Document:

EXHIBIT 4.2.46
                                                                  --------------

EXCEPT AS OTHERWISE PROVIDED IN THIS WARRANT, THE SECURITIES EVIDENCED BY THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS (i) THERE IS
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING SUCH SECURITIES, (ii)
THE SALE IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT, OR (iii) THE COMPANY
RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY
SATISFACTORY TO THE COMPANY STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR
HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF THE ACT.

                             SALON MEDIA GROUP, INC.
                          COMMON STOCK PURCHASE WARRANT

            1. Price and Number of Shares Subject to Warrant. FOR VALUE RECEIVED
and subject to the terms and conditions herein set forth, John Warnock, (the
"Purchaser"), is entitled to purchase from Salon Media Group, Inc., a Delaware
corporation (the "Company"), at any time after 5:00 p.m. California time on July
28, 2003 and before the termination of this Warrant pursuant to Section 12
below, at a price per share equal to $0.0345, as adjusted in accordance with
Section 3 below (the "Warrant Price"), that number of shares indicated in
Section 2 below of fully paid and nonassessable shares of the Common Stock of
the Company (which Common Stock currently trades on the OTC), as adjusted
pursuant to Section 3 (the "Warrant Shares").

            2. Number of Shares of Warrant Shares. The number of Warrant Shares
for which this Warrant is exercisable is equal to 300,000.

            3. Adjustment of Warrant Price and Warrant Shares. The number of
shares of Warrant Shares issuable upon the exercise of this Warrant and the
exercise price thereof shall be subject to adjustment from time to time, and the
Company agrees to provide notice upon the happening of certain events, as
follows:

                  (a) Merger, Sale of Assets, etc. If at any time the Company
proposes to (i) consolidate with or merge with or sell or convey all or
substantially all of its assets to any other corporation or entity, or (ii)
distribute stock, securities or other assets to the holders of Common Stock in
exchange for their shares of the Company's Common Stock, then the Company shall
give the holder of this Warrant thirty (30) days advance notice of the effective
date of such transaction and to the extent the Warrant has not been exercised in
full by the effective date of such transaction, this Warrant shall terminate.
The foregoing notwithstanding, a merger or consolidation of the Company with or
into another corporation after which the shareholders of the Company immediately
prior to such transaction hold more than fifty percent (50%) of the voting power
of the surviving entity, shall not result in termination of this Warrant;
instead this Warrant shall be exchanged for a warrant of the surviving
corporation that shall entitle the holder hereof to acquire upon the exercise
thereof the number of shares of stock or

<PAGE>

other property to which the holder of the number of shares of the Warrant Shares
which are subject to this Warrant on the effective date of the merger would have
been entitled to receive for such securities under the terms of the merger.

                  (b) Reclassification, etc. If the Company at any time shall,
by subdivision, combination or reclassification of securities or otherwise,
change any of the securities to which purchase rights under this Warrant exist
into the same or a different number of securities of any class or classes, this
Warrant shall thereafter entitle its holder to acquire such number and kind of
securities as would have been issuable as the result of such change with respect
to the securities which were subject to the purchase rights under this Warrant
immediately prior to such subdivision. combination, reclassification or other
change. If shares of the class of the Company's stock for which this Warrant is
being exercised are subdivided or combined into a greater or smaller number of
shares of stock, the Warrant Price shall be proportionately reduced in the case
of subdivision of shares or proportionately increased in the case of combination
of shares, in both cases by the ratio which the total number of shares of such
class of stock to be outstanding immediately after such event bears to the total
number of shares of such class of stock outstanding immediately prior to such
event.

                  (c) Adjustment for Dividends in Stock. In case at any time or
from time to time on or after the date hereof the holders of the shares of the
Company's capital stock of the same class and series as the Warrant Shares (or
any shares of stock or other securities at the time receivable upon the exercise
of this Warrant) shall have received, or, on or after the record date fixed for
the determination of eligible shareholders, shall have become entitled to
receive, without payment therefor, other or additional stock of the Company by
way of dividend, then and in each case, the holder of this Warrant shall, upon
the exercise hereof, be entitled to receive, in addition to the number of shares
of Warrant Shares receivable thereupon, and without payment of any additional
consideration therefor, the amount of such other or additional stock of the
Company which such holder would hold on the date of such exercise had it been
the holder of record of such Warrant Shares on the date hereof and had
thereafter, during the period from the date hereof to and including the date of
such exercise, retained such shares and/or all other additional stock receivable
by it as aforesaid during such period, giving effect to all adjustments called
for during such period by paragraph (c) of this Section 3.

                  (d) Adjustment of Warrant Price.

                  (i) Special Definitions. For purposes of this Section 3(d),
the following definitions shall apply:

                  (A) "Options" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire either Common Stock or Convertible
Securities (as defined below).

                  (B) "Convertible Securities" shall mean any evidences of
indebtedness, shares or other securities convertible into or exchangeable for
Common Stock.

<PAGE>

                  (C) "Additional Shares of Common Stock" shall mean all shares
of Common Stock issued (or, pursuant to Section 3(d)(iii) below, deemed to be
issued) by the Company after the Warrant Issue Date (as defined below), other
than shares of Common Stock issued or issuable:

                  (I) upon conversion of shares of Series A Preferred Stock or
Series B Preferred Stock;

                  (II) to officers, directors or employees of, or consultants
to, the Company pursuant to a warrant, stock grant, option agreement or plan,
purchase plan or other employee stock incentive program or agreement approved by
the Board of Directors, up to a maximum number of shares of Common Stock
(assuming full conversion of any such convertible securities into Common Stock)
equal to 25% of the then outstanding shares of the Company's Common Stock,
Series A Preferred Stock (as converted) and Series B Preferred Stock (as
converted);

                  (III) in connection with the acquisition by the Company of
another business entity or majority ownership thereof approved by the Board of
Directors;

                  (IV) to lease companies, real estate lessors, banks or
financial institutions, whether shares or warrants, in connection with any lease
or debt financing transaction approved by the Board of Directors;

                  (V) upon exercise of warrants outstanding as of the date of
the Warrant Issue Date (as defined hereafter);

                  (VI) in connection with a transaction described in Section
3(d)(iv);

                  (VII) in connection with a strategic investment and/or
acquisition of technology or intellectual property approved by the Board of
Directors;

                  (VIII) by way of dividend or other distribution on shares of
Common Stock excluded from the definition of Additional Shares of Common Stock
by the foregoing clauses (1) through (7).

                  (D) "Warrant Issue Date" shall mean the date on which the
Warrant was first issued by the Company.

                  (ii) No Adjustment of Warrant Price. No adjustment in the
Warrant Price shall be made with respect to the issuance of Additional Shares of
Common Stock unless the consideration per share for an Additional Share of
Common Stock issued or deemed to be issued by the Company is less than the
Warrant Price in effect on the date of, and immediately prior to, such issue.

                  (iii) Deemed Issue of Additional Shares of Common Stock. In
the event the Company at any time or from time to time after the Warrant Issue
Date shall issue any Options or Convertible Securities or shall fix a record
date for the determination of holders

<PAGE>

of any class of securities entitled to receive any such Options or Convertible
Securities, then the maximum number of shares (as set forth in the instrument
relating thereto without regard to any provisions contained therein for a
subsequent adjustment of such number) of Common Stock issuable upon the exercise
of such Options or, in the case of Convertible Securities, the conversion or
exchange of the Convertible Securities shall be deemed to be Additional Shares
of Common Stock issued as of the time of the issuance of such Option or
Convertible Security or, in case such a record date shall have been fixed, as of
the close of business on such record date:

                  (A) except as provided in Section 3(d)(iii)(B) and
3(d)(iii)(C) below, no further adjustment in the Warrant Price shall be made
upon the subsequent issue of Convertible Securities or shares of Common Stock
upon the exercise of such Options or conversion or exchange of such Convertible
Securities;

                  (B) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any change in the
consideration payable to the Company, or change in the number of shares of
Common Stock issuable, upon the exercise, conversion or exchange thereof (other
than under or by reason of provisions designed to protect against dilution), a
Warrant Price computed upon the original issue thereof (or upon the occurrence
of a record date with respect thereto) and any subsequent adjustments based
thereon, shall, upon any such increase or decrease becoming effective, be
recomputed to reflect such increase or decrease insofar as it affects such
Options or the rights of conversion or exchange under such Convertible
Securities;

                  (C) upon the expiration of any such Options or Convertible
Securities, the Warrant Price, to the extent in any way affected by or computed
using such Options or Convertible Securities, shall be recomputed to reflect the
issuance of only the number of shares of Common Stock actually issued upon the
exercise of such Options or Convertible Securities; and

                  (D) no readjustment pursuant to Section 3(d)(iii) clauses (B)
and (C) above shall have the effect of increasing the Warrant Price to an amount
which exceeds the lower of (1) the Warrant Price on the original adjustment date
or (2) the Warrant Price that would have resulted from any issuance of
Additional Shares of Common Stock between the original adjustment date and such
readjustment date.

                  (iv) Adjustment of Warrant Price Upon Issuance of Additional
Shares of Common Stock Below Purchase Price. In the event this Corporation shall
issue Additional Shares of Common Stock (including Additional Shares of Common
Stock deemed to be issued pursuant to Section 3(d)(iii)), after the Warrant
Issue Date, without consideration or for a consideration per share less than the
Warrant Price in effect on the date of and immediately prior to such issue (such
issuance price being referred to herein as the "Dilution Price"), then and in
each such event the Warrant Price shall automatically be adjusted as set forth
in this Section 3(d)(iv), unless otherwise provided in this Section 3(d)(i).

                  (A) Adjustment Formula. Whenever the Conversion Price is
adjusted by Section 3(d)(iv), the new Warrant Price shall be determined by
multiplying the Warrant Price then in effect by a fraction, the numerator of
which shall be the number of

<PAGE>

shares of Common Stock outstanding immediately prior to such issue plus the
number of shares of Common Stock which the aggregate consideration received by
the Company for the total number of Additional Shares of Common Stock so issued
would purchase at such Warrant Price in effect immediately prior to such
issuance, and the denominator of which shall be the number of shares of Common
Stock outstanding immediately prior to such issues plus the number of such
additional shares of Common Stock so issued. For the purposes of this paragraph,
the number of outstanding shares of Common Stock shall be deemed to include the
Common Stock issuable on conversion of all other outstanding Preferred Stock,
upon conversion or exercise of any other outstanding Convertible Securities and
upon exercise of all vested Options (and assuming conversion of Convertible
Securities issuable upon exercise of Options).

                  (v) Determination of Consideration. For purposes of this
Section 3(d), the consideration received by the Company for the issue of any
Additional Shares of Common Stock shall be computed as follows:

                  (A) Cash and Property: Such consideration shall:

                  (1) insofar as it consists of cash, be computed at the
aggregate amount of cash received by the Company before deducting any reasonable
discounts, commissions or other expenses allowed, paid or incurred by the
Company for any underwriting or otherwise in connection with the issuance and
sale thereof;

                  (2) insofar as it consists of property other than cash, be
computed at the fair value thereof at the time of such issue, as determined by
Board in the good faith exercise of its reasonable business judgment; and

                  (3) in the event Additional Shares of Common Stock are issued
together with other shares or securities or other assets of the Company for
consideration which covers both, be the proportion of such consideration so
received, computed as provided in clauses (1) and (2) above, as determined in
good faith by the Board.

                  (B) Options and Convertible Securities. The consideration per
share received by the Company for Additional Shares of Common Stock deemed to
have been issued pursuant to Section 3(d), relating to Options and Convertible
Securities, shall be determined by dividing:

                  (1) the total amount, if any, received or receivable by the
Company as consideration for the issue of such Options or Convertible
Securities, plus the minimum aggregate amount of additional consideration (as
set forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such consideration) payable to
the Company upon the exercise of such Options or the conversion or exchange of
such Convertible Securities, or in the case of Options for Convertible
Securities, the exercise of such Options for Convertible Securities and the
conversion or exchange of such Convertible Securities, by

<PAGE>

                  (2) the maximum number of shares of Common Stock (as set forth
in the instruments relating thereto, without regard to any provision contained
therein for a subsequent adjustment of such number) issuable upon the exercise
of such Options or the conversion or exchange of such Convertible Securities.

