TABLE OF CONTENTS

Article I DEFINITIONS			1
1.1 Definitions			1
1.2 Other Definitional and Interpretive Matters			17
1.3 Joint Negotiation and Preparation of Agreement			18
Article II PURCHASE AND SALE			18
2.1 The Sale			18
2.2 Excluded Assets			19
2.3 Assumed Obligations			20
2.4 Excluded Liabilities			21
Article III PURCHASE PRICE			22
3.1 Purchase Price			22
3.2 Determination of Base Price			23
3.3 Determination of Purchase Price			24
3.4 Allocation of Purchase Price			27
3.5 Proration			27
Article IV THE CLOSING			28
4.1 Time and Place of Closing			28
4.2 Payment of Base Price			28
4.3 Deliveries by Seller			28
4.4 Deliveries by Buyer			30
4.5 Parent Guaranty			30
Article V REPRESENTATIONS AND WARRANTIES OF SELLER			30
5.1 Organization; Qualification			31
5.2 Authority Relative to this Agreement			31
5.3 Consents and Approvals; No Violation			31
5.4 Governmental Filings			32
5.5 No Material Adverse Effect; Liabilities			32
5.6 Operation in the Ordinary Course			32
5.7 Title			32
5.8 Leases			33
5.9 Environmental			33
5.10 Certain Contracts and Arrangements			34
5.11 Legal Proceedings and Orders			34
5.12 Permits			35
5.13 Compliance with Laws			35

5.14 Insurance			35
5.15 Taxes			35
5.16 Fees and Commissions			36
5.17 Adequacy of Purchased Assets			36
5.18 Employee Benefits			36
5.19 Regulation as a Utility			37
Article VI REPRESENTATIONS AND WARRANTIES OF BUYER			37
6.1 Organization			37
6.2 Authority Relative to this Agreement			37
6.3 Consents and Approvals; No Violation			38
6.4 Buyers Knowledge			38
6.5 Legal Proceedings			38
6.6 Fees and Commissions			38
6.7 Financing Commitments			39
Article VII COVENANTS OF THE PARTIES			39
7.1 Conduct of Business			39
7.2 Access to Information			40
7.3 Expenses			43
7.4 Further Assurances; Procedures with Respect to Certain Agreements and Other Assets			43
7.5 Public Statements			47
7.6 Consents and Approvals			47
7.7 Tax Matters			49
7.8 Supplements to Schedules			50
7.9 Eminent Domain; Casualty Loss			50
7.10 Transitional Use of Signage and Other Materials Incorporating Sellers Name or other Logos			51
7.11 Litigation Support			51
7.12 Financing			51
7.13 Post-Closing Operations			52
7.14 Affiliate Relationships			52
7.15 Financial Statements			53
7.16 Non-Opposition			53
7.17 Title Insurance			53
7.18 Insurance			54
Article VIII EMPLOYEE MATTERS			54
8.1 Offers of Employment; Transferred Employees			54
8.2 Treatment of Transferred Employees			55
8.3 Services Provided by Represented Employees; Leased Employees			56
8.4 WARN			57
8.5 Employee Benefits			57

8.6 Sellers Defined Benefit Pension Plan			58
8.7 Retiree Health			58
8.8 Tax-Qualified Defined Contribution Plan			59
Article IX CONDITIONS TO CLOSING			59
9.1 Conditions to Each Partys Obligations to Effect the Closing			59
9.2 Conditions to Obligations of Buyer			59
9.3 Conditions to Obligations of Seller			61
Article X INDEMNIFICATION			62
10.1 Survival of Representations and Warranties; Notices of Claims			62
10.2 Indemnification			62
10.3 Indemnification Procedures			64
10.4 Limitations on Indemnification			66
10.5 Applicability of Article X			67
10.6 Tax Treatment of Indemnity Payments			68
10.7 Waiver of Certain Damages			68
10.8 Exclusive Remedy			68
Article XI TERMINATION AND OTHER REMEDIES			68
11.1 Termination			68
11.2 Procedure and Effect of Termination			69
11.3 Remedies upon Termination			69
11.4 Specific Performance			71
Article XII MISCELLANEOUS PROVISIONS			71
12.1 Amendment and Modification			71
12.2 Waiver of Compliance; Consents			71
12.3 Notices			71
12.4 Assignment			73
12.5 Governing Law			73
12.6 Severability			73
12.7 Entire Agreement			73
12.8 Bulk Sales or Transfer Laws			73
12.9 Delivery			74

