are
               not  physically  interconnected  with  any  of  the  Transmission
               Facilities owned or Functionally  Controlled by the Company,  the
               Company determines, in its reasonable discretion, that

                                       28

<PAGE>

               subjecting  such  Transmission  Facilities to this Agreement will
               result in net  benefits to the  Company,  (ii) such  Transmission
               Owner consents and (iii) such action does not violate  Applicable
               Laws and Regulations. If Transmission Facilities are added to the
               Transmission  System  as set forth  above,  the  Company  and the
               Transmission  Owner  transferring the facilities shall amend such
               Transmission  Owner's  subappendix  to Appendix A to include such
               Transmission Facilities.

          4.1.5Performance of Regulatory  Obligations.  Each Transmission  Owner
               and the Company if it owns  facilities  that comprise part of the
               Transmission   System  shall  comply,   and  shall  provide  such
               information  to the Company as it  requires to comply,  and shall
               otherwise  assist the Company in  complying,  with  transmission,
               reporting,  operating,  filing,  and planning  obligations of the
               Company that are imposed by Applicable Laws and Regulations.

     4.2  Additional Obligations.

          4.2.1Information.  Subject to the confidentiality provisions set forth
               in Section  10.14,  each  Transmission  Owner shall  provide such
               information  concerning its Transferred Facilities to the Company
               as is  necessary  or  appropriate  for the Company to perform its
               obligations under this Agreement,  the MISO OATT and the MISO ITC
               Agreement.

          4.2.2 Facilities Access.

               (a)  Each  Transmission  Owner shall upon reasonable notice allow
                    the  Company  access  to its  Transferred  Facilities  as is
                    necessary  (i)  to  verify  and  audit  compliance  by  such
                    Transmission  Owner  with  this  Agreement  or (ii)  for the
                    Company to perform its obligations  under this Agreement and
                    the MISO ITC  Agreement.  Such access shall be at reasonable
                    times and under reasonable  conditions.  Representatives  of
                    the Company shall comply with a Transmission  Owner's safety
                    regulations   when  accessing  such   Transmission   Owner's
                    Transferred Facilities.

               (b)  Each   Transmission   Owner's  rights  in  its   Transferred
                    Facilities  shall be  subject  to the  Company's  Functional
                    Control of the  Transmission  System in accordance  with the
                    terms of this Agreement and the MISO ITC Agreement.  Nothing
                    in this Agreement shall be deemed to restrict or to prohibit
                    access to Transferred  Facilities by the Transmission' Owner
                    that owns such Transferred Facilities, or those acting under
                    its authority.

          4.2.3Inspection and Auditing Procedures. Each Transmission Owner shall
               grant the Company and its outside  auditors and consultants  such
               access  to such  Transmission  Owner's  books and  records  as is
               necessary (i) to verify

                                       29

<PAGE>

               and  audit  compliance  by  such  Transmission  Owner  with  this
               Agreement  or (ii) for the  Company  to perform  its  obligations
               under this  Agreement  and the MISO ITC  Agreement.  Such  access
               shall be at  reasonable  times and under  reasonable  conditions.
               Each Transmission Owner shall also comply with the accounting and
               reporting  requirements of any  Governmental  Authorities  having
               jurisdiction over the Transmission  Owner with respect to aspects
               of the Company's business operations.  Contacts between officers,
               employees,  and agents of the Company and those of a Transmission
               Owner,  pursuant to this Section 4.2.3 shall be strictly  limited
               to the purpose of this Section 4.2.3.

          4.2.4 Indemnification by Transmission Owners.

               (a)  Each  Transmission   Owner   ("Indemnifying   Owner")  shall
                    indemnify and hold harmless  each other  Transmission  Owner
                    ("Indemnified  Owners")  from any  Losses  arising  from the
                    Indemnifying Owner's  performance,  neglect or breach of its
                    obligations  under this  Agreement  (whether  arising from a
                    finding of  negligence,  strict  liability or other fault or
                    responsibility),  except  in  cases  where,  and only to the
                    extent that,  the  negligence  or willful  misconduct of any
                    other  Indemnified  Owner  contributed  to the Loss.  In the
                    event   two   or   more   Transmission    Owners   have   an
                    indemnification  obligation under this Section 4.2.4(a) with
                    respect to the same matter, such indemnification  obligation
                    shall be borne by such indemnifying  Transmission  Owners in
                    proportion to each such  indemnifying  Transmission  Owner's
                    comparative  fault.  If the Company  acquires  ownership  of
                    facilities  that comprise part of the  Transmission  System,
                    the  Company  shall be treated as if it were a  Transmission
                    Owner for purposes of this Section 4.2.4(a). Notwithstanding
                    any other provision of this Agreement, no Transmission Owner
                    shall be  liable  to any  other  Transmission  Owner for any
                    actions  taken  in  accordance  with  the   instructions  or
                    direction  of the Company or the Midwest ISO except in cases
                    of the  negligence or  intentional  wrong-doing of the first
                    Transmission Owner.

               (b)  Except  with  respect to its  Transferred  Facilities  or as
                    otherwise  provided in the MISO OATT or this  Agreement,  no
                    Transmission Owner shall be liable for any costs or expenses
                    relating  to  the   operation,   repair,   maintenance,   or
                    improvement   of   any  of   the   Transmission   Facilities
                    constituting part of the Transmission System that are owned,
                    operated,  or controlled by any other  Transmission Owner or
                    the Company.

               (c)  Each Transmission Owner shall severally and not jointly,  on
                    a pro rata  basis as  described  below,  indemnify  and hold
                    harmless  the  Company  from any  Losses  (determined  after
                    application  of the

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<PAGE>

                    proceeds of any applicable  insurance  policies) suffered or
                    incurred by the Company (but  excluding any lost profits and
                    similar  damages   suffered  or  incurred  by  the  Company)
                    resulting  from any claim by a third  party by reason of the
                    Company's  acts,  omissions  or  alleged  acts or  omissions
                    arising under this Agreement,  the MISO ITC Agreement or the
                    MISO  OATT or by reason of any of the  Midwest  ISO's  acts,
                    omissions  or  alleged  acts  or  omissions   ("Third  Party
                    Claims");  provided,  however,  that such indemnity does not
                    cover (i) Losses  arising out of any action or inaction  (A)
                    of the Company  taken in bad faith,  (B) of the Company that
                    constitutes Gross Negligence or Willful Misconduct or (C) of
                    the Company in its capacity as an owner of  facilities  that
                    comprise  part  of  the  Transmission  System,  (ii)  Losses
                    arising out of Third Party Claims  occurring in any calendar
                    year which involve any Good Business Practice Breach, to the
                    extent the Losses  paid or due and payable by the Company in
                    respect of such Third Party Claim plus all Company  Payments
                    with respect to all other claims  occurring in such calendar
                    year  are  less  than  the  Liability  Cap  Amount  for such
                    calendar  year or (iii)  Losses  from any claim or series of
                    related  claims unless such Losses exceed  $150,000 and then
                    only to the extent that such Losses exceed $150,000. The pro
                    rata liability of each Transmission Owner under this Section
                    4.2.4(c)  shall be equal to a  percentage  of the  aggregate
                    amount  of the  Losses  equal to the  percentage  that  such
                    Transmission  Owner's Net Plant bears to the  aggregate  Net
                    Plant as of the time in which the claim  giving  rise to the
                    Losses  in  question  occurred.   The  obligations  of  each
                    Transmission  Owner set forth in this Section 4.2.4(c) shall
                    terminate automatically for all purposes with respect to all
                    Losses from claims  arising after the Initial  Member ceases
                    to be the  Managing  Member for any reason.  Notwithstanding
                    anything to the contrary in this Agreement, the Transmission
                    Owners'  indemnification   obligations  under  this  Section
                    4.2.4(c) shall terminate  automatically  for all purposes in
                    the  event one or more  Transmission  Owners  and/or  former
                    Transmission  Owners pay, in the aggregate,  an amount equal
                    to $25,000,000 in any year pursuant to this Section 4.2.4(c)
                    (the "Indemnity  Cap"),  regardless of when the claims which
                    gave rise to the  indemnification  obligations  occurred and
                    regardless  of whether  the claims  involve a Good  Business
                    Practice Breach ("Payment  Event");  provided,  however,  if
                    prior to the occurrence of the Payment Event, if the Company
                    owns  Transmission  Facilities  having a Fair  Market  Value
                    equal to or greater than  $250,000,000  in the  aggregate at
                    the time of the acquisition, the indemnification obligations
                    of the Transmission Owners under this Section 4.2.4(c) shall
                    not terminate upon the  occurrence of a Payment  Event,  but
                    nothing in this  proviso is a  limitation  on the  automatic
                    termination of the

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<PAGE>

                    Transmission Owners' indemnification obligations as provided
                    above in the  event  the  Initial  Member  ceases  to be the
                    Managing Member for any reason.