            4. No Stockholder Rights. This Warrant, by itself, as distinguished
from any shares purchased hereunder, shall not entitle its holder to any of the
rights of a stockholder of the Company.

            5. Exercise of Warrant. This Warrant may be exercised in whole or
part by the holder, at any time after the date hereof and prior to the
termination of this Warrant, by the surrender of this Warrant, together with the
Notice of Exercise attached hereto as Attachment 1, duly completed and executed
at the principal office of the Company, accompanied by payment in full of the
Warrant Price in cash or by check with respect to the shares of Warrant Shares
being purchased. This Warrant shall be deemed to have been exercised immediately
prior to the close of business on the date of its surrender for exercise as
provided above, and the person entitled to receive the shares of Warrant Shares
issuable upon such exercises shall be treated for all purposes as holder of such
shares of record as of the close of business on such date. As promptly as
practicable after such date, the Company shall issue and deliver to the person
or persons entitled to receive the same a certificate or certificates for the
number of full shares of Warrant Shares issuable upon such exercise.

            6. Conversion. In lieu of exercising this Warrant or any portion
hereof by paying cash, the holder hereof shall have the right to convert this
Warrant or any portion hereof and receive Warrant Shares by executing and
delivering to the Company at its principal office the written notice of
conversion in the form attached hereto as Attachment 2, respectively, specifying
the portion of the Warrant to be converted, and accompanied by this Warrant. The
number of shares of Warrant Shares to be issued upon such conversion shall be
computed using the following formula:

            X = (P)(Y)(A-B)/A

            Where                   X = the number of shares of Warrant Shares
                                        to be issued to the holder for the
                                        portion of the Warrant being converted.

                                    P = the portion in the form of a fraction of
                                        the Warrant being converted.

                                    Y = the total number of shares of Warrant
                                        Shares issuable upon exercise of the
                                        Warrant in full.

                                    A = the fair market value of one share of
                                        Warrant Shares which shall mean the last
                                        reported sale price per share of the
                                        Common Stock as reported on the Nasdaq
                                        National Market (or if the Common Stock
                                        is not then listed on the Nasdaq
                                        National Market, then such last reported
                                        sale price on a national securities
                                        exchange or other

<PAGE>

                                        nationally recognized exchange or
                                        trading system) on the day upon which
                                        the holder delivered its notice of
                                        conversion to the Company, or if no such
                                        price is reported on such day, such
                                        price on the next preceding business day
                                        for which such price is reported.

                                    B = the Warrant Price on the day upon which
                                        the holder delivered its notice of
                                        conversion to the Company.

Any portion of this Warrant that is converted shall be immediately canceled.

            7. Certificate of Adjustment. Whenever the Warrant Price or number
or type of securities issuable upon exercise of this Warrant is adjusted, as
herein provided, the Company shall deliver to the record holder of this Warrant
a certificate of an officer or other authorized person of the Company setting
forth the nature of such adjustment and a brief statement of the facts requiring
such adjustment.

            8. Sale or Transfer of Warrant. The Purchaser shall not sell or
transfer this Warrant other than to an affiliate of Purchaser. For the purposes
of this Agreement, an "Affiliate" shall mean any partner, limited partner or
member of Purchaser or any person or entity that directly or indirectly through
one or more intermediaries controls or is controlled by or is under common
control with Purchaser.

            9. Successors and Assigns. The terms and provisions of this Warrant
shall inure to the benefit of, and be binding upon the Company, its successors
and assigns. This Warrant cannot be assigned by Purchaser, except to an
Affiliate, without the express written consent of the Company.

            10. Representations and Covenants of the Company. The Company makes
the following representations and covenants:

                  (a) Authorization. All corporate action on the part of the
Company, its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Warrant, the performance of all
obligations of the Company hereunder and thereunder, and the authorization,
issuance (or reservation for issuance), sale and delivery of the Warrant Shares
issuable hereunder has been taken or will be taken prior to the Closing, and
this Warrant constitutes valid and legally binding obligations of the Company,
enforceable in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) to the extent the indemnification
provisions contained in this Warrant may be limited by applicable federal or
state securities laws.

                  (b) Valid Issuance of Common Stock. The Warrant Shares
issuable hereunder, when issued, sold and delivered in accordance with the terms
of this Warrant for the consideration expressed herein, will be duly and validly
issued, fully paid and nonassessable, and will be free of restrictions on
transfer other than restrictions on transfer under this Warrant and under
applicable state and federal securities laws.

<PAGE>

                  (c) Reservation of Common Stock. The Common Stock issuable
upon exercise or conversion of this Warrant has been duly and validly reserved.
The Company will at all times during the term of the Warrant have authorized and
reserved a sufficient number of shares of Common Stock to provide for the
exercise rights represented by the Warrant, free from preemptive rights. In the
event the number of authorized but unissued shares of Common Stock are not
sufficient to permit exercise of the Warrant, the Company will take any such
corporate action necessary to increase its authorized but unissued shares of
common Stock to permit such exercise.

                  (d) Company Action. The Company will at all times during the
term of this Warrant act in good faith to assist in the carrying out of all of
the provisions of this Warrant. The Company will at all times during the term of
the Warrant take any and all action as may be necessary or appropriate to
protect the exercise of the rights of the Purchaser under this Warrant.

            11. Representations and Covenants of the Purchaser. This Warrant has
been entered into by the Company in reliance upon the following representations
and covenants of the Purchaser:

                  (a) Investment Purpose. The right to acquire Common Stock
contained herein will be acquired for investment and not with a view to the sale
or distribution of any part thereof, and the Purchaser has no present intention
of selling or engaging in any public distribution of the same except pursuant to
a registration or exemption.

                  (b) Private Issue. The Purchaser understands (i) that the
Common Stock issuable upon exercise of the purchase rights under this Warrant is
not registered under the Securities Act of 1933 Act or qualified under
applicable state securities laws on the ground that the issuance contemplated by
this Warrant will be exempt from the registration and qualifications
requirements thereof, and (ii) that the Company's reliance on such exemption is
predicated on the representations set forth in this Section.

                  (c) Financial Risk. Purchaser (i) has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of Purchaser's investment; (ii) has the ability to bear the
economic risks of Purchaser's prospective investment; (iii) has had access to
such information as Purchaser has considered necessary to make a determination
to purchase the investment together with such additional information as is
necessary to verify the accuracy of the information supplied; and (iv) has not
been offered the investment by any form of advertisement, article, notice or
other communication published in any newspaper, magazine, or similar media or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any such media.

                  (d) Accredited Investor. Purchaser is an "accredited investor"
within the meaning of SEC Rule 501 of Regulation D, as presently in effect.

                  (e) Authorization. This Warrant constitutes the Purchaser's
valid and legally binding obligation, enforceable in accordance with its terms.

<PAGE>

                  (f) Disclosure of Information. Purchaser believes it has
received all the information it considers necessary or appropriate for deciding
whether to purchase the rights under this Warrant. Purchaser further represents
that it has had an opportunity to ask questions and receive answers from the
Company regarding the terms and conditions of the Warrant and the Common Stock
issuable upon exercise of the purchase rights thereunder.

                  (g) Investment Experience. Purchaser is an investor in
securities of companies and acknowledges that it is able to fend for itself, can
bear the economic risk of its investment and has such knowledge and experience
in financial or business matters that it is capable of evaluating the merits and
risks of the investment in the Company's stock. If other than an individual,
Purchaser also represents that it has not been organized for the purpose of
acquiring the rights under this Warrant.

                  (h) Legends. It is understood that the Common Stock issuable
upon exercise of the rights under this Warrant may bear one or all of the
following legends:

                  (i) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND ARE
"RESTRICTED SECURITIES" AS DEFINED IN RULE 144 PROMULGATED UNDER THE ACT. THE
SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR OTHERWISE DISTRIBUTED EXCEPT
(i) IN CONJUNCTION WITH AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER
THE ACT OR (ii) IN COMPLIANCE WITH RULE 144, OR (iii) PURSUANT TO AN OPINION OF
COUNSEL, THAT SUCH REGISTRATION OR COMPLIANCE IS NOT REQUIRED AS TO SAID SALE,
OFFER OR DISTRIBUTION."

                  (ii) Any legend required by the laws of the State of
California or other states, including any legend required by the California
Department of Corporations and Sections 417 and 418 of the Corporations Code.

            12. Termination. Unless otherwise terminated pursuant to Section 3
(a) above, this Warrant shall terminate at 5:00 p.m., California time, on the
third anniversary of the date hereof.

            13. Notices. Unless otherwise provided, any notice required or
permitted under this Warrant shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
receipt after deposit with the United States Post Office, by registered or
certified mail, postage prepaid and addressed to the party to be notified at the
address supplied by Purchaser to the Company or at such other address as
Purchaser shall designate by ten days advance written notice to the Company.

            14. Miscellaneous. This Warrant shall be governed by the laws of the
State of Delaware, as such laws are applied to contracts to be entered into and
performed entirely in Delaware by Delaware residents. The headings in this
Warrant are for purposes of convenience and reference only, and shall not be
deemed to constitute a part hereof. Any provision of this Warrant may be
amended, waived or modified upon the written consent of the Company, and the
Purchaser; provided, however that each other Purchaser of a Warrant shall, at
its option, be entitled to amend, waive or modify the Warrant held by such
Purchaser in a similar manner.

<PAGE>

Upon delivery of written notice to the Company by the Purchaser, this Warrant
shall be deemed amended, waived or modified in the same manner as any other
Warrant. Any amendment or waiver effected in accordance with this Section 14
shall be binding upon the Company, the Purchaser and each transferee of this
Warrant.

                                                  SALON MEDIA GROUP, INC.

                                                  Signed:

                                                  Printed:  Michael O'Donnell

                                                  Title:  President / CEOEXHIBIT 10.1

                                                                 EXECUTION COPY

                                TOLLING AGREEMENT

                                     Between

                              POWER RESOURCES, LTD.
                           a Texas limited partnership

                                       and

                ONEOK ENERGY MARKETING AND TRADING COMPANY, L.P.
                           a Texas limited partnership

                                 AUGUST 5, 2003

<PAGE>
                                TABLE OF CONTENTS                         Page
1.      DEFINITIONS AND INTERPRETATION.......................................1
   1.1    CERTAIN DEFINED TERMS..............................................1
          ---------------------
   1.2    INTERPRETATION.....................................................8
   ---    --------------
   1.3    RULES OF CONDUCT...................................................9
   ---    ----------------
2.      TERM.................................................................9
   2.1    TERM...............................................................9
   ---    ----
3       FUEL SUPPLY..........................................................9
   3.1    BUYER FUEL SUPPLY REQUIREMENT......................................9
          -----------------------------
4.      DELIVERY OF ENERGY, CAPACITYAND ANCILLARY SERVICES..................11
   4.1    OBLIGATION TO SELL AND PURCHASE...................................11
          -------------------------------
   4.2    SCHEDULING........................................................11
          ----------
   4.3    DELIVERY POINT....................................................12
          --------------
   4.4    ENERGY IMBALANCE..................................................13
          ----------------
   4.5    MEASUREMENT.......................................................13
          -----------
   4.6    TITLE, RISK OF LOSS, INDEMNITY AND FINES..........................14
          ----------------------------------------
5.      PAYMENTS............................................................15
   5.1    CAPACITY, BUYER VARIABLE O&M COSTS AND BUYER STARTUP COST PAYMENTS15
          ------------------------------------------------------------------
   5.2    AVAILABILITY REQUIREMENTS.........................................16
          -------------------------
6.      REPRESENTATIONS AND  WARRANTIES.....................................17
   6.1    REPRESENTATIONS AND WARRANTIES....................................17
          ------------------------------
   6.2    NO OTHER REPRESENTATIONS AND WARRANTIES...........................18
          ---------------------------------------
7.      COVENANTS...........................................................18
   7.1    REMAKING OF REPRESENTATIONS AND WARRANTIES........................18
          ------------------------------------------
   7.2    PARTIES' OBLIGATIONS..............................................18
          --------------------
   7.3    PROFESSIONAL OPERATIONS...........................................18
          -----------------------
   7.4    CONFIDENTIALITY...................................................18
          ---------------
   7.5    PLANNED OUTAGES...................................................18
          ---------------
   7.6    PLANT MODIFICATIONS...............................................19
          -------------------
8.      EVENTS OF DEFAULT AND REMEDIES......................................19
   8.1    EVENT OF DEFAULT..................................................19
          ----------------
   8.2    REMEDIES UPON AN EVENT OF DEFAULT.................................20
          ---------------------------------
   8.3    ACKNOWLEDGMENT OF THE PARTIES.....................................21
          -----------------------------
   8.4    OTHER EVENTS......................................................21
          ------------
9.      BILLING AND PAYMENT.................................................21
   9.1    BILLING AND PAYMENT...............................................22
          -------------------
   9.2    AUDIT.............................................................22
          -----
10.     ASSIGNMENT; BINDING EFFECT..........................................22
   10.1   ASSIGNMENT........................................................22
          ----------
   10.2   BINDING EFFECT....................................................23
          --------------
11.     FORCE MAJEURE AND LIMITATION OF LIABILITY...........................23
   11.1   FORCE MAJEURE.....................................................23
          -------------
   11.2   LIMITATION OF REMEDIES, LIABILITY AND DAMAGES.....................23
          ---------------------------------------------
   11.3   DUTY TO MITIGATE..................................................24
          ----------------
12.     TAXES; STRANDED COSTS...............................................24
   12.1   GENERAL...........................................................24
          -------
   12.2   APPLICABLE TAXES AND CHANGE IN LAW................................24
          ----------------------------------
   12.3   STRANDED COSTS....................................................25
          --------------
13.     THERMAL ENERGY......................................................25
14.     INSURANCE...........................................................25
15.     MISCELLANEOUS.......................................................26
   15.1   NOTICES...........................................................26
          -------
   15.2   ENTIRETY..........................................................26
          --------
                                       i
<PAGE>