EXHIBITS AND SCHEDULES

Exhibits

Exhibit 1.1-A		Form of Assignment and Assumption Agreement
Exhibit 1.1-B		Form of Bill of Sale
Exhibit 1.1-C		Form of Deed
Exhibit 1.1-D		Form of Distribution Interconnect Agreement
Exhibit 1.1-E		Form of Generator Interconnect Agreement
Exhibit 1.1-F		Form of Parent Guaranty
Exhibit 1.1-G		Form of Transition Services Agreement

Schedules

Schedule 1.1-A		Buyers Knowledge
Schedule 1.1-B		Permitted Encumbrances
Schedule 1.1-C		Sellers Knowledge
Schedule 1.1-D		Transmission Easements
Schedule 1.1-E		Excluded Easements
Schedule 1.1-F		Transmission Fee Interests
Schedule 1.1-G		Excluded Fee Interests
Schedule 1.1-H		Transmission Leases
Schedule 1.1-I		Excluded Contracts
Schedule 1.1-J		Transmission Lines
Schedule 1.1-K		Excluded Transmission Line Facilities
Schedule 1.1-L		Transmission Substation Facility
Schedule 1.1-M		Excluded Transmission Substation Facility
Schedule 2.1(b)		Inventory
Schedule 2.1(d)		Tangible Personal Property
Schedule 2.1(j)		Software
Schedule 2.1(k)		Warranties
Schedule 2.2(i)		Excluded Software
Schedule 2.2(j)		Excluded Communication Assets
Schedule 2.2(k)		Other Excluded Assets and Rights
Schedule 2.3(e)		State Regulatory Orders
Schedule 2.3(h)		Certain Liabilities and Obligations
Schedule 2.4(l)		Certain Excluded Liabilities
Schedule 4.3(j)		Joint Use Transmission Real Property
Schedule 4.4(g)		Joint Use Distribution Fee Interests
Schedule 5.3(a)		Sellers Governing Documents
Schedule 5.3(b)		Encumbrances; Defaults
Schedule 5.3(c)		No Violations
Schedule 5.3(d)		Consents and Approvals
Schedule 5.5(a)		No Material Adverse Effect
Schedule 5.5(b)		Undisclosed Liabilities
Schedule 5.6		Operation in the Ordinary Course

Schedule 5.7(a)(i)		Title Exceptions
Schedule 5.7(a)(ii)		Preferential Purchase Rights
Schedule 5.7(b)		Real Property
Schedule 5.8(a)		Real Property Leases
Schedule 5.8(b)		Real Property Lease Liabilities
Schedule 5.9(a)-1		Environmental Laws
Schedule 5.9(a)-2		Transferable Environmental Permits
Schedule 5.9(b)		Environmental Law Violations
Schedule 5.9(c)		Releases
Schedule 5.9(d)		Other Environmental Matters
Schedule 5.9(e)		Hazardous Materials
Schedule 5.10(a)		Certain Contracts and Arrangements
Schedule 5.10(b)		Contract Liabilities
Schedule 5.11		Legal Proceedings and Orders
Schedule 5.12(a)		Transferable Permits
Schedule 5.13		Compliance with Laws
Schedule 5.14(a)		Insurance
Schedule 5.14(b)		Exceptions to Insurance
Schedule 5.17		Adequacy of Purchased Assets
Schedule 5.18(a)		Seller Plans
Schedule 5.18(e)		Employees
Schedule 6.3		Consents and Approvals; No Violation
Schedule 6.5		Legal Proceedings
Schedule 6.7		Financing Commitments
Schedule 7.1		Conduct of Business
Schedule 7.1(g)		Capital Expenditure Budget
Schedule 7.4(c)		Shared Easements
Schedule 7.8		Real Estate Schedule Update Procedures
Schedule 7.14		Affiliate Relationships
Schedule 8.1(b)		Approved Leave