               (d)  For  avoidance of doubt,  no  indemnification  obligation is
                    owed by the Transmission  Owners under Section 4.2.4(c) with
                    respect to Losses arising out of any claim  occurring in any
                    calendar  year  and  which  arises  out of a  Good  Business
                    Practice Breach to the extent that the amount of such Losses
                    plus all Company  Payments  with respect to all other claims
                    occurring in such  calendar year are less than the Liability
                    Cap Amount for such year.

          4.2.5 Administration of Third Party Claims.

               (a)  Promptly  after  receiving  notice  that a third  party  has
                    commenced   a  claim   that   would   be   subject   to  the
                    indemnification provisions of either Section 3.4.1 or 4.2.4,
                    each Party  entitled to  indemnification  (individually  and
                    collectively, "Indemnified Party") under such Sections shall
                    in turn  give  written  notice of that  claim to each  Party
                    obligated to provide the indemnification  under such Section
                    (individually and collectively,  "Indemnifying  Party"). The
                    written notice shall include  reasonable  detail in light of
                    the  circumstances  then  known  to the  Indemnified  Party.
                    Failure to give such notice, or any notice, will not relieve
                    the  Indemnifying  Party  from its  obligations  under  such
                    Sections  except where,  and then solely to the extent that,
                    such failure  actually and materially  prejudices the rights
                    of the Indemnifying Party.

               (b)  After  receiving  the written  notice  described  in Section
                    4.2.5(a), the Indemnifying Party will have the right but not
                    the duty to defend such claim;  provided,  however, that the
                    Indemnifying   Party  shall   acknowledge   in  writing  its
                    indemnification  obligations  hereunder with respect to such
                    claim.  If, with respect to a claim,  the Indemnified  Party
                    will retain  liability  for a material  amount in connection
                    with such claim, the  Indemnifying  Party shall not have the
                    right to assume the  defense of such claim  hereunder.  This
                    right  to  defend  will  include  the  right to  pursue  any
                    strategy  in  defending   such  claim,   file  any  and  all
                    pleadings,  pursue  discovery in any manner,  make  whatever
                    arguments the Indemnifying Party deems  appropriate,  and to
                    select  counsel of its choice to defend the claim,  provided
                    that (i) the Indemnified  Party gives its written consent to
                    counsel  selected by the  Indemnifying  Party (which consent
                    shall   not  be   unreasonably   withheld)   and   (ii)  the
                    Indemnifying  Party  conducts  the  defense  of  such  claim
                    actively and diligently. Attorneys' fees incurred by counsel
                    selected by the  Indemnifying  Party in defending the claim,
                    as  well  as  other  costs  and  expenses   associated  with
                    defending the claim, will be paid by the

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<PAGE>

                    Indemnifying  Party. If the  Indemnifying  Party consists of
                    one or more of the  Transmission  Owners,  the  decision  to
                    defend  a claim  and the  administration  of such  claim  as
                    provided  in  this  Section   4.2.5(a)   shall  be  made  by
                    Transmission  Owners whose  collective Net Plant exceeds 50%
                    of  the  aggregate  Net  Plant  of all  Transmission  Owners
                    comprising   the   Indemnifying   Party  (the  "Majority  of
                    Indemnifying  Transmission Owners"). Each Transmission Owner
                    agrees that the Majority of Indemnifying Transmission Owners
                    shall have no liability to any other  Transmission  Owner in
                    connection  with the  administration  of claims  under  this
                    Section   4.2.5   except  to  the  extent  the  Majority  of
                    Indemnifying  Transmission  Owners  exercise their authority
                    hereunder in bad faith or in a grossly negligent manner.

               (c)  If the Indemnifying Party assumes the defense of such claim,
                    the Indemnified Party agrees to reasonably cooperate in such
                    defense as long as the  Indemnified  Party is not materially
                    prejudiced  thereby.  As long as the  Indemnifying  Party is
                    conducting   the   defense  of  such  claim   actively   and
                    diligently,   the  Indemnified  Party  may  retain  separate
                    co-counsel  at its own cost and expense and may  participate
                    in the defense of such claim, though ultimate control of the
                    claim's defense shall remain with the Indemnifying Party.

               (d)  In the event the  Indemnifying  Party  does not  assume  the
                    defense of such  claim,  or ceases to conduct the defense of
                    such claim  actively  and  diligently,  or has a conflict of
                    interest with the  Indemnified  Party,  (i) the  Indemnified
                    Party  may  defend  against,  and,  with the  prior  written
                    consent of the  Indemnifying  Party (which consent shall not
                    be  unreasonably  withheld),  consent  to the  entry  of any
                    judgment or enter into any settlement  with respect to, such
                    claim,  (ii)  the  Indemnifying  Party  will  reimburse  the
                    Indemnified Party promptly and periodically for the costs of
                    defending   against   such   claim,   including   reasonable
                    attorneys'  fees and  expenses,  and (iii) the  Indemnifying
                    Party will remain responsible for any Losses the Indemnified
                    Party  may  suffer  as a  result  of such  claim to the full
                    extent provided in Sections 3.4.1 and 4.2.4.

               (e)  If after  the  making  of any  indemnification  payment  the
                    amount of Losses to which such payment relates is reduced by
                    recovery,   settlement  or  otherwise  under  any  insurance
                    coverage, or pursuant to any claim, recovery,  settlement or
                    payment by or against any other  Person,  the amount of such
                    reduction  (less  any  costs,  expenses,  premiums  or Taxes
                    incurred in connection therewith) will promptly be repaid by
                    the Indemnified Party to the Indemnifying Party. Upon making
                    any indemnification

                                       33

<PAGE>

                    payment,  the Indemnifying Party will, to the extent of such
                    indemnification  payment, be subrogated to all rights of the
                    Indemnified  Party against any third party in respect of the
                    Losses  to  which  the   indemnification   payment  relates;
                    provided  that  (i)  the  Indemnifying   Party  is  then  in
                    compliance  with its  obligations  under this  Agreement  in
                    respect of such Losses, and (ii) until the Indemnified Party
                    recovers  full  payment  of such  Losses,  all claims of the
                    Indemnifying  Party  against any such third party on account
                    of  said  indemnification  payment  will be  subrogated  and
                    subordinated in right of payment to the Indemnified  Party's
                    rights  against  such  third  party.  Without  limiting  the
                    generality or effect of any other  provision of this Section
                    4.2.5(e), each such Indemnified Party and Indemnifying Party
                    will duly execute upon  request all  instruments  reasonably
                    necessary  to  evidence  and  perfect  the   above-described
                    subrogation and subordination rights.