   15.3   GOVERNING LAW.....................................................26
          -------------
   15.4   NON-WAIVER........................................................26
          ----------
   15.5   SEVERABILITY......................................................26
          ------------
   15.6   HEADINGS; EXHIBITS................................................27
          ------------------
   15.7   NO THIRD PARTY BENEFICIARIES......................................27
          ----------------------------
   15.8   COUNTERPARTS......................................................27
          ------------
   15.9   FURTHER ASSURANCES................................................27
          ------------------
   15.10  RENEWAL...........................................................27
   16     DISPUTE RESOLUTION................................................27
   17     FORWARD CONTRACT..................................................28

                                    EXHIBITS
                                    --------

Exhibit A - Project Description
Exhibit B - Fuel Specifications
Exhibit C - Project Constraints
Exhibit D - Planned Outages
Exhibit E - Addresses
Exhibit F -  Anticipated Conversion Heat Rates
Exhibit G -  Interconnection Agreement

                                       ii

<PAGE>

                                TOLLING AGREEMENT

         THIS TOLLING  AGREEMENT  ("Agreement")  is entered into as of August 5,
2003 (the  "Effective  Date"),  by and between  POWER  RESOURCES,  LTD., a Texas
limited  partnership  ("Seller") and ONEOK ENERGY MARKETING AND TRADING COMPANY,
L.P.,  a  Texas  limited  partnership   ("Buyer").   Buyer  and  Seller  may  be
individually  referred  to  herein  as  a  "Party"  and,  collectively,  as  the
"Parties."

         WHEREAS,  Buyer desires to purchase from Seller,  and Seller desires to
sell and make available to Buyer,  all of the fuel conversion  capability of the
Project (as defined below),  including  electric  generation  capacity,  thermal
energy,  and electric  energy,  including  all  ancillary  products and services
marketable in the ERCOT (as defined  below)  transmission  area from the Project
(as defined  below),  subject to the terms,  exceptions  and  conditions of this
Agreement; and

         WHEREAS,  the Parties  desire to enter into this Agreement to set forth
their respective  rights and obligations in connection with the sale of capacity
and energy from Seller to Buyer.

         NOW, THEREFORE,  in consideration of the mutual promises and agreements
set forth herein and for other good and valuable consideration,  the receipt and
sufficiency  of which are  hereby  acknowledged,  the  Parties  hereby  agree as
follows:

1.       DEFINITIONS AND INTERPRETATION

1.1      CERTAIN DEFINED TERMS.
         ----------------------

         In addition to terms  defined in the  recitals  hereto,  the  following
terms shall have the meanings set forth below.

         "Affiliate" means any Person that directly or indirectly Controls or is
Controlled by or is under common Control with, the Person in question.

          "AGC"  means  the  ability  to  adjust  the  output of a Unit or Units
automatically  to provide load  following,  load  regulation  and frequency bias
service and other similar types of services.

         "Aggregate Energy" has the meaning set forth in Section 5.2(a).

         "Aggregate  Energy  Demand"  means,  with respect to any period of time
during the Delivery Term, the total quantity of Energy Scheduled for delivery to
Buyer from the Project during such period of time.

         "Ancillary Services" means those services that are necessary to support
the   transmission  of  capacity  and  Energy  from  resources  to  loads  while
maintaining reliable operation of the Connecting  Utility's  transmission system
in accordance with Prudent Industry  Practice.  Such services typically include,
but are not limited  to,  regulation  reserve,  spinning  reserve,  non-

<PAGE>

spinning reserve, voltage support, and black start generating capability.

         "Annual  Availability  Factor"  has the  meaning  set forth in  Section
5.2(a).

         "Anticipated  Conversion  Heat  Rates"  has the  meaning  set  forth in
Exhibit F.

         "Applicable   Requirements"   means  any  and  all   applicable   laws,
regulations,  announcements,  codes, directives,  judgments,  decrees, orders or
interpretations  of any Government  Agency,  and any valid waivers,  exemptions,
variances, permits, licenses, authorizations,  orders, consents or conditions of
or from, in any such case, any Government Agency.

         "Applicable  Schedule"  means,  with  respect  to any time  during  the
Delivery Term, the applicable  quantities of Energy Scheduled in accordance with
Section 4.2 for each hour of a scheduling period as in effect at such time.

         "Business  Day"  means  any Day  other  than a Day that is a  Saturday,
Sunday or legal holiday in the State of Texas.

         "Buyer Fuel Supply  Requirement"  or "Buyer's Fuel Supply  Requirement"
means, for any Day, the sum, without duplication,  of (i) the Buyer Startup Fuel
Quantity for each Startup (or portion  thereof)  that occurs during such Day and
(ii) each Buyer Operating Fuel Quantity for each hour of such Day.

         "Buyer  Operating Fuel Quantity"  means,  with respect to any hour, the
quantity of Fuel used for the  operation  of the Project for the  generation  of
electric energy during such hour.

         "Buyer  Startup  Costs"  means,  with  respect to Startups  during each
Contract Year, the greater of (i) $3,643 per turbine per Startup,  (ii) $939,986
or (iii) $140 per turbine per hour of operation for such Contract Year.

         "Buyer Startup Fuel Quantity" means,  with respect to any Startup,  the
quantity of Fuel actually required by the Project for such Startup.

         "Buyer Variable O&M Costs" means, with respect to any Month the product
of $0.50  multiplied  by the quantity of Energy (in MWh)  delivered by Seller to
Buyer for such Month.

         "Calendar Year" means a calendar year.

         "Capacity  Payment" means,  for any Month,  the product of the Contract
Capacity  (expressed in kW) and the Fixed  Capacity  Rate, as such amount may be
adjusted in accordance with Section 5.1.

         "Change-in-Law"   means,   after  the  Effective  Date,  the  adoption,
imposition,   promulgation  or  modification  by  a  Government  Agency  of  any
Applicable Requirement,  or the issuance of an order, judgment,  award or decree
of a Government Agency having the effect of the foregoing.

                                      -2-
<PAGE>

         "Change-in-Law  Taxes" means any Taxes  (including  without  limitation
taxes or other  assessments  on gross  receipts,  gross  revenues or  comparable
measures  thereof)  arising  from a  Change-in-Law  other  than any Taxes of the
nature of income taxes,  real property taxes,  personal  property taxes,  local,
county and Tribal taxes,  and special  district  assessments  (such as taxes and
assessments for the construction and/or improvement of local schools,  roads and
sanitation  systems)  not  related to the  business of Seller;  provided  that a
Change-in-Law  Tax must result in either a net increase or a net decrease in the
affected  Party's Tax due by such Party and shall not include changes in Federal
or state Tax laws that have the effect of substituting a new Tax for an existing
Tax (e.g., eliminating property taxes in favor of tax on energy or gas).

         "Claims"  means all  claims or actions  filed by a Person  other than a
Party, and whether groundless,  false or fraudulent, that directly or indirectly
relate to the subject matter of an indemnity, and the resulting losses, damages,
expenses,  attorney's  fees and court costs,  whether  incurred by settlement or
otherwise,  and  whether  such claims or actions are filed prior to or after the
termination of this Agreement.

         "Common  Facilities" means the equipment of the Project (other than the
Units)  necessary for the generation and  transmission  of Energy from the Units
including,  but not limited to, any such necessary control room,  machine shops,
warehouse,  parking,  domestic  water supply and waste  disposal,  switch yards,
electrical  bus  bars,  Interconnection  Facilities,  and  Fuel  interconnection
facilities.

          "Connecting Utility" means either or both, as the context so requires,
of Oncor and its Affiliates and successors and ERCOT or its successors.

         "Contract  Capacity"  means,  for each Month 212,000 kW;  however,  the
Parties  agree that the Project  Capacity may exceed the  Contract  Capacity and
Buyer  shall have the right to dispatch  the Project up to its Project  Capacity
for periods of time reasonably  acceptable to Seller,  and provided further that
subject to the  limitations  otherwise  provided  herein,  Buyer shall have full
dispatch rights as to the Contract Capacity.

         "Contract Quantity" means, with respect to any Month, all of the Energy
(in MWh),  that Seller sells and delivers,  or causes to be delivered,  to Buyer
pursuant to this Agreement during such Month.

         "Contract  Term"  means  the term of this  Agreement  beginning  on the
Effective Date of the Agreement and ending on the Termination Date.

         "Contract Year" means a twelve-month  period  commencing at hour ending
0100 CPT on  October  1 and  ending  at hour  ending  2400 CPT on the  following
September 30.

         "Control" means the possession,  directly or indirectly, through one or
more  intermediaries,  of  either  of the  following:  (a) (i) in the  case of a
corporation,  50% or more of the outstanding voting securities thereof;  (ii) in
the case of a limited liability  company,  partnership,  limited  partnership or
venture,  the  right to 50% or more of the  distributions  therefrom  (including
liquidating distributions);  (iii) in the case of a trust or estate, 50% or more
of the beneficial interest therein; or (iv) in the case of any other entity, 50%
or more of the economic or beneficial

                                      -3-
<PAGE>

interest  therein;  or (b) in the case of any  entity,  the power or  authority,
through the ownership of voting securities,  by contract or otherwise, to direct
the management, activities or policies of the entity.

         "CPT" means the prevailing  time in any hour of any given Day in Howard
County, Texas.

         "Cumulative  Undelivered  Energy"  has the meaning set forth in Section
5.2(a).

         "Day" means a calendar day.

         "Delivery   Point"   means   (i)  the   point  of   direct   electrical
interconnection  of the Project with the  transmission  system of Oncor, or (ii)
any other point mutually agreed upon by Buyer and Seller in writing.

         "Delivery Term" means the period commencing at the hour ending 0100 CPT
on  October  1, 2003  through  and  including  the hour  ending  2400 CPT on the
Termination Date.

         "Energy"  means the electric  energy to be delivered by Seller to Buyer
pursuant to this Agreement, and includes,  without limitation any energy related
Ancillary Services.

         "Energy Imbalance" has the meaning set forth in Section 4.4.

         "Energy  Imbalance  Charges"  means the charges  assessed by ERCOT as a
result of deviations  between energy  scheduled and energy delivered or received
or between  energy  delivered and energy  received  (however  named,  including,
without   limitation,   "energy   imbalances,"   "oversupply   imbalances,"   or
"undersupply imbalances").

         "ERCOT" means the Electric Reliability Council of Texas, Inc. or its
successors.

         "ERCOT  Independent  System  Operator" means the entity carrying on the
functions  of the  independent  system  operator  for ERCOT or its  successor in
regulatory  function as designated from time to time by the Texas Public Utility
Commission.