ASSET SALE AGREEMENT

     This Asset Sale Agreement (this Agreement), dated as of January 18, 2007, is made and entered into by and between Interstate Power and Light Company, an Iowa corporation (Seller), and ITC Midwest LLC, a Michigan limited liability company (Buyer).

     WHEREAS, Buyer desires to purchase, and Seller desires to sell, the Purchased Assets (as hereinafter defined) upon the terms and conditions set forth in this Agreement.

     NOW THEREFORE, in consideration of the Parties respective covenants, representations, warranties, and agreements hereinafter set forth and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

ARTICLE I
DEFINITIONS

     1.1 Definitions.

     (a) As used in this Agreement, the following capitalized terms have the meanings specified in this Section 1.1(a):

     Actual Capital Expenditure Amount means the amount of any capital expenditures made by Seller between January 1, 2006 and the Effective Time, that increase the Rate Base Assets or CWIP, as finally determined pursuant to Section 3.3.

     Actual CWIP Amount means the CWIP transferred to Buyer included in the Purchased Assets as of the Effective Time, as reflected on the Final Rate Base Statement delivered pursuant to Section 3.3(a).

     Actual Rate Base Amount means the Rate Base Amount attributable to the Rate Base Assets as of the Effective Time, as finally determined pursuant to Section 3.3.

     Actual Rate Base Reclassification Amount means the amount of any increase in Net Transmission Plant Investment between the date hereof and the Effective Time, to the extent attributable to a reclassification of assets as Rate Base Assets.

     Adjustment Amount means an amount (which may be a negative number) equal to the Purchase Price minus the Base Price.

     Affiliate has the meaning set forth in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended.

     Affiliated Group means any affiliated group within the meaning of Code section 1504(a) or any similar group defined under a similar provision of Law.

     Ancillary Services means those services which provide support to or stabilize the transmission system but are not an integral part of Buyers business operations following Closing, including without limitation, reactive supply from generation sources, voltage control by generation sources, regulation and frequency response, energy imbalance, generation imbalance, operating reserve, spinning reserve, supplemental reserve, scheduling of transmission service, scheduling entity status, responsible entity status, ownership of generation assets including plants, sales of energy, resource dispatch services, ownership of financial transmission rights, and any other similar service as otherwise provided under the MISO tariff.

     Assignment and Assumption Agreement means the Assignment and Assumption Agreement to be executed and delivered by Seller and Buyer at Closing, in the form of Exhibit 1.1-A.

     Assignment of Easements means the Assignment of Easements in form and substance reasonably acceptable to the Parties.

     Bill of Sale means the Bill of Sale to be executed and delivered by Seller at the Closing, in the form of Exhibit 1.1-B.

     Business Day means any day other than Saturday, Sunday, and any day which is a legal holiday or a day on which banking institutions in the States of Iowa or New York are authorized or obligated by Law to close.

     Buyers Knowledge, or words to similar effect, means the actual knowledge, after reasonable inquiry, of the persons set forth in Schedule 1.1-A.

     Buyer Material Adverse Effect means an effect, event, development or change which individually or in the aggregate with all effects, events, developments or changes is or is likely to become materially adverse to the ability of Buyer to execute and perform its obligations under this Agreement or to consummate the transactions contemplated hereby.

     Buyer Required Regulatory Approvals means the following filings or approvals: (i) the filings by Seller and Buyer required by the HSR Act and the expiration or early termination of all waiting periods under the HSR Act, (ii) the State Transaction Approvals, (iii) the FERC Transaction Approvals, (iv) the FERC 204 Approval, and (v) the FERC 205 Approval.