          4.3  Payments to the Company

               4.3.1Management Fee. Each Transmission  Owner shall severally and
                    not  jointly,  pay the  Company  its pro  rata  share of the
                    annual  Management Fee. Each  Transmission  Owner's pro rata
                    share of the  Management  Fee in each year shall be equal to
                    the percentage of the Management Fee equal to the percentage
                    that  such  Transmission  Owner's  Net  Plant  bears  to the
                    aggregate Net Plant of all Transmission  Facilities  subject
                    to the  Functional  Control of the Company  pursuant to this
                    Agreement in such year. The amount of the Initial Management
                    Fee,  as  adjusted  pursuant  to  Section  6.3(b) of the LLC
                    Agreement,  may be increased upon and in connection with the
                    addition  of  a  Transmission  Owner  as  a  Party  to  this
                    Agreement  pursuant to Section 3.4.3 of this Agreement by an
                    amount  agreed upon between the Company and such  additional
                    Transmission  Owner;  provided,  however,  that  (a) 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  and (b)
                    after  giving   effect  to  such  increase  in  the  Initial
                    Management Fee, the several  obligation of each Transmission
                    Owner to pay its pro rata  share of the  Initial  Management
                    Fee under this Section 4.3 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 of all Transmission  Facilities  subject
                    to the  Functional  Control of the Company  pursuant to this
                    Agreement 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.

               4.3.2Incentive  Compensation.  In addition to the  Management Fee
                    payable to the Company, each Transmission Owner shall pay to
                    the  Company   incentive   compensation   pursuant  to  such
                    incentive compensation  arrangements as are agreed from time
                    to time  between  the  Company  and such other  Transmission
                    Owners as shall agree thereto.  The Company

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<PAGE>

                    shall,  from time to time but no less frequently than within
                    thirty  (30) days after the  Transmission  Service  Date and
                    each anniversary thereof, propose to the Transmission Owners
                    incentive  compensation  arrangements  designed to encourage
                    the  efficient  and enhanced  operation  of the  Transferred
                    Facilities  without  regard to any benefit or  detriment  to
                    other businesses and activities of the Transmission  Owners,
                    including   their   electric   generation   businesses   and
                    activities,  which may result  from  implementation  of such
                    proposals.  Any incentive  arrangements  between the Company
                    and the Transmission  Owners shall provide that (a) not less
                    than 25 percent of net incentive  revenues  which are earned
                    through  the  implementation  of  Company's  proposals,   or
                    otherwise  as  a  result  of  the   Company's   exercise  of
                    Functional Control over the Transferred Facilities, shall be
                    payable to the Company as  incentive  compensation;  and (b)
                    each  Transmission  Owner shall  receive a percentage of the
                    balance  of  such  net  incentive   revenues  equal  to  the
                    percentage that such Transmission Owner's Net Plant bears to
                    the  aggregate  Net  Plant  of all  Transmission  Facilities
                    subject to the Functional Control of the Company pursuant to
                    this Agreement in such year .

          4.4  Transmission Owners' Remedies.

               4.4.1Accounting Failures. If an Accounting Failure occurs, at the
                    written  request of a majority  of the  Transmission  Owners
                    (each Transmission Owner having one vote), the Company shall
                    retain and pay for the  services  of an  accounting  firm of
                    national reputation,  which accounting firm shall conduct an
                    examination and analysis of the accounting procedures of the
                    Company  and shall be  required  to issue a  written  report
                    regarding  such   examination  and  analysis,   including  a
                    description  of any  material  weaknesses  in the  Company's
                    accounting  procedures  discovered by such accounting  firm,
                    and recommendations to correct such weaknesses.  The Company
                    shall provide to the Transmission Owners copies of all draft
                    and  final  reports  prepared  by such  accounting  firm and
                    within  thirty  (30) days after  issuance  of a report,  the
                    Company  shall provide a response  thereto  delivered to the
                    Transmission  Owner  which  states  the  extent to which the
                    Company accepts the report's  findings and the basis for any
                    objections.

               4.4.2Operational  Failures.  If an Operational Failure occurs, at
                    the written request of a majority of the Transmission Owners
                    (each Transmission Owner having one vote), the Company shall
                    retain  and pay for the  services  of a  consulting  firm of
                    national  reputation  with  experience  in  electric  energy
                    operations   and   management  and  which  is  a  Non-Market
                    Participant.   Such   consulting   firm  shall   conduct  an
                    examination  and  assessment  of  the  Company's   operating
                    procedures,  management,  staffing and such other matters as
                    such   consulting   firm   deems   appropriate   under   the
                    circumstances  considering  the  nature  of the  Operational
                    Failure  and shall be  required  to issue a  written  report
                    regarding such examination and assessment. The Company shall
                    provide to the  Transmission  Owners

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<PAGE>

                    copies  of all  draft and  final  reports  prepared  by such
                    consulting  firm and within thirty (30) days after  issuance
                    of a report,  the Company shall  provide a response  thereto
                    delivered to the Transmission Owners which states the extent
                    to which the Company  accepts the report's  findings and the
                    basis for any objections.

               4.4.3Removal of Managing Member 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,
                    the Company shall cause the Managing Member to be removed in
                    accordance   with  the  provisions  of  the  LLC  Agreement;
                    provided,  however, that (x) if the Managing Member contests
                    its removal pursuant to the terms of the LLC Agreement,  the
                    Company  shall  acknowledge  and shall  cause  the  Managing
                    Member to acknowledge the rights of the Transmission  Owners
                    to participate in any proceeding to resolve the dispute over
                    the removal pursuant to Section 10.3 of the LLC Agreement or
                    Section 6.3 and (y) no removal of the Managing  Member shall
                    be effective unless and until approved by the Commission.

               4.4.4Replacement  of  Managing  Member.  If a Managing  Member is
                    removed as a result of an Early  Termination Event under the
                    LLC  Agreement,  including a removal for Cause,  the Company
                    shall cause the successor  Managing Member to be selected by
                    vote of a Super Majority of Transmission Owners.

                                    ARTICLE V
                              TERM AND TERMINATION

          5.1  Term. This Agreement shall become effective as to the Company and
each  Transmission  Owner on the  Effective  Date or the  date set  forth in the
amendment  hereto  entered  into  between the Company and a  Transmission  Owner
pursuant to Section 3.4.3.  For each  Transmission  Owner and the Company,  this
Agreement  shall  continue  in  effect  until  the  end  of  the  Initial  Term.
Notwithstanding the scheduled termination hereof at the end of the Initial Term,
this Agreement automatically shall be extended as to a Transmission Owner for an
additional term of two (2) years at the end of the Initial Term,  unless written
notice of termination  hereof is given by such Transmission  Owner to each other
Party at least six months prior to the last day of the Initial  Term;  provided,
however,  that,  if at the time  such  notice  of  termination  is given by such
Transmission Owner, applicable provisions in the Midwest ISO Transmission Owners
Agreement  governing the right of a "Transmission  Owner" thereunder to withdraw
from the  Midwest ISO specify a longer  minimum  time for notice of  withdrawal,
then, unless the Commission shall otherwise  approve,  upon the effectiveness of
the  termination  of  this  Agreement  as  to  any  Transmission   Owner,   such
Transmission Owner shall automatically be and become a member of Midwest ISO for
a term of not less than the

                                       36

<PAGE>

minimum notice period for withdrawal  specified in the Midwest ISO  Transmission
Owners Agreement (measured from the date of the notice of termination  delivered
hereunder) less six months.  Following any such additional term, the term hereof
automatically  shall be  extended  as to a  Transmission  Owner  for  successive
additional terms of two (2) years each (any additional term,  whether  following
the Initial Term or an  additional  term,  being an  "Additional  Term")  unless
written notice of termination hereof is given by such Transmission Owner to each
other  Party  at least  six  months  prior to the last day of the then  existing
Additional  Term;  provided,  however,  that,  if at the  time  such  notice  of
termination is given by such Transmission  Owner,  applicable  provisions in the
Midwest ISO Transmission Owners Agreement governing the right of a "Transmission
Owner" thereunder to withdraw from the Midwest ISO specify a longer minimum time
for notice of withdrawal from the Midwest ISO, then, unless the Commission shall
otherwise  approve,  upon the effectiveness of the termination of this Agreement
as to any Transmission Owner, such Transmission Owner shall automatically be and
become a member of Midwest  ISO for a term of not less than the  minimum  notice
period for withdrawal specified in the Midwest ISO Transmission Owners Agreement
(measured from the date of the notice of termination  delivered  hereunder) less
six months.

