PURCHASE AND SALE AGREEMENT


                                 by and between


                              TLS Investors, L.L.C.


                                       and


                        Black Hills Energy Capital, Inc.




                                  June 18, 2001




<PAGE>
                              Table of Contents
<TABLE>
<CAPTION>
                                                                                                      Page

<S>     <C>      <C>  <C>                                                                              <C>
ARTICLE 1             Certain Definitions...............................................................1

         1.1      Certain Defined Terms.................................................................1

         1.2      References, Gender, Number............................................................9

ARTICLE 2             Purchase and Sale.................................................................9

ARTICLE 3             Purchase Price and Payment........................................................9

         3.1      Purchase Price........................................................................9

         3.2      Payment..............................................................................10

         3.3      Closing Statement....................................................................10

         3.4      Post-Closing Adjustment to the Purchase Price........................................10

         3.5      Allocation of Purchase Price.........................................................11

ARTICLE 4             Representations and Warranties...................................................12

         4.1      Representations and Warranties of Seller.............................................12

         4.2      Representations and Warranties of Buyer..............................................21

ARTICLE 5             Access and Confidentiality.......................................................23

         5.1      General Access.......................................................................23

         5.2      Confidential Information.............................................................24

         5.3      No Other Contract....................................................................24

ARTICLE 6             Tax Matters......................................................................24

         6.1      Preparation..........................................................................24

         6.2      Access to Information................................................................24

         6.3      Transfer Taxes.......................................................................25

         6.4      Tax Sharing Agreements...............................................................25

         6.5      Assistance and Cooperation...........................................................25

         6.6      Tax Indemnity........................................................................25

         6.7      Tax Indemnity Claims.................................................................26

         6.8      Tax Refunds..........................................................................26

ARTICLE 7             Covenants of Seller and Buyer....................................................27

         7.1      Conduct of Business Pending Closing..................................................27

         7.2      Qualifications on Conduct............................................................31

         7.3      Public Announcements.................................................................32
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                                       i
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<S>     <C>       <C> <C>                                                                             <C>
         7.4      Actions by Parties...................................................................32

         7.5      Supplements to Schedules.............................................................32

         7.6      Further Assurances...................................................................32

         7.7      Records..............................................................................32

         7.8      Assumption of Obligations of SWP and any Subsidiary..................................33

         7.9      Regulatory and Other Authorizations and Consents.....................................33

         7.10     Fees and Expenses....................................................................35

         7.11     Excluded Assets......................................................................35

         7.12     Guarantees and Other Affiliate Contracts.............................................36

         7.13     Use of Enron Marks...................................................................36

         7.14     Insurance............................................................................36

         7.15     Lending Matters......................................................................37

ARTICLE 8             Closing Conditions...............................................................37

         8.1      Seller's Closing Conditions..........................................................37

         8.2      Buyer's Closing Conditions...........................................................38

ARTICLE 9             Closing..........................................................................39

         9.1      Closing..............................................................................39

         9.2      Seller's Closing Obligations.........................................................39

         9.3      Buyer's Closing Obligations..........................................................40

ARTICLE 10            Limitations......................................................................40

         10.1     Buyer's Review.......................................................................40

         10.2     Disclaimer of Warranties.............................................................41

         10.3     Waiver of Damages....................................................................42

ARTICLE 11            Indemnification..................................................................42

         11.1     Indemnification By Seller............................................................42

         11.2     Indemnification By Buyer.............................................................42

         11.3     Limitations on Indemnity.............................................................43

         11.4     Third Party Claims...................................................................43

         11.5     Survival and Time Limitation.........................................................44

         11.6     Sole and Exclusive Remedy............................................................44
</TABLE>

                                       ii
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<S>     <C>       <C> <C>                                                                             <C>
         11.7     Compliance with Express Negligence Rule..............................................45

ARTICLE 12            Termination and Remedies.........................................................45

         12.1     Termination..........................................................................45

         12.2     Remedies.............................................................................45

ARTICLE 13            Other Provisions.................................................................46

         13.1     Counterparts.........................................................................46

         13.2     Governing Law........................................................................46

         13.3     Arbitration..........................................................................46

         13.4     Entire Agreement.....................................................................47

         13.5     Notices..............................................................................47

         13.6     Successors and Assigns...............................................................48

         13.7     Amendments and Waivers...............................................................48

         13.8     Schedules and Exhibits...............................................................49

         13.9     Interpretation and Rules of Construction.............................................49

         13.10    Agreement for the Parties' Benefit Only..............................................49

         13.11    Attorneys' Fees......................................................................50

         13.12    Severability.........................................................................50

         13.13    Time of Essence......................................................................50

         13.14    Bulk Sales or Transfer Laws..........................................................50

ARTICLE 14            Letter of Credit; GUARANTY BY BKH................................................50

         14.1     Letter of Credit.....................................................................50

         14.2     Guaranty by BKH......................................................................51

         14.3     Effect of Failure to Deliver Letter of Credit or Guaranty............................51
</TABLE>


                                       iii
<PAGE>


                           PURCHASE AND SALE AGREEMENT

         THIS PURCHASE AND SALE AGREEMENT (this "Agreement"), dated as of June
18, 2001, is by and between TLS Investors, L.L.C., a Delaware limited liability
company ("Seller"), and Black Hills Energy Capital, Inc. ("Buyer") a Delaware
corporation. Seller and Buyer are sometimes referred to herein individually as a
"Party" and collectively as the "Parties."

                                    Recitals:

         A.       Seller  desires to sell,  or cause to be sold, to Buyer,  and
Buyer  desires to purchase, all of the issued and outstanding  member interests
the "LLC  Interests") of Southwest Power,  L.L.C., a Delaware limited liability
company ("SWP"), upon the terms and subject to the conditions set forth in this
Agreement; and

         B. In order to maintain the QF status of the Operating Facility, at the
Closing, Buyer will transfer no less than one-half of all of the issued and
outstanding member interests of the owners of the general and limited
partnership interests in the Operating Facility to one or more third parties
that are not electric utilities or electric utility holding companies and are
not affiliated or associated with electric utilities or electric utility holding
companies.

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, the Parties agree as follows:

                                   ARTICLE 1
                               Certain Definitions

        1.1      Certain Defined Terms.

         As used in this Agreement, the following terms have the respective
meanings set forth below or set forth in the Sections referred to below:

         "Action" means any action, suit, investigation, proceeding,
condemnation, or audit by or before any court or other Governmental Authority or
any arbitration proceeding.

         "Additional Project Agreement" is defined in Section 7.1(b)(iii).

         "Adjusted Purchase Price" is defined in Section 3.1.

         "Affiliate" means, as to the Person specified, any Person controlling,
controlled by or under common control with such specified Person. The concept of
control, controlling or controlled as used in the aforesaid context means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of another, whether through the
ownership of voting securities, by contract or otherwise. No Person shall be
deemed an Affiliate of any Person by reason of the exercise or existence of
rights, interests, or remedies under this Agreement.

         "Agreement" is defined in the preamble.


                                       1
<PAGE>


         "Allegheny" means Allegheny Energy Supply Company, L.L.C., a Delaware
limited liability company.

         "Assignment and Assumption Agreements" means the Assignment and
Assumption Agreements, each in substantially the form attached hereto as Exhibit
9.2, pursuant to which the LLC Interests shall be conveyed to Buyer.

         "BKH" means Black Hills Corporation, a South Dakota corporation and the
parent corporation of Buyer.

         "BKH Guaranty" is defined in Section 14.2.

         "Bridge Loan" is defined in Section 3.2.

         "Business" with respect to SWP, means the business and operations of
SWP related to the Operating Facility and the Development Project.

         "Business Day" means any day which is not a Saturday, Sunday, or legal
holiday recognized by the United States of America.

         "Buyer" is defined in the preamble.

         "Buyer Indemnified Party" and "Buyer Indemnified Parties" are defined
in Section 11.1.

         "Buyer's Construction Representative" is defined in Section 7.1(c).

         "Closing" is defined in Section 9.1.

         "Closing Date" means the later to occur of either (i) the first
Business Day after the conditions in Section 8.1 and Section 8.2 are either
satisfied or waived by the Party entitled to waive such condition, or (ii)
August 31, 2001, or such other date as may be mutually agreed to by Seller and
Buyer.

         "Closing Payment" is defined in Section 3.2.

         "Closing Statement" is defined in Section 3.3.

         "Closing Statement Arbitrator" is defined in Section 3.4(b).

         "Code" means the Internal Revenue Code of 1986, as amended.

         "Confidentiality Agreement" is defined in Section 5.2.

         "Damage Award" is defined in Section 14.1.

         "Deductible Amount" means $500,000.

         "Development Budget" means the budget for development and construction
of the Development Project set forth in Exhibit B.


                                       2
<PAGE>


         "Development Expenses" means any and all costs, expenses or liabilities
incurred, paid or performed by Seller, SWP or any Subsidiary in connection with
the development, permitting or construction of the Development Project in
accordance with Seller Practice, including, without limitation, expenditures for
equipment, consultants, contractors, permits, deposits, lease payments and
finance costs.

         "Development Project" means the 222 (nominal) megawatt, natural gas
fired electrical generating facility currently under development by a Subsidiary
on the Development Project Site.

         "Development Project Activities" is defined in Section 7.1(b)(i).

         "Development Project Site" means the site of the Development Project
more fully described in Part I of Exhibit A.

         "Dispute" is defined in Section 13.3.

         "Dollar," "Dollars" and "$" mean United States dollars.

         "Effective Date" means the date first written above.

         "Enron Marks" means the name "Enron" and other trademarks, service
marks, and trade names owned by Seller and its Affiliates.

         "Environmental Claim" means any claim by (i) any Governmental Authority
for enforcement, cleanup, removal, response, remedial or other actions or
damages pursuant to any applicable Environmental Law, and (ii) any other Person
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief (A) resulting from the presence or disposal of Hazardous
Materials off-site or at the Operating Facility or Development Project Site or
(B) otherwise arising under or related to Environmental Laws.

          "Environmental  Law"  means all Laws,  as  existing  as of the date
of this Agreement, relating to (i) the control of any pollutant, or protection
of the air, water, or land, (ii) solid,  gaseous or liquid waste generation,
handling, treatment, storage, disposal or transportation, and (iii) exposure to
hazardous, toxic or other harmful substances. "Environmental  Laws" shall
include, but not be  limited  to,  the Clean Air Act, 42  U.S.C.ss.7401 et seq.,
the Resource Conservation Recovery Act, 42 U.S.C.ss.6901 et seq., the Federal
Water Pollution  Control Act, 33  U.S.C.ss.1251  et seq.,  the Safe Drinking
Water Act, 42 U.S.C.ss.300f et seq., and the Comprehensive Environmental
Response,   Compensation,  and  Liability  Act,  as  amended  by  the  Superfund
Amendments and Reauthorization Act, 42 U.S.C.ss.9601 et seq.

          "EPC  Contract"  means  the  Engineering,   Procurement  and
Construction  Contract  between  Las  Vegas Cogeneration II, L.L.C. and Modern
Continental South, Inc., dated as of March 29, 2001.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder.

                                       3
<PAGE>

         "Estimated Adjusted Purchase Price" is defined in Section 3.3.

         "Excluded Assets" is defined in Section 7.11

         "FERC" means the Federal Energy Regulatory Commission.

         "Final Closing Statement" is defined in Section 3.4(b).

         "Final Settlement Date" is defined in Section 3.4(a).

         "Financial Statements" is defined in Section 4.1(q).

         "GAAP" means United States generally accepted accounting principles as
in effect on the Effective Date.

         "Government Antitrust Authority" means any Governmental Authority with
jurisdiction over the enforcement of any applicable antitrust Laws.

         "Good Operating Practices" means, with respect to the Operating
Facility, the practices, methods, and acts generally engaged in or approved by a
significant portion of the independent electric power industry in the United
States for similarly situated facilities in the United States during a
particular time period, or any of such practices, methods, and acts, which, in
the exercise of reasonable judgment in light of the facts known or that
reasonably should be known at the time a decision is made, would be expected to
accomplish the desired result in a manner consistent with law, regulation,
reliability, safety, environmental protection, economy and expedition, and
taking into consideration the requirements of this Agreement, the applicable
Project Documents, the Transferred Contracts, and the other contracts and
agreements affecting the operation of the Operating Facility. Good Operating
Practices are not intended to be limited to the optimum practices, methods or
acts, to the exclusion of all others, but rather to include a spectrum of
possible practices, methods, or acts generally acceptable in the region during
the relevant period in light of the circumstances.

         "Governmental Approvals" means all material consents and approvals of
Governmental Authorities, including those required under the HSR Act or from the
FERC and the Securities and Exchange Commission, that reasonably may be deemed
necessary so that the consummation of the transactions contemplated hereby will
be in compliance with applicable Laws and the failure to comply with which would
have a Material Adverse Effect.

         "Governmental Authority" means (i) the United States of America, (ii)
any state, county, municipality, or other governmental subdivision within the
United States of America, and (iii) any court or any governmental department,
commission, board, bureau, agency, or other instrumentality of the United States
of America or of any state, county, municipality, or other governmental
subdivision within the United States of America.

         "Guarantees" means any and all obligations relating to the guarantees,
letters of credit, surety bonds, and other credit assurances of a comparable
nature of Seller or any of its Affiliates (other than SWP) for the benefit of
SWP or any Subsidiary and listed or described on Schedule 7.12(a).


                                       4
<PAGE>


         "Hazardous Material" means (a) any "hazardous substance," as defined by
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, (b) any "hazardous waste," as defined by the Resource Conservation and
Recovery Act, and (c) any pollutant, contaminant or hazardous, dangerous or
toxic chemical, material, waste or substance within the meaning of any
applicable Environmental Law.

         "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976 and the rules and regulations adopted pursuant thereto, as amended.

         "Indemnified Party" is defined in Section 11.4.

         "Indemnifying Party" is defined in Section 11.4.

         "Interest Rate" means a rate of interest equal to the lesser of (i) the
LIBOR Rate or (ii) the maximum rate of interest from time to time allowed by
applicable Law.

         "Knowledge of Buyer" means the actual knowledge of any fact,
circumstance or condition by Maurice Klefeker and John Salyer.

         "Knowledge of Seller" means the actual  knowledge of any fact,
circumstance  or condition by  Christopher Calger, Jim Gilbert, Jody Blackburn,
Ed Clark and J. D. Hawkins.

         "Law" means any applicable statute, law (including common law),
ordinance, regulation (including Environmental Laws), rule, treaty, code,
permit, certificate, license, interpretation, judgment, ruling, order, writ,
injunction, decree, or other official act of or by any Governmental Authority.

         "Letter of Credit" is defined in Section 14.1.

         "LIBOR Rate" means, for each calendar month, (i) the rate per annum
(rounded upward, if not an integral multiple of 1/100 of 1%, to the nearest
1/100 of 1% per annum) appearing on Telerate Page 3750 (or any successor page)
as the London interbank offered rate for deposits in United States dollars at
approximately 11:00 a.m. (London time) two Business Days before the first day of
such calendar month for a term comparable thereto; (ii) if for any reason the
rate specified in clause (i) of this definition does not so appear on Telerate
Page 3750 (or any successor page), the rate per annum (rounded upward, if not an
integral multiple of 1/100 of 1%, to the nearest 1/100 of 1% per annum)
appearing on Reuters Screen LIBO page (or any successor page) as the London
interbank offered rate for deposits in United States dollars at approximately
11:00 a.m. (London time) two Business Days before the first day of such calendar
month for a term comparable thereto; provided, however, if more than one rate is
specified on Reuters Screen LIBO page (or any successor page), the applicable
rate shall be the arithmetic mean of all such rates; and (iii) if the rate
specified in clause (i) of this definition does not so appear on Telerate Page
3750 (or any successor page) and if no rate specified in clause (ii) of this
definition so appears on Reuters Screen LIBO page (or any successor page), the
interest rate per annum (rounded upward to the nearest whole multiple of 1/16 of
1% per annum if such rate is not such a multiple) equal to the rate per annum at
which deposits in United States dollars are offered by the principal office of
Citibank, N.A. in London, England to prime banks in the London interbank market
at 11:00 a.m. (London time) two Business Days before the first day of such
calendar month.

                                       5
<PAGE>


         "Lien" means any lien, security interest, charge, claim, mortgage, deed
of trust, option, warrant, purchase right, lease, or other encumbrance.

         "LLC Interests" is defined in the Recital.

         "Losses" means any and all claims, liabilities, losses, causes of
action, fines, penalties, litigation, lawsuits, administrative proceedings,
administrative investigations, costs, and expenses, including reasonable
attorneys' fees, court costs, and other costs of suit or proceeding.

         "LVC Finance" means Las Vegas Cogeneration Energy Financing Company,
L.L.C., a subsidiary of SWP.

         "LVC II" means Las Vegas Cogeneration II, L.L.C., a Delaware limited
liability company.

         "Material Adverse Effect" means a material adverse effect on the value
of SWP and any Subsidiary taken as a whole, excluding any effect resulting from
any change in economic, industry, or market conditions (whether general or
regional in nature or limited to any area where any assets of SWP or any
Subsidiary are located) or from any change in law or regulatory policy.

         "NatWest Loan" means loans and other credit accommodations made to or
for the account of Seller by National Westminster Bank PLC and certain other
lenders pursuant to the Credit Agreement dated August 31, 1999, as in effect as
of the Effective Date.

         "Notice of Disagreement" is defined in Section 3.4(a).

         "Operating Facility" means the generation and green house facilities
identified in Part II of Exhibit A, and all of the assets related thereto.

         "Party" and "Parties" are defined in the preamble.

         "Permits" is defined in Section 4.1(t).