         "ERCOT  Operating  Guides"  means  the  operating  guides  for ERCOT as
promulgated by the ERCOT  Independent  System Operator and approved by the Texas
Public Utility Commission as the same may be amended from time to time.

         "ERCOT   Protocols"   means  the   operating   protocols  for  electric
reliability  system  of ERCOT as  promulgated  by the ERCOT  Independent  System
Operator and approved by the Texas Public Utility  Commission as the same may be
amended from time to time.

         "Event of Default" has the meaning set forth in Section 8.1.

         "Expected Amount of Fuel" has the meaning set forth in Section 3.1(d).

                                      -4-
<PAGE>

         "Fixed  Capacity  Rate" means for each Month during the  Delivery  Term
$1.75 per kW.

         "Force  Majeure"  means any cause  beyond the  reasonable  control  and
without the fault or negligence of the Party relying on such cause to excuse its
performance  hereunder (such Party, the "Claiming  Party"),  whether of the kind
enumerated below or otherwise,  including without limitation the following:  (i)
any storm, flood, freeze, hurricane,  windstorm,  lightning, earthquake or other
acts of God, fire, explosion, civil disturbance, strike, lockout, labor dispute,
act of the public enemy,  action of a court,  regulatory  or other  governmental
authority (as long as the Claiming Party has not sought, supported, applied for,
or assisted in the application  for, such  regulatory or  governmental  action),
failure to obtain or maintain a  governmental  permit,  license or approval  (as
long as the applying person has used  commercially  reasonable  efforts to apply
for,  obtain  and  maintain  such  permit,  license  or  approval),  or (ii) any
unavailability  or interruption in the supply of Fuel or breakdown of pipelines,
facilities  and/or  equipment other than as a result of improper  maintenance or
the negligence of the Claiming Party;  provided,  however, that no obligation to
make payments for energy  delivered or other services  rendered shall be excused
by the occurrence of an event of Force Majeure; and provided,  further, that the
following acts, events or causes shall not constitute an event of Force Majeure:
(a) the loss of Buyer's resale markets;  (b) Buyer's  inability  economically to
use or  resell  energy  or  capacity  purchased  hereunder;  and (c) any lack of
profitability  to Seller of the  Project.  Any Force  Majeure  event (other than
labor disputes,  strikes, or lockouts) shall be remedied so far as possible with
reasonable dispatch.

         "Fuel" means the natural gas or Jet A fuel used in the operation of the
Project for the purpose of  generating  electric  energy or Startup and excludes
any  natural gas used by the Project  for the  production  of thermal  energy or
extraction steam.

         "Fuel  Delivery  Point(s)"  means  the  Project's  receipt  points  for
transportation of Fuel supplied by Buyer.

         "Government  Agency"  means any  federal,  state,  local,  territorial,
tribal or municipal  government and any department,  commission,  board, bureau,
agency,   instrumentality,   judicial  or  administrative  body  thereof  having
jurisdiction over the Project, Buyer or Seller, as the case may be, and includes
without limitation, the ERCOT Independent System Operator.

         "Heat Rate" has the meaning set forth in Section 3.1(d).

         "Hourly Energy" has the meaning set forth in Section 5.2(a).

         "Hourly  Undelivered  Energy"  has the  meaning  set  forth in  Section
5.2(a).

         "Interconnection  Facilities" means the interconnection facilities that
connect the Units with the Connecting  Utility,  as more fully  described in the
Oncor Generation Interconnection Agreement.

         "Interconnection  Point" means the  physical  points at which the Units
are connected with the Connecting  Utility, as more fully described in the Oncor
Generation  Interconnection  Agreement,  or such other  point as the Parties may
agree.

                                      -5-
<PAGE>

          "kW" means kilowatt.

         "kWh" means kilowatt-hour.

         "Late  Payment  Rate" means a per annum rate of  interest  equal to the
Prime Rate plus three percent (3%); provided,  the Late Payment Rate shall never
exceed the maximum lawful rate permitted by applicable law.

         "Meter"  means  the  "ERCOT  Polled  Settlement  Meter" as such term is
defined by, and construed in accordance with the ERCOT Operating  Guides and the
ERCOT Protocols.

         "Month" or "Monthly" means a calendar month or a calendar month period.

         "MMBtu" means one million British thermal units.

         "MW" means a megawatt. One MW is equal to 1,000 kW.

         "MWh" means a megawatt-hour. One MWh is equal to 1,000 kWh.

         "NERC" means the North  American  Electric  Reliability  Council or its
successors.

         "Net Margin" has the meaning set forth in Article 13.

         "Oncor" means Oncor  Electric  Delivery  Company and its affiliates and
successors.

         "Oncor Generation  Interconnection  Agreement" means an agreement to be
entered into between Seller and Oncor providing for the  interconnection  of the
Project to the Oncor transmission  system, as amended from time to time, and any
replacement  agreement,  a copy of which, as it exists on the Effective Date, is
attached hereto as Exhibit G.

          "Person"  means  an  individual,  partnership,   corporation,  limited
liability  company,  association,   trust,  unincorporated  organization,  or  a
government authority or agency or political subdivision thereof.

         "Planned  Outage"  means any outage of the Project  due to  inspection,
testing,  maintenance,  repair or overhaul,  as described in Section  5.2(b) and
scheduled by Seller in accordance with the requirements of Exhibit D.

         "Prime  Rate" means the prime  lending rate as may from time to time be
published in the Wall Street Journal or any successor  publication  under "Money
Rates" or a  successor  heading,  provided  that if more than one prime  rate is
published under such heading,  the Prime Rate shall be the average of such rates
so  published.  If  the  Wall  Street  Journal  ceases  to  be  published  or if
publication is suspended,  the Parties shall agree on a successor or publication
that reports comparable prime lending rates.

                                      -6-
<PAGE>

         "Project"  means the gas-fired  combined  cycle  electrical  generation
facility located in Howard County,  Texas, which is further described in Exhibit
A.

         "Project  Capacity"  means the  capacity  actually  available  from the
Project  to supply  Energy,  which  may be  greater  or less  than the  Contract
Capacity,  as measured at the Delivery Point, and which is otherwise  determined
in accordance with the ERCOT Protocols.

         "Project Constraints" has the meaning set forth on Exhibit C.

         "Prudent  Industry  Practice"  means  any  of the  practices,  methods,
techniques,  standards  and acts  required  or  approved  from time to time by a
significant  portion of the electric  power  industry in the  geographic  region
covered by ERCOT, or any of the practices,  methods, techniques,  standards, and
acts which,  in the exercise of reasonable  judgment in light of the facts known
at the time the decision was made,  could have been expected to  accomplish  the
desired result at a reasonable cost consistent with the Applicable Requirements,
good business practices,  reliability,  safety,  environmental  protection,  and
expedition.  "Prudent  Industry  Practice"  is not intended to be limited to the
optimum practice, method or act to the exclusion of all others, but rather to be
practices,  methods  or  acts  generally  accepted  from  time  to  time  in the
geographic region covered by ERCOT.

         "Representatives"  of a Person shall mean any Affiliates of such Person
and directors, officers, employees, agents or Controlling Persons of such Person
or its Affiliates.

         "Schedule" or "Scheduled"  means the acts of Buyer and Seller  pursuant
to Section 4.2 setting  forth a written  schedule  requesting  and accepting the
delivery of Energy by Seller to Buyer during the Delivery Term.

         "Scheduled  Energy" means the Energy  requested by Buyer and dispatched
by Seller pursuant to the requirements of Section 4.

         "Scheduling  Fees" means fees  assessed  by any Person to schedule  the
delivery of the Energy.

         "Startup" or  "Start-Up"  means a firing of either or both of the Units
and the emergency generators used in starting the gas turbines.  The period of a
Startup of a Unit  begins at the  commencement  of such firing and ends when the
Unit obtains the desired  Aggregate Energy Demand.  Startups shall be limited to
one per combustion  turbine per day unless  otherwise  mutually agreed to by the
Parties.

         "Stranded Costs" means any charges or costs that are assessed or levied
by any  Government  Agency  in order to  recoup  the  expenses  and  liabilities
associated with stranded  investments  including without limitation any stranded
costs assessed or levied pursuant to 18 C.F.R. ss.35.26.

         "Taxes"  means,  with respect to any Person,  all taxes,  withholdings,
assessments,  impositions,  duties,  governmental fees,  governmental charges or
levies imposed directly or

                                      -7-
<PAGE>

indirectly  by any  Government  Agency on such Person or its income,  profits or
property  or  measured  by the  volume  or amount of  consumption  of fuel,  the
production of energy or the provision of electric generation capacity,  or gross
revenue, gross receipts or comparable measure thereof, and whether characterized
as an ad valorem, sales, gross receipts, BTU, carbon, energy production or other
similar taxes.

         "Termination   Date"  means  December  31,  2005,  unless  extended  in
accordance  with Section  15.10 or such earlier  date as this  Agreement  may be
terminated as provided for in this Agreement.

         "Termination Payment" has the meaning set forth in Section 8.2.

         "Total   Transmission   Services"  means  all  transmission   services,
ancillary  services,  control area services and such other  services  associated
with the transmission of electric energy from one location to another.

         "Transmission  Costs"  means all  costs  associated  with line  losses,
congestion charges, inadvertent energy flows, ERCOT charges, charges assessed by
the applicable  Connecting  Utility and other applicable system costs or charges
associated  with the  transmission  of  electric  energy  from one  location  to
another.

         "Unit or Units" means one or more of the gas turbine  generation  units
comprising the Project as more specifically described in Exhibit A.

         "Unplanned  Outage" means (i) an unplanned  component  failure or other
condition that requires the Project, or part thereof, to be removed from service
immediately  or that can be deferred but requires the Project,  or part thereof,
to be removed from service  before the next Planned  Outage (or that  prevents a
Start-Up),  (ii) an unplanned deration of the Project that requires an immediate
reduction  of  capacity  or that can be deferred  but  requires a  reduction  of
capacity  prior  to the  next  Planned  Outage  or  (iii)  any  other  unplanned
interruption or reduction in generation from the Project for any reason.

1.2      INTERPRETATION.   In this Agreement:
         ---------------

         (a) the table of contents,  headings, and Article and Section numbering
are for convenience only and shall be ignored in construing this Agreement;

         (b) the singular includes the plural and vice versa;

         (c) references to Articles, Sections, Recitals and Exhibits are, unless
the context  otherwise  requires,  references  to Articles  and Sections of, and
Recitals and Exhibits to, this Agreement;

         (d) the Exhibits to this Agreement form a part of this Agreement;

                                      -8-
<PAGE>

         (e) the words "hereof," "herein," "hereinafter," "hereunder," "hereby,"
"hereto,"  and  similar  words  refer to this  entire  Agreement  and not to any
particular Article, Section, Recital or Exhibit;

         (f) if any payment  hereunder  is required to be made on a day which is
not a Business Day, such payment shall be made on the next  succeeding  Business
Day, provided that if such next succeeding Business Day is not in the same Month
as the date required for payment,  such payment shall be made on the immediately
preceding Business Day; and

         (g)  any  reference  to a time  shall  be a  reference  to  CPT  unless
otherwise specified.

1.3      RULES OF CONDUCT.  In this Agreement:
         ----------------

         (a) unless otherwise provided herein, whenever a consent or approval is
required by one Party from the other Party,  such consent or approval  shall not
be unreasonably withheld or delayed; and

         (b) in carrying out their  obligations and duties under this Agreement,
each Party shall have an implied obligation of good faith.

2.       TERM

2.1      TERM.
         ----

         (a) Subject  to Article 8 and  Article  15.10  hereof,  this  Agreement
shall be effective for the Contract Term.

         (b) On the  Termination  Date,  the Parties  will no longer be bound by
this  Agreement,  except (i) to the extent  necessary  to enforce  any rights or
obligations of the Parties  arising under this Agreement  before the Termination
Date, (ii)  indemnification  obligations,  which will survive the termination of
this  Agreement  and will continue for two (2) years  following the  Termination
Date,  and (iii) rights and  obligations  arising under Section 9.2,  which will
survive the  termination of this Agreement for a period of two (2) years for the
purpose of statements and payment objections.