Each Transmission Owner may withdraw from the GridAmerica ITC and this Agreement
shall  terminate  with respect to such Party under the following  circumstances:
(a) if a  Transmission  Owner  delivers  notice of its intent to contribute  its
Transferred  Facilities to the Company  pursuant to Section 5.1(a) of the Master
Agreement  prior to the date thirty (30) months after the Effective  Date,  then
each Transmission  Owner may withdraw from the GridAmerica ITC and terminate its
participation under this Agreement by providing all of the other Parties written
notice of such  withdrawal  within  thirty (30) days of receipt of the notice of
such  contribution;  or (b) if no Transmission Owner has delivered notice of its
intent to  contribute  its  Transferred  Facilities  to the Company  pursuant to
Section  5.1(a)  of  the  Master  Agreement  prior  to  the  expiration  of  the
twenty-ninth  (29th) month following the Effective Date, then each  Transmission
Owner may withdraw from the  GridAmerica  ITC and  terminate  its  participation
under this  Agreement by providing  all of the other Parties  written  notice of
such withdrawal  within the thirtieth (30th) month following the Effective Date.
Any withdrawal from the GridAmerica ITC and termination of  participation  under
this  Agreement  shall  be  effective  on the  first  day of the  seventh  month
following  the month in which notice  thereof is delivered  in  accordance  with
Section 10.9; provided, however, that, notwithstanding the foregoing, unless the
Commission shall otherwise approve, no withdrawal by any Transmission Owner from
the  GridAmerica  ITC pursuant to Section  5.1(a) or Section  5.1(b) shall be or
become effective unless and until such Transmission

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<PAGE>

Owner  becomes  a member of the  Midwest  ISO.  Upon  receipt  of any  notice of
withdrawal from the GridAmerica ITC and termination of participation  under this
Agreement pursuant to Section 5.1(a) or Section 5.1(b),  each other Transmission
Owners shall have the right,  exercisable  within thirty (30) days of receipt of
such  notice,   to  withdraw  from  the   GridAmerica   ITC  and  terminate  its
participation under this Agreement; provided, however, that, notwithstanding the
foregoing,  unless the Commission shall otherwise approve,  no withdrawal by any
Transmission  Owner from the  GridAmerica  ITC pursuant to this sentence of this
Section  5.1 shall be or become  effective  unless and until  such  Transmission
Owner becomes a member of the Midwest ISO.  Without the prior written consent of
NGUSA  pursuant  to  Section  5.7  of  the  Master  Agreement,  no  part  of the
Transferred  Facilities  of any  Transmission  Owner  that  withdraws  from  the
GridAmerica ITC and terminates its  participation  under this Agreement shall be
included in or managed by an ITC that  exercises  functions  similar in scope to
the function exercised by the Company with respect to the Transferred Facilities
(determined after taking into account the functions exercised by the Midwest ISO
under the MISO ITC  Agreement)  for a period of one (1) year after the effective
date of such  Transmission  Owner's  withdrawal,  provided,  however,  that  the
foregoing  prohibition  shall  not apply if the  Initial  Member  exercised  its
resignation  rights  pursuant to Section  5.7(a) or Section 5.7(b) of the Master
Agreement prior to the date of any such withdrawal.

     5.2 Termination.

          5.2.1No  Termination.  No Party shall have any right to  terminate  or
               withdraw from this Agreement,  nor shall any  Transmission  Owner
               have the right to withdraw any of its Transferred Facilities from
               GridAmerica  ITC,  except  as  provided  in  Section  5.1 or this
               Section  5.2.  The  provisions  of Article 10 shall  survive  any
               termination of this Agreement.

          5.2.2Divestiture  or Sale of  Transferred  Facilities.  This Agreement
               shall  terminate  as to any  Transmission  Owner on the date such
               Transmission Owner contributes to the Company pursuant to Section
               3.1(b) of the LLC Agreement or otherwise  sells to a Person other
               than the Company  any of such  Transmission  Owner's  Transferred
               Facilities,  but such termination  shall only be to the extent of
               and  extend to such  Transmission  Owner  only in respect of such
               contributed  or  otherwise  sold  Transferred   Facilities.   Any
               proposed sale by a Transmission  Owner of Transferred  Facilities
               shall be conditioned on the delivery by the purchaser  thereof of
               an  assumption   agreement  in  form  and  substance   reasonably
               satisfactory  to the  Company  pursuant  to which  the  purchaser
               assumes  the  obligations  of  the  selling   Transmission  Owner
               hereunder. Such Transmission Owner shall remain a party hereto to
               the extent such  Transmission  Owner continues to own Transferred
               Facilities.   In  the  event  that  a   Transmission   Owner  has
               contributed all of its  Transferred  Facilities to the Company or
               has  otherwise  sold  all of  its  Transferred  Facilities,  this
               Agreement shall

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<PAGE>

               terminate as to the  Transmission  Owner as of the effective date
               of the  contribution  or sale (as the case may be) of all of such
               Transmission  Owner's  Transferred  Facilities,  including in the
               case  of a  Transmission  Owner  that  retains  ownership  of its
               Non-transferred   Facilities,   except   with   respect   to  any
               obligations of the Transmission Owner hereunder accruing prior to
               the  effective  date  of  the  contribution  or  sale,  including
               indemnification  obligations  pursuant to Section  4.2.4  arising
               from  any  event  occurring  prior to the  effective  date of the
               contribution or sale.

          5.2.3ITC Status.  A  Transmission  Owner may terminate  this Agreement
               with respect to the Transferred  Facilities at any time following
               (i) a determination by the Commission that the Company has ceased
               to be an ITC,  or (ii) an order by the  Commission  requiring  or
               authorizing the Company or the  Transferred  Facilities to become
               subject to the control or  direction  of a Regional  Transmission
               Organization other than the Midwest ISO.

          5.2.4Failure   to   Achieve   Transmission   Service   Date.   If  the
               Transmission  Service  Date has not occurred on or before June 30
               2003,  then at any time after June 30, 2003,  any Party may, upon
               thirty (30) days prior written notice to the other Parties, cause
               the GridAmerica ITC and this Agreement to terminate.

     5.3  Effect Of Termination  Pursuant to Sections 5.1 or 5.2.3. In the event
that a Transmission  Owner terminates this Agreement pursuant to Sections 5.1 or
5.2.3, the following provisions shall apply.

          5.3.1Transmission Customers Held Harmless.  Transmission Customers and
               Interconnection   Customers   taking   service  that  involves  a
               terminating    Transmission   Owner's   Transferred   Facilities,
               including Transmission Service that involves transmission service
               agreements  and  interconnection   and/or  operating   agreements
               executed  before such  Transmission  Owner provided notice of its
               termination  shall receive  service for the remaining term of the
               agreement at the same rates,  terms,  and  conditions  that would
               have been  applicable if there were no  termination,  unless such
               agreements are modified by the Commission in accordance  with its
               statutory  authority  or by  agreement  of  the  parties  to  the
               agreement.  Such  Transmission  Owner  shall make its  facilities
               available to provide service to such  Transmission  Customers and
               Interconnection  Customers  and allow the  Company to continue to
               exercise Functional Control over the Transferred  Facilities with
               respect to such service and shall receive no more in revenues for
               that  service  than if  there  had  been no  termination  by such
               Transmission   Owner.   This  Section  5.3.1  shall  survive  the
               termination of the Agreement by a Transmission Owner.

          5.3.2Existing   Obligations.   Obligations   incurred   and   payments
               applicable to time periods  prior to the  effective  date of such
               termination shall survive

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<PAGE>

               the termination of this Agreement. The reconciliation and payment
               of all  such  amounts  shall  be  done  as  soon  as  practicable
               following  such   termination.   This  Section  5.3.2  shall  not
               constitute a general  guarantee of the obligations of the Company
               by any Transmission Owner.

          5.3.3Construction   of   Facilities.   Obligations   relating  to  the
               construction  of new  facilities  pursuant to an approved plan of
               the  Company,   which   imposed   duties  upon  the   terminating
               Transmission   Owner   prior   to   such   Transmission   Owner's
               termination, shall be renegotiated as between the Company and the
               terminating   Transmission   Owner   taking  into   consideration
               commitments  made to Transmission  Customers and  Interconnection
               Customers and funds  advanced,  if any,  prior to  termination of
               this  Agreement  with  respect to such  terminating  Transmission
               Owner.  Such  obligations  shall survive the  termination of this
               Agreement with respect to such Transmission Owner.