         "Permitted Exceptions" means, with respect to any Person, any one or
more of the following: (a) Liens for taxes, assessments or other governmental
charges or levies either not yet delinquent or which are being contested in good
faith by appropriate proceedings diligently prosecuted and as to which adequate
reserves shall have been set aside in conformity with GAAP, (b) deposits or
pledges to secure the payment of workers' compensation, unemployment insurance,
social security benefits or obligations arising under similar legislation, or to
secure the performance of public or statutory obligations, surety or appeal
bonds, and other obligations of a like nature incurred in the ordinary course of
business, (c) materialmen's, mechanics', workmen's, repairmen's, employees',
landlord's, lessor's or other like Liens arising in the ordinary course of
business to secure obligations not yet due or being contested in good faith and
as to which adequate reserves shall have been set aside in conformity with GAAP
or as to which adequate bonds shall have been obtained, (d) zoning restrictions,
easements, rights-of-way, restrictions,

                                       6
<PAGE>

servitudes, permits, reservations, encroachments, exceptions, conditions,
covenants, and any other restrictions on the use of real property none of which
materially impairs the use of such property by the owner of such property in the
operation of its business, (e) Liens and other matters shown on the Title
Commitment, (f) any obligations or duties affecting any of the property of such
Person to any municipality or public authority with respect to any franchise,
grant, license or permit which do not materially impair the use of such property
for the purposes for which it is held, (g) defects, irregularities and
deficiencies in title to any property of such Person which in the aggregate do
not materially impair the use of such property for the purposes for which such
property is held by such Person, (h) other minor Liens or encumbrances none of
which interferes materially with the use of the property affected in the
ordinary conduct of the Seller's business and which individually or in the
aggregate do not have a Material Adverse Effect, (i) utility easements, building
restrictions and such other encumbrances or charges against real property which
are of a nature generally existing with respect to properties of a similar
character and which do not materially affect the marketability of the same or
interfere with the use thereof in the business of such Person, and (j) Liens in
favor of Allegheny granted pursuant to the Tolling Agreement, which Liens shall
be fully subordinate to liens in favor of any "Senior Lender" as defined in the
Tolling Agreement.

         "Person" means any Governmental Authority or any individual, firm,
partnership, corporation, limited liability company, joint venture, trust,
unincorporated organization or other entity or organization.

         "Project Documents" is defined in Section 4.1(m)(ii).

         "PUHCA" means the Public Utility Holding Company Act of 1935, as
amended.

         "Purchase Price" is defined in Section 3.1.

         "PURPA" is defined in Section 4.1(v).

         "QF" is defined in Section 4.1(v).

         "Real Property" is defined in Section 4.1(s).

         "Records" means any and all of the books, records, contracts,
agreements and files of SWP and any Subsidiary existing on the Closing Date and
all increases and additions thereto after the Closing Date, including computer
records and electronic copies of such information (but excluding electronic mail
and other computer-based communications) whether maintained by Seller, SWP, or
Buyer or, in each case, its Affiliate, but excluding in each case all
information protected by any attorney/client, work product or like privilege.

         "Schedules" means Seller's disclosure schedules attached to this
Agreement.

         "Securities Act" is defined in Section 4.2(i).

         "Seller" is defined in the preamble.


                                       7
<PAGE>


         "Seller Guaranty" means the Guaranty of Enron North America Corp. in
substantially the form of Exhibit E.

         "Seller Practice" is defined in Section 7.1(b)(i).

         "Seller Indemnified Party" and "Seller Indemnified Parties" are defined
 in Section 11.2.

         "Subordinated Note" means that certain Subordinated Note dated August
31, 1999 by Las Vegas Cogeneration Limited Partnership in favor of Enron North
America Corp. (formerly known as Enron Capital & Trade Resources Corp.).

         "Subsidiary" means any limited liability company or limited partnership
of which at least a majority of the voting interests (i.e., member or partner
interests entitled to vote for the election of directors or managers, but
excluding interests entitled so to vote only upon the happening of some
contingency unless such contingency has occurred) are owned directly or
indirectly by SWP.

         "SWP" is defined in the Recital.

         "Tangible Personal Property" is defined in Section 4.1(r)(i).

         "Tax" or "Taxes" means any and all taxes, including any interest,
penalties, or other additions to tax that may become payable in respect thereof,
imposed by any federal, state, local, or foreign government or any agency or
political subdivision of any such government, which taxes shall include, without
limiting the generality of the foregoing, all income or profits taxes, payroll
and employee withholding taxes, unemployment insurance taxes, social security
taxes, severance taxes, license charges, taxes on stock, sales and use taxes, ad
valorem taxes, excise taxes, franchise taxes, gross receipts taxes, business
license taxes, occupation taxes, real and personal property taxes, stamp taxes,
environmental taxes, Transfer Taxes, workers' compensation, and other
obligations of the same or of a similar nature to any of the foregoing.

         "Tax Proceeding" is defined in Section 6.5.

         "Tax Return" means any and all returns, reports, declarations,
statements, bills, schedules, claims for refund, or written information of or
with respect to any Tax which is required to be supplied to any taxing
authority, including any schedule or attachment thereto, and including any
amendment thereof.

         "Title Commitment" means Title Commitment No. 99090132(A)LJJ dated as
of June 5, 2001.

         "Title Endorsement" means an endorsement to the Title Policy insuring
Buyer against loss or damage sustained by reason of the Title Company denying
liability under the Title Policy by reason of Knowledge of Seller.

         "Title Policy" means that certain Final Title Insurance Policy
No. 99090132LJJ, dated September 1, 1999.


                                       8
<PAGE>


         "Tolling Agreement" means the Capacity and Ancillary Services Sale and
Tolling Agreement, dated May 4, 2001, between LVC II and Allegheny.

         "Transfer Taxes" means all transfer Taxes (excluding Taxes measured by
net income), including without limitation sales, use, excise (including excise
Taxes on petroleum, products of petroleum, petrochemicals and other taxable
substances), stock, stamp, documentary, filing, recording, permit, license,
authorization and similar Taxes, filing fees and similar charges.

         "Transferred Contracts" is defined in Section 7.1(h).

         "Transition Services" is defined in Section 7.1(e).

         "Work Plan" means the activities to be undertaken and pursued by SWP
and any Subsidiary until the Closing Date in connection with the development,
construction and licensing of the Development Project, as set forth on Schedule
7.1.

        1.2      References, Gender, Number.

         All references in this Agreement to an "Article," "Section" or
"subsection" shall be to an Article, Section, or subsection of this Agreement,
unless the context requires otherwise. Unless the context otherwise requires,
the words "this Agreement," "hereof," "hereunder," "herein," "hereby" or words
of similar import shall refer to this Agreement as a whole and not to a
particular Article, Section, subsection, clause or other subdivision hereof.
Whenever the context requires, the words used herein shall include the
masculine, feminine and neuter gender, and the singular and the plural.

                                   ARTICLE 2
                                Purchase and Sale

         On and subject to the terms and conditions of this Agreement, Seller
agrees to sell and convey, or cause to be sold and conveyed, to Buyer, and Buyer
agrees to purchase and receive, all of the LLC Interests.

                                   ARTICLE 3
                           Purchase Price and Payment

        3.1      Purchase Price.

         The purchase price for the sale and conveyance of the LLC Interests to
Buyer shall consist of a cash purchase price of $71,250,000 (the "Purchase
Price") subject to adjustment in accordance with the terms of this Agreement,
and shall be payable by Buyer as provided in Sections 3.2, 3.3 and 3.4. The
"Adjusted Purchase Price" shall be the Purchase Price, (i) plus all Transfer
Taxes applicable to the transactions contemplated hereby, (ii) plus all
Development Expenses which may be paid or incurred by Seller or by SWP or any
Subsidiary through the Closing Date, and (iii) plus the principal amount of (not
to exceed $53,543,000), and accrued and unpaid interest on, the NatWest Loan on
the Closing Date.

                                       9
<PAGE>


        3.2      Payment.

         The "Closing Payment" shall be an amount equal to the Estimated
Adjusted Purchase Price. At the Closing, Buyer shall wire transfer the Closing
Payment in immediately available funds to the account of the Seller. Upon
payment of the Closing Payment to or for the account of Seller, (i) all
indebtedness of Las Vegas Cogeneration II, L.L.C. to Enron North America Corp.
incurred pursuant to that certain Amended and Restated Bridge Loan Agreement
effective as of May 10, 2001, by and between Enron North America Corp., Joint
Energy Development Investments II Limited Partnership, and Las Vegas
Cogeneration II, L.L.C. (the "Bridge Loan") shall be deemed to have been paid in
full and Buyer, SWP and its Subsidiaries shall be released of all liabilities
and obligations thereunder and (ii) all indebtedness of Las Vegas Cogeneration
Limited Partnership under the NatWest Loan and the Subordinated Note shall be
deemed to have been paid in full and Buyer, SWP and its Subsidiaries shall be
released of all liabilities and obligations thereunder.

        3.3      Closing Statement.

         Not later than three (3) Business Days prior to the Closing Date,
Seller shall prepare and deliver to Buyer a statement (the "Closing Statement")
of the estimated adjustments to the Purchase Price and the estimated Adjusted
Purchase Price which statement shall, among other things, set forth in
reasonable detail the estimated components thereof (the "Estimated Adjusted
Purchase Price").

        3.4      Post-Closing Adjustment to the Purchase Price.

     (a)  Revised  Closing  Statement.  On or before the date that is sixty (60)
days after the Closing Date, Seller shall prepare and deliver to Buyer a revised
Closing Statement setting forth the actual Adjusted Purchase Price which
statement shall, among other things, set forth in reasonable detail the
components thereof. To the extent reasonably required by Seller, Buyer shall
assist in the preparation of such revised Closing Statement. Seller shall
provide to Buyer such data and information as Buyer may reasonably request
supporting the amounts reflected on the revised Closing Statement. The revised
Closing Statement shall become final and binding upon the Parties on the date
(the "Final Settlement Date") that is sixty (60) days following receipt thereof
by Buyer unless Buyer gives written notice of its disagreement ("Notice of
Disagreement") to Seller prior to such date. Any Notice of Disagreement shall
specify in detail the dollar amount, nature, and basis of any disagreement so
asserted. If a Notice of Disagreement is received by Seller in a timely manner,
then the Closing Statement (as revised in accordance with paragraph (b) or (c)
below) shall become final and binding on the Parties on, and the Final
Settlement Date shall be, the earlier of (i) the date upon which Seller and
Buyer agree in writing with respect to all matters specified in the Notice of
Disagreement or (ii) the date upon which the Final Closing Statement is issued
by the Closing Statement Arbitrator.

     (b) Final Closing Statement. During the thirty (30) days following the date
upon which Seller receives the Notice of Disagreement, if any, Seller and Buyer
shall attempt in good faith to resolve in writing any differences that they may
have with respect to all matters specified in the Notice of Disagreement. If at
the end of such thirty (30) day period (or earlier by mutual agreement), Buyer
and Seller have not reached agreement on such matters, the matters

                                       10
<PAGE>


that remain in dispute may be submitted to an arbitrator (the "Closing Statement
Arbitrator") by either Party for review and resolution. The Closing Statement
Arbitrator shall be a nationally recognized independent public accounting firm
that does not serve as Seller's or Buyer's independent auditor, as shall be
agreed upon by Buyer and Seller in writing. The hearing date will be scheduled
by the Closing Statement Arbitrator as soon as reasonably practicable, and shall
be conducted on a confidential basis. Each Party shall, not later than seven (7)
days prior to the hearing date set by the Closing Statement Arbitrator, submit a
brief with dollar figures for settlement of the disputes as to the amount of the
Adjusted Purchase Price (together with a proposed Closing Statement that
reflects such figures). The figures submitted need not be the figures offered
during prior negotiations. The Closing Statement Arbitrator shall render a
decision limited to resolving the matters in dispute (which decision shall
include a written statement of findings and conclusions) within three (3)
Business Days after the conclusion of the hearing, unless the Parties reach
agreement prior thereto and withdraw the dispute from arbitration. The Closing
Statement Arbitrator shall provide to the Parties explanations in writing of the
reasons for its decisions regarding the Adjusted Purchase Price and shall issue
the Final Closing Statement reflecting such decisions. The decision of the
Closing Statement Arbitrator shall be final and binding on the Parties. The cost
of any arbitration (including the fees and expenses of the Closing Statement
Arbitrator) pursuant to this Section 3.4(b) shall be borne equally by Buyer and
Seller. The fees and disbursements of Seller's independent auditors incurred
with the procedures performed with respect to the Closing Statement shall be
borne by Seller and the fees and disbursements of Buyer's independent auditors
incurred in connection with respect to the Notice of Disagreement shall be borne
by Buyer. As used in this Agreement, the term "Final Closing Statement" shall
mean the revised Closing Statement described in Section 3.4(a), as prepared by
Seller and as may be subsequently adjusted to reflect any subsequent written
agreement between the Parties with respect thereto, or if submitted to the
Closing Statement Arbitrator, the Closing Statement issued by the Closing
Statement Arbitrator.

        (c) Final Settlement. If the amount of the Adjusted Purchase Price as
set forth on the Final Closing Statement exceeds the amount of the Estimated
Adjusted Purchase Price, then Buyer shall pay to Seller, within five (5)
Business Days after the Final Settlement Date, the amount by which the Adjusted
Purchase Price as set forth on the Final Closing Statement exceeds the amount
of the Estimated Adjusted Purchase Price, together with interest on such excess
amount from the Closing Date until paid at the Interest Rate. If the amount of
the Adjusted Purchase Price as set forth on the Final Closing Statement is less
than the amount of the Estimated Adjusted Purchase Price, then Seller shall pay
to Buyer, within five (5) Business Days after the Final Settlement Date, the
amount by which the Adjusted Purchase Price as set forth on the Final Closing
Statement is less than the amount of the Estimated Adjusted Purchase Price,
together with interest on such deficiency amount from the Closing Date until
paid at the Interest Rate. Any post-Closing payment made pursuant to this
Section 3.4(c) shall be made by means of a wire transfer of immediately
available funds to a bank account designated by the Party receiving the funds.

        3.5      Allocation of Purchase Price.

         The Parties shall use their reasonable efforts to agree in good faith
upon an allocation of the Adjusted Purchase Price consistent with Section 1060
of the Code and the Treasury regulations thereunder as follows: Buyer shall
deliver to Seller a proposed allocation of the

                                       11
<PAGE>


Adjusted Purchase Price among the assets of SWP and the Subsidiaries (the
"Proposed Allocation") as soon as practicable after the Closing Date. Within
twenty (20) days after the receipt of the Proposed Allocation, Seller shall
propose Seller's changes to the Proposed Allocation, if any. Any dispute with
respect to the Proposed Allocation that Buyer and Seller, acting in good faith,
are thereafter unable to resolve within twenty (20) days shall be conclusively
resolved by a nationally recognized independent public accounting firm mutually
agreed to in writing by Buyer and Seller to resolve such dispute, which
resolution shall be final and binding between Buyer and Seller. The Parties
shall report this transaction for federal income tax purposes in accordance with
the allocation so agreed upon, and to file all federal (including without
limitation Form 8594), state and local Tax Returns in accordance with such
allocation after delivery by Seller of its proposed changes to the Proposed
Allocation.

                                   ARTICLE 4
                         Representations and Warranties

4.1      Representations and Warranties of Seller.

         As of the date of this Agreement, Seller represents and warrants to
Buyer as follows:

     (a)  Organization  and Good  Standing;  Subsidiaries.  Seller  is a limited
liability company duly organized, validly existing and in good standing under
the Laws of the State of Delaware. SWP is a limited liability company duly
organized, validly existing and in good standing under the Laws of the State of
Delaware. SWP owns, directly or indirectly, no equity or other ownership
interest in any Person, except for the Subsidiaries set forth on Schedule
4.1(a). Each Subsidiary is directly or indirectly wholly owned by SWP and is
duly organized, validly existing and in good standing under the Laws of its
jurisdiction of organization.

     (b) Qualification of SWP and any Subsidiary;  Business of LVC Finance. Each
of SWP and any Subsidiary has the requisite limited liability company or
partnership power to carry on its business as now being conducted and to own and
use their respective assets. No filing, recording, publication or other act that
has not been made or done is necessary in connection with the continuing
existence and good standing of SWP or any Subsidiary or the conduct of their
Business. Seller has prior to the execution of this Agreement delivered to Buyer
true and complete copies of the certificate of formation, limited liability
company agreements and partnership agreements, as applicable, of SWP and each
Subsidiary as in effect on the date hereof, other than any such documents in
respect of LVC Finance, copies of which shall be delivered prior to the Closing.
SWP and each Subsidiary is duly qualified to do business in the State of Nevada
and in all other places where necessary in light of the business it conducts and
the Real Property it owns and intends to own and in light of the transactions
contemplated hereby. Prior to taking possession of any equipment to be leased to
LVC II, LVC Finance will be authorized and licensed in the State of Nevada as a
company engaged in the business of purchasing goods for resale. Prior to the
Closing Date, LVC Finance shall not have engaged in any business or operations
other than the purchase of equipment for lease to, and the lease of such
equipment to LVC II and related activities. The major items of equipment
acquired to be incorporated into the Development Project will be acquired by LVC
Finance as inventory held for resale.

                                       12
<PAGE>


     (c) Authority. Seller has all requisite limited liability company power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. The execution, delivery and performance of this Agreement and the
transactions contemplated hereby have been duly and validly authorized by all
requisite limited liability company action on the part of Seller.

     (d)  Enforceability.  This Agreement has been duly and validly executed and
delivered by Seller and constitutes a legal, valid and binding obligation of
Seller enforceable against it in accordance with its terms, subject to (i)
applicable bankruptcy, insolvency, reorganization, moratorium, and other similar
Laws of general application from time to time in effect that affect creditors'
rights generally, (ii) general principles of equity, and (iii) the power of a
court to deny enforcement of remedies generally based upon public policy.