3.       FUEL SUPPLY

3.1      BUYER FUEL SUPPLY REQUIREMENT.
         ------------------------------

         (a) Throughout the Delivery  Term,  Buyer shall,  at no cost to Seller,
deliver and make  available,  or cause to be  delivered  and made  available  to
Seller,  each Day on which  Buyer  desires to  Schedule  Energy,  the Buyer Fuel
Supply Requirement in accordance with the following terms:

             (i) Buyer shall   provide   Fuel  that  meets  the  quality
         specifications as set forth on Exhibit B; however, Buyer has the option
         of providing either natural gas or Jet A fuel.

                                      -9-
<PAGE>

             (ii) Buyer  shall  deliver the Fuel to the Project at the Fuel
         Delivery Point(s).

In  connection  with the  procurement  and  delivery of Jet A fuel,  Buyer shall
provide  notice to Seller of Buyer's  desire to utilize Jet A fuel in connection
with the tolling services  provided  hereunder.  Buyer shall provide such notice
not less than two (2) hours in  advance  of the hour on which  Buyer  desires to
dispatch the Project  utilizing Jet A fuel. Upon Buyer's election to utilize Jet
A fuel,  Seller  shall  procure and deliver  such fuel to the Project on Buyer's
behalf in amounts  necessary  to meet the  Buyer's  requirements  for  Scheduled
Energy.  Seller shall first notify the Buyer of the cost of procuring  the Jet A
fuel and Buyer shall  promptly  instruct  Seller  whether or not to proceed with
such  procurement.  Buyer shall  reimburse  Seller for  Seller's  actual cost of
procurement  on a direct pass  through  basis.  Buyer shall not be  obligated to
reimburse  Seller for any amounts  attributable  to the Jet A fuel deliveries in
excess of the actual  costs  incurred by Seller  (including,  but not limited to
transportation, storage and any Taxes). Seller shall, upon the request of Buyer,
provide Buyer with all supporting  documentation as may be reasonably  necessary
for Buyer to verify Seller's actual cost of Jet A fuel.

         (b) Buyer shall be  responsible  for arranging for, and paying the cost
of, any necessary  transportation of Buyer's Fuel Supply Requirement to the Fuel
Delivery Point(s) of the Project.

         (c) Each  Party  shall  cooperate  reasonably  with the other  Party to
coordinate  the  supply  and  transportation  of Fuel for the  Project  with the
operation of the Project (i) by providing  the other Party such  information  as
the  first  Party  shall   reasonably   request   relating  to  the  supply  and
transportation  of the Fuel to the  Project and the  consumption  of Fuel by the
Project (in each case,  on both an historical  and  estimated  future basis) and
(ii) by maintaining  personnel  available at all times to address  scheduling of
Fuel  supply  and   transportation   and  to  timely  provide  the   information
contemplated by clause (i).

         (d)  Throughout  the Delivery  Term,  it is  anticipated  that when the
Project is dispatched at certain Scheduling levels by Buyer, the Project will be
capable of converting the Buyer Fuel Supply  Requirements to Scheduled Energy at
a conversion  rate ("Heat Rate") within one hundred eight percent  (108%) of the
applicable  Anticipated  Conversion Heat Rates.  Seller and Buyer agree that the
Heat Rate will be tested not more than four (4) times during the  Calendar  Year
at such times as may be mutually agreed upon by the Parties. Each such Heat Rate
test shall be performed  at one of the  selected  load points shown on Exhibit F
after the Project has been  operated in a steady  state  condition  (output held
constant)  for a period  of not  less  than  thirty  (30)  minutes  prior to the
beginning of the test. The test shall be considered valid only if it is of a two
(2) hour  duration at the steady  state  condition.  The  Project's  natural gas
metering  devices and the Meter will be used for measuring the  respective  Fuel
and Energy data.  Seller shall be responsible  for ensuring that such meters are
appropriately  calibrated.  The test will be deemed  successful if the Heat Rate
measurement,  as adjusted for actual  temperatures,  is up to and  including one
hundred eight percent  (108%) of the  Anticipated  Conversion  Heat Rate. If the
Heat  Rate  measurement   exceeds  one  hundred  eight  percent  (108%)  of  the
Anticipated

                                      -10-
<PAGE>

Conversion  Heat  Rate,  then the Heat Rate  shall be  retested  not later  than
forty-eight  (48) hours  from the time of the prior test using the same  testing
procedure. Should the second test confirm that the Heat Rate measurement exceeds
one hundred eight percent (108%) of the  Anticipated  Conversion Heat Rate, then
(i) neither the first test nor the second test shall be included in the total of
the four (4) Heat Rate  tests to which  Buyer is  entitled  under  this  Section
3.1(d) and (ii) Buyer will notify  Seller that the Heat Rate exceeds one hundred
eight percent (108%) of the  Anticipated  Conversion  Heat Rate and Seller shall
have sixty (60) Days  during  which  Seller may take such  action as it may deem
necessary  to cause the  Project to achieve a Heat Rate that does not exceed one
hundred eight percent  (108%) of the  Anticipated  Conversion  Heat Rate.  Buyer
shall continue to make Capacity  Payments during such sixty (60) Day period.  If
Seller is unable to conduct a Heat Rate test that achieves a Heat Rate that does
not exceed one hundred eight percent (108%) of the  Anticipated  Conversion Heat
Rate  within  such  sixty  (60) Day  period,  then  Buyer  may,  as its sole and
exclusive remedy, terminate this Agreement.

4.       DELIVERY OF ENERGY, CAPACITY AND ANCILLARY SERVICES

4.1      OBLIGATION TO SELL AND PURCHASE.
         --------------------------------

         (a) Subject to the terms and conditions of this  Agreement,  during the
Delivery  Term,  Seller shall accept and receive Fuel  delivered by Buyer to the
Fuel Delivery Point and deliver a corresponding  quantity of Scheduled Energy by
converting Buyer's Fuel Supply Requirement into Energy.

         (b) Subject to the terms and conditions of this  Agreement,  during the
Delivery Term,  Seller shall sell and make available,  and Buyer shall purchase,
Buyer's Project Capacity.

         (c) Subject to the terms and conditions of this Agreement, Seller shall
provide all rights to  Ancillary  Services to Buyer.  Buyer shall be entitled to
receive any Black Start Payments from ERCOT and Seller shall assign the right to
receive such payments to Buyer.

4.2      SCHEDULING.
         -----------

         (a) Seller  shall,  by 5:00 a.m. CPT each Day,  inform Buyer of (i) the
estimated availability of the Project to supply Energy to Buyer during each hour
of the  remaining  portion  of such Day  commencing  three (3) hours  after such
deadline  and (ii) for the Day  immediately  thereafter  subject only to Planned
Outages  defined in Exhibit D. Seller  shall advise Buyer as soon as possible of
any changes in the estimated  availability  of the Project for such Days.  These
estimates  shall not be binding upon Seller and Seller may  subsequently  revise
its  estimates.  The  foregoing  estimates  by Seller  shall not be construed to
permit  Seller to estimate or limit the  availability  of the Project  such that
Buyer is restricted  from  Scheduling the Contract  Capacity  unless the Project
Capacity is  physically  unavailable  due to Force  Majeure,  Planned  Outage or
Unplanned Outage, as the case may be.

         (b) No later  than 3:00 p.m.  CPT on each  Business  Day,  Buyer  shall
deliver to Seller a written  statement (which may be communicated by fax, e-mail
or other  electronic  medium)  setting  forth the  quantity of Energy that Buyer
requests Seller to deliver during each hour of the immediately  following Day at
the Delivery Point.  Scheduling  shall otherwise be accomplished by Buyer in the
manner  contemplated by the ERCOT Independent System Operator,  and accordingly,
may be  implemented  from  hour  to  hour  by  means  of  electronic  real  time
scheduling.

                                      -11-
<PAGE>

Buyer's  written  statement  may request the delivery of Energy from the Project
during any or all hours of any Day, subject only to the Project Constraints.

         (c) Seller  shall be  obligated to accept a request for Energy that has
been provided to Seller in accordance  with the  requirements  of Section 4.2(b)
except  to the  extent  (i) such  request  does  not  comply  with  the  Project
Constraints  or (ii)  Seller  declares  that the Project is not  available  as a
result of a Planned  Outage,  an Unplanned  Outage or an event of Force Majeure.
Seller shall promptly notify Buyer if Seller  determines that it will not accept
a Schedule submitted by Buyer for any of the foregoing reasons.  Notwithstanding
the foregoing,  Seller shall not be obligated to Startup the Project if doing so
is not within the Project Constraints.

         (d) Buyer may request changes to the Applicable  Schedule in accordance
with the Applicable  Requirements  of the ERCOT  Independent  System Operator as
long as such  changes  are  within  the  Project  Constraints.  Seller  shall be
obligated to accept a request for a change to the Applicable Schedule for Energy
that has been provided to Seller in accordance with the  requirements of Section
4.2(b).

         (e) Buyer shall pay all  Scheduling  Fees charged by any third parties,
if any, associated with the scheduling of Energy for its benefit.

         (f) If requested by Seller, Buyer shall cooperate reasonably to attempt
to establish additional scheduling and operating procedures for implementation
of this Agreement.

         (g) From time to time during the Delivery Term, Buyer may designate a
third party to act as Buyer's Qualified Scheduling Entity in accordance with the
Applicable  Requirements.  Buyer may also wish to change the  designated  entity
acting as Buyer's Qualified  Scheduling  Entity from time to time.  Accordingly,
upon request of Buyer,  Seller shall make such  arrangements  in accordance with
the Applicable  Requirements  at Buyer's cost as may be reasonably  necessary to
facilitate the re-designation of Buyer's Qualified Scheduling Entity.

4.3      DELIVERY POINT.
         ---------------

         (a) All deliveries and receipts of Energy shall be made at the Delivery
Point.

         (b) Buyer shall arrange for, provide and be solely  responsible for all
Total Transmission  Services and pay all Transmission Costs necessary to receive
the Energy at, and deliver the Energy from and after, the Delivery Point.  Buyer
shall not be responsible for any transmission services, costs or related charges
arising out of any energy  purchased by Seller for utilization in the Project or
that otherwise flows from the primary  transmission grid to which the Project is
interconnected.

         (c)  Seller  shall  enter  into,  on or before  the  Delivery  Term,  a
Generation Interconnection Agreement with Oncor, in a form that is substantially
similar to that  shown in  Exhibit  G.  Seller  shall  maintain  the  Generation
Interconnection  Agreement in effect throughout the Delivery Term. If Seller has
not executed a Generation Interconnection Agreement substantially in the form of
Exhibit G prior to the  commencement of the Delivery Term, then

                                      -12-
<PAGE>

Buyer shall have the unilateral right to terminate this Agreement. Upon such
termination, neither Seller nor Buyer shall have any further rights, duties or
obligations under this Agreement.

4.4      ENERGY IMBALANCE.
         -----------------

         If either Buyer or Seller  becomes aware that actual hourly  deliveries
or receipts of Energy  hereunder are greater or less than the hourly quantity of
Scheduled Energy (any such  discrepancy,  an "Energy  Imbalance"),  the Party on
notice shall immediately notify the other Party so that appropriate arrangements
regarding  the Energy  Imbalance can be made with the ERCOT  Independent  System
Operator.  If actual deliveries of Energy are greater or less than the Scheduled
Energy,  the Parties shall work together to perform corrective action as soon as
reasonably  possible to eliminate (i) the then current Energy Imbalance and (ii)
the cumulative Energy  Imbalance.  Seller shall pay all Energy Imbalance Charges
resulting  from  Seller's  failure to deliver  Scheduled  Energy for any hour in
which Buyer has Scheduled  Energy in accordance with Section 4. Seller shall not
be responsible  for any Energy  Imbalance  Charges due to a Force Majeure event.
Buyer  shall  also pay all  other  Energy  Imbalance  Charges  including  Energy
Imbalance  Charges  resulting  from the  failure  of Buyer  to  provide  Fuel as
required hereunder,  the failure by Buyer to schedule the transmission of Energy
on the  Connecting  Utility in a manner that  conforms  to the Energy  Scheduled
hereunder,  the failure of Buyer to receive  Energy in a manner that conforms to
the Energy  Scheduled  hereunder,  the failure of any other  Persons to take the
Energy from Buyer in a manner that  conforms  to the Energy  Scheduled  by Buyer
hereunder or the failure of Buyer or of any customer of Buyer to receive  Energy
from the  Connecting  Utility in a manner that conforms to the Energy  Scheduled
hereunder.