          5.3.4Other Obligations.  Other obligations between the Company and the
               terminating  Transmission  Owner shall be renegotiated as between
               the Company and the terminating  Transmission  Owner,  subject to
               approval  by  the  Commission.  If  such  obligations  cannot  be
               resolved  through   negotiations,   they  shall  be  resolved  in
               accordance with the dispute resolution procedures provided for in
               this Agreement.

     5.4  Effect of Termination  Pursuant to Section 5.2.2.  In the event that a
Transmission  Owner  terminates  this  Agreement  pursuant  to Section  5.2.2 by
divesting  to the  Company or  otherwise  selling  to another  Person all of its
Transferred Facilities, the following provisions shall apply.

          5.4.1Transmission   Customers  Held   Harmless.   In  the  case  of  a
               Transmission Owner that retains ownership of its  Non-transferred
               Facilities,  Transmission  Customers taking service that involves
               transmission    service    over   such    Transmission    Owner's
               Non-transferred Facilities pursuant to agreements executed before
               such Transmission  Owner provided notice of its termination shall
               continue  to  receive  service  for  the  remaining  term  of the
               agreement at the same rates,  terms,  and  conditions  that would
               have been  applicable  if there were no  withdrawal,  unless such
               agreements are modified by the Commission in accordance  with its
               statutory  authority  or by  agreement  of  the  parties  to  the
               agreement. Such Transmission Owner shall make its Non-transferred
               Facilities  available  to provide  service  to such  Transmission
               Customers   and  allow  the   Company  to  continue  to  exercise
               Functional Control over the Non-transferred  Facilities and shall
               receive no more in revenues  for that  service  than if there had
               been no  termination  by such  Transmission  Owner.  This Section
               5.4.1  shall  survive  the  termination  of  the  Agreement  by a
               Transmission Owner.

          5.4.2Existing   Obligations.   Obligations   incurred   and   payments
               applicable to time periods  prior to the  effective  date of such
               termination shall survive

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<PAGE>

               the termination of this Agreement. The reconciliation and payment
               of all  such  amounts  shall  be  done  as  soon  as  practicable
               following   such   withdrawal.   This  Section  5.4.2  shall  not
               constitute a general  guarantee of the obligations of the Company
               by any Transmission Owner.

          5.4.3Other Obligations.  Other obligations between the Company and the
               terminating  Transmission  Owner shall be renegotiated as between
               the Company and the terminating  Transmission  Owner,  subject to
               approval  by  the  Commission.  If  such  obligations  cannot  be
               resolved  through   negotiations,   they  shall  be  resolved  in
               accordance with the dispute resolution procedures provided for in
               this Agreement.

     5.5  Regulatory  And Other  Approvals Or Procedures.  The  termination by a
Transmission Owner of its obligations hereunder and/or withdrawal of some or all
of its  Transferred  Facilities  from the  GridAmerica  ITC shall be  subject to
applicable   federal  and  state   regulatory   approvals  or  other  regulatory
procedures,   including,  without  limitation,  any  required  approval  of  the
Commission and any  requirement of the Commission that such  Transmission  Owner
join a Commission approved regional transmission organization.

                                   ARTICLE VI
                               DISPUTE RESOLUTION

     6.1  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  within  thirty (30) days of
such notice  being sent,  any Party to the dispute may declare the  consultation
procedure  set forth in this  Section  6.1  terminated  and refer the dispute or
controversy to arbitration pursuant to Section 6.2.

     6.2  Arbitration.  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 6.1, then such dispute shall be resolved according
to this  Section  6.2.  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 6.2, 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  6.1,  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.
For the avoidance of doubt,  this Section 6.1 does not apply to disputes arising
under the MISO OATT,  which shall be resolved in accordance  with the procedures
set forth therein,  or to disputes arising under another  agreement  between and
among the  Company  and one or more of the  Transmission  Owners or between  the

                                       41

<PAGE>

Company and the Midwest  ISO,  which  shall be resolved in  accordance  with the
dispute resolution procedures of such other agreement.

               (a)  All  Claims  To Be  Arbitrated.  Except as  provided  in the
                    immediately  preceding  sentence and in Sections  6.2(l) and
                    9.2.1, 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 6.1,
                    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.

               (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.

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<PAGE>

               (d)  Number  and  Qualification  of  Arbitrators.  The  panel  of
                    arbitrators (the "Panel") shall consist of three arbitrators
                    appointed  in  accordance  with  this  Section  6.2  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 chairperson  shall 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 6.2(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 10.2.

               (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

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<PAGE>

                    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  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
                    VI. 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  9.2.  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
                    orders 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,  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

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<PAGE>

                    confidential  by the  arbitrators,  the AAA and any  Persons
                    participating   in  the   Arbitration,   except   that   the
                    confidentiality obligations of the Parties shall be governed
                    by Section 10.14.

               (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  6.1,   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   6.2(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
                    independently  and under this Section 6.2 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 6.2.

               (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

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<PAGE>

                    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 New York,  New York,
                    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
                    6.2 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 6.2.

     6.3  Arbitration of Certain Claims Regarding Removal of Managing Member. If
a Super  Majority of  Transmission  Owners have attempted to remove the Managing
Member for Cause pursuant to Section 4.4.3 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  Arbitration")  according to this Section 6.3. The
Removal  Claim  shall  be  finally  resolved  by  one  arbitrator  appointed  in
accordance  with this  Section 6.3 and the  Arbitration  Rules to the extent not
inconsistent with the provisions of this Agreement.  The Expedited Procedures of
the Arbitration

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<PAGE>

Rules  shall  be used  unless  the  arbitrator  determines  that  they  would be
inappropriate. The arbitrator shall take an oath of neutrality.

          6.3.1Application  to Removal  Claim;  Relation  to Other  Claims.  Any
               dispute other than a Removal Claim must be resolved in a separate
               Arbitration  pursuant to Section 6.2. 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 6.2.

          6.3.2Referral of Claims to Arbitration. A Managing Member who receives
               a written notice of removal as  contemplated  in Section 4.4.3 (a
               "Removal  Notice"),  and who  disputes  that  Cause  for  removal
               exists,  or a Member or a  Transmission  Owner  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
               Transmission  Owners 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.

          6.3.3Appointment  of  Arbitrator.  Within ten (10) days of delivery of
               the Notice of  Removal  Dispute,  the  Removal  Respondent  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  both  contain  a  common
               proposed arbitrator, such person shall be selected as arbitrator;
               otherwise, the AAA shall appoint one of them as arbitrator. If no
               persons are named on both lists,  then 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 6.3. An arbitrator appointed pursuant
               to this Section  6.3.3 may not also be appointed as an arbitrator
               pursuant to Section 6.2.

          6.3.4Governing  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 of the State
               of New York, in accordance with Section 10.2 hereof.

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<PAGE>

          6.3.5Powers  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  attorney's  fees (in
               accordance  with  Section  10.19),  costs,  and  expenses  of the
               Removal Arbitration  (including the attorneys' fees and expenses)
               against  one or  more  of  the  Parties  in  whatever  manner  or
               allocation the arbitrator deems appropriate.

          6.3.6Venue;  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.

          6.3.7Arbitration  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  and 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 VII
                                   TAX MATTERS

     7.1  Responsibility  for Transmission  Owner Taxes. Each Transmission Owner
shall be  responsible  for  preparation  and filing of all Tax Returns and other
filings related to its Transmission Business and Transferred  Facilities and for
payment  of any  Tax  liabilities  related  to  its  Transmission  Business  and
Transferred Facilities.  No Party shall be responsible for, or required to, file
any Tax Returns or other reports for any other Transmission Owner and shall have
no  liability  for  any  Taxes  related  to  any  other   Transmission   Owner's
Transmission Business or Transferred Facilities.