     (e) LLC  Interests.  At the Closing,  Seller will  deliver,  or cause to be
delivered, to Buyer good and valid title to the LLC Interests free and clear of
any Liens (except as created by this Agreement and restrictions on sales of
securities under applicable securities Laws). There exists no option, warrant,
purchase right, or other contract or commitment (other than this Agreement) that
would require the sale, transfer, or other disposition of any LLC Interests or
member or partnership interests of any Subsidiary. There exists no voting trust,
proxy, or other agreement or understanding with respect to the voting of any LLC
Interests or member or partnership interests of any Subsidiary.

     (f)  Capitalization.  The LLC  Interests  constitute  all of the issued and
outstanding membership interests of SWP. All of the LLC Interests have been duly
authorized and are validly issued, fully paid, and nonassessable and were not
issued in violation of the preemptive rights of any Person. SWP has no
outstanding convertible security, call, preemptive right, option, warrant,
purchase right, or other contract or commitment that would, directly or
indirectly, require SWP to sell, issue, or otherwise create any membership
interests in addition to the LLC Interests.

     (g) No Violation or Breach. Except as set forth in Schedule 4.1(g), neither
the  execution  and  delivery  of this  Agreement  nor the  consummation  of the
transactions  and performance of the terms and conditions  hereof by Seller will
(i) result in a violation or breach of any  provision  of the limited  liability
company  agreement or other similar  governing  documents of Seller,  SWP or any
Subsidiary or any agreement,  indenture or other  instrument  under which either
Seller,  SWP or any Subsidiary is bound,  other than such breaches or violations
of agreements,  indentures, or other instruments that would not, individually or
in the aggregate, have a Material Adverse Effect or adversely affect the ability
of Seller to perform its obligations under this Agreement,  (ii) violate any Law
applicable  to Seller,  SWP or any  Subsidiary,  the  Operating  Facility or the
Development  Project in any material  respect,  other than such  violations that
would not,  individually or in the aggregate,  have a Material Adverse Effect or
adversely  affect the  ability of Seller to perform its  obligations  under this
Agreement,  or (iii)  result  in, or create  any Lien  (other  than a  Permitted
Exception) upon or with respect to any of the Real Property or Personal Property
now owned or hereafter acquired by SWP or any Subsidiary.

     (h) Consents. No consent,  approval,  authorization or permit of, or filing
with or notification to, any Person is required for or in connection with the
execution and delivery of

                                       13
<PAGE>

this Agreement by Seller or for or in connection with the consummation of the
transactions and performance of the terms and conditions contemplated hereby by
Seller, except for (i) requirements of the FERC, if any, (ii) requirements under
the HSR Act (which will be obtained or satisfied prior to the Closing Date),
(iii) the consents, filings, and notices set forth on Schedule 4.1(h), and (iv)
consents, approvals, authorizations, permits, filings or notices that, if not
obtained or made, would not, individually or in the aggregate, have a Material
Adverse Effect.

     (i)  Actions.  Except as set forth on Schedule  4.1(i),  there is no Action
pending or, to the Knowledge of Seller, threatened against Seller, SWP or any
Subsidiary, the Operating Facility or the Development Project, except for
threatened Actions that are not reasonably expected by Seller, individually or
in the aggregate, to have a Material Adverse Effect or adversely affect the
ability of Seller to perform its obligations under this Agreement.

     (j)  Compliance  With Laws.  Except as set forth on  Schedule  4.1(j),  and
except with respect to any  Environmental  Law, Tax Law or any employee matters,
which are exclusively  addressed in Sections 4.1(n), (o) and (p),  respectively,
no uncured  violation of any Law by SWP or any  Subsidiary  or by Seller  (which
could  reasonably  be  expected  to  relate  to  the  Operating  Facility,   the
Development Project, SWP or any Subsidiary) exists, other than violations of Law
which  could not  reasonably  be  expected  by  Seller,  individually  or in the
aggregate, to have a Material Adverse Effect.

     (k) Brokerage  Fees and  Commissions.  Neither  Seller nor any Affiliate of
Seller has  incurred  any  obligation  or  entered  into any  agreement  for any
investment banking,  brokerage,  or finder's fee or commission in respect of the
transactions  contemplated  by this  Agreement  for  which  Buyer  or SWP or any
Subsidiary shall have any liability.

     (l)  Bankruptcy.  There are no bankruptcy,  reorganization,  or arrangement
proceedings pending against, being contemplated by, or, to the Knowledge of
Seller, threatened against Seller, SWP or any Subsidiary.

        (m)      Project Documents.

          (i) Set forth in Part I of Schedule  4.1(m) is a list of the following
     agreements  and  contracts to which SWP or any  Subsidiary is a party or by
     which SWP or any  Subsidiary  is bound and  which  relate to the  Operating
     Facility:

               (A)  gas   pipeline   interconnection   agreements,   gas  supply
          agreements,  gas purchase and sale agreements,  and gas transportation
          agreements;

               (B)  power  purchase  agreements,  tolling  services  agreements,
          electricity transmission agreements,  and electricity  interconnection
          agreements;

               (C) swap, exchange, commodity option or hedging agreements;

               (D) operating and maintenance agreements;


                                       14
<PAGE>


               (E)  equipment  purchase  and  sale  contracts  and  construction
          contracts;

               (F) any contract requiring a capital  expenditure or a commitment
          by SWP or any Subsidiary in excess of $50,000 in any calendar year;

               (G) any pending sale or lease of real or personal property of SWP
          or any Subsidiary (other than sales of electric energy in the ordinary
          course of business) in excess of $50,000;

               (H) any loan agreements and related documents;

               (I)  any  contract  that  contains  a  covenant  not  to  compete
          applicable to SWP or any Subsidiary; and

               (J) any amendment relating to any of the foregoing.

          (ii)  Set  forth  in  Part  II of  Schedule  4.1(m)  is a list  of all
     agreements  and  contracts to which SWP or any  Subsidiary is a party or by
     which SWP or any  Subsidiary  is bound and which relate to the  Development
     Project.  The agreements and contracts listed in Parts I and II of Schedule
     4.1(m) are collectively referred to as the "Project Documents."

          (iii)  Set  forth  in Part  III of  Schedule  4.1(m)  is a list of all
     material agreements and contracts to which SWP or any Subsidiary is a party
     or by which SWP or any  Subsidiary  is bound and which do not relate to the
     Operating Facility or the Development Project.

          (iv)  Except  as set  forth  in Part  IV of  Schedule  4.1(m),  to the
     Knowledge  of Seller,  neither SWP nor any  Subsidiary  is, in any material
     respect, in breach of or in default under, and no event has occurred and is
     continuing  which would  constitute a material  breach or default by SWP or
     any Subsidiary  under,  any material  provision of any Project Document and
     neither SWP nor any Subsidiary  has received  written notice from any other
     party to any Project  Document  that SWP or any  Subsidiary is in breach of
     any Project Document which has not been remedied.

          (v) True and complete  copies of the Project  Documents have been made
     available to Buyer.

     (n)  Environmental  Matters.  This Section 4.1(n) shall constitute the sole
representations of Seller with respect to environmental  matters.  Except as set
forth in Schedule  4.1(n),  or as would not,  individually  or in the aggregate,
have a Material Adverse Effect:

          (i) there is no  uncured  violation  of any  Environmental  Law by the
     Seller,  SWP  or any  Subsidiary  that  would  result  in  any  remediation
     obligations of SWP or any Subsidiary under any Environmental Law;


                                       15
<PAGE>


          (ii) there have been no written notices or written complaints received
     by  Seller,  SWP  or any  Subsidiary  with  respect  to a  violation  of an
     Environmental Law by SWP or any Subsidiary;

          (iii)  no  Lien  has  been  imposed  on  any  property  of  SWP or any
     Subsidiary by any  Governmental  Authority in connection with any violation
     of or noncompliance with Environmental Laws;

          (iv) to the  Knowledge of Seller,  there are no facts,  circumstances,
     conditions or occurrences that would reasonably be expected (A) to form the
     basis of an  Environmental  Claim against SWP or any Subsidiary,  or (B) to
     cause SWP or any Subsidiary to be subject to any restrictions on ownership,
     occupancy,  use or transferability under any Environmental Law inconsistent
     with the  customary  and standard  operation of the  Operating  Facility or
     development of the Development Project;

          (v)  there  are no past,  pending  or,  to the  Knowledge  of  Seller,
     threatened Environmental Claims against SWP or any Subsidiary;

          (vi) to the Knowledge of Seller,  Hazardous  Materials are not now and
     have not at any time been used or released  at, on,  under or from the Real
     Property other than in compliance with applicable laws;

          (vii) Seller has made available to Buyer all correspondence,  studies,
     audits,  reviews,   investigations,   analyses,  and  reports  on  material
     environmental matters relating to the Operating Facility or the Development
     Project that are in the possession of Seller, SWP or any Subsidiary; and

          (viii) to the Knowledge of Seller,  there are no  underground  storage
     tanks, active or abandoned, on the Real Property.

     (o) Tax Matters.  This Section 4.1(o) is the sole  representation of Seller
with  respect to tax matters.  With  respect to each of SWP and any  Subsidiary,
except as set forth in Schedule  4.1(o) or as would not,  individually or in the
aggregate, have a Material Adverse Effect:

          (i) all Tax Returns required to be filed by or with respect to SWP and
     any  Subsidiary  have been or will be  timely  filed  with the  appropriate
     taxing  authorities  in all  jurisdictions  in which such Tax  Returns  are
     required to be filed;

          (ii) such Tax Returns are or will be true and correct in all  material
     respects,  and all Taxes  reported on such Tax Returns have been or will be
     timely paid prior to Closing;

          (iii)  neither  SWP nor any  Subsidiary  has  extended  or waived  the
     application of any statute of limitations of any jurisdiction regarding the
     assessment or collection of any Tax;


                                       16
<PAGE>


          (iv)  to  the  Knowledge  of  Seller,  there  are no  audits,  claims,
     assessments,  levies,  administrative  proceedings,  or lawsuits pending or
     threatened against SWP or any Subsidiary by any taxing authority;

          (v) there are no Liens for Taxes (other than for current Taxes not yet
     due or payable) upon the assets of either SWP or any Subsidiary);

          (vi) neither SWP nor any Subsidiary has any liability for Taxes of any
     Person (other than SWP and any  Subsidiary) as transferee from or successor
     to such Person;

          (vii) no election has been made by SWP or any Subsidiary to be treated
     as a corporation for federal income tax purposes;

          (viii)  none  of the  assets  of SWP or  any  Subsidiary  directly  or
     indirectly  secures  any debt the  interest  on which is tax  exempt  under
     Section 103(a) of the Code; and

          (ix) Seller is not a person other than a United  States  person within
     the meaning of the Code and the  transactions  contemplated  herein are not
     subject to the tax withholding provisions of Chapter 3 of the Code.

Notwithstanding anything in this Section 4.1(o) to the contrary, no
representation or warranty is made with respect to the amount, availability,
expiration, limitation, or reduction of any net operating losses of any of SWP
or any Subsidiary.

     (p) Employee  Matters.  This Section 4.1(p) is the sole  representation  of
Seller with respect to employee matters.  Part I of Schedule 4.1(p) sets forth a
complete  list of employees of either SWP or any  Subsidiary as of the Effective
Date.  Buyer has agreed to provide  employment  for the employees  identified in
Part I of Schedule 4.1(p) in their current  positions or in other  substantially
similar positions with Buyer. Except as set forth in Part II of Schedule 4.1(p),
neither  Seller  nor SWP nor any  Subsidiary  is a party  to or is  bound by any
collective  bargaining or labor agreement with respect to any employees assigned
to the  business  of SWP,  and to the  Knowledge  of Seller,  no  present  union
organizing efforts are underway with respect to any such employees.  Part III of
Schedule  4.1(p) sets forth a complete  listing of any employee  benefit plan as
defined in Section 3(3) of ERISA that is  maintained  or sponsored by SWP or any
Subsidiary,  or to which SWP or any Subsidiary is a party,  or otherwise has any
obligations or liability.

     (q) Financial Condition.

          (i)  Part I of  Schedule  4.1(q)  hereto  contains  copies  of (A) the
     audited  financial  statements of SWP  (including  the notes thereto) as of
     December  31,  2000  and for the year  then  ended,  and (B) the  unaudited
     financial  statements of SWP  (including the notes thereto) as of March 31,
     2001  and  for  the  period  then  ended,  (collectively,   the  "Financial
     Statements").  The Financial Statements are in each case true, complete and
     correct and fairly present in all material respects the financial condition
     of SWP and any  Subsidiary as of the date thereof,  all in accordance  with
     GAAP,  consistently  applied,

                                       17
<PAGE>


     except as disclosed in Part I of Schedule 4.1(q), and in the  case  of the
     Financial Statements which have not been audited, except for the absence of
     footnote  disclosure and the possibility of audit  adjustments  which shall
     not, in the aggregate, be material in amount.

          (ii) As of the Effective  Date, and except (A) as set forth in Part II
     of  Schedule  4.1(q),  (B) as  reflected,  reserved  against  or  otherwise
     disclosed in the  Financial  Statements,  (C) as have been  incurred in the
     ordinary course of business of operating the Operating Facility  consistent
     with past practice or which may have arisen or have been incurred under any
     Project  Document,   and  (D)  as  would  constitute  Development  Expenses
     specified in the Development Budget or otherwise approved by Buyer pursuant
     to  Section  7.1(b),  SWP and any  Subsidiary  do not have  liabilities  or
     obligations (whether contingent or absolute, matured or unmatured, known or
     unknown) which exceed $50,000 in the aggregate.

          (iii) Except as disclosed  in Part III of Schedule  4.1(q),  since the
     date set forth in each of the Financial Statements,  there has not been any
     adverse change in the assets, liabilities,  business, results of operation,
     or financial  condition of SWP and any Subsidiary that would,  individually
     or in the aggregate, have a Material Adverse Effect.

        (r)      Personal Property.

          (i) SWP and each Subsidiary is in possession of and has good and valid
     title  to,  or has  valid  leasehold  interests  in or valid  rights  under
     contract to use,  all of its assets  constituting  personal  property  (the
     "Tangible  Personal  Property"),  and on the Closing Date a Subsidiary will
     have  possession  of and good and  valid  title  to the  Tangible  Personal
     Property which is the subject of the Transferred Contracts,  free and clear
     of all Liens, except: (A) Liens arising by operation of law for amounts not
     yet  due  and  payable;  (B)  the  rights  of  customers,   suppliers,  and
     subcontractors in the ordinary course of business under general  principles
     of  commercial  law for amounts  not in  default;  (C) Liens that would not
     reasonably  be expected  to have a Material  Adverse  Effect;  (D) Liens in
     favor or Allegheny granted pursuant to the Tolling  Agreement,  which Liens
     shall be fully  subordinate  to liens in favor of any  "Senior  Lender"  as
     defined in the Tolling Agreement;  and (E) Liens listed on Schedule 4.1(r);
     it being --------------- agreed that any such Liens relating to or securing
     the NatWest  Loan,  the Bridge Loan and/or the  Subordinated  Note shall be
     released at the Closing.

          (ii) To the  Knowledge of Seller,  SWP and its  Subsidiaries  have the
     exclusive   right  to  use  the  "Las  Vegas   Delight"   brand  name,  all
     registrations  with  and  applications  to any  Governmental  Authority  in
     respect of such brand  name are in full  force and  effect,  and such brand
     name is not being infringed by any other Person.

     (s) Real Property.  Schedule  4.1(s) lists all real property owned in whole
or in part by SWP and each Subsidiary (the "Real  Property"),  and except as set
forth on Schedule 4.1(s):


                                       18
<PAGE>


          (i) SWP and  each of the  Subsidiaries  has good  and  marketable  fee
     simple title to all of the Real Property owned by it, free and clear of all
     Liens,  except  Permitted  Exceptions,   it  being  agreed  that  Permitted
     Exceptions relating to or securing the NatWest Loan, the Bridge Loan and/or
     the Subordinated Note shall be released at the Closing;

          (ii) there are no leases, subleases,  easements, licenses, concessions
     or other  agreements  (written or oral)  granting to any Person (other than
     SWP or any  Subsidiary)  the right to use or occupy  the Real  Property  or
     granting  to any Person a right or  interest  in any of the Real  Property,
     except as disclosed in the Title  Commitment or which would  otherwise be a
     Permitted Exception;

          (iii)  there are no  outstanding  options,  rights  of first  offer or
     rights of first  refusal  to  purchase  the Real  Property  or any  portion
     thereof or interests therein;

          (iv) neither SWP nor any of its  Subsidiaries  has received any notice
     in writing or by publication  of any  appropriation,  condemnation  or like
     proceeding, or of any violation of any applicable zoning law, regulation or
     rule or other law, order,  regulation,  rule or requirement  relating to or
     affecting any of the Real Property; and

          (v) SWP does not owe any  brokerage  commissions  with  respect to the
     Real Property.

     (t) Permits.


          (i)  Part I of  Schedule  4.1(t)  sets  forth a list  of all  material
     permits,  franchises,  approvals,  or other  authorizations  ("Permits") of
     Governmental  Authorities  required  to operate the  Operating  Facility as
     currently  operated.  Each Permit is in full force and effect, SWP and each
     Subsidiary  is  in  compliance  in  all  material  respects  with  all  its
     obligations with respect thereto, and, to the Knowledge of Seller, no event
     has occurred which permits,  or with or without the giving of notice or the
     passage of time or both would permit,  the revocation or termination of any
     Permit.

          (ii)  Part II of  Schedule  4.1(t)  sets  forth a list of all  Permits
     obtained by Seller,  SWP or any  Subsidiary as of the Effective  Date and a
     list of all  applications  for  Permits  filed with or  requested  from any
     Governmental  Authority as of the  Effective  Date in  connection  with the
     Development Project.  Seller has made available to Buyer a true and correct
     copy of each of (i) the material documents, reports and correspondence from
     SWP or Seller, (ii) the material documents provided by SWP or Seller to any
     Governmental  Authority,  and, to the  Knowledge  of Seller,  the  material
     documents  and  correspondence  received  by Seller  form any  Governmental
     Authority,  in each case with respect to such applications.