4.5      MEASUREMENT.
         ------------

         (a) All Energy  delivered by Seller to Buyer from the Project  shall be
metered at, and by the Meter.  For purposes of determining the Scheduled  Energy
delivered by Seller to Buyer  hereunder,  measurement of all Energy delivered by
Seller  from the  Project  shall be based on  readings  of the Meter.  Scheduled
Energy shall be deemed to be sold and delivered by Seller  hereunder to Buyer if
provided by Seller at the Delivery  Point whether or not Buyer takes such Energy
at the Delivery Point.

         (b)  Seller  shall  request  each   Connecting   Utility  to  maintain,
calibrate,  test and read the  Meters  in a  manner  consistent  with the  Oncor
Generation  Interconnection  Agreement.  Seller  and  Buyer  may  agree on other
metering  procedures  consistent  with  the  Oncor  Generation   Interconnection
Agreement and ERCOT.

         (c) If for any  reason the Meter is out of  service  as  determined  in
accordance  with the ERCOT  Protocols,  or out of  repair so that the  amount of
Energy  delivered cannot be ascertained or computed from readings thereof by the
ERCOT  Independent  System  Operator,  the Energy delivered during the period of
such  outage  shall be  estimated  by  Seller  upon the  basis of the best  data
available  and such  estimate  shall be  binding on Buyer as if it were based on
actual data from the Meter.

         (d) Buyer may, at its  expense,  construct,  install,  own and maintain
communications

                                      -13-
<PAGE>

equipment to allow real-time  measurement of the Project's operating  parameters
and transmission of such information to Buyer's operation center(s).

         (e)  Seller shall, at Seller's expense, have the Meter calibrated prior
to the Effective Date and shall supply Buyer with confirmation of the results of
such  calibration.  Thereafter,  Seller  shall  perform  or  shall  cause  to be
performed the inspection, testing, calibration and adjustment of all of Seller's
metering  devices  at its own  expense  on an  annual  basis at a time  mutually
convenient  to Buyer and Seller.  Seller  shall  provide  Buyer with  reasonable
advance notice of, and permit a  representative  of Buyer to witness and verify,
such inspections,  tests and adjustments. In addition to the foregoing, upon two
(2) weeks'  prior  written  notice by Buyer,  but not more than twice during any
calendar year, Seller shall perform additional inspections or tests of the Meter
and any of Seller's  metering  devices and Seller's  back-up  metering  devices.
Seller shall conduct any such requests in  accordance  with the ERCOT  Protocols
and the requirements of the ERCOT Independent System Operator.  Seller and Buyer
shall agree on a mutually  convenient  time for such  inspections or tests,  and
Seller  shall permit a qualified  representative  of Buyer to inspect or witness
such testing of any of Seller's  metering  devices and Seller's back-up metering
devices.  The actual  expense of any such  requested  additional  inspection  or
testing shall be borne by Buyer  unless,  upon such  inspection or testing,  the
Meter  is  found  to  register  inaccurately  in  comparison  to the  applicable
tolerances  required by the ERCOT  Independent  System  Operator,  Oncor, or the
manufacturer's  recommendations,  whichever  is  more  conservative.  If  any of
Seller's  metering  devices or Seller's back-up metering devices are found to be
defective  or  inaccurate  as  described  above,  the Meter  shall  promptly  be
adjusted, repaired, replaced and/or re-calibrated at the sole expense of Seller.

         (f) If the Meter  fails to  register,  or if the  measurements made by
the Meter are found upon testing to be  inaccurate,  an  adjustment  to previous
billings  shall  be  made  correcting  all  measurements  by the  inaccurate  or
defective  metering  device  for  billing  purposes,  for both the amount of the
inaccuracy and the period of the inaccuracy.  If the period of inaccuracy cannot
be  determined,  then any such  adjustment  shall be limited to the most  recent
previous  billing,  or  shall  otherwise  be  resolved  in  accordance  with the
directives of the ERCOT Independent System Operator.  Any such adjustments shall
be made in a manner consistent with the ERCOT Protocols and the requirements and
recommendations of the ERCOT Independent System Operator.

4.6      TITLE, RISK OF LOSS, INDEMNITY AND FINES.
         ----------------------------------------

         (a) As between the  Parties,  Seller shall be deemed to be in exclusive
control of the Energy prior to delivery to the Delivery Point and Buyer shall be
deemed to be in exclusive control of the Energy at and after the Delivery Point.
Each Party shall indemnify, defend and hold harmless (to the extent permitted by
law) the other Party from any Claims arising from any destruction of property or
personal injury caused by the Energy under its control. Seller warrants that the
Scheduled  Energy  delivered  by Seller  shall be free and  clear of all  liens,
claims and encumbrances  arising prior to the Delivery Point.  Title to and risk
of loss related to the Scheduled Energy shall transfer from Seller to Buyer upon
delivery of the Scheduled Energy at the Delivery Point.

                                      -14-
<PAGE>

         (b) Any fines,  penalties  or other costs  incurred by either  Party or
such Party's agents,  employees or  subcontractors  for  non-compliance  by such
Party, its agents,  employees or subcontractors with any Applicable Requirements
shall not be reimbursed by the other Party but shall be the sole  responsibility
of such  non-complying  Party.  If such  fines,  penalties  or other  costs  are
assessed  against  Buyer  by  any  Government   Agency  or  court  of  competent
jurisdiction   due  to  the   non-compliance   by  Seller  with  any  Applicable
Requirements, Seller shall indemnify and hold harmless Buyer against any and all
Claims  suffered  or  incurred  because  of the  failure  of  Seller  to  comply
therewith.  Seller  shall  also  reimburse  Buyer for any and all legal or other
expenses (including  attorneys' fees) reasonably incurred by Buyer in connection
with such Claims.  If such fines,  penalties or other costs are assessed against
Seller by any Government  Agency or court of competent  jurisdiction  due to the
non-compliance by Buyer with any Applicable Requirements,  Buyer shall indemnify
and hold harmless Seller against any and all Claims suffered or incurred because
of the failure of Buyer to comply  therewith.  Buyer shall also reimburse Seller
for any and all legal or other expenses  (including  attorneys' fees) reasonably
incurred by Seller in connection with such Claims.

5.       PAYMENTS

5.1      CAPACITY, BUYER VARIABLE O&M COSTS AND BUYER STARTUP COST PAYMENTS .
         -------------------------------------------------------------------

         (a) Buyer  shall pay the  Capacity  Payment  to Seller  for each  Month
during the Delivery Term.  The Capacity  Payment shall be due monthly in arrears
throughout  the  Delivery  Term whether or not Buyer  actually  takes any Energy
under this  Agreement,  except for the Capacity  Payment due in any Month during
which a Planned  Outage  occurs in which event,  the Capacity  Payment  shall be
reduced to reflect the actual Project  Capacity  available  during such Month if
such Project Capacity is less than the Contract  Capacity.  The Capacity Payment
shall not be increased for periods in which the Project Capacity is greater than
the Contract  Capacity,  and any previous  reductions in the Capacity Payment as
described  above,  may not be  subsequently  recovered due to an increase in the
Project Capacity to amounts greater than the Contract Capacity.

         (b) Buyer  shall pay the Buyer  Variable  O&M Costs to Seller  for each
Month during the Delivery  Term.  Payment for the Buyer Variable O&M Costs shall
also be due monthly in arrears throughout the Delivery Term.

         (c) Buyer shall pay to Seller the Buyer  Startup  Costs over the course
of each  Calendar  Year.  For  purposes  of  administering  the payment of Buyer
Startup Costs, Buyer shall pay to Seller for each Month during the Delivery Term
an amount  equal to  $78,333  per Month.  If at the end of a  Calendar  Year (or
partial  Calendar Year at the end of the Delivery  Term) it is  determined  that
Seller is owed more than the  amount  paid by Buyer for Buyer  Startup  Costs in
comparison to the monthly payments  described above,  Buyer shall pay the actual
Buyer Startup  Costs within  thirty (30) Days of the end of such Calendar  Year.
For purposes of determining such Calendar Year  adjustment,  the amounts paid by
Buyer  shall be  compared  to the  greater of (i) $3,643 per turbine per Startup
during the Calendar  Year,  (ii)  $939,986 or (iii) $140 per turbine per hour of
operation for such  Calendar  Year.  In addition to the  foregoing,  Buyer shall
reimburse  Seller for the incremental TDSP Charges (as defined in Oncor's Tariff
for Retail

                                      -15-
<PAGE>

Delivery  Service  dated  September  1, 2002,  as amended),  and related  energy
associated  with the dispatch of one of the Units where such Unit is  dispatched
in response to any instruction by Buyer to dispatch the Units  simultaneously to
the levels contemplated in Paragraph 3 of Exhibit C. The foregoing reimbursement
shall not apply to any TDSP  Charges  or energy  associated  with the  auxiliary
power requirements of the Project.  The expected energy demand that results from
such a dispatch  instruction is one (1) MW. The expected energy consumption that
results from such a dispatch instruction is 250 kWh.

         (d) Buyer  shall pay all pass  through  Jet A fuel costs to Seller on a
monthly basis.

5.2      AVAILABILITY REQUIREMENTS.
         --------------------------

         (a) For each  Contract  Year during the  Delivery  Term,  Seller  shall
maintain an Annual  Availability  Factor of at least ninety-six percent (96%) in
accordance with this Section  5.2(a).  The Annual  Availability  Factor shall be
determined,  for each Contract Year, by dividing (i) the difference  between the
Aggregate  Energy less the Cumulative  Undelivered  Energy by (ii) the Aggregate
Energy. The Annual Availability Factor shall be expressed as a percentage, which
shall be deemed in no event to exceed one hundred percent (100%).

         WHERE;

         "Aggregate  Energy" means, for any Contract Year, the sum of the Hourly
Energy for each hour of such Contract Year.

         "Hourly  Energy"  means,  for any hour,  the  product  of the  Contract
Capacity for such hour multiplied by one (1) hour.

         "Hourly  Undelivered  Energy"  means,  for any hour,  the sum,  without
duplication,  of (i) the Energy in MWh  Scheduled  by Buyer in  accordance  with
Section 4.2 and not  delivered by Seller during such hour and (ii) any Energy in
MWh not  Scheduled by Buyer to the extent  Seller has declared such Energy to be
unavailable  during  such  hour in  accordance  with  clause  (ii) of the  first
sentence of Section 4.2(a). For the avoidance of doubt, any Energy not delivered
by Seller because of a breach by Buyer of its  obligations  under this Agreement
shall not be counted in determining the foregoing sum.

         "Cumulative  Undelivered  Energy" means, for any Contract Year, the sum
of the Hourly Undelivered Energy for each hour of such Contract Year.

         Notwithstanding the foregoing,  there shall be excluded for purposes of
calculating the Annual  Availability  Factor, each hour in which Planned Outages
occur (except to the extent described in Exhibit D) and each hour that satisfies
both of the following requirements for which (i) events of Force Majeure ,except
as limited in Section 5.2(c) or (ii) scheduled maintenance:

              (x) adversely affected the Project's production or delivery of
Scheduled Energy during such hour; or

                                      -16-
<PAGE>

              (y) resulted in Seller  declaring any Energy to be unavailable in
accordance with clause (ii) of the first sentence of Section 4.2(a).

         At the end of the Contract Year,  Seller shall pay to Buyer, as Buyer's
sole and  exclusive  remedy  for any  failure  of Seller to  maintain  an Annual
Availability  Factor of at least ninety six percent  (96%) during such  Contract
Year,  a rebate in an  amount  equal to the  product  of (i) one  hundred  (100)
multiplied   by  the  quantity   (ninety-six   percent  (96%)  less  the  Annual
Availability Factor) and (ii) $100,000; provided, however, that Seller's maximum
payment  shall not exceed  $400,000  for the term of the Contract  Year.  If the
Annual Availability Factor exceeds ninety-six percent (96%), during any Contract
Year,  Buyer at the end of such Contract Year, shall pay to Seller a bonus in an
amount equal to the product of (i) one hundred (100)  multiplied by the quantity
(the  Annual  Availability  Factor  less  ninety-six  percent  (96%))  and  (ii)
$100,000. For calculation of the penalty/bonus provision, Hourly Energy will not
exceed  212  MWs per  hour.  For any  period  less  than a  Contract  Year,  the
penalty/bonus  shall be  prorated  by  multiplying  $100,000  by a fraction  the
numerator  of  which  is the  number  of  Months  during  such  period  and  the
denominator is twelve (12).