     7.2  Responsibility for the Company Taxes. The Company shall be responsible
for  preparation  and filing of all Tax Returns and other filings related to its
business and the facilities  owned by it constituting  part of the  Transmission
System and for payment of any Tax liabilities

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related thereto. No Transmission Owner shall have any responsibility for filing,
or be  required to file,  any Tax  Returns or other  reports for the Company and
shall have no liability for any Taxes related to the Company's owned facilities.

                                  ARTICLE VIII
                                  FORCE MAJEURE

     If a Party is rendered  wholly or partly unable to perform its  obligations
under this  Agreement  because of a Force  Majeure  event,  that Party  shall be
excused from  whatever  performance  is affected by such Force Majeure event but
only to the extent so affected,  provided  that:  (i) the Party,  within two (2)
days after the  occurrence of the Force Majeure  event,  gives the other Parties
notice describing the particulars of the occurrence and its estimated  duration;
(ii) the  suspension  of  performance  is of no  greater  scope and of no longer
duration than is required by the Force Majeure  event;  and (iii) the Party uses
commercially reasonable efforts to remedy its inability to perform and to resume
its full performance under this Agreement;  provided,  however, that the Party's
obligation to remedy its  inability to perform shall not require the  settlement
of any strike,  walkout,  lockout or other labor  dispute on terms that,  in the
sole judgment of the Party  involved in said  dispute,  are contrary to its best
interest.

                                   ARTICLE IX
                            BREACH, CURE AND DEFAULT

     9.1  Continued Operation.  In the event of a breach or default hereunder by
any Party,  the Parties shall continue to operate and maintain their  respective
facilities and perform all acts reasonably  necessary for the Company to operate
and maintain the  Transmission  System in accordance with this Agreement and the
MISO ITC Agreement.

     9.2  Remedies.

          9.2.1Specific  Performance.  The Parties  agree and  stipulate  that a
               breach by a Party of this  Agreement  will result in  irreparable
               damage to the other  Parties  for  which no money  damages  could
               adequately compensate. In addition to all other remedies to which
               the other Parties may be entitled hereunder, including reasonable
               attorneys'  fees pursuant to Section  10.19 and court costs,  any
               other  Party  shall be  entitled  to seek  injunctive  relief  or
               specific  performance to restrain or compel the breaching  Party.
               Each of the Parties  expressly  waives any claim that an adequate
               remedy at Law exists for such a breach.

          9.2.2All  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

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<PAGE>

               subsequent   employment   of   any   other   right   or   remedy.
               Notwithstanding the foregoing:

               (a)  as between  the  Parties,  notwithstanding  anything  to the
                    contrary in this  Agreement,  no Party will be liable to any
                    other Party for indirect, consequential, special or punitive
                    damages  on  account  of any  action or  proceeding  brought
                    hereunder or related  hereto;  provided,  however,  that the
                    foregoing  shall not apply to indemnity  obligations  of any
                    Party   hereunder   that  relate  to   liabilities   of  the
                    Indemnified Party to third parties, even if such liabilities
                    to   third   parties   include   liability   for   indirect,
                    consequential,  special or punitive damages suffered by such
                    third parties; and

               (b)  except with respect of the obligations of the Company (i) to
                    reimburse  Transmission  Owners for costs on a  Pass-Through
                    Basis under the  circumstances  described  in Sections  2.3,
                    2.4, 2.5, 4.1.3(a),  (ii) to pay amounts to the Transmission
                    Owners  on  a   Pass-Through   Basis  as  provided  in  this
                    Agreement,  (iii) to perform its  obligations  under Section
                    3.3.4,  and (iv) to  indemnify  the  Transmission  Owners as
                    provided in Section  3.4.1,  the Company  shall be liable to
                    the Transmission Owners only in the case of Gross Negligence
                    or Willful Misconduct.

     9.3  No Joint  Liability.  The  liabilities  and  obligations of each Party
under this  Agreement  shall be several  and not  joint,  and no Party  shall be
jointly  liable under this  Agreement  with any other Party.  Without in any way
limiting the  foregoing,  the failure of one  Transmission  Owner to perform its
obligations  hereunder  shall not  constitute  a failure to perform by any other
Transmission Owner.

                                    ARTICLE X
                            MISCELLANEOUS PROVISIONS

     10.1 Not for Benefit of Third  Parties.  This  Agreement  is intended to be
solely for the benefit of the Parties, 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.

     10.2 Governing Law. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT SHALL
BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THIS
AGREEMENT  IS REQUIRED TO BE  INTERPRETED  OR  ENFORCED IN  ACCORDANCE  WITH THE
FEDERAL LAW OF THE UNITED STATES OF AMERICA, AND WITHOUT REFERENCE TO THE CHOICE
OF LAW PRINCIPLES IN THE STATE OF NEW YORK THAT REQUIRE  APPLICATION OF THE LAWS
OF A DIFFERENT JURISDICTION.

     10.3 Successors And Assigns.  This Agreement shall inure to the benefit of,
and be binding  upon,  each of the  Parties,  their  respective  successors  and
assigns.  This Agreement may not be assigned by a Transmission Owner except that
this  Agreement  (i) shall be assigned to any

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<PAGE>

successor to the ownership of a Transmission Owner's Transferred Facilities, and
any such  successor  shall become a  Transmission  Owner under this Agreement or
(ii) may be  assigned  to a  lender.  This  Agreement  may not be  assigned,  by
operation of Law or otherwise by the Company,  except to a lender. An assignment
of this Agreement by a Transmission  Owner as to its  Transferred  Facilities in
conformance with clause (i) of this Section 10.3 shall release such Transmission
Owner  from  further   liability  or  obligation  under  this  Agreement  as  to
obligations arising after the date of such assignment.

     10.4 Effect of Waiver.  No waiver by a Party of any one or more defaults by
another Party hereto in the  performance of this  Agreement  shall operate or be
construed as a waiver of any future  default or  defaults,  whether of a like or
different character.

     10.5 Severability.  Except for Section 5.1 of this Agreement, 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, and such invalid, void, or unenforceable provision may be replaced
with a suitable  and  equitable  provision  pursuant to Section 10.6 in order to
carry out,  so far as may be valid and  enforceable,  the intent and  purpose of
such invalid, void, or unenforceable provision.

     10.6 Renegotiation.  If any provision of this Agreement, or the application
thereof  to  any  Person,  Entity,  or  circumstance,  is  held  by a  court  or
Governmental  Authority  of  competent  jurisdiction  to be  invalid,  void,  or
unenforceable, or if a modification or condition to this Agreement is imposed by
a Governmental Authority exercising  jurisdiction over this Agreement,  then the
Parties shall  endeavor in good faith to negotiate  such amendment or amendments
to this Agreement as will restore the relative rights, obligations, and economic
position of the Parties under this Agreement  immediately prior to such holding,
modification,  or condition to the extent consistent with the orders,  decisions
or  requirements  of the  applicable  Governmental  Authority.  The  rights  and
obligations of the Parties under this Agreement  shall be modified to the extent
necessary (i) to comply with an order of the  Commission or (ii) as is necessary
to avoid a determination  by the Commission that the Company has ceased to be an
ITC; provided,  however, that any such modification  (including any modification
of the definition of Functional Control and the scope of activities performed by
each Party hereunder) shall preserve to the maximum extent possible the relative
rights,  obligations,  and  economic  positions  of the Parties  hereunder as in
effect prior to giving effect to such modification.