          (iii) Part III of Schedule  4.1(t)  sets forth a list of all  material
     permits,  licenses,  consents and approvals from a  Governmental  Authority
     which,  to the Knowledge of Seller as of the Effective Date, are or will be
     required to be obtained by Seller,  Buyer,  SWP or any  Subsidiary  for the
     development,  construction  and ownership and operation of the  Development
     Project.

                                       19
<PAGE>


          (iv) SWP and each  Subsidiary  is in  material  compliance  with  each
     Permit issued to it or which governs its operations.

     (u) Bank Accounts.  Set forth on Schedule 4.1(u) are the names of each bank
or other financial  institution  with which SWP or any Subsidiary has an account
and description of such account.

     (v) QF Status.  The Operating  Facility has been certified by the FERC as a
qualifying   cogeneration   facility  ("QF")  pursuant  to  the  Public  Utility
Regulatory Policy Act of 1978, as amended  ("PURPA") and the FERC's  regulations
implementing  PURPA in an order  issued  on  October  17,  1991.  The  Operating
Facility has  satisfied  the relevant  criteria for QF status at all times after
September 1, 1999,  and to the  Knowledge of Seller,  at all times after October
17, 1991 and prior to September 1, 1999.

     (w) Sole Purpose;  Nature of Business.  Neither SWP nor any  Subsidiary has
conducted at any time after August 31, 1999, and is not conducting, any business
or operations,  other than the operations of the Operating  Facility and related
operations and the development and  construction of the Development  Project and
the leasing of assets to LVC II in connection with the Development Project.

     (x) Status.

          (i) None of Seller or any of its Affiliates is or will be by virtue of
     the execution,  delivery, or performance of this Agreement (A) an "electric
     utility  company," a "registered  holding  company" or either a "subsidiary
     company" or an "affiliate" of a "registered holding company," as such terms
     are defined in PUHCA, (B) subject to regulation under PUHCA except pursuant
     to  Section  9(a)(2)  thereof,  or (C)  subject  to  regulation  under  the
     applicable  Law of the State of  Nevada  respecting  the rates of  electric
     utilities.

          (ii) Neither SWP nor any  Subsidiary is an  "investment  company" or a
     company  "controlled" by an "investment  company" within the meaning of the
     Investment  Company  Act of  1940 or an  "investment  advisor"  within  the
     meaning of the Investment Company Act of 1940.

     (y)  Affiliate   Transactions.   There  is  no  indebtedness   (other  than
indebtedness  which will be paid in full prior to the Closing  Date) between SWP
or any  Subsidiary,  on the one hand,  and  Seller,  any  officer,  director  or
Affiliate (other than SWP or any Subsidiary) of Seller, on the other.

     (z) Utility  Services.  All  customary  utility  services  necessary in the
development and operation of the Development Project (other than fuel supply and
water  supply,  the  procurement  of  which  is part of the  development  of the
Development  Project),  including as  necessary,  storm and  sanitary  services,
electric and telephone services and facilities,  are or will be available to the
Development Project.


                                       20
<PAGE>


        4.2      Representations and Warranties of Buyer.

         Buyer represents and warrants to Seller as follows:

     (a) Organization and Qualification.  Buyer is a corporation duly organized,
validly  existing,  and in good standing under the Laws of the State of Delaware
and has the  requisite  power  under  its  formation  documents  to carry on its
business as now being conducted.  Buyer is duly qualified to do business in each
state in which it conducts business.

     (b) Authority.  Buyer has all requisite  power and authority to execute and
deliver this Agreement and to perform its obligations under this Agreement.  The
execution,  delivery,  and  performance of this  Agreement and the  transactions
contemplated  hereby  have been duly and  validly  authorized  by all  requisite
corporate action on the part of Buyer.

     (c)  Enforceability.  This Agreement has been duly and validly executed and
delivered  by Buyer and  constitutes  a valid  and  binding  agreement  of Buyer
enforceable  against it in accordance with its terms,  subject to (i) applicable
bankruptcy,  insolvency,  reorganization,  moratorium, and other similar Laws of
general  application from time to time in effect that affect  creditors'  rights
generally,  (ii) general principles of equity, and (iii) the power of a court to
deny enforcement of remedies generally based upon public policy.

     (d) No  Violation  or Breach.  Neither the  execution  and delivery of this
Agreement nor the  consummation of the transactions and performance of the terms
and  conditions  hereof by Buyer will (i) result in a violation or breach of any
provision  of the  governing  documents  of  Buyer  or any  material  agreement,
indenture  or other  instrument  under  which  Buyer is bound,  other  than such
breaches or violations of agreements, indentures or other instruments that would
not, individually or in the aggregate, reasonably be expected to have a material
adverse effect on Buyer or adversely  affect the ability of the Buyer to perform
its obligations under this Agreement or (ii) violate any Law applicable to Buyer
or the  assets  of Buyer  other  than such  violations  of Law that  would  not,
individually  or in the  aggregate,  reasonably  be  expected to have a material
adverse effect on Buyer or adversely  affect the ability of the Buyer to perform
its obligations under this Agreement.

     (e) Consents. No consent, approval,  authorization, or permit of, or filing
with or  notification  to, any Person is required for or in connection  with the
execution and delivery of this  Agreement by Buyer or for or in connection  with
the consummation of the transactions and performance of the terms and conditions
contemplated  hereby by Buyer, except for any (i) requirements of the FERC, (ii)
requirements under the HSR Act, and (iii) consents,  approvals,  authorizations,
permits,  filings  or  notices  that,  if  not  obtained  or  made,  would  not,
individually or in the aggregate, have a material adverse effect on Buyer or its
Affiliates.

     (f)  Actions.  To the  Knowledge  of Buyer,  there is no Action  pending or
threatened against Buyer,  except for Actions which are not reasonably  expected
to have a material adverse effect on Buyer or its assets or adversely affect the
ability of the Buyer to perform its obligations under this Agreement.

     (g)  Brokerage  Fees and  Commissions.  Neither  Buyer nor any Affiliate of
Buyer  has  incurred  any  obligation  or  entered  into any  agreement  for any
investment banking

                                       21
<PAGE>


brokerage, or finder's fee or commission in respect of the transactions
contemplated  by this Agreement for which either  Seller,  SWP or any Subsidiary
shall incur any liability.

     (h)  Funds.  Buyer  has,  and at all  times  prior to  Closing  will  have,
sufficient  funds available to it to enable Buyer to consummate the transactions
contemplated hereby and to pay the Closing Payment,  the other payments required
of Buyer hereunder, and all fees and expenses of Buyer.

     (i) Experienced Investor;  No Distribution.  The parent company of Buyer is
an  experienced  and   knowledgeable   investor  in  the  power  generation  and
development  business  in  the  United  States.  Prior  to  entering  into  this
Agreement,  Buyer and its  Affiliates  were  advised  by  counsel,  accountants,
financial  advisors,  and such other Persons deemed appropriate  concerning this
Agreement and has relied solely on an independent  investigation  and evaluation
of, and appraisal and judgment with respect to, SWP and each  Subsidiary and the
revenue,  price,  and  expense  assumptions  applicable  thereto.  Buyer  hereby
acknowledges  that the LLC Interests are not registered under the Securities Act
of 1933, as amended (the "Securities  Act"), or registered or qualified for sale
under any state  securities  laws and  cannot  be  resold  without  registration
thereunder or exemption  therefrom.  Buyer is an "accredited  investor," as such
term is defined in Regulation D of the  Securities  Act and will acquire the LLC
Interests  for its own  account  and not  with a view to a sale or  distribution
thereof  in  violation  of the  Securities  Act,  and the rules and  regulations
thereunder,  any  applicable  state  blue  sky  laws  or  any  other  applicable
securities laws. Buyer has sufficient  knowledge and experience in financial and
business  matters to enable it to evaluate  the risks of  investment  in the LLC
Interests and has the ability to bear the economic risk of this  investment  for
an indefinite period of time.

     (j)  Bankruptcy.  There are no bankruptcy,  reorganization,  or arrangement
proceedings pending against, being contemplated by, or to the Knowledge of Buyer
threatened against, Buyer.

     (k) Inspection.  Buyer  acknowledges  that,  prior to its execution of this
Agreement, (i) it has been afforded access to and the opportunity to inspect the
Operating  Facility and the Development  Project Site, and to review the Project
Documents,  and all other due  diligence  items made  available  by Seller  with
respect to SWP and any Subsidiary,  (ii) it has inspected the Operating Facility
and the Development Project Site and reviewed the Project Documents and Permits,
and as of the Closing  Date, it will have  inspected the Operating  Facility and
the Development Project Site and all other due diligence items made available by
Seller with respect to SWP and any  Subsidiary to the extent it deems  necessary
or advisable, and (iii) it is relying upon its own inspections and investigation
in order to satisfy itself as to the condition and  suitability of the Operating
Facility and the Development Project Site.

     (l) Qualified Entity. Buyer is a "Qualified Entity" as that term is defined
in the Tolling Agreement.

                                       22
<PAGE>


                                   ARTICLE 5
                           Access and Confidentiality

        5.1      General Access.

         Promptly following the execution of this Agreement and until the
Closing Date (or earlier termination of this Agreement), Seller shall permit
(and with respect to SWP and each Subsidiary, Seller shall cause SWP and each
Subsidiary to permit) Buyer and its representatives:

     (a) to have  reasonable  access,  at reasonable  times and upon  reasonable
advance  notice  in  Seller's  and  SWP's  offices  and in a manner so as not to
interfere  unduly  with  the  business  operations  of  Seller  or  SWP  or  any
Subsidiary,  to the books, records,  contracts, and documents of each of SWP and
any  Subsidiary  relating to their assets and  operations,  and of Seller to the
extent directly relating to the Operating  Facility or the Development  Project,
insofar as the same may be disclosed without (i) violating any legal constraints
or any legal  obligation  (it being agreed that if Seller  denies  access to any
materials  pursuant to this clause (a), Seller shall disclose to Buyer the legal
constraints  or obligations  requiring such denial and shall,  at the request of
Buyer,  use  commercially  reasonable  efforts to obtain any consents or waivers
necessary   to  afford   Buyer  the   requested   access),   (ii)   waiving  any
attorney/client,  work product, or like privilege,  (iii) disclosing information
about  the  activities  of  Seller  or its  Affiliates  (other  than SWP and any
Subsidiary),  or (iv)  disclosing  proprietary  models  of  Seller or any of its
Affiliates pertaining to energy project evaluation,  energy or natural gas price
curves or projections,  or other economic  predictive models;  provided that all
requests for access shall be directed to Jody Blackburn or such other persons as
Seller may designate from time to time.

     (b) subject to any required consent of any third Person and upon reasonable
advance  notice to Seller,  to conduct at  reasonable  times and at Buyer's sole
risk,  cost,  and  expense,  in  the  presence  of  representatives  of  Seller,
reasonable  inspections of the Operating  Facility and the  Development  Project
Site.  Buyer agrees to indemnify  and hold  harmless,  release and defend Seller
Indemnified  Parties  and SWP and any  Subsidiary  from and  against any and all
Losses  arising,  in whole or in part,  from the acts or  omissions of the Buyer
Indemnified  Parties in  connection  with Buyer's  inspection  of the  Operating
Facility, the Development Project Site and other assets and records of Seller or
SWP and any Subsidiary, including claims for personal injuries, property damage,
and reasonable attorneys' fees and expenses,  except to the extent that any such
Losses  arise  from  the  acts or  omissions  of any  one or more of the  Seller
Indemnified Parties.

         Nothing in this Article 5 shall be construed to permit Buyer or its
representatives to have access to any files, records, contracts, or documents of
Seller or SWP or any Subsidiary relating to this Agreement or the contemplated
transaction, including any bids or offers received by Seller or SWP or any
Subsidiary for the sale of the LLC Interests or the Operating Facility or the
Development Project Site, it being agreed that all such bids or offers shall be
the sole property of Seller.


                                       23
<PAGE>


        5.2      Confidential Information.

         Buyer agrees to maintain all information made available to it under
this Agreement confidential and to cause its officers, directors, agents,
employees, representatives, consultants, and advisors to maintain all
information made available to them under this Agreement confidential, all as
provided in that certain confidentiality agreement dated October 13, 2000, as
amended on May 11, 2001 (the "Confidentiality Agreement"), by and between Seller
and Buyer which is attached hereto as Exhibit 5.2, the terms of which are
incorporated herein by reference and made a part of this Agreement.

        5.3      No Other Contract.

         Buyer shall not contact or correspond with any customer, employee or
other Person associated with the business of SWP without the prior written
consent of Seller.

                                   ARTICLE 6
                                  Tax Matters

        6.1      Preparation.

         Any Tax Return to be prepared pursuant to the provisions of this
Section 6.1 shall be prepared in a manner consistent with practices followed in
prior years with respect to similar Tax Returns, except for changes required by
changes in law or fact. Buyer shall not file an amended Tax Return for any
period ending on or prior to the Closing Date without the consent of Seller,
which may be withheld in Seller's sole discretion. The following provisions
shall govern the allocation of responsibility as between Buyer and Seller for
certain Tax matters following the Closing Date:

          (a) Tax Periods  Ending on or Before the Closing  Date.  Seller  shall
     prepare  or cause  to be  prepared  and  file or cause to be filed  all Tax
     Returns for SWP and each  Subsidiary  for all periods ending on or prior to
     the Closing Date regardless of when they are to be filed.  Seller shall pay
     the Taxes  attributable  to SWP and each  Subsidiary  with  respect to such
     periods.

          (b) Tax Periods  Beginning  Before and Ending After the Closing  Date.
     Buyer shall  prepare or cause to be prepared  and file or cause to be filed
     any Tax Returns of SWP and each  Subsidiary for Tax periods which end after
     the Closing Date.  Seller shall pay to Buyer within fifteen (15) days after
     the date on which Buyer delivers  substantiation of Taxes paid with respect
     to such  periods an amount  equal to the portion of such Taxes that relates
     to the portion of such Tax period ending on the Closing Date.

        6.2      Access to Information.

         After Closing, Seller shall grant to Buyer (or its designees) access at
all reasonable times to all of the information, books, and records relating to
SWP and any Subsidiary within the possession of Seller (including work papers
and correspondence with taxing authorities), and shall afford Buyer (or its
designees) the right (at Buyer's expense) to take extracts therefrom and to make
copies thereof, to the extent reasonably necessary to permit Buyer (or its
designees) to prepare Tax Returns and to conduct negotiations with taxing
authorities. After Closing,

                                       24
<PAGE>

Buyer shall grant or cause SWP and any Subsidiary to grant to Seller (or its
designees) access at all reasonable times to all of the information, books and
records relating to SWP and any Subsidiary within the possession of Buyer or SWP
and any Subsidiary (including work papers and correspondence with taxing
authorities), and shall afford Seller (or its designees) the right (at Seller's
expense) to take extracts therefrom and to make copies thereof, to the extent
reasonably necessary to permit Seller (or its designees) to prepare Tax Returns
and to conduct negotiations with Tax authorities.

        6.3      Transfer Taxes.

         Buyer shall be responsible for the payment of all Transfer Taxes
resulting from the transactions contemplated by this Agreement.

        6.4      Tax Sharing Agreements.

         On or before the Closing Date, Seller shall ensure that no Tax
indemnity agreement, Tax allocation agreement, or Tax sharing agreement with
respect to SWP or any Subsidiary is in force or effect as to SWP or any
Subsidiary and that there shall be no liability of SWP or any Subsidiary on and
after the Effective Date under any such agreement.

        6.5      Assistance and Cooperation.

         After the Closing Date, in the case of any threatened or actual audit,
examination, or other proceeding with respect to Taxes ("Tax Proceeding") for
which Seller is or may be liable pursuant to this Agreement, Buyer shall inform
Seller within ten (10) days of the receipt of any notice of such Tax Proceeding,
and shall afford Seller, at Seller's expense, the opportunity to control the
conduct of such Tax Proceedings. Buyer shall execute or cause to be executed
powers of attorney or other documents necessary to enable Seller to take all
actions desired by Seller with respect to such Tax Proceeding to the extent such
Tax Proceeding may affect the amount of Taxes for which Seller is liable
pursuant to this Agreement. Seller shall have the right to control any such Tax
Proceedings and, if there is substantial authority therefor, to initiate any
claim for refund, file any amended return or take any other action which it
deems appropriate with respect to such Taxes.

        6.6      Tax Indemnity.

         Notwithstanding any other provisions of this Agreement, Sections 6.6
and 6.7 shall apply to indemnifications by Seller to Buyer for, and shall be the
sole remedy of Buyer in respect of, Losses described in the following sentence.
Seller agrees to indemnify and hold harmless Buyer from and against the entirety
of any and all Losses that Buyer may suffer for any Taxes attributable to SWP or
any Subsidiary with respect to any Tax year or portion thereof ending on or
before the Closing Date (or for any Tax year beginning before and ending after
the Closing Date to the extent allocable (determined in a manner consistent with
Section 6.1(b)) to the portion of such period beginning before and ending on the
Closing Date). No right to indemnity shall exist if the Loss is the result of
actions of Buyer or its Affiliates.