         (b)  Planned  Outages  for  a  Combustion  Inspection,   Hot  Gas  Path
Inspections, Steam Turbine/Generator Maintenance and Major Maintenance Overhauls
as  referred to in Exhibit D will be excluded  from Annual  Availability  Factor
calculations.

         (c) Force Majeure events having a duration of twelve (12) hours or less
and  aggregating  up to and including  seventy-two  (72) hours during a Contract
Year shall be included in the Annual  Availability  Factor calculation and shall
be considered the same as Unplanned Outage hours.

6.       REPRESENTATIONS AND WARRANTIES

6.1      REPRESENTATIONS AND WARRANTIES.
         -------------------------------

         As a material  inducement to entering into this  Agreement,  each Party
with  respect to itself,  hereby  represents  and warrants to the other Party as
follows:

         (a) it is duly organized,  validly  existing and in good standing under
the laws of the  jurisdiction  of its  formation and is qualified to conduct its
business in those jurisdictions necessary to perform this Agreement;

         (b) the  execution,  delivery and  performance  of this  Agreement  are
within its partnership,  corporate or limited  liability company powers and have
been  duly  authorized  by  all  necessary  partnership,  corporate  or  limited
liability company action;

         (c) this Agreement constitutes a legal, valid and binding obligation of
such Party  enforceable  against  it in  accordance  with its terms,  subject to
bankruptcy,  insolvency,  reorganization  and other  laws  affecting  creditor's
rights  generally,  and the  application of equitable  principles  regardless of
whether enforcement is sought in a proceeding at law or in equity; and

                                      -17-
<PAGE>

         (d) there are no bankruptcy, insolvency,  reorganization,  receivership
or other  similar  proceedings  pending or being  contemplated  by it, or to its
knowledge threatened against it.

6.2      NO OTHER REPRESENTATIONS AND WARRANTIES.
         ----------------------------------------

         Each Party  acknowledges  that it has not entered  into this  Agreement
based upon any  representations and warranties,  express or implied,  other than
the express representations and warranties set forth in this Agreement.

7.       COVENANTS

7.1      REMAKING OF REPRESENTATIONS AND WARRANTIES.
         -------------------------------------------

         Each Party covenants that it will cause its respective  representations
and  warranties  in  Section  6.1(a)  through  (c) to  remain  true and  correct
throughout the Contract Term.

7.2      PARTIES' OBLIGATIONS.
         ---------------------

         (a) Seller  shall  operate  and  maintain  or cause the  operation  and
maintenance  of the Units and  Common  Facilities  in  accordance  with  Prudent
Industry Practices and otherwise in accordance with this Agreement. Seller shall
during the Delivery Term,  acquire and maintain in effect all licenses,  permits
and  governmental  approvals as required at the Effective Date for the operation
and dispatch of the Project at levels equal to the Contract Capacity.

         (b) Buyer shall be the exclusive purchaser of the Contract Capacity,
Energy,  and Ancillary  Services from the Project  during the Contract Term and,
subject  to the  provisions  of  Sections  9.1 and 8.2,  shall  pay when due all
amounts required to be paid under this Agreement..

7.3      PROFESSIONAL OPERATIONS.
         ------------------------

         Each Party shall employ,  either  directly or indirectly,  professional
personnel  who are fully  capable  of  performing  the tasks of such  Party on a
24-hour per Day, 7-Day per week basis.

7.4      CONFIDENTIALITY.
         ----------------

         The existence of this Agreement and all of the terms and conditions set
forth  in this  Agreement  shall  be  governed  by the  terms  of  that  certain
Confidentiality Agreement executed by the Parties dated June 30, 2003.

7.5      PLANNED OUTAGES.
         ----------------

         Seller shall  schedule  Planned  Outages in accordance  with Exhibit D.
Planned Outages for a Combustion  Inspection,  Hot Gas Path  Inspections,  Steam
Turbine/Generator  Maintenance  and  Major  Maintenance  Overhauls  will  not be
scheduled during the Months of June, July, August and September.

                                      -18-
<PAGE>

7.6      PLANT MODIFICATIONS.
         --------------------

         (a) Seller agrees that it will use commercially  reasonable  efforts to
refurbish  its Jet A fuel  system at the  Project  prior to the first day of the
Delivery   Term.   Buyer  agrees  to  contribute  up  to  $50,000   toward  such
refurbishment  and shall reimburse Seller for such amount upon completion of the
refurbishment.  Seller  shall,  at its  own  expense,  perform  or  cause  to be
performed periodic maintenance on such system during the Delivery Term.

         (b) Seller  agrees to install an AGC system at the Project prior to the
first day of the Delivery Term. Buyer agrees to contribute up to $250,000 toward
the  installation  of the AGC and shall  reimburse  Seller for such  amount upon
completion of the  installation.  At the end of the Delivery  Term, if Buyer and
Seller  do not  agree to renew  the  Agreement,  Seller  shall  refund  to Buyer
one-half of Buyer's contribution toward the cost of installation of the AGC.

8.       EVENTS OF DEFAULT AND REMEDIES

8.1      EVENT OF DEFAULT.  An "Event of Default" shall mean:
         ----------------

         (a) the failure of the defaulting  Party to make, when due, any payment
required  under this  Agreement if such failure is not remedied  within five (5)
Business  Days after written  notice of such failure is given to the  defaulting
Party by the other Party; or

         (b) any  material  representation  or warranty  made by the  defaulting
Party in this  Agreement  shall  prove to have been false or  misleading  in any
material respect when made; or

         (c) the  material  breach by the  defaulting  Party of any covenant set
forth in this  Agreement  (other than any event that is  otherwise  specifically
covered in this Section 8.1 as a separate Event of Default), and such failure is
not cured within thirty (30) Days after written notice thereof to the defaulting
Party or, if the  breach or  default  is not of the type that can be  reasonably
cured within  thirty (30) Days,  within a reasonable  period of time, so long as
the  defaulting  Party has  commenced to cure the breach or default  within such
thirty (30) Day period and thereafter diligently pursues such cure to completion
within one hundred eighty (180) days; or

         (d) the defaulting Party shall:

             (i) make an  assignment  or any  general  arrangement  for the
benefit of creditors;

             (ii) file a  petition  or  otherwise  commence,  authorize  or
         acquiesce in the  commencement of a proceeding or cause of action under
         any bankruptcy or similar law for the protection of creditors,  or have
         such petition  filed against it and in the case of such petition  filed
         against it is not  withdrawn or dismissed  within sixty (60) Days after
         such filing;

                                      -19-
<PAGE>

             (iii)  otherwise   become   bankrupt  or  insolvent   (however
         evidenced); or

             (iv) be unable to pay its debts as they fall due.

8.2      REMEDIES UPON AN EVENT OF DEFAULT.
         ----------------------------------

                  (a) If an Event of Default occurs with respect to a defaulting
          Party at any time during the Contract Term, the  non-defaulting  Party
          may, for so long as the Event of Default is continuing,  (i) deliver a
          written notice that establishes a date (which date, in the case of the
          Events of Default  described in Section  8.1(a) through (c) shall be a
          date that is no earlier than thirty (30) Days after the non-defaulting
          Party delivers notice,  and which, in the case of the Event of Default
          described in Section  8.1(d) may be immediate) on which this Agreement
          will be  terminated,  (ii) withhold any payment due in respect of this
          Agreement and (iii) pursue any other  remedies  available at law or in
          equity,  except to the extent such remedies are  expressly  limited by
          this Agreement.

                  (b) In the event  Seller,  its partners,  employees,  agents,
          representatives   or   subcontractors   knowingly,   intentionally  or
          willfully  fail to deliver  Energy to Buyer,  which Energy should have
          otherwise been  delivered to Buyer under the terms of this  Agreement,
          or  Buyer,  its  partners,   employees,  agents,   representatives  or
          subcontractors knowingly,  intentionally or willfully fail to make any
          payments required under the terms of this Agreement, in each case when
          such  failure  is not due to Force  Majeure,  a  Planned  Outage or an
          Unplanned Outage, then the non-defaulting Party may elect to terminate
          the  Agreement  in  accordance  Section  8.2(a),  in  which  case  the
          defaulting Party shall pay to the non-defaulting  Party, a Termination
          Payment. The "Termination  Payment" payable by the defaulting Party to
          the non-defaulting  Party shall equal: (1) the non-defaulting  Party's
          Loss as calculated under paragraph (i) below and discounted to present
          value as set forth below; plus (2) the non-defaulting  Party's Cost as
          calculated under paragraph (ii) below; minus (3) any set-offs to which
          the  non-defaulting  Party is entitled  as set forth  under  paragraph
          (iii) below. The Parties intend that the non-defaulting Party's "Loss"
          shall be the economic  loss  (exclusive of Costs),  if any,  resulting
          from  the  termination   ----  of  the  Agreement,   determined  in  a
          commercially  reasonable  manner as calculated in accordance with this
          Section 8.2(b). The Loss, if any, suffered by the non-defaulting Party
          shall be determined  by comparing the value of the remaining  Contract
          Term  (including  all market  based value  components)  to one hundred
          percent (100%) of the Contract Capacity under the Agreement had it not
          been  terminated to the equivalent  quantity and relevant market price
          for  the  remaining  Contract  Term  either  quoted  by  a  bona  fide
          third-party offer or which are reasonably  expected to be available in
          the  market  under  a  replacement  contract  for  the  Agreement.  To
          ascertain the market price of a replacement  agreement  (including all
          market based value components), the non-defaulting Party may consider,
          among other valuations, quotations from leading dealers in tolling and
          energy  and  commodity  contracts,  and other  bona fide  third  party
          offers, all adjusted for the length of the remaining Contract Term and
          differences  in   transmission.   It  is  expressly  agreed  that  the
          non-defaulting  Party shall not be required to enter into  replacement
          transactions in order to determine the Termination Payment.

                                      -20-
<PAGE>

                    (i)  The  Loss  calculated  under  paragraph  (b)  shall  be
               discounted to present value using the net present value at a rate
               equal to the rate of interest  paid on a one-year  United  States
               Treasury  obligation as reported in the Wall Street Journal as of
               the time of termination  (to take into account the period between
               the time notice of termination was effective and when such amount
               would have otherwise been due pursuant to this Agreement).

                    (ii) The non-defaulting  Party's "Costs" shall be calculated
               as the sum of the brokerage  fees,  commissions and other similar
               transaction costs and expenses reasonably incurred in terminating
               and replacing the Agreement,  including,  reasonable transmission
               and ancillary  service costs  associated with the Agreement,  and
               reasonable  attorneys' fees, if any,  incurred in connection with
               the non-defaulting  Party enforcing its rights with regard to the
               Agreement.  The non-defaulting Party shall use reasonable efforts
               to mitigate or eliminate Costs.

                    (iii) The  non-defaulting  Party  shall  set-off  any or all
               other  amounts  owing  between the Parties  under this  Agreement
               against  the  Termination  Payment so that all such  amounts  are
               aggregated  and/or netted to a single amount.  The net amount due
               shall be paid within  thirty (30) Days  following  the  effective
               date  of  termination.  If the  Parties  disagree  regarding  the
               calculation of the Termination  Payment,  then such dispute shall
               be resolved in accordance with Article 16.

                    (c) Notwithstanding any other provision of this Agreement, a
               Party's damages shall not include any Stranded Costs.

8.3      ACKNOWLEDGMENT OF THE PARTIES.
         ------------------------------

         (a) Each Party hereby stipulates that the payment obligations set forth
in  Section  5.2  are  reasonable  in  light  of the  anticipated  harm  and the
difficulty of estimation or  calculation of actual damages and each Party hereby
waives the right to contest such payments as an unreasonable penalty. The remedy
set forth in Section 5.2(a) shall be the sole and exclusive  remedy of the Buyer
under Section 5.2.