     10.7 Representations And Warranties. Each Party represents and warrants, as
of the  Effective  Date,  to each other  Party that:

                    (i)  it is  duly  organized,  validly  existing  and in good
                         standing under the applicable Laws of the  jurisdiction
                         of its organization and is qualified to do business (A)
                         in  the   jurisdictions   necessary   to  perform  this
                         Agreement,  in the case of the  Company,  or (B) in the
                         jurisdictions  in which its Transferred  Facilities are
                         located, in the case of a Transmission Owner;

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<PAGE>

                    (ii) it has the power to execute and deliver this  Agreement
                         and to perform its obligations under this Agreement and
                         has taken all necessary  corporate and/or other actions
                         to authorize such execution, delivery and performance;

                    (iii)its  execution  and delivery of this  Agreement and its
                         performance of its obligations  under this Agreement do
                         not violate or conflict with (A) any Laws applicable to
                         it, (B) any  provision  of its  charter or by-laws  (or
                         comparable  constituent  documents),  (C) any  order or
                         judgment  of  any  court  or   Governmental   Authority
                         applicable  to it or  any  of its  assets  or  (D)  any
                         contractual  restriction  binding on or affecting it or
                         any of its assets,  except third-party joint agreements
                         covered by Section 10.13;

                    (iv) subject to the  receipt of any  Required  Consents  (as
                         defined in the Master Agreement) required by it, to its
                         knowledge,  there are no Consents  required  for it and
                         its Affiliates to perform their respective  obligations
                         under this  Agreement  other than  Consents  which have
                         been  obtained  and  Consents  which may be required to
                         perform   obligations  which,  by  the  terms  of  this
                         Agreement,  will not arise and are not  required  to be
                         performed  except  upon  the  happening  of one or more
                         contingencies specified in this Agreement;

                    (v)  this  Agreement has been duly executed and delivered by
                         the Party and constitutes its legal, valid, and binding
                         obligation,  enforceable  against it in accordance with
                         its   terms,   subject   to   applicable    bankruptcy,
                         reorganization,  insolvency, moratorium or similar Laws
                         affecting  creditors' rights generally and subject,  as
                         to enforceability,  to equitable  principles of general
                         application   (regardless  of  whether  enforcement  is
                         sought in a proceeding in equity or at Law); and

                    (vi) except as otherwise  permitted  herein,  it has neither
                         initiated  nor received  written  notice of any pending
                         action,  proceeding,  or  investigation,   nor  to  its
                         knowledge   is  any   such   action,   proceeding,   or
                         investigation  threatened  (or any basis therefor known
                         to it), which questions the validity of this Agreement,
                         or which  would  materially  or  adversely  affect  its
                         rights or obligations under this Agreement.

     10.8 Further Assurances.  Each Party agrees that it shall hereafter execute
and deliver  such  further  instruments,  provide all  information,  and take or
forbear such further acts and things as may be reasonably required and useful to
carry out the intent and purpose of this  Agreement and as are not  inconsistent
with the provisions of this Agreement.

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<PAGE>

     10.9 Notices.  Every  notice,  request,  or other  statement  to be made or
delivered  to a Party  pursuant  to this  Agreement  shall be  directed  to such
Party's  representative  at the address or  facsimile  number for such Party set
forth on Appendix C or to such other  address or  facsimile  number as the Party
may  designate  by  written  notice to each other  Party 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.

     10.10Regulatory Proceedings.  Subject to the provisions of Section 10.6, no
Party shall seek to amend this Agreement through a unilateral application to the
Commission to do so.  Notwithstanding  the foregoing,  nothing in this Agreement
shall be deemed to prohibit or limit any Party's right to otherwise  initiate or
intervene in any  proceedings  before the  Commission or any other  Governmental
Authority involving its rights,  duties, and obligations under this Agreement or
any aspect of the Transmission System.

     10.11Entire Agreement;  Amendments.  This Agreement  constitutes the entire
agreement  among  the  Parties  pertaining  to the  subject  matter  hereof  and
supersedes all prior agreements,  representations and understandings, written or
oral,  pertaining thereto including that certain Letter of Intent dated June 20,
2002 among NGUSA,  Ameren, ATSI and NIPSCO regarding the formation and operation
of GridAmerica as an ITC within the Midwest ISO. Except as otherwise provided in
Section  3.4.3,  no amendment to or  modification,  termination  or waiver of or
under any provision of this Agreement shall be valid unless the same shall be in
writing  and signed by the Company and one or more  Transmission  Owners  owning
Transmission Facilities with a Net Plant of at least 66.67% of the aggregate Net
Plant of all Transmission  Facilities  subject to the Functional  Control of the
Company  pursuant hereto (other than any  Transmission  Facilities  owned by the
Company);  provided, however, that (i) Sections 3.4.1, 4.2.4 and 4.3 may only be
so amended, modified, terminated or waived with the unanimous written consent of
the Company and all the Transmission  Owners, (ii) any amendment,  modification,
termination or waiver that materially adversely affects a specific  Transmission
Owner must be approved in writing by such Transmission Owner, and (iii) a waiver
by a Party as to only its rights may be granted by such Party.

     10.12Efforts of the Parties. Where the consent,  agreement,  or approval of
a Party must be obtained hereunder,  such consent,  agreement, or approval shall
not be unreasonably withheld, conditioned, or delayed. Where a Party is required
or  permitted  to act, or omit to act,  based on its opinion or  judgment,  such
opinion or judgment shall not be unreasonably  exercised. To the extent that the
jurisdiction of any Governmental Authority applies to any part of this Agreement
and/or the transactions or actions covered by this Agreement,  each Transmission
Owner shall  cooperate  with the Company  and all other  Transmission  Owners to
secure any

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<PAGE>

necessary or desirable  approval or acceptance of such Governmental  Authorities
of such part of this Agreement and/or such transactions or actions.

     10.13Third-Party   Joint   Agreements.   This   Agreement,   including  the
appendices, shall not be construed,  interpreted, or applied in such a manner as
to  cause  a  Transmission  Owner  to be in  material  breach,  anticipatory  or
otherwise,  of any  agreement  in effect on the  Effective  Date,  between  such
Transmission  Owner  and one or more  third  parties  for the  joint  ownership,
operation, or maintenance of any electrical facilities covered by this Agreement
or  the  MISO  OATT.  If a  Transmission  Owner  has  such a  third-party  joint
agreement,  it shall discuss with the Company any material conflict between 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,  vis-a-vis the
Company,  be and remain within the sole  discretion of the  Transmission  Owner;
provided,  however,  that the  Transmission  Owner  shall,  if the  conflict  is
otherwise  unresolved,  utilize the  available  remedies and dispute  resolution
procedures to resolve such conflict,  including,  but not limited to, submitting
such conflict to the Commission for resolution;  provided,  further, that unless
so ordered by the Commission or a court having  jurisdiction,  in no event shall
the  Transmission  Owner enter into a resolution  of such  conflict  which would
impair the  reliability of the  Transmission  System.  Each  Transmission  Owner
hereby  represents and warrants that,  except as otherwise set forth on Appendix
B, the  application  of the  provisions  of this  Section  10.13 will not have a
material adverse effect on the ability of the Company to perform its obligations
under  this  Agreement.   Notwithstanding  anything  to  the  contrary  in  this
Agreement,  the  Company  shall  not be  deemed  to be in  breach  of any of its
obligations  under this Agreement or subject to liability  hereunder if it takes
action  or  fails  to  take  action  with  respect  to any  matter  involving  a
Transmission Owner's exercise of its rights under this Section 10.13.

     10.14Confidentiality.  The following  provisions set forth the  obligations
arising  out of the  disclosure  of  Confidential  Information  by a Party  (the
"Disclosing  Party") to one or more Parties (the  "Recipient"  or  "Recipients")
under any Transaction Agreement.