                                       25
<PAGE>


        6.7      Tax Indemnity Claims.

         The provisions of this Section 6.7 shall apply only to the
indemnification provided for under Section 6.6. If a claim for Taxes is made
against Buyer and if Buyer intends to seek indemnity with respect thereto under
Section 6.6, Buyer shall promptly furnish written notice to Seller of such
claim. Failure of Buyer to so notify Seller within fifteen (15) days of the
claim being made against Buyer shall terminate all rights of Buyer to indemnity
by Seller as to such claim. Seller shall have thirty (30) days after receipt of
such notice to undertake, conduct, and control (through counsel of its own
choosing and at its own expense) the settlement or defense thereof, and Buyer
shall cooperate with it in connection therewith. Seller shall permit Buyer to
participate in such settlement or defense through counsel chosen by Buyer (but
the fees and expenses of such counsel shall be paid by Buyer). So long as
Seller, at Seller's cost and expense, (i) has undertaken the defense of, and
assumed full responsibility for all indemnified Losses with respect to, such
claim, (ii) is reasonably contesting such claim in good faith, by appropriate
proceedings, and (iii) has taken such action (including the posting of a bond,
deposit, or other security) as may be necessary to prevent any action to
foreclose a lien against or attachment of the property of Buyer for payment of
such claim, Buyer shall not pay or settle any such claim. Notwithstanding
compliance by Seller with the preceding sentence, Buyer shall have the right to
pay or settle any such claim, but in such event it shall waive any right to
indemnity by Seller for such claim. If within thirty (30) days after the receipt
of Buyer's notice of a claim of indemnity hereunder, Seller does not notify
Buyer that it elects (at Seller's cost and expense) to undertake the defense
thereof and assume full responsibility for all indemnified Losses with respect
thereto, or gives such notice and thereafter fails to contest such claim in good
faith or to prevent action to foreclose a lien against or attachment of Buyer's
property as contemplated above, Buyer shall have the right to contest, settle,
or compromise such claim and Buyer shall not thereby waive any right to
indemnity for such claim under this Agreement.

        6.8      Tax Refunds.

         Refunds of Taxes paid or payable with respect to Taxes attributable to
SWP or any Subsidiary shall be promptly paid as follows (or, to the extent
payable but not paid due to offset against other Taxes, shall be promptly paid
by the Party receiving the benefit of the offset as follows): (i) to Seller if
attributable to Taxes with respect to any Tax year or portion thereof ending on
or before the Closing Date (or for any Tax year beginning before and ending
after the Closing Date to the extent allocable (determined in a manner
consistent with Section 6.1(b)) to the portion of such period beginning before
and ending on the Closing Date); and (ii) to Buyer if attributable to Taxes with
respect to any Tax year or portion thereof beginning after the Closing Date (or
for any Tax year beginning before and ending after the Closing Date to the
extent allocable (determined in a manner consistent with Section 6.1) to the
portion of such period ending after the Closing Date).

                                       26
<PAGE>

                                   ARTICLE 7
                          Covenants of Seller and Buyer

        7.1      Conduct of Business Pending Closing.

         Subject to Section 7.2, except as disclosed in Schedule 7.1 or as
otherwise consented to or approved by Buyer (which consent or approval shall not
be unreasonably withheld, conditioned, or delayed), Seller covenants and agrees
that:

     (a)  Changes in  Business.  Except as  contemplated  by  Section  7.1(b) in
respect of the Development  Project,  Seller shall cause SWP and each Subsidiary
to comply with the following:

          (i) SWP  shall  not make,  nor  permit  any  Subsidiary  to make,  any
     material  change in the conduct of its  business or  operations,  except as
     contemplated by the matters described in Schedule 7.1;

          (ii) except in the  ordinary  course of business and  consistent  with
     past practices, and except for the transfer of the Transferred Contracts as
     provided in Section  7.1(h),  SWP shall not, nor permit any  Subsidiary to,
     enter  into,  assign,  terminate,  or amend in any  material  respect,  any
     Project Document;

          (iii) Neither SWP nor any Subsidiary shall:

               (A) merge into or with or consolidate with any other  corporation
          or acquire all or  substantially  all of the business or assets of any
          Person;

               (B) make any material  change in its  certificate of formation or
          limited liability company agreement or partnership agreement;

               (C) purchase any securities of any Person, except for investments
          made in the  ordinary  course of business  and  consistent  with prior
          practices;

               (D) declare or pay any  dividends  or make any  distributions  in
          respect  of, or issue any of,  its  equity  securities  or  securities
          convertible  into its equity  securities,  or repurchase,  redeem,  or
          otherwise  acquire any such  securities or make or propose to make any
          other change in its capitalization; or

               (E)  except  for  obligations  that  will be repaid in full at or
          prior to the Closing,  incur any  obligations  for  borrowed  money or
          guarantee or otherwise  become liable for the  obligations of, or make
          any loans or advances to, any Person not an Affiliate of Seller.

          (iv) other than pursuant to the requirements of existing  contracts or
     commitments,  SWP shall not, nor permit any Subsidiary to, sell,  lease, or
     otherwise dispose of any of its assets, except for (a) assets sold, leased,
     or otherwise  disposed of in the ordinary course of business,  (b) the sale
     or disposition of any item of personal property or equipment having a value
     of less than  $50,000,  and (c) the  transfer or other


                                       27
<PAGE>


     disposition  of the accounts  receivable  or advances due or owed to SWP or
     any Subsidiary from any Affiliate of Seller;

          (v) SWP shall not,  nor permit any  Subsidiary  to, take any action or
     enter  into any  commitment  with  respect  to or in  contemplation  of any
     liquidation,  dissolution,   recapitalization,   reorganization,  or  other
     winding up of its business or operations;

          (vi)  SWP  shall  not,  nor  permit  any  Subsidiary  to,  change  its
     accounting policies or practices (including, without limitation, any change
     in depreciation or amortization policies), except as required under GAAP;

          (vii) SWP shall  not,  nor permit any  Subsidiary  to,  enter into any
     employment  agreement not terminable by SWP or such  Subsidiary at will and
     without cost to SWP or such Subsidiary; and

          (viii)  SWP shall  not,  nor  permit  any  Subsidiary  to,  create any
     employee  benefit plan (within the meaning of Section 3(3) of ERISA) or any
     other  employee  benefit  plan or program not  subject to ERISA,  except as
     required by Law.

     (b) Continued Development of Development Project.  Notwithstanding anything
contained in Section 7.1(a) to the contrary,  until the Closing Date, Seller and
SWP and any  Subsidiary  shall  continue to pursue and control the  development,
permitting and  construction of the Development  Project,  all as Seller and SWP
and any Subsidiary deem appropriate, subject only to the express requirements of
this Agreement. Except as otherwise expressly provided in this Agreement:

          (i) all  activities  of Seller,  SWP and any  Subsidiary in connection
     with the  development  of the  Development  Project  ("Development  Project
     Activities") shall be undertaken and pursued in substantial accordance with
     the principles  and practices  which are applicable to Seller's power plant
     development projects generally at the time in question ("Seller Practice");
     provided, that Seller shall cooperate and coordinate with Buyer through the
     Project Transition  Committee as provided in Section 7.1(c) with respect to
     the  development  and  construction  of the  Development  Project and shall
     provide to Buyer, its agents, consultants and counsel upon reasonable prior
     notice  (which may be delivered  by  telephone or facsimile  transmission),
     access to the Development Project by Buyer's representatives on the Project
     Transition  Committee  at all  reasonable  times for  purposes of observing
     Seller's development and construction activities and conducting (at Buyer's
     expense) any examinations and surveys as Buyer may reasonably request;

          (ii) subject to Section 7.1(b)(i),  SWP and any Subsidiary and Seller,
     on behalf of SWP and any  Subsidiary,  may spend or incur such  Development
     Expenses  as they  deem  appropriate  in  connection  with the  Development
     Project, provided that (x) no cost or expense incurred in connection with a
     Change  Order under the EPC  Contract  shall be  included  in the  Adjusted
     Purchase Price without  Buyer's prior written  consent (which consent shall
     not be unreasonably withheld,  conditioned or delayed), it being understood

                                       28
<PAGE>

     that in the event Buyer  unreasonably  withholds,  conditions or delays any
     such consent to a Change  Order which is  performed  under the EPC Contract
     the costs or expenses  incurred in connection  with such Change Order shall
     be included in the  Adjusted  Purchase  Price and borne by Buyer and (y) no
     Development  Expenses (other than expenses to satisfy obligations under the
     EPC  Contract)  in excess of 110% of the total  amount of each line item of
     expenses  set  forth  in  the  Development  Budget  (determined  after  the
     application by the Seller or SWP of any contingency  amount included in the
     Development  Budget)  shall be  included  in the  Adjusted  Purchase  Price
     without   Buyer's  prior  written  consent  (which  consent  shall  not  be
     unreasonably withheld, conditioned or delayed), it being understood that in
     the event  Buyer  unreasonably  withholds,  conditions  or delays  any such
     consent to any such  expense the costs or expenses  incurred in  connection
     therewith  shall be included in the  Adjusted  Purchase  Price and borne by
     Buyer;

          (iii) Neither Seller nor SWP or any Subsidiary shall,  without Buyer's
     prior written  consent (which consent shall not be  unreasonably  withheld,
     conditioned or delayed), amend or supplement any existing Project Document,
     enter into any new agreement which is not consistent with Seller's Practice
     (an  "Additional   Project  Agreement")  in  respect  of  the  development,
     construction,  ownership or operation of the Project which is material,  or
     amend or supplement any Additional  Project Agreement once entered into, if
     such amendment or supplement or Additional  Project Agreement would cause a
     Material   Adverse  Effect  or  would  result  in  a  payment   obligation,
     individually or in the aggregate, in excess of $50,000;

          (iv) SWP and any  Subsidiary  may deal and contract  with Seller,  and
     Seller and SWP and any Subsidiary may deal and contract with  Affiliates of
     Seller,  freely and without  limitation or  restriction  of any kind and on
     such terms and  conditions  as SWP and any  Subsidiary  and Seller and such
     Affiliates  deem  appropriate,  subject  only to the  requirement  that any
     obligations  of SWP and any  Subsidiary  paid or  incurred to Seller or any
     Affiliates of Seller shall be for reasonably  equivalent  value on terms no
     less  favorable  to SWP and any  Subsidiary  than they  could  obtain in an
     arm's-length  transaction with a Person that is not an Affiliate of Seller;
     and

          (v)  Seller  and SWP and any  Subsidiary  may take or omit to take any
     action in connection with the  Development  Project,  the existing  Project
     Documents,  the  Additional  Project  Agreements or any of the  Development
     Project  Activities  for any or no  reason,  as it deems  appropriate.  The
     phrase "deems appropriate," when used in this Agreement with respect to any
     decision,  action,  or inaction by Seller or SWP and any Subsidiary,  means
     that the  decision,  action or inaction  may be made or taken for any or no
     reason deemed appropriate in the sole discretion of Seller or either of SWP
     and any Subsidiary considering only its own interests and not the interests
     of any other Person (including, but not limited to, Buyer), subject only to
     any requirements of this Agreement.

     (c) Transition  Committee.  Promptly after the Effective  Date,  Seller and
Buyer shall establish a project  transition  committee (the "Project  Transition
Committee") for the purpose of facilitating  ongoing  communication  between the
Parties with respect to the

                                       29
<PAGE>

development  of the  Development  Project prior to the Closing Date. The Project
Transition  Committee shall be comprised of four (4) members,  two (2) appointed
by Seller and two (2) appointed by Buyer. The Project Transition Committee shall
meet no less frequently  than weekly,  or more often as the Parties may mutually
agree or this Agreement may require. Meetings shall be held at such locations as
the members of the Project Transition  Committee may agree upon, on no less than
twenty-four  (24) hours' prior written  notice of either Party (which notice may
be waived in writing by both  Parties),  provided  that either  Party may call a
special meeting to address an urgent matter on such notice as may be practicable
under  the  circumstances.  All  meetings  may be  held  telephonically  and all
representatives  shall be  available  for  meetings  on short  notice (and shall
designate an alternate for purposes of unavailability).  At each meeting, Seller
shall provide an update on any Development  Project Activities  undertaken since
the last weekly meeting of the Project Transition Committee (including an update
of  Development  Expenses)  and shall consult with Buyer  regarding  anticipated
future  Development  Project  Activities.  The Parties  shall discuss such other
matters  related to Development  Project  Activities  generally as they may deem
appropriate.  Buyer shall designate one or more individuals (who may be a member
of the Project Transition  Committee) to be available on a twenty-four (24) hour
per day basis to consult with Seller in respect of the  Development  Project and
to be available to receive  "time  critical"  requests  from Seller  pursuant to
Section   7.1(d)   (each  such   individual   being  a   "Buyer's   Construction
Representative").

     (d) All requests by Seller for consent by Buyer to Development Expenses for
which Buyer's consent is required pursuant to Section 7.1(b)(ii) hereof shall be
submitted  exclusively to the Project Transition Committee (which submission may
be made through any Buyer Construction  Representative) and Seller shall have no
obligation to submit such requests to any other Person, notwithstanding anything
to  the  contrary  provided  herein.  Buyer's  representatives  on  the  Project
Transition Committee shall have authority to grant or deny such consent.  Seller
may  designate  certain  events  as "time  critical"  in the  event  Seller  has
determined  in good  faith  that such  events are  material  to the  Development
Project and are of such a nature that a decision  related thereto by the Project
Transition  Committee must be reached  immediately in order to serve the overall
best interests of the Development Project. Buyer agrees that in the event Seller
designates any such request as "time  critical,"  Buyer's  representatives  will
respond to such request with  Buyer's  consent or denial of consent  within such
time period as Seller may specify therefor,  which shall not in any case be less
than twelve (12) hours after Buyer's Construction  Representative has personally
received such request. Any such request for consent shall include such detail as
is  reasonably  necessary for Buyer's  representative  to evaluate the merits of
such  request.  It shall be  presumptively  unreasonable  for Buyer to withhold,
condition,  delay  or deny  consent  to any  such  item  if it is  substantially
consistent with Seller Practice and the Work Plan.

     (e) Buyer may, at its reasonable discretion,  engage the services of Seller
or its  Affiliates for the purpose of providing any services  deemed  reasonable
and necessary to assist Buyer or SWP and any Subsidiary with the development and
management of the Development Project,  including the services set forth in Part
I on Schedule 7.1(e) (the  "Transition  Services").  Seller shall have and shall
make  available  to Buyer and LLC that number of Seller  employees  which Seller
reasonably believes is necessary to perform fully the Transition Services.  Part
II on Schedule 7.1(e) sets forth a list of the key Seller  personnel whom Seller
shall make available to render the Transition Services,  together with a list of
their hourly billing rates.  In the event the

                                       30
<PAGE>

Parties mutually agree to utilize personnel not identified in Part I on Schedule
7.1(e),  Seller shall bill Buyer or the LLC at an  agreed-upon  hourly costs for
such Transition  Services.  Seller, in consultation  with Buyer,  shall have the
right to exchange or reassign the personnel  whom Seller shall make available to
render the Transition Services. All requests from Buyer or SWP or any Subsidiary
and all Transition  Services  performed by Seller or its  affiliates  under this
Section 7.1(e) shall be consistent with applicable Laws.

     (f) Liens. Seller shall not, and will cause SWP and each Subsidiary not to,
grant any  express  Lien on any assets of SWP or any  Subsidiary,  except to the
extent (i) required or permitted  incident to the operation of the assets of SWP
or any  Subsidiary and the business of SWP or any Subsidiary or (ii) required or
evidenced by any of the Project Documents.

     (g) Operation of Operating Facility. Seller shall:

          (i) cause the Operating  Facility to be maintained and operated in the
     ordinary course of business  consistent with past practices  (including the
     repair  or  replacement  of  damaged,  destroyed,  obsolete,   depreciated,
     non-working,  or  non-economical  items  of  equipment  or  other  personal
     property),  and in  accordance  with  Good  Operating  Practices,  maintain
     insurance now in force with respect to such  Facility,  and pay or cause to
     be paid all costs and expenses in connection therewith promptly when due;

          (ii) cause SWP and each  Subsidiary  responsible  therefor to maintain
     the Operating Facility's QF status; and

          (iii) cause SWP and each  Subsidiary to use its reasonable  efforts to
     maintain its  relationships  with suppliers,  customers,  and others having
     material business relationships with SWP and any Subsidiary with respect to
     the  Operating  Facility  so that they will be  preserved  for Buyer on and
     after the Closing Date.

     (h)  Transferred  Contracts.  On or before the Closing  Date,  Seller shall
cause each of the  contracts  described  in Schedule  7.1(h)  (the  "Transferred
Contracts")  to be  assigned  and  transferred  to, and  assumed  by, SWP or its
appropriate  Subsidiary  shown for each such  Transferred  Contract  in Schedule
7.1(h).

          (i)  Permits.  Seller and its  Affiliates  shall use all  commercially
     reasonable efforts,  and shall cause the SWP and any Subsidiary,  to obtain
     all  authorizations,  consents,  orders,  and approvals of, and to give all
     notices  to  and  make  all  filings  with,  all  Governmental  Authorities
     (including  those  pertaining  to the  Governmental  Approvals)  and  third
     parties that may be or become  necessary or  desirable in  connection  with
     this  Agreement  and the  transactions  contemplated  hereby  in  order  to
     preserve  and  protect,  and not to impair,  the Permits  (whether  already
     obtained or applied for).

        7.2      Qualifications on Conduct.

         Seller, SWP and any Subsidiary may take (or not take, as the case may
be) any of the actions described in Section 7.1 above if reasonably necessary
under emergency circumstances

                                       31
<PAGE>


(or if required or prohibited pursuant to Law) and provided Buyer is notified as
soon thereafter as practicable.

        7.3      Public Announcements.

         Prior to the Closing Date, without the prior written approval of the
other Party (which approval shall not be unreasonably withheld, conditioned, or
delayed), no Party will issue, or permit any agent or Affiliate of such Party to
issue, any press releases or otherwise make, or cause any agent or Affiliate of
such Party to make, any public statements with respect to this Agreement and the
transactions contemplated hereby, except when such release or statement is
deemed in good faith by the releasing Party to be required by Law or under the
applicable rules and regulations of a stock exchange or market on which the
securities of the releasing Party or any of its Affiliates are listed. In each
case to which such exception applies, the releasing Party will use its
reasonable efforts to provide a copy of such release or statement to the other
Party and incorporate any reasonable changes which are suggested by the
non-releasing Party prior to releasing or making the statement. After the
Closing Date, the Parties will confer with each other regarding their initial
public announcement for the transaction contemplated herein.