         (b) In the event either Party fails to pay amounts in  accordance  with
the terms of this  Agreement  when due, the  aggrieved  Party (a) shall have the
right to  suspend  performance  until such  amounts  plus  interest  at the Late
Payment  Rate have been paid,  and (b) shall be entitled to interest at the Late
Payment Rate from the date due until the date paid.

8.4      OTHER EVENTS.
         ------------

         In the event  that  Buyer is  regulated  by a  federal,  state or local
regulatory body, and such body shall disallow  recovery of all or any portion of
any costs  incurred or yet to be incurred by Buyer under any  provision  of this
Agreement, such action shall not operate to excuse Buyer from performance of any
obligation  nor shall such  action give rise to any right of Buyer to any refund
or retroactive adjustment of the amounts owed under the Agreement.

9.       BILLING AND PAYMENT

                                      -21-
<PAGE>

9.1      BILLING AND PAYMENT.
         --------------------

         Seller  shall  render to Buyer (by  regular  mail,  facsimile  or other
acceptable  means  pursuant to Section  15.1) for each Month during the Delivery
Term a  statement  setting  forth the  Capacity  Payment,  the payment for Buyer
Variable  O&M Costs and the payment for Buyer  Startup  Costs for such Month and
any other  charges  due to Seller,  including  payments  or credits  between the
Parties  pursuant to Sections 4.4 and 5.2 during the  preceding  Month,  and the
amounts due to Seller  from Buyer  therefor.  If Seller is missing any  relevant
information at the time Seller prepares a regular monthly  invoice,  then Seller
may  separately   invoice  Buyer  for  any  affected  payment  or  amount  in  a
supplemental  invoice or subsequent regular invoice upon receipt of the relevant
information.  On or before twenty (20) Days after receipt of Seller's statement,
or if such Day is not a Business  Day, on the Day  provided  in Section  1.2(f),
Buyer shall render, by wire transfer,  the amount set forth on such statement to
the payment address  provided in Exhibit E hereto.  If either Party disputes the
accuracy of a statement, the Parties shall use their best efforts to resolve the
dispute in  accordance  with Section 16. Any  adjustments  which the Parties may
subsequently  agree to make with  respect to any such billing  dispute  shall be
made by a credit or additional  charge on the next  statement  rendered.  If the
Parties are unable to resolve the dispute in this manner,  any amounts remaining
in dispute  that are  disputed in good faith as of the due date for such billing
period may be withheld  pending  final  resolution  of the dispute in accordance
with Section 16, provided that any undisputed amount shall be promptly paid; and
provided,  further,  that  amounts paid as a result of the  settlement  or other
resolution of a dispute  shall be paid with  interest  thereon from the original
due date until paid at the Late  Payment  Rate.  Overdue  payments  shall accrue
interest  from,  and  including,  the due date to,  but  excluding,  the date of
payment at the Late Payment Rate.

9.2      AUDIT.
         -----

         Each Party (and its Representatives) has the right, at its sole expense
and during normal  working hours and upon five (5) business days, to examine the
records of the other  Party to the  extent  reasonably  necessary  to verify the
accuracy  of  any  statement,  charge  or  computation  made  pursuant  to  this
Agreement.  If requested,  a Party shall  provide to the other Party  statements
evidencing the quantities of Energy delivered at the Delivery Point. If any such
examination reveals any inaccuracy in any statement,  the necessary  adjustments
in such statement and the payments  thereof will be promptly made and shall bear
interest  calculated at the Late Payment Rate from the date the  overpayment  or
underpayment was made until paid; provided,  however, that no adjustment for any
statement or payment will be made unless  objection to the accuracy  thereof was
made prior to the lapse of two (2) years from the rendition thereof.

10.      ASSIGNMENT; BINDING EFFECT

10.1     ASSIGNMENT.
         -----------

         Neither  Party  shall  assign  this  Agreement  or any of its rights or
obligations  hereunder  without the prior  written  consent of the other  Party,
which consent shall not be unreasonably withheld or delayed. Notwithstanding the
foregoing,  either Party may,  without the need for

                                      -22-
<PAGE>

consent from the other Party (and without  relieving  itself of its  obligations
hereunder), (i) transfer, sell, pledge, encumber or assign this Agreement or the
accounts,  revenues or proceeds hereof in connection with any financing or other
financial arrangements;  or (ii) transfer or assign this Agreement to any person
or entity  succeeding to all or  substantially  all of the assets of such Party;
provided,  however,  that in each such  case  other  than  clause  (i),  (x) the
assignee shall make  representations to the other Party identical to those under
Section  6.1,  and (y) the  assignee  shall  agree in writing to be bound by the
terms and conditions of this Agreement.

10.2     BINDING EFFECT.
         ---------------

         This  Agreement  shall inure to the benefit of and be binding  upon the
Parties and their respective  successors and permitted assigns. No assignment or
transfer  permitted  hereunder  shall  relieve  Seller  or Buyer of any of their
respective obligations under this Agreement.

11.      FORCE MAJEURE AND LIMITATION OF LIABILITY

11.1     FORCE MAJEURE.
         ---------------

         If either  Party is rendered  unable by Force  Majeure to carry out, in
whole or in part,  its  obligations  under this  Agreement  and such Party gives
notice and full  details of the event to the other Party as soon as  practicable
after the  occurrence  of the event  (but in no event  later  than ten (10) Days
following the  occurrence),  the  obligations of the Party affected by the event
shall be suspended to the extent so  affected.  The Party  affected by the Force
Majeure  shall use  commercially  reasonable  efforts to continue to perform its
obligations under this Agreement and remedy its inability to perform;  provided,
however,  that this provision  shall not require Seller to deliver,  or Buyer to
receive,  Energy  at  points  other  than  the  Delivery  Point.  The  delay  in
performance during an event of Force Majeure shall be of no greater scope and of
no longer duration than is caused by the event of Force Majeure. The Party whose
performance is impaired by Force Majeure shall provide regular written  progress
reports to the other  Party  during the period  that  performance  is delayed or
prevented   describing  the  actions  taken  and  to  be  taken  to  remedy  the
consequences  of the event of Force  Majeure,  the schedule for such actions and
the expected date by which  performance  will no longer be affected by the event
of Force  Majeure.  When  performance  of the Party  claiming the event of Force
Majeure is no longer being  delayed or  prevented,  that Party shall provide the
other Party with written  notice to that effect.  If the remedy of such an event
shall exceed  twenty-one  (21) Days from the date of  occurrence  of such event,
then  following  such  twenty-one  (21) Day period,  Buyer may  suspend  further
payment of the Capacity  Payment without recourse or remedy by Seller until such
remedy occurs. If the remedy of such event shall exceed sixty (60) days from the
date of occurrence  of such event,  then  following  such sixty (60) day period,
either Party shall, upon ten (10) Days' prior written notice, have the option to
terminate this Agreement.

11.2     LIMITATION OF REMEDIES, LIABILITY AND DAMAGES.
         ----------------------------------------------

         THE PARTIES  CONFIRM THAT EXCEPT AS OTHERWISE SET FORTH HEREIN  SECTION
5.2(a) PROVIDES THE SOLE AND EXCLUSIVE  REMEDY AND MEASURE OF DAMAGES UNDER THIS
AGREEMENT  AND THE  OBLIGOR'S  LIABILITY  SHALL BE  LIMITED AS SET FORTH IN SUCH
PROVISION

                                      -23-
<PAGE>

AND ALL OTHER  REMEDIES  OR  DAMAGES  AT LAW OR IN  EQUITY  ARE  WAIVED.  UNLESS
EXPRESSLY  PROVIDED  IN THIS  AGREEMENT,  NEITHER  PARTY  SHALL  BE  LIABLE  FOR
CONSEQUENTIAL,  INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, BY STATUTE,
IN TORT OR CONTRACT, UNDER INDEMNITY PROVISION OR OTHERWISE. IT IS THE INTENT OF
THE PARTIES THAT THE  LIMITATIONS  HEREIN IMPOSED ON REMEDIES AND THE MEASURE OF
DAMAGES BE WITHOUT  REGARD TO THE CAUSE OR CAUSES  RELATED  THERETO,  INCLUDING,
WITHOUT  LIMITATION,  THE  NEGLIGENCE OF ANY PARTY,  WHETHER SUCH  NEGLIGENCE BE
SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE.

11.3     DUTY TO MITIGATE.
         -----------------

         Each Party agrees that it has a duty to mitigate  damages and covenants
that it will use commercially  reasonable efforts to minimize any damages it may
incur as a result of the other Party's  performance or  non-performance  of this
Agreement.

12.      TAXES; STRANDED COSTS

12.1     GENERAL.
         ---------

         Buyer and Seller shall each use  reasonable  efforts to  implement  the
provisions of and to administer  this Agreement in accordance  with their intent
to minimize Taxes, so long as neither Party is materially  adversely affected by
such efforts.  Either Party, upon written request of the other,  shall provide a
certificate of exemption or other reasonably  satisfactory evidence of exemption
if either Party is exempt from Taxes, and shall use reasonable efforts to obtain
and cooperate  with  obtaining any  exemption  from or reduction of Tax.  Either
Party with  knowledge  of a Tax on the  purchase  or sale of energy  that may be
applicable  to the  Energy  sold  hereunder  shall  notify the other  Party,  in
advance,  of the applicability of such Tax and shall also notify the other Party
of any proposal to implement a new Tax or apply an existing Tax to the purchase,
sale, delivery, or receipt of Energy hereunder.

12.2     APPLICABLE TAXES AND CHANGE IN LAW.
         -----------------------------------

         (a)  Seller  shall be  responsible  for all Taxes  (including,  but not
limited to  Change-in-Law  Taxes) on or with  respect to the Energy or Ancillary
Services sold and delivered  hereunder prior to the Delivery Point.  Buyer shall
be  responsible  for all Taxes imposed on the Energy or Ancillary  Services from
and after the  Delivery  Point.  If Seller is required to collect or pay any Tax
levied  at and after  the  Delivery  Point on behalf of Buyer as a result of the
sales transaction  contemplated in this Agreement Buyer shall reimburse that Tax
to Seller.  Neither  Party shall be  required  to pay, or cause to be paid,  any
Taxes measured by the income of the other Party.  Each Party shall indemnify (to
the extent permitted by law), release,  defend and hold harmless the other Party
from and against any and all liability  for (i) Taxes  measured by the income of
the  indemnifying  Party  and (ii)  Taxes  imposed  or  assessed  by any  taxing
authority with respect to the Energy sold, delivered and received hereunder that
are the  responsibility  of the Party pursuant to this Section 12.2. Seller will
be responsible for the payment of Taxes imposed on Seller and its property,  and
the Capacity  Payments,  energy  payments and other amounts  payable by Buyer to
Seller  hereunder  will not be subject to adjustment for Taxes imposed on Seller
and

                                      -24-
<PAGE>

its  property.  Buyer will be  responsible  for the payment of Taxes  imposed on
Buyer and its property, and no amount payable by Seller to Buyer will be subject
to adjustment for Taxes imposed on Buyer and its property.

         (b) If the  capital  or  variable  costs of the  design,  construction,
testing, commissioning,  operation or maintenance of the Project changes or will
change as a result of a Change-in-Law notwithstanding the choice or alternatives
Seller makes to comply with the Change-in-Law  (which choice will be Seller's in
its sole discretion), the Capacity Payment, the energy payments and/or any other
amounts  payable  hereunder  will not, under such  circumstances  be adjusted to
reflect the cost of such change. If a Change-in-Law  results in Seller having to
make material changes to the Project in order to comply with such Change-in-Law,
then  Seller,  as its sole and  exclusive  remedy  for such  circumstances,  may
terminate this Agreement upon thirty (30) Days' notice to Buyer.

12.3     STRANDED COSTS.
         ---------------

         Notwithstanding  any other provision in this Agreement to the contrary,
in  performance  of this  Agreement  neither  Party  shall be  required to bear,
directly or indirectly,  any Stranded Costs (including,  without limitation, any
transmission  surcharges,  Taxes,  etc.)  incurred  by the  other  Party  or any
customer  or  supplier  of the  other  Party or any  other  Person,  or that are
assessed or levied by any Person against the other Party.

13. THERMAL ENERