<PAGE>

                      BOEING CAPITAL CORPORATION
                      1250 Capital of Texas Highway South
                      Building 2, Suite 300
                      Austin, TX 78746




June 5, 2001




Mr. David Pruitt
President & Chief Executive Officer
Cap Rock Electric Cooperative, Inc.
500 West Wall Street, Suite 400
Midland, TX  79701

Dear Mr. Pruitt:

This letter (Letter of Intent) sets forth the intent of Boeing Capital
Corporation ("BCC") and Cap Rock Electric Cooperative, Inc. ("Cap Rock") with
respect to the proposed acquisition by BCC of the transmission assets (the
"System") presently owned by NewCorp Resources Electric Cooperative, Inc., a
wholly owned subsidiary of Cap Rock.

It is the intention of the parties to proceed with the proposed transaction
as follows:

1.      The transaction would take the form of a purchase by BCC and a sale
        by Cap Rock of the System.  The assets to be included in the System
        sold to BCC would be all assets necessary for the continued operation
        of the System on the same basis as the System is presently operated.
        Cap Rock would retain the ownership of easements and other real
        property rights, and the parties would execute a ground lease (the
        "Ground Lease") to convey usage of these rights to BCC.  The rent
        paid under the Ground Lease will be a nominal amount.

2.      Subject to the due diligence outlined in the Duke Engineering
        Proposal, attached hereto, and such other appraisal and due diligence
        as BCC may deem necessary, BCC will pay approximately $75,250,000 for
        the purchase of the System.

3.      The parties will enter into a Maintenance Agreement wherein Cap Rock
        will provide maintenance services at a fair market value for a period
        of not less than ten years.  It is anticipated that the system will
        be operated as a part of the Southwest Power Pool, which may become a
        regional transmission organization ("RTO").

<PAGE>

4.      The parties will enter into a Network Services Agreement to provide
        transmission services.

5.      The fees charged by Duke Engineering for the "fatal flaw" and due
        diligence study will total $175,000 plus expenses.  These fees and
        expenses will be included in the transaction costs, if and when the
        transaction is completed.  However, if a fatal flaw is discovered and
        the transaction is not completed, the Duke Engineering fee of
        $25,000, plus expenses, for the "fatal flaw" portion of the
        investigation will be split evenly between the parties.  Should the
        fatal flaw portion of the investigation result in a transaction
        structure which limits the accounting recognition by Cap Rock of the
        gain on the sale of the System and should Cap Rock elect not to
        proceed with the transaction for that reason, Cap Rock will be
        responsible for the full $25,000 fee, plus all expenses.  As used in
        this letter, "fatal flaw" means a material deficiency in the System
        that may be brought to BCC's attention as a result of the Phase I
        review, outlined in the Duke Engineering Proposal.

6.      Subject to the conditions set forth below, the parties anticipate
        closing the proposed transaction on or before August 31, 2001.
        Should Cap Rock elect not to close solely for the reason that the
        transaction was not completed by August 31, 2001, all expenses of the
        transaction described herein will be for the account of Cap Rock.

This Letter of Intent is not a commitment by the parties to enter into the
proposed transaction.  Such commitment shall be evidenced only by the
execution by the parties of a definitive agreement and other documents
satisfactory to both parties (the "Definitive Agreement").

The completion of the transaction is conditioned upon the satisfaction of
certain conditions at or prior to the closing, including:

        Approval of the transaction by the Investment Committee of BCC and
        the Board of Directors of Cap Rock.

        Satisfactory completion by BCC of all due diligence.

        Execution of the Definitive Agreement and all other necessary
        agreements and documents to consummate the sale and purchase of the
        System.

        Execution of the Network Services Agreement, the Maintenance
        Agreement and the Ground Lease.

        Execution of a Confidentiality Agreement that, among other things,
        will include an agreement not to disclose the failure by the parties
        to close this transaction.  Unless required by law, disclosure of the
        discussions regarding this transaction, prior to the execution of the
        Confidentiality Agreement, will require the approval of both parties.

        Making all required applications and filings with governmental
        agencies and obtaining all necessary governmental approvals
        including, but not limited to, filings with and approvals by the
        Federal Energy Regulatory Commission ("FERC"), and fulfilling the
        requirement to join the RTO.

<PAGE>

        From the date of this Letter of Intent to the closing of the
        transaction, there shall have not occurred any material adverse
        change in the financial condition or other circumstances of the
        System or of Cap Rock, and no material change in the manner of
        conducting the business of the System.

        All expenses in excess of $250,000 including, but not limited to,
        documentation, registration, lien search fees, filing fees, outside
        counsel fees, appraisal fees, fees of outside engineering consultants
        and any other out-of-pocket expenses incurred by BCC shall be for the
        account of Cap Rock and will reduce the purchase price.

If the foregoing correctly sets forth your understanding of our intentions
with respect to the proposed transaction, so indicate by executing the
enclosed copy of this letter in the space provided below and returning to the
undersigned.

Cordially,                              AGREED AND ACCEPTED:
                                        Cap Rock Electric Cooperative, Inc.


/s/ Jennifer L. Stamps                          /s/ David Pruitt
Jennifer L. Stamps                      By: __________________________
Marketing Director - Southwest Region           President/CEO
Commercial Finance Services             Title: _______________________
Boeing Capital Corporation                      6/6/01
                                        Date: ________________________