        7.4      Actions by Parties.

         Each Party agrees to use commercially reasonable efforts to satisfy the
conditions to Closing set forth in Article 8 and to refrain from taking any
action within its control which would cause a breach of a representation or
warranty set forth herein.

        7.5      Supplements to Schedules.

         Seller may, from time to time prior to the Closing by written notice to
Buyer, supplement or amend the Schedules to this Agreement to correct any matter
that would constitute a breach of any representation or warranty of Seller in
Section 4.1. For purposes of determining whether Buyer's condition set forth in
Section 8.2(a) has been fulfilled, the Schedules shall be deemed to include only
that information contained therein on the Effective Date and shall be deemed to
exclude all information contained in any supplement or amendment thereto, but if
the Closing shall occur, then all matters disclosed to Buyer pursuant to any
such supplement or amendment at or prior to the Closing shall be deemed to be
waived by Buyer and Buyer shall not be entitled to make any claim thereon or
relating thereto under Section 11.1.

        7.6      Further Assurances.

         Seller and Buyer each agree that from time to time after the Closing
Date, it will execute and deliver or cause its respective Affiliates (including
SWP and each Subsidiary) to execute and deliver such further instruments, and
take (or cause its respective Affiliates, including SWP and each Subsidiary, to
take) such other action, as may be reasonably necessary to carry out the
purposes and intents of this Agreement.

        7.7      Records.

         Buyer agrees to maintain, or cause SWP and each Subsidiary to maintain,
the Records in existence on the Closing Date until the fifth (5th) anniversary
of the Closing Date (or for such

                                       32
<PAGE>

longer  period of time as Seller shall advise Buyer is necessary to have Records
available with respect to open years for Tax audit  purposes),  or if any of the
Records pertain to any claim or dispute  pending on the fifth (5th)  anniversary
of the Closing  Date,  Buyer shall  maintain  any of the Records  designated  by
Seller  until such claim or  dispute  is finally  resolved  and the time for all
appeals has been exhausted. After the Closing Date, Buyer shall provide or cause
SWP and each Subsidiary to provide Seller and its representatives  during normal
business hours and upon reasonable notice, reasonable access to and the right to
copy the Records at Seller's cost and expense, for the purposes of:

          (i) preparing and  delivering any  accounting  statement  provided for
     under this Agreement and adjusting, prorating, and settling the charges and
     credits provided for in this Agreement;

          (ii)  complying with any Law affecting  Seller's  ownership of the LLC
     Interests  or  the  Operating  Facility,  the  Development  Project  or the
     Development Project Site prior to the Closing Date;

          (iii)  preparing  any  audit of the books and  records  of any  Person
     relating to the LLC Interests or the Operating  Facility or the Development
     Project prior to the Closing  Date, or responding to any audit  prepared by
     such third parties;

          (iv) preparing Tax Returns;

          (v) responding to or disputing any Tax audit; or

          (vi)  asserting,  defending,  or  otherwise  dealing with any claim or
     dispute  under this  Agreement or with respect to SWP or any  Subsidiary or
     the Operating Facility or Development Project.

         From and after the Closing Date until the fifth (5th) anniversary of
the Closing Date, in no event shall Buyer, SWP or any Subsidiary, or any of
their respective Affiliates destroy any Records without giving Seller at least
sixty (60) days advance written notice thereof and the opportunity, at Sellers
expense, for Seller to obtain such Records prior to their destruction.
Additionally, Buyer shall not, and shall not permit SWP or any Subsidiary to,
after the Closing Date, waive the attorney-client, work product or like
privilege of Seller, its Affiliates, or SWP or any Subsidiary with respect to
any of the Records existing as of the Closing Date, without Seller's prior
written consent.

        7.8      Assumption of Obligations of SWP and any Subsidiary.

         From and after the Closing Date, Buyer agrees to cause SWP and each
Subsidiary to fully perform and fulfill all of its obligations and commitments,
whether existing as of the Closing Date or arising or incurred thereafter.

        7.9      Regulatory and Other Authorizations and Consents.

     (a) Filings.  Each Party shall use all commercially  reasonable  efforts to
obtain all authorizations,  consents,  orders, and approvals of, and to give all
notices to and make all

                                       33
<PAGE>

filings with, all  Governmental  Authorities  (including those pertaining to the
Governmental  Approvals)  and third parties that may be or become  necessary for
its execution and delivery of, and the  performance  of its  obligations  under,
this Agreement and will cooperate fully with the other Party in promptly seeking
to obtain all such authorizations,  consents, orders, and approvals, giving such
notices,  and making such filings.  To the extent  required by the HSR Act, each
Party shall (i) file or cause to be filed,  as promptly as practicable but in no
event later than the tenth (10th)  Business Day after the execution and delivery
of this  Agreement,  with the Federal  Trade  Commission  and the United  States
Department of Justice,  all reports and other documents  required to be filed by
such Party under the HSR Act concerning the transactions contemplated hereby and
(ii)  promptly  comply  with or cause to be  complied  with any  requests by the
Federal  Trade  Commission  or the  United  States  Department  of  Justice  for
additional  information  concerning such transactions,  in each case so that the
initial  thirty (30) day waiting  period  applicable  to this  Agreement and the
transactions  contemplated  hereby  under  the HSR Act  shall  expire as soon as
practicable  after the  execution  and  delivery of this  Agreement.  Each Party
agrees to request,  and to cooperate with the other Party in  requesting,  early
termination of any applicable waiting period under the HSR Act. Seller and Buyer
shall each pay one half of the filing fees in connection with the filings by the
Parties required by the HSR Act.

     (b) Additional  Undertakings of Buyer.  Without  limiting the generality of
Buyer's undertakings pursuant to Section 7.9(a), Buyer shall:

          (i) take promptly any or all actions, including the following actions,
     to the  extent  necessary  to  eliminate  any  concerns  on the part of any
     Governmental  Authority  regarding the legality,  under any Law, of Buyer's
     acquisition of the LLC  Interests:  entering into  negotiations,  providing
     information,  making proposals,  entering into and performing agreements or
     submitting to judicial or administrative  orders, holding separate (through
     the establishment of a trust or otherwise)  particular assets or categories
     of  assets,  or  businesses,  of SWP and any  Subsidiary  or  Buyer  or its
     Affiliates,  or  agreeing  to dispose of one or more  assets or  properties
     (whether owned by Buyer or its Affiliates or SWP or any Subsidiary) whether
     before  or after the  Closing;  provided,  however,  that  nothing  in this
     Agreement shall require Buyer or its Affiliates or SWP or any Subsidiary to
     dispose of or sell assets or properties, hold separate particular assets or
     categories  of  assets,  or  businesses,  or  agree to  dispose  of or hold
     separate one or more assets or  properties or to take any other action that
     could have a material adverse impact on Buyer or its Affiliates,  or SWP or
     any Subsidiary;

          (ii) use commercially  reasonable  efforts (including taking the steps
     contemplated  by Section  7.9(b)(i))  to prevent  the entry in a  judicial,
     administrative   or  other   proceeding   brought  under  any  Law  by  any
     Governmental  Authority or any other Person for a permanent or  preliminary
     injunction or other order that would make  consummation of the transactions
     contemplated by this Agreement unlawful or that would prevent or delay such
     consummation; and

(iii)    take promptly, in the event that such an injunction or order has been
         issued in such a proceeding, any and all reasonable steps, including
         the appeal thereof, the posting of a bond or the steps contemplated by
         Section 7.9(b)(i), necessary to

                                       34
<PAGE>

         vacate,  modify,  or suspend such  injunction or order so as to permit
         such  consummation  on  a  schedule  as  close  as  possible  to  that
         contemplated by this Agreement.

     (c) Transfer. If the transfer of any instrument,  contract, license, lease,
permit,  or other document to Buyer  hereunder  shall require the consent of any
party thereto other than Seller,  then this  Agreement  shall not  constitute an
agreement to assign the same,  and such item shall not be assigned to or assumed
by Buyer, if an actual or attempted assignment thereof would constitute a breach
thereof or default  thereunder.  In such case,  Seller and Buyer shall cooperate
and each shall use  commercially  reasonable  efforts to obtain such consents to
the extent required of such other parties and, if and when any such consents are
obtained,  to transfer the  applicable  instrument,  contract,  license,  lease,
permit, or other document. If any such consent cannot be obtained,  Seller shall
cooperate  in any  reasonable  arrangement  designed  to  obtain  for  Buyer all
benefits,  privileges,  obligations and privileges of the applicable instrument,
contract, license, lease, permit, or document.

     (d) Third Party Consents.  Buyer will use its best efforts to assist Seller
in obtaining any consents of Persons and Governmental  Authorities  necessary or
advisable in connection  with the  transactions  contemplated by this Agreement,
including providing to such Persons and Governmental  Authorities such financial
statements and other publicly  available  financial  information with respect to
Buyer and its parent  company as such Persons or  Governmental  Authorities  may
reasonably request.

        7.10     Fees and Expenses.

         Except as otherwise expressly provided in this Agreement, all fees and
expenses, including fees and expenses of counsel, financial advisors, and
accountants, incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the Party incurring such fee or expense,
whether or not the Closing shall have occurred. Buyer shall be obligated to pay
any and all costs of any audit of SWP and any Subsidiary as may be required to
enable Buyer to complete and file any filing by Buyer or an Affiliate of Buyer
with the Securities and Exchange Commission.

        7.11     Excluded Assets.

         Notwithstanding Article 9 hereof, the transactions contemplated by this
Agreement exclude, and prior to the Closing Date, Seller may cause SWP or any
Subsidiary to transfer to Seller or any of its Affiliates (other than SWP and
any Subsidiary) the following (the "Excluded Assets"):

          (i) the assets listed or described on Schedule 7.11;

          (ii) all insurance policies and rights under any insurance policies in
     respect to any and all claims made under such policies  whether such claims
     are  asserted  before  or after  the  Closing  Date and all  rights  to any
     proceeds payable under any such policy; and

          (iii) the Enron Marks.

                                       35
<PAGE>


Seller's representations and warranties in Article 4 shall not apply to any of
the items described in clauses (i) through (iii) of the preceding sentence.

        7.12     Guarantees and Other Affiliate Contracts.

         Buyer shall cause, at the Closing Date, (i) the Guarantees and any
liabilities related thereto to be released as to Seller and any Affiliate of
Seller and (ii) substitute arrangements, if required, of Buyer or its Affiliates
to be in effect for any such Guarantees. At the Closing Date, Seller may
terminate those Project Documents described on Schedule 7.12 as the "Terminated
Contracts."

        7.13     Use of Enron Marks.

         Enron Marks may appear on some of the assets of SWP or any Subsidiary,
including signage at the Operating Facility and the Development Project Site,
and on supplies, materials, stationery, brochures, advertising materials,
manuals and similar consumable items of SWP and any Subsidiary. Buyer
acknowledges and agrees that it obtains no right, title, interest, license, or
any other right whatsoever to use the Enron Marks. Buyer shall, (i) within
ninety (90) days after the Closing Date, remove the Enron Marks from the assets
of SWP and any Subsidiary, including signage at the Operating Facility and the
Development Project Site, and provide written verification thereof to Seller
promptly after completing such removal and (ii) within two (2) weeks after the
Closing Date, return or destroy (with proof of destruction) all other assets of
SWP and any Subsidiary that contain any Enron Marks that are not removable.
Buyer agrees never to challenge Seller's or its Affiliates' ownership of the
Enron Marks or any application for registration thereof or any registration
thereof or any rights of Seller or its Affiliates therein as a result, directly
or indirectly, of its ownership of SWP and any Subsidiary. Buyer will not do any
business or offer any goods or services under the Enron Marks. Buyer will not
send, or cause to be sent, any correspondence or other materials to any Person
on any stationery that contains any Enron Marks or otherwise operate SWP and any
Subsidiary in any manner which would or might confuse any Person into believing
that Buyer has any right, title, interest, or license to use the Enron Marks.

        7.14     Insurance.

         Buyer acknowledges and agrees that, effective upon the Closing, the
insurance policies of Seller related to SWP and any Subsidiary shall be
terminated or modified to exclude coverage of all or any portion of SWP and any
Subsidiary, and, as a result, Buyer shall be obligated at or before Closing to
obtain at its sole cost and expense replacement insurance, including insurance
required by any Person to be maintained by SWP and any Subsidiary. Buyer further
acknowledges and agrees that Buyer may need to provide to certain Governmental
Authorities and third parties evidence of such replacement or substitute
insurance coverage for the continued operations of the Businesses of SWP and any
Subsidiary following the Closing. Notwithstanding Section 7.11(ii), if any
claims are made or losses occur prior to the Closing Date that relate solely to
the Businesses of SWP and any Subsidiary and such claims, or the claims
associated with such losses, may be made against the policies retained by Seller
or its Affiliates under Section 7.11(ii) or under policies otherwise retained by
Seller or its Affiliates after the Closing, then Seller shall use its reasonable
commercial efforts so that SWP and any

                                       36
<PAGE>

Subsidiary  can file,  notice,  and  otherwise  continue  to pursue  such claims
pursuant  to the terms of such  policies.  Seller  and its  Affiliates  shall be
reimbursed by Buyer (or otherwise  indemnified and held harmless) for any Losses
or other costs  incurred by Seller or its  Affiliates  (including  by way of any
reduction in, or loss of, available insurance to cover other insurable losses or
associated  expenses  of Seller or its  Affiliates)  arising  out of SWP and any
Subsidiary pursuing such claims under such policies.

        7.15     Lending Matters.

         Seller agrees to cooperate with Buyer and the Lender and to use
commercially reasonable efforts to assist Buyer in obtaining (x) such consents
from parties to the Project Documents as Buyer's lender may reasonably request,
and (y) mechanics' lien waivers for all work completed and paid for through the
Closing Date under the EPC Contract and material subcontracts thereunder
relating to the Development Project, provided that the inability of Buyer to
obtain any such item which (a) is not in a form reasonably customary for
transactions of this nature or (b) is required to be obtained from any third
party not an Affiliate of Seller shall not excuse Buyer's performance of its
obligations hereunder.

                                   ARTICLE 8
                               Closing Conditions

       8.1      Seller's Closing Conditions.

         The obligation of Seller to proceed with the Closing contemplated
hereby is subject, at the option of Seller, to the satisfaction on or prior to
the Closing Date of all of the following conditions:

     (a)  Representations,  Warranties,  and Covenants.  The representations and
warranties of Buyer contained in Section 4.2 of this Agreement shall be true and
correct in all  material  respects  on and as of the  Closing  Date,  except for
representations  and  warranties  that speak as of a specific date or time other
than the  Closing  Date  (which  need only be true and  correct in all  material
respects as of such date or time) except that all representations and warranties
which  by their  terms  are  qualified  as to  materiality  shall be true in all
respects as if made on and as of such date,  and the covenants and agreements of
Buyer to be  performed  on or  before  the  Closing  Date  shall  have been duly
performed in all material respects in accordance with this Agreement,  and Buyer
shall  have  delivered  to  Seller a  Certificate,  dated the  Closing  Date and
executed  by a Vice  President  of Buyer,  reasonably  satisfactory  in form and
substance to Seller, confirming the foregoing.

     (b) Closing  Documents.  On or prior to the Closing Date,  Buyer shall have
delivered,  or be  standing  ready to deliver at the  Closing,  all  agreements,
instruments, and documents required to be delivered by Buyer under Section 9.3.

     (c) No Action.  On the Closing Date, no Action  (excluding  any such matter
initiated  by Seller or any of its  Affiliates)  shall be pending or  threatened
before any Governmental Authority of competent jurisdiction seeking to enjoin or
restrain the  consummation  of the Closing or recover  substantial  damages from
Seller or any Affiliate of Seller resulting therefrom.

                                       37
<PAGE>


     (d) Waiting Period.  The waiting period under the HSR Act applicable to the
consummation of the transactions  contemplated hereby shall have expired or been
terminated or the Parties shall have otherwise complied with the HSR Act.

     (e) Governmental Approvals.  The Governmental Approvals and other consents,
filings  and  notices   required  for  the   consummation  of  the  transactions
contemplated  hereby, as identified on Schedules 4.1(n) and 8.1(e) hereto, shall
have been obtained.

     (f) Purchase Price.  Buyer shall have delivered,  or be ready,  willing and
able to deliver at the Closing,  the Closing  Payment to Seller by wire transfer
in immediately available funds.

     (g)  Guarantees.  The  Guarantees  shall be  released  as to Seller and its
Affiliates and, if required,  substitute arrangements of Buyer or its Affiliates
shall be in effect.

     (h) Financing  Commitment.  Buyer shall have provided Seller with a written
commitment from its lender on or before August 24, 2001  acknowledging  that all
of the  conditions  precedent  to such  lender  making its loan to  finance  the
Adjusted   Purchase  Price  are  satisfied   (other  than  the  closing  of  the
transactions contemplated by this Agreement and Buyer's lending documents).

        8.2      Buyer's Closing Conditions.

         The obligation of Buyer to proceed with the Closing contemplated hereby
is subject, at the option of Buyer, to the satisfaction on or prior to the
Closing Date of all of the following conditions:

     (a)  Representations,  Warranties,  and Covenants.  The representations and
warranties of Seller in Section 4.1 of this Agreement  shall be true and correct
in  all  material   respects  on  and  as  of  the  Closing  Date,   except  for
representations  and  warranties  that speak as of a specific date or time other
than the  Closing  Date  (which  need only be true and  correct in all  material
respects as of such date or time) except that all representations and warranties
which  by their  terms  are  qualified  as to  materiality  shall be true in all
respects as if made on and as of such date,  and the covenants and agreements of
Seller to be  performed  on or before  the  Closing  Date  shall  have been duly
performed in all material respects in accordance with this Agreement, and Seller
shall have delivered to Buyer a Certificate, dated the Closing Date and executed
by a Vice President of Seller,  reasonably satisfactory in form and substance to
Buyer, confirming the foregoing.