               (a)  Agreement of Non Disclosure and Non-Use. In consideration of
                    the  disclosure  by a  Disclosing  Party to a  Recipient  of
                    Confidential  Information,  the  Recipient and its officers,
                    directors,   partners,   employees,    Affiliates,   agents,
                    representatives,  outside auditors, attorneys, and any Third
                    Party   Recipient  who  have  access  to  the   Confidential
                    Information (collectively, "Representatives"):

                    (i)  shall keep  Confidential  Information  confidential and
                         will not,  without  the prior  written  consent of such
                         Disclosing  Party  or as  allowed  by  this  Agreement,
                         disclose Confidential Information to other Persons; and

                    (ii) shall not use Confidential  Information  other than for
                         purposes  legitimately  related to the operation of the
                         business of the Company, including, without limitation,
                         the exercise of Functional Control over any Transferred
                         Facilities   ("Approved  Uses");   provided,   however,
                         that

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<PAGE>

                         nothing contained  herein  shall  limit  the  right  of
                         the Company or any of its Representatives  from  using
                         any Confidential  Information  disclosed to the Company
                         by any Party  consisting of methods,  techniques,  rate
                         design and other similar Confidential Information which
                         relates  to   the   electric   transmission    industry
                         generally,  and not to the business of any Party,  (but
                         excluding any software  developed by the Company or any
                         Transmission  Owner  and  excluding   any  Confidential
                         Information  of   a    Transmission    Owner     marked
                         "Proprietary" by such  Transmission  Owner)  for  other
                         than Approved Uses which are not in  competition  with
                         the business of such Party.  Each  Recipient  agrees to
                         transmit the Confidential Information  of  a Disclosing
                         Party only to such of the  Recipient's  Representatives
                         who need to know the Confidential Information  for  the
                         purpose of assisting the  Recipient in  Approved  Uses,
                         and who are  informed of the provisions of this Section
                         10.14. A Recipient shall be fully liable for any breach
                         of this Agreement by its Representatives and agrees, at
                         its  sole  expense,  to  take  reasonable   measures to
                         restrain  its  Representatives   from   prohibited   or
                         unauthorized  disclosure  or  use  of  the Confidential
                         Information.

               (b)  Disclosure  Required by Subpoena,  Law,  Litigation or Legal
                    Process.  If any  portion  of  Confidential  Information  is
                    required  to be  disclosed  by  subpoena,  Law,  litigation,
                    arbitration,  or similar legal process, or to a Governmental
                    Authority, the Recipient will promptly inform the Disclosing
                    Party of the existence,  terms and circumstances surrounding
                    such request before any such disclosure is required so as to
                    allow  the  Disclosing  Party to  protect  the  Confidential
                    Information.  The Recipient will consult with the Disclosing
                    Party on the advisability of taking  legally-available steps
                    to resist or narrow such request.  The Disclosing  Party may
                    thereafter  seek  to  obtain  a  protective  order,  and the
                    Recipient shall  cooperate with the Disclosing  Party in its
                    efforts to obtain a protective order, to restrict access to,
                    and any use or disclosure of, the Confidential  Information,
                    at the  expense  of the  Disclosing  Party.  Notwithstanding
                    anything else to the contrary contained herein, Confidential
                    Information that is required to be disclosed in the ordinary
                    course of the Company's  business to the Commission or other
                    Governmental  Authority pursuant to Law or the MISO OATT may
                    be  so  disclosed  without   compliance  with  this  Section
                    10.14(b).

               (c)  Disclosure  In Connection  with  Financing  Transactions  or
                    Transfer  of  Transferred  Facilities.  In  the  event  that
                    a  Recipient

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<PAGE>

                    desires to disclose  Confidential  Information in connection
                    with  a  financing  or  other  similar   transaction  or  in
                    connection  with a transfer of its  Transferred  Facilities,
                    including  as  part  of the  due  diligence  requested  by a
                    proposed   counterparty   or   transferee  (a  "Third  Party
                    Recipient"),  such Recipient may disclose such  Confidential
                    Information to such Third Party Recipient only after receipt
                    by such  Recipient  from such  Third  Party  Recipient  of a
                    confidentiality agreement containing substantially the terms
                    and conditions  set forth in this Section  10.14;  provided,
                    however,  that  no  competitively   sensitive   Confidential
                    Information concerning a Transmission Owner may be disclosed
                    to  any  Person  that  is  a  direct   competitor   of  such
                    Transmission  Owner without such Transmission  Owner's prior
                    written consent.

               (d)  Disclosure  in  Connection  with  Dispute.  A Recipient  may
                    disclose  Confidential  Information  to  (i)  the  Panel  in
                    connection with an Arbitration pursuant to Section 6.2, (ii)
                    to the Commission in connection  with a Claim being heard by
                    the  Commission  and (iii) to a court in  connection  with a
                    dispute being heard by such court;  provided,  however, that
                    the  Recipient  shall take  reasonable  steps to protect the
                    confidentiality of such Confidential  Information and, where
                    the Recipient would not be materially  adversely affected by
                    its  disclosure  to the  Disclosing  Party of its  intent to
                    disclose such Confidential  Information in connection with a
                    dispute as provided  above,  the Recipient shall so disclose
                    to  the  Disclosing  Party  the  Recipient's  intent  to  so
                    disclose such  Confidential  Information  so as to allow the
                    Disclosing   Party   the   opportunity   to   protect   such
                    Confidential Information.  In such case, the Recipient shall
                    cooperate with the Disclosing Party in its efforts to obtain
                    a protective order, to restrict access to, and any other use
                    or disclosure of, the Confidential Information.

               (e)  Survival of  Obligations.  The  obligations  with respect to
                    Confidential  Information set forth herein shall survive the
                    termination of this  Agreement for five (5) years.  Upon the
                    termination  of  the  obligations  of  this  Agreement  with
                    respect  to  an  item  of  Confidential   Information,   the
                    Recipient  shall be free to use and  disclose  such  item of
                    information   freely  and  without  any  obligation  to  the
                    Disclosing Party.

               (f)  Ownership of Confidential Information. Each Disclosing Party
                    reserves its (and, if applicable,  its licensor's) ownership
                    rights in and to its Confidential Information disclosed to a
                    Recipient and only grants a license to use such Confidential
                    Information  for  the  Approved  Uses.  In  addition,   each
                    Recipient  agrees  that it does not  acquire  any  ownership
                    interest in the  Confidential  Information of any Disclosing
                    Party by  virtue  of the  combination  of such

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                    Confidential    Information    with    other    Confidential
                    Information, including that of the Company.

     10.15No  Partnership.  This  Agreement  is not  intended,  and shall not be
construed, interpreted or applied, to create a partnership or joint venture, and
no  Transmission  Owner  shall  be  entitled  to act as an agent  for any  other
Transmission Owner with respect to the Company.

     10.16Current Documents.  The Company shall maintain current versions of all
agreements and procedures,  all amendments thereto and shall post such documents
on its Internet World Wide Web Site or equivalent form of electronic posting and
provide such documents to the Transmission Owners.

     10.17Late  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  owning  Party of the  portion of such owning  Party's  payment  that is in
default, together with interest thereon as provided above.

     10.18Counterparts.  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  Parties are not
signatories to the original or to the same counterpart.

     10.19Attorneys'  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.

     10.20Time is of the  Essence.  Time is of the essence of each  provision of
this Agreement.

     10.21Representatives.  No later than fourteen (14) days after the execution
of this Agreement by a Party, such Party shall appoint one (1) representative to
serve as a point of  contact  for  matters  arising  under  this  Agreement.  No
representative  has the right to amend this  Agreement or waive any rights under
this Agreement.  A Party may replace its  representative  at any time at its own
discretion upon providing notice to the other Parties.

                                       57

<PAGE>

     IN  WITNESS  WHEREOF,   the  Parties  have  caused  their  duly  authorized
representatives to execute this Agreement, on their respective behalves.

                                  GridAmerica LLC

                                  By  \s\Nicholas P. Winser
                                    --------------------------------------------
                                  Name (typed or printed):  Nicholas P. Winser
                                  Title           Chief Executive Officer

                                  Union Electric Company d/b/a/ AmerenUE
                                  Central Illinois Public Service Company d/b/a/
                                  AmerenCIPS
                                  By:  Ameren Services Company
                                       (their agent)

                                  By  \s\David A. Whiteley
                                    --------------------------------------------
                                  Name (typed or printed):  David A. Whiteley
                                  Title             Senior Vice President

                                  American Transmission Systems, Incorporated

                                  By  \s\Stanley F. Szwed
                                    --------------------------------------------
                                  Name (typed or printed):  Stanley F. Szwed
                                  Title             Vice President

                                  Northern Indiana Public Service Company

                                  By  \s\Jerry L. Godwin
                                    --------------------------------------------
                                  Name (typed or printed):   Jerry L. Godwin
                                  Title                Chief Operating Officer

                                       58

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