     (b) Closing  Documents.  On or prior to the Closing Date, Seller shall have
delivered,  or be  standing  ready to deliver at the  Closing,  all  agreements,
instruments,  and  documents  required  to be  delivered  by Seller  pursuant to
Section 9.2.

     (c) No Action.  On the Closing  Date, no suit,  action or other  proceeding
(excluding any such matter initiated by Buyer or any of its Affiliates) shall be
pending  or  threatened  before  any  court or  governmental  agency  or body of
competent  jurisdiction  seeking to enjoin or restrain the  consummation  of the
Closing or recover  substantial  damages  from Buyer or any  Affiliate  of Buyer
resulting therefrom.

                                       38
<PAGE>


     (d) Waiting Period.  The waiting period under the HSR Act applicable to the
consummation of the transactions  contemplated hereby shall have expired or been
terminated or the Parties shall have otherwise complied with the HSR Act.

     (e) Governmental Approvals.  The Governmental Approvals and other consents,
filings  and  notices   required  for  the   consummation  of  the  transactions
contemplated  hereby, as identified on Schedules 4.1(h) and 8.2(e) hereto, shall
have been obtained.

     (f) Equipment Procurement.  At the Closing,  Seller shall have caused to be
assigned to SWP or any  Subsidiary,  the rights of Seller as "buyer" under those
contracts and agreements  described on Schedule  8.2(f),  but only to the extent
that such  contracts and  agreements  relate to the specific  items of equipment
described therein.

     (g) Payment of NatWest  Loan and Bridge  Loan.  Buyer  shall have  received
evidence  satisfactory to it that the obligations of SWP and any Subsidiary with
respect to NatWest Loan, the Bridge Loan and the Subordinated Note shall be paid
in  full  from  the  proceeds  of  the  Adjusted  Purchase  Price  and  evidence
satisfactory  to it of the release of Buyer and all Real Property  therefrom for
any liabilities,  obligations or otherwise under any of the agreement,  document
or instrument  with respect  thereto,  including the  Subordinated  Note and any
interest rate swap or other hedge  arrangement  in  connection  with the NatWest
Loan (including the Interest Rate Swap  Transaction  M186845 dated July 22, 1999
between Las Vegas Cogeneration Limited Partnership and Enron North America Corp.
(formerly  known as Enron  Capital & Trade  Resources  Corp.))  and of any Liens
securing such loans.

                                   ARTICLE 9
                                    Closing

        9.1      Closing.

         A closing (the "Closing") shall be held on the Closing Date at 10:00
a.m., Denver time, at the offices of LeBoeuf, Lamb, Greene & MacRae, LLP, in
Denver, Colorado, or at such other time or place as Seller and Buyer may
otherwise agree in writing. To facilitate the Closing, Buyer and Seller agree
that a pre-closing at which all closing agreements shall be signed shall occur
at least two Business Days prior to the Closing Date.

        9.2      Seller's Closing Obligations.

         At the Closing, Seller shall execute and deliver, or cause to be
executed and delivered, to Buyer the following:

          (i) duly executed copies of the Assignment and Assumption Agreements;

          (ii) a duly executed copy of the Seller Guaranty;

          (iii)  resignations or terminations  of the officers,  directors,  and
     managers of each of SWP and each  Subsidiary from their status as officers,
     directors, and managers effective as of the Closing;

                                       39
<PAGE>


          (iv)  the  officer's   certificate  referred  to  in  Section  8.2(a);

          (v) an opinion of  LeBoeuf,  Lamb,  Greene & MacRae,  LLP or  Seller's
     in-house counsel  covering the matters  described on Exhibit C, in form and
     substance reasonably satisfactory to Buyer;

          (vi) a "non-imputation  endorsement affidavit" in the form customarily
     used in the State of Nevada to allow Buyer to obtain the Title  Endorsement
     to the Title Policy; and

          (vii) any other documents or instruments  reasonably required by Buyer
     to consummate the transactions contemplated hereunder.

        9.3      Buyer's Closing Obligations.

         At the Closing, Buyer shall deliver, or cause to be delivered, to
Seller the following:

          (i) the Closing  Payment to Seller in immediately  available  funds to
     the bank account as provided in Section 3.2;

          (ii) duly executed copies of the Assignment and Assumption Agreements;

          (iii) the officer's certificate referred to in Section 8.1(a);

          (iv) an  opinion of Morgan,  Lewis & Bockius  LLP or Buyer's  in-house
     counsel covering the matters  described on Exhibit D, in form and substance
     reasonably satisfactory to Seller; and

          (v) any other documents or instruments  reasonably  required by Seller
     to consummate the transaction contemplated hereunder.

                                   ARTICLE 10
                                   Limitations

        10.1     Buyer's Review.

     (a) No  Reliance.  Buyer has  reviewed  and had  access  to all  documents,
records and  information  which it has desired to review in connection  with its
decision  to enter  into this  Agreement,  and to  consummate  the  transactions
contemplated  hereby.  Buyer has not relied upon any  representation,  warranty,
statement,  advice,  document,  projection,  or  other  information  of any type
provided by Seller or its Affiliates,  SWP and any  Subsidiary,  or any of their
representatives,  except for those  representations and warranties expressly set
forth herein.  In deciding to enter into this  Agreement,  and to consummate the
transactions   contemplated  hereby,  Buyer  has  relied  solely  upon  its  own
knowledge, investigation, and analysis (and that of its representatives) and not
on any disclosure or representation made by, or any duty to disclose on the part
of,  Seller  or its  Affiliates,  SWP  and  any  Subsidiary,  or  any  of  their
representatives, other than the express representations and warranties of Seller
set forth herein.

                                       40
<PAGE>


     (b) Limited Duties.  Any and all duties and obligations  which either Party
may  have  to the  other  with  respect  to or in  connection  with  SWP and any
Subsidiary,  this Agreement, or the transactions contemplated hereby are limited
to those set forth in this  Agreement.  Neither  the duties nor  obligations  of
either Party, nor the rights of either Party, shall be expanded beyond the terms
of this  Agreement  on the basis of any legal or  equitable  principle or on any
other  basis  whatsoever.  Neither any  equitable  nor legal  principle  nor any
implied  obligation of good faith or fair dealing nor any other matter  requires
either  Party to incur,  suffer or  perform  any act,  condition  or  obligation
contrary to the terms of this  Agreement,  whether or not  existing  and whether
foreseeable or unforeseeable.  The Parties  acknowledge that it would be unfair,
and that they do not intend,  to increase  any of the  obligations  of any Party
under this Agreement on the basis of any implied obligation or otherwise.

        10.2     Disclaimer of Warranties.

     (a)  INFORMATION.  EXCEPT AS  PROVIDED  IN  SECTION  4.1,  SELLER  MAKES NO
REPRESENTATION  OR  WARRANTY,  EXPRESS,  IMPLIED,  AT COMMON LAW,  STATUTORY  OR
OTHERWISE,  WITH RESPECT TO THE  ACCURACY OR  COMPLETENESS  OF THE  INFORMATION,
RECORDS,  AND DATA NOW,  HERETOFORE,  OR  HEREAFTER  MADE  AVAILABLE TO BUYER IN
CONNECTION  WITH  THIS  AGREEMENT  (INCLUDING  ANY  DESCRIPTION  OF SWP  AND ANY
SUBSIDIARY,  THE OPERATING FACILITY, THE DEVELOPMENT PROJECT, REVENUE, PRICE AND
EXPENSE ASSUMPTIONS, ELECTRICITY DEMAND FORECASTS, OR ENVIRONMENTAL INFORMATION,
OR ANY OTHER INFORMATION FURNISHED TO BUYER BY SELLER OR ANY AFFILIATE OF SELLER
OR ANY DIRECTOR, OFFICER, EMPLOYEE, COUNSEL, AGENT, OR ADVISOR THEREOF).

     (b) Facilities.  Notwithstanding  anything contained to the contrary in any
other provision of this Agreement,  it is the explicit intent of each Party that
Seller  and its  Affiliates  are  not  making  any  representation  or  warranty
whatsoever,  express, implied, at common law, statutory or otherwise, except for
the express  representations  or warranties  given in this Agreement,  and it is
understood  that  Buyer,  with such  exceptions,  takes the LLC  Interests,  the
Operating Facility, the Development Project, and any other assets of SWP and any
Subsidiary  "as is" and "where  is."  Without  limiting  the  generality  of the
immediately preceding sentence,  except as expressly provided in this Agreement,
Seller hereby expressly  disclaims and negates any  representation  or warranty,
express or implied, at common law, statutory, or otherwise,  relating to (i) the
condition of the Operating Facility,  the Development  Project, and other assets
of SWP  and any  Subsidiary  (including  any  implied  or  express  warranty  of
merchantability or fitness for a particular  purpose, or of conformity to models
or samples of materials,  or the presence or absence of any hazardous  materials
in  or  on,  or  disposed  or  discharged  from,  the  Operating  Facility,  the
Development Project Site and other assets of SWP and any Subsidiary) or (ii) the
adequacy,  completeness  or  accuracy  of any  plans or  specifications  for the
Development Project,  the  appropriateness,  fitness for use or condition of any
equipment or materials  intended to be used in connection  with or  incorporated
into the  Development  Project,  the accuracy or sufficiency of any schedules or
budgets for  completion of the  Development  Project or estimates of whether the
Development Project, if completed,  will perform at any projected levels or will
comply with the terms of any permits or licenses,  or any other matters relating
to  Development  Project,  or  (iii)  any  infringement  by  Seller,  SWP or any
Subsidiary, or any of their Affiliates of any patent or proprietary right of any
Person.  Buyer has

                                       41
<PAGE>

agreed not to rely on any representation  made by Seller with
respect to the  condition,  quality,  or state of the Operating  Facility or the
Development  Project  except  for  those in this  Agreement,  but  rather,  as a
significant  portion of the consideration  given to Seller for this purchase and
sale, has agreed to rely solely and  exclusively  upon its own evaluation of the
SWP and any Subsidiary and the Operating  Facility and the Development  Project,
except as expressly provided herein. The provisions  contained in this Agreement
are the result of extensive  negotiations  between Buyer and Seller and no other
assurances, representations or warranties about the quality, condition, or state
of SWP and any Subsidiary or the Operating Facility and the Development  Project
were made by Seller in the  inducement  thereof,  except as  expressly  provided
herein.

        10.3     Waiver of Damages.

         NOTWITHSTANDING ANYTHING CONTAINED TO THE CONTRARY IN THIS AGREEMENT,
SELLER AND BUYER AGREE THAT, EXCEPT FOR THE LIQUIDATED DAMAGES SPECIFICALLY
PROVIDED FOR IN SECTION 12.2, THE RECOVERY BY EITHER PARTY OF ANY DAMAGES
SUFFERED OR INCURRED BY IT AS A RESULT OF ANY BREACH BY THE OTHER PARTY OF ANY
OF ITS OBLIGATIONS UNDER THIS AGREEMENT SHALL BE LIMITED TO THE ACTUAL DAMAGES
SUFFERED OR INCURRED BY THE NON-BREACHING PARTY AS A RESULT OF THE BREACH BY THE
BREACHING PARTY OF ITS OBLIGATIONS HEREUNDER AND IN NO EVENT SHALL THE BREACHING
PARTY BE LIABLE TO THE NON-BREACHING PARTY FOR ANY INDIRECT, CONSEQUENTIAL,
SPECIAL, EXEMPLARY, OR PUNITIVE DAMAGES (INCLUDING ANY DAMAGES ON ACCOUNT OF
LOST PROFITS OR OPPORTUNITIES OR LOST OR DELAYED GENERATION) SUFFERED OR
INCURRED BY THE NON-BREACHING PARTY AS A RESULT OF THE BREACH BY THE BREACHING
PARTY OF ANY OF ITS OBLIGATIONS HEREUNDER.

                                   ARTICLE 11
                                 Indemnification

        11.1     Indemnification By Seller.

         From and after the Closing, subject to the other terms and limitations
in this Agreement, Seller shall indemnify, defend, reimburse, and hold harmless
Buyer and its Affiliates, and its and their directors, officers, partners and
employees (individually a "Buyer Indemnified Party" or collectively, the "Buyer
Indemnified Parties") from and against any and all Losses asserted against or
incurred by any of the Buyer Indemnified Parties (i) for any breach of Seller's
representations or warranties made in this Agreement, (ii) for any breach of the
covenants or obligations of Seller under this Agreement, or (iii) in respect of
the Excluded Assets. In the event and to the extent that any such Losses
incurred by the Buyer Indemnified Parties are adjudicated to be attributable to
contributory negligence, concurrent liability or fault of the Buyer Indemnified
Parties, Seller shall remain liable to indemnify the Buyer Indemnified Parties
for all such Losses that are not so attributable.

        11.2     Indemnification By Buyer.

         From and after the Closing, subject to the other terms and limitations
in this Agreement, Buyer shall indemnify, defend, reimburse, and hold harmless
Seller, its Affiliates, and its and their directors, officers, partners,
employees, consultants, agents, representatives, advisors,

                                       42
<PAGE>

successors,   and  assigns   (individually  a  "Seller   Indemnified  Party"  or
collectively,  the "Seller  Indemnified  Parties")  from and against any and all
Losses asserted against or incurred by any of the Seller Indemnified Parties (i)
for any breach of Buyer's  representations or warranties made in this Agreement,
(ii) for any breach of the covenants or  obligations of Buyer and its Affiliates
under this Agreement,  or (iii) that relate to or arise out of the businesses of
SWP or any Subsidiary or the development, construction, ownership, operation, or
maintenance of the Development  Project or that otherwise relate to or arise out
of SWP or any Subsidiary  (whether relating to periods of time prior to or after
the  Closing  Date) or to the extent such  Losses are not  properly  asserted by
Buyer (or any Buyer  Indemnified  Party) under the  provisions of Section 6.6 or
Section  11.1  (subject  to the  limitations  in  this  Agreement)  by the  date
specified  in Section  11.5.  Buyer  acknowledges  that the Losses  described in
clause (iii) of the preceding sentence shall be retained by and transferred with
SWP or any Subsidiary and shall continue to be the  responsibility of SWP or any
Subsidiary  and  Buyer.  In the event  and to the  extent  that any such  Losses
incurred by the Seller Indemnified Parties are adjudicated to be attributable to
contributory negligence, concurrent liability or fault of the Seller Indemnified
Parties',  Buyer shall remain liable to indemnify the Seller Indemnified Parties
for all such Losses that are not so attributable.

        11.3     Limitations on Indemnity.

         None of the Buyer Indemnified Parties shall be entitled to assert any
right to indemnification under Section 11.1 until the aggregate amount of all
the Losses actually suffered by the Buyer Indemnified Parties exceeds the
Deductible Amount, and then only to the extent such Losses exceed, in the
aggregate, the Deductible Amount. Except as provided in the next succeeding
sentence of this Section 11.3, in no event shall Seller ever be required to
indemnify Buyer or the Buyer Indemnified Parties for Losses pursuant to Section
11.1, or any other provision of this Agreement, or pay any other amount in
connection with or with respect to this Agreement or the transactions
contemplated by this Agreement, in an amount exceeding, in the aggregate, the
Purchase Price. Notwithstanding anything contained in this Section 11.3 to the
contrary, Seller's maximum liability for Losses arising out of a breach of
Seller's representations and warranties contained in the first and second
sentences of Section 4.1(e) shall not exceed the Adjusted Purchase Price, and
the limits on liability of the Seller contained in this Section shall not apply
to indemnity claims pursuant to Section 6.6, and Sections 3.2(i) and 3.2(ii)
relating to the release of all liabilities and obligations under the Bridge
Loan, the NatWest Loan or the Subordinated Note.

        11.4     Third Party Claims.

         If a claim by a Person is made against a Seller Indemnified Party or a
Buyer Indemnified Party (each, an "Indemnified Party"), and if such Indemnified
Party intends to seek indemnity with respect thereto under Article 11, such
Indemnified Party shall promptly furnish written notice to other party (the
"Indemnifying Party") of such claim. The failure of the Indemnified Party to
deliver prompt written notice of a claim shall not affect the indemnity
obligations of the Indemnifying Party hereunder except to the extent the
Indemnifying Party was substantially disadvantaged by such delay in delivery
notice of such claim. The Indemnifying Party shall have thirty (30) days after
receipt of such notice to undertake, conduct, and control (through counsel of
its own choosing and at its own expense) the settlement or defense thereof, and

                                       43
<PAGE>



the Indemnified Party shall cooperate with it in connection therewith. The
Indemnifying Party shall permit the Indemnified Party to participate in such
settlement or defense through counsel chosen by such Indemnified Party (but the
fees and expenses of such counsel shall be borne by such Indemnified Party). So
long as the Indemnifying Party, at the Indemnifying Party's cost and expense,
(i) has undertaken the defense of, and assumed full responsibility for all
indemnified liabilities with respect to, such claim, (ii) is reasonably
contesting such claim in good faith, by appropriate proceedings, and (iii) has
taken such action (including the posting of a bond, deposit, or other security)
as may be necessary to prevent any action to foreclose a Lien against or
attachment of the property of the Indemnified Party for payment of such claim,
the Indemnified Party shall not pay or settle any such claim. Notwithstanding
compliance by the Indemnifying Party with the preceding sentence, the
Indemnified Party shall have the right to pay or settle any such claim, but in
such event it shall waive any right to indemnity by the Indemnifying Party for
such claim. If within thirty (30) days after the receipt of the Indemnified
Party's notice of a claim of indemnity hereunder, the Indemnifying Party does
not notify the Indemnified Party that it elects (at the Indemnifying Party's
cost and expense) to undertake the defense thereof and assume full
responsibility for all indemnified liabilities with respect thereto, or gives
such notice and thereafter fails to contest such claim in good faith or to
prevent action to foreclose a Lien against or attachment of the Indemnified
Party's property as contemplated above, the Indemnified Party shall have the
right to contest, settle, or compromise such claim and the Indemnified Party
shall not thereby waive any right to indemnity for such claim under this
Agreement.

        11.5     Survival and Time Limitation.

         The terms and provisions of this Agreement shall survive the Closing of
the transactions contemplated hereunder. Notwithstanding the foregoing, after
Closing, any assertion by Buyer or any Buyer Indemnified Party that Seller is
liable to Buyer or any Buyer Indemnified Party for indemnification under the
terms of this Agreement or otherwise in connection with the transactions
contemplated in this Agreement must be made in writing and must be given to
Seller (or not at all) on or prior to the date that is eighteen (18) months
after the Closing Date, except for indemnification for matters addressed in
Sections 3.2(i), 3.2(ii), 4.1(e) and 6.6 which must be made in writing and must
be given to Seller (or not at all) on or prior to the date that is ninety (90)
days after the date on which the applicable statute of limitations expires with
respect to the matters covered thereby.

        11.6     Sole and Exclusive Remedy.

         FROM AND AFTER THE CLOSING, EXCEPT AS PROVIDED IN SECTION 6.6 OF THIS
AGREEMENT FOR ANY CLAIM IN RESPECT OF TAXES, THE INDEMNIFICATION PROVISIONS OF
THIS ARTICLE 11 SHALL BE THE SOLE AND EXCLUSIVE REMEDY FOR ANY BREACH OF THE
OTHER PARTY'S REPRESENTATIONS, WARRANTIES, COVENANTS, OR AGREEMENTS CONTAINED IN
THIS AGREEMENT OR OTHERWISE WITH RESPECT TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.

                                       44
<PAGE>


        11.7     Compliance with Express Negligence Rule.

         ALL RELEASES, DISCLAIMERS, LIMITATIONS ON LIABILITY, AND INDEMNITIES IN
THIS AGREEMENT, INCLUDING THOSE IN THIS ARTICLE 11, SHALL APPLY EVEN IN THE
EVENT OF THE SOLE, JOINT, AND/OR CONCURRENT NEGLIGENCE, STRICT LIABILITY, OR
FAULT OF THE PARTY WHOSE LIABILITY IS RELEASED, DISCLAIMED, LIMITED, OR
INDEMNIFIED.

                                   ARTICLE 12
                            Termination and Remedies

        12.1     Termination.

     (a)  Termination  of  Agreement.   This  Agreement  and  the   transactions
contemplated hereby may be terminated at any time prior to the Closing:

          (i) by the mutual consent of Seller and Buyer; or

          (ii) if the  Closing  has not  occurred  by the close of  business  on
     August 31, 2001,  then by Seller if any condition  specified in Section 8.1
     has not been  satisfied on or before such close of business,  and shall not
     theretofore  have been waived by Seller;  provided,  in each case, that the
     failure to consummate  the  transactions  contemplated  hereby on or before
     such  date did not  result  from the  failure  by  Seller  to  fulfill  any
     undertaking or commitment provided for herein on the part of Seller that is
     required to be fulfilled on or prior to Closing; or

          (iii) if the  Closing  has not  occurred  by the close of  business on
     August 31, 2001,  then by Buyer if any  condition  specified in Section 8.2
     has not been  satisfied or waived on or before such close of business,  and
     shall not theretofore have been waived by Buyer,  provided that the failure
     to consummate the transactions  contemplated  hereby on or before such date
     did not result  from the  failure by Buyer to fulfill  any  undertaking  or
     commitment  provided for herein on the part of Buyer that is required to be
     fulfilled on or prior to Closing.

     (b) Effect of Termination. Without limiting Seller's and Buyer's respective
remedies  in the  event of  termination  of this  Agreement  by  Seller or Buyer
pursuant to Section  12.1(a),  written notice thereof shall promptly be given by
the  terminating  Party to the other Party,  and this Agreement  shall thereupon
terminate.  Following any such  termination,  Buyer will continue to be bound by
its  obligations  set  forth in  Sections  5.1 and  5.2.  If this  Agreement  is
terminated as provided herein,  all filings,  applications and other submissions
made  to any  Governmental  Authority  shall,  to  the  extent  practicable,  be
withdrawn from the Governmental Authority to which they were made.

        12.2     Remedies.

     (a) Seller's  Remedies.  Notwithstanding  anything  herein to the contrary,
upon the failure by Buyer to fulfill any undertaking or commitment  provided for
herein on the part of Buyer  that is  required  to be  fulfilled  on or prior to
August 31,  2001  (August  24, 2001 in the case of the  condition  described  in
Section  8.1(h))  for  closing,  Seller,  at its sole  option,  may (i)  enforce

                                       45
<PAGE>


specific  performance  of this  Agreement  or (ii) pursue any rights or remedies
available at law or in equity.

     (b)  Buyer's  Remedies.  Notwithstanding  anything  herein  provided to the
contrary,  upon  failure  of Seller to fulfill  any  undertaking  or  commitment
provided for herein on the part of Seller that is required to be fulfilled on or
prior to August 31,  2001,  Buyer at its sole  option may (i)  enforce  specific
performance of this Agreement or (ii) pursue any rights or remedies available at
law or in equity.

(c) Election of Remedies. If either Party elects to pursue singularly any remedy
available to it under this Section 12.2, then such Party may at any time
thereafter cease pursuing that remedy and elect to pursue any other remedy
available to it under this Section 12.2.

                                   ARTICLE 13
                                Other Provisions

        13.1     Counterparts.

         This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become effective
when one or more counterparts have been signed by each of the Parties and
delivered to the other Party.

        13.2     Governing Law.

         THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED BY, ENFORCED, AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

        13.3     Arbitration.

         Except for matters that are covered by Section 3.4, any claim,
counterclaim, demand, cause of action, dispute, and controversy arising out of
or relating to this Agreement (or any agreement delivered in connection with
this Agreement) or in any way relating to the subject matter of this Agreement
involving the Parties or their representatives (each a "Dispute"), even if such
Disputes allegedly are extra-contractual in nature, sound in contract, tort or
otherwise, or arise under state or federal Law, shall be resolved by final and
binding arbitration. Arbitration shall be conducted in accordance with the rules
of arbitration of the Federal Arbitration Act and, to the extent an issue is not
addressed by the federal Law on arbitration, by the commercial arbitration rules
of the American Arbitration Association. The validity, construction and
interpretation of this Agreement to arbitrate, and all other procedural aspects
of the arbitration conducted pursuant hereto shall be decided by the
arbitrators. In deciding the substance of the Parties' Dispute, the arbitrators
shall refer to the governing Law. The arbitrators shall have no authority to
award treble, consequential, exemplary, or punitive damages of any type under
any circumstances whether or not such damages may be available under state or
federal Law, or under the Federal Arbitration Act, or under the commercial
arbitration rules of the American Arbitration Association, the Parties hereby
waiving their right, if any, to recover any such damages or to appeal or object
to the enforcement of any decision or award by the arbitrators. Each Party
agrees that any arbitration award against it may be enforced in any jurisdiction

                                       46
<PAGE>


in which such Party holds or keeps assets and that judgment on any arbitration
award may be entered by any court having jurisdiction. The arbitration
proceeding shall be conducted in Houston, Texas. Within thirty (30) days of the
notice initiation of the arbitration procedure, each Party shall select one
arbitrator. The two arbitrators shall select a third arbitrator. The third
arbitrator shall be a Person who has over eight (8) years professional
experience in power generation transactions and is not an Affiliate of and who
has not previously been employed by either Party and does not have a direct or
indirect interest in either Party or in any Person having an ownership interest
in either Party or the subject matter of the arbitration. While the third
arbitrator shall be neutral, the two Party appointed arbitrators are not
required to be neutral, and it shall not be grounds for removal of either of the
two Party appointed arbitrators or for vacating the arbitrators' award that
either of such arbitrators has past or present minimal relationships with the
Party that appointed such arbitrator. To the fullest extent permitted by Law,
any arbitration proceeding and the arbitrators award shall be maintained in
confidence by the Parties.

        13.4     Entire Agreement.

         This Agreement (including the Confidentiality Agreement) and the
Schedules and Exhibits hereto contain the entire agreement between the Parties
with respect to the subject matter hereof and there are no agreements,
understandings, representations, or warranties between the Parties other than
those set forth or referred to herein.

        13.5     Notices.

         All notices hereunder shall be sufficiently given for all purposes
hereunder if in writing and delivered personally, sent by documented overnight
delivery service or, to the extent receipt is confirmed, by United States Mail,
telecopy or overnight delivery to the appropriate address or number as set forth
below. Notices to Seller shall be addressed as follows:

         TLS Investors, L.L.C.
         1400 Smith Street
         Houston, TX  77002
         Attention:  President
         Telecopy No.:  (503) 464-3740

         with copy to:

         Enron North America Corp.
         121 SW Salmon Street, 3WTC0306
         Portland, OR  97204
         Attention:  Dale Rasmussen
         Telecopy No.:  (503) 464-8058

         or at such other address and to the attention of such other Person as
         Seller may designate by written notice to Buyer.


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<PAGE>


         Notices to Buyer shall be addressed to:

         Black Hills Energy Capital, Inc.
         1075 Noel Avenue
         Wheeling, IL  60090
         Attention:  Maurice Klefeker
         Telecopy No.:  (847) 459-4140

         with copy to:

         Morgan, Lewis & Bockius, LLP
         300 South Grand Avenue, 22nd Floor
         Los Angeles, CA  90071-3132
         Attention:  Richard A. Shortz, Esq.
         Telecopy No.:  (213) 612-2554

or at such other address and to the attention of such other Person as Buyer may
designate by written notice to Seller.

         Notice given by overnight delivery or mail shall be effective upon
actual receipt. Notice given by telecopier shall be effective upon actual
receipt if received during the recipient's normal business hours, or at the
beginning of the recipient's next business day after receipt if not received
during the recipient's normal business hours. All notices by telecopier shall be
confirmed promptly after transmission in writing by certified mail or overnight
delivery.

        13.6     Successors and Assigns.

         The rights and obligations of the Parties shall not be assigned or
delegated by either Party without the written consent of the other Party, which
may be withheld in such Party's sole discretion, except that (and without being
released from any of its obligations hereunder) Buyer shall have the right,
without the consent of Seller, (a) to transfer, pledge or assign this Agreement
as security for any financing, or (b) transfer or assign this Agreement to any
Affiliate of Buyer. In the event of an assignment by Buyer to an Affiliate, such
assignee shall execute and deliver an agreement containing the assumption by
such assignee of the performance and observance of each covenant and condition
of this Agreement to be performed or observed by Buyer. Subject to the
preceding, this Agreement shall be binding upon and inure to the benefit of the
Parties and their successors and assigns.

        13.7     Amendments and Waivers.

         This Agreement may not be modified or amended except by an instrument
or instruments in writing signed by the Party against whom enforcement of any
such modification or amendment is sought. Any Party may, only by an instrument
in writing, waive compliance by the other Party with any term or provision of
this Agreement on the part of such other Party to be performed or complied with.
The waiver by a Party of a breach of any term or provision of this Agreement
shall not be construed as a waiver of any subsequent breach.

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<PAGE>


        13.8     Schedules and Exhibits.

         All Schedules and Exhibits hereto which are referred to herein are
hereby made a part hereof and incorporated herein by such reference. Each
Schedule to this Agreement shall be deemed to include and incorporate all
disclosures made on the other Schedules to this Agreement. Certain information
set forth in the Schedules is included solely for informational purposes, is not
an admission of liability with respect to the matters covered by the
information, and may not be required to be disclosed pursuant to this Agreement.
The specification of any dollar amount in the representations and warranties
contained in this Agreement or the inclusion of any specific item in the
Schedules is not intended to imply that such amounts (or higher or lower
amounts) are or are not material, and no Party shall use the fact of the setting
of such amounts or the fact of the inclusion of any such item in the Schedules
in any dispute or controversy between the Parties as to whether any obligation,
item, or matter not described herein or included in a Schedule is or is not
material for purposes of this Agreement.

        13.9     Interpretation and Rules of Construction.

         This Agreement shall not be construed against either Party, and no
consideration shall be given or presumption made, on the basis of who drafted
this Agreement or any particular provision hereof or who supplied the form of
Agreement. In construing this Agreement:

          (i)  examples  shall  not  be  construed  to  limit,  expressly  or by
     implication, the matter they illustrate;

          (ii) the word "includes" and its derivatives  means "includes,  but is
     not limited to" and corresponding derivative expressions;

          (iii) a defined term has its defined meaning throughout this Agreement
     and each Exhibit and Schedule to this  Agreement,  regardless of whether it
     appears before or after the place where it is defined;

          (iv) each  Exhibit and  Schedule to this  Agreement  is a part of this
     Agreement,  but if there is any conflict or inconsistency  between the main
     body of this  Agreement and any Exhibit or Schedule,  the provisions of the
     main body of this Agreement shall prevail; and

          (v) the headings and titles herein are for convenience  only and shall
     have no significance in the interpretation hereof.

        13.10    Agreement for the Parties' Benefit Only.

         Except as specified in Section 5.1 and Article 11, which are also
intended to benefit and to be enforceable by the Seller Indemnified Parties,
this Agreement is not intended to confer upon any Person not a party hereto any
rights or remedies hereunder, and no Person, other than the Parties or the
Seller Indemnified Parties, is entitled to rely on any representation, warranty,
covenant, or agreement contained herein.

                                       49
<PAGE>


        13.11    Attorneys' Fees.

         The prevailing Party in any legal proceeding brought under or to
enforce this Agreement shall be additionally entitled to recover court costs and
reasonable attorneys' fees from the nonprevailing Party.

        13.12    Severability.

         If any term or other provision of this Agreement is invalid, illegal,
or incapable of being enforced by any Law or public policy, all other conditions
and provisions of this Agreement shall nevertheless remain in full force and
effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any adverse manner to a Party. Upon such
determination that any term or other provision is invalid, illegal, or incapable
of being enforced, the Parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the Parties as closely as
possible in an acceptable manner to the end that the transactions contemplated
hereby are fulfilled to the extent possible.

        13.13    Time of Essence.

         Time is of the essence in this Agreement. If the date specified in this
Agreement for giving any notice or taking any action is not a Business Day (or
if the period during which any notice is required to be given or any action
taken expires on a date which is not a Business Day), then the date for giving
such notice or taking such action (and the expiration date of such period during
which notice is required to be given or action taken) shall be the next day
which is a Business Day.

        13.14    Bulk Sales or Transfer Laws.

         Seller and Buyer hereby waive compliance by either Party with the
provisions of the bulk sales or transfer laws of all applicable jurisdictions.

                                   ARTICLE 14
                        Letter of Credit; GUARANTY BY BKH

        14.1     Letter of Credit.

         In order to secure Buyer's obligations hereunder, it shall deliver to
Seller on or before 5:00 p.m. Central time on June 21, 2001, an irrevocable
letter of credit issued by (a) U.S. Bank or (b) another U.S. commercial bank or
a foreign bank with a U.S. branch, in each case having a minimum market
capitalization of $500,000,000 with the long term senior unsecured debt of such
bank having a credit rating of at least A- from S&P or A3 from Moody's, in a
form reasonably acceptable to Seller, in the principal amount of U.S.
$15,000,000 (the "Letter of Credit"), which may be drawn upon by Seller in the
amount of any Damage Award upon delivering to the issuing bank (i) a draw
request stating that the Agreement has been terminated pursuant to Article 12
hereof, and (ii) a statement that an arbitral body, in accordance with Section
13.3 hereof, shall have awarded Seller damages (the "Damage Award") payable by
Buyer resulting from the failure by Buyer to fulfill any undertaking or
commitment provided for

                                       50
<PAGE>

herein.  Buyer may, at any time prior to Closing,  substitute  for the Letter of
Credit the BKH Guaranty as provided in Section 14.2 below.

        14.2     Guaranty by BKH.

         At Buyer's option, Buyer may at any time prior to Closing deliver to
Seller in substitution for the Letter of Credit (a) an unconditional guaranty by
BKH substantially in the form attached hereto as Exhibit F (the "BKH Guaranty"),
guaranteeing the full payment by Buyer of the Adjusted Purchase Price; provided,
however, that BKH shall in no event be obligated to pay pursuant to the BKH
Guaranty any amounts exceeding, in the aggregate, U.S. $15,000,000; and (b) an
opinion of counsel satisfactory to Seller confirming that the BKH Guaranty
constitutes a valid and binding agreement of BKH enforceable against BKH in
accordance with its terms, subject to (x) applicable bankruptcy, insolvency,
reorganization, moratorium, and other similar laws of general application from
time to time in effect that affect creditors' rights generally, (y) general
principles of equity, and (z) the power of a court to deny enforcement of
remedies generally based upon public policy.

        14.3     Effect of Failure to Deliver Letter of Credit or Guaranty.

         If Buyer fails to deliver the Letter of Credit or the BKH Guaranty on
or prior to 5:00 p.m. Central time on June 21, 2001, then Seller shall have the
right, but not the obligation, to terminate this Agreement by providing notice
to Buyer on or before 5:00 p.m. Central time on June 25, 2001, without any
further liability or obligation to Buyer.


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<PAGE>


         IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of
each of the Parties as of the day first above written.

                                     Seller:

                                     TLS Investors, L.L.C.

                                     By:
                                        ---------------------------------------
                                     Name:
                                          -------------------------------------
                                     Title:
                                           ------------------------------------

                                     Buyer:

                                     BLACK HILLS ENERGY CAPITAL, INC.

                                     By:
                                        ---------------------------------------
                                     Name:
                                          -------------------------------------
                                     Title:
                                           ------------------------------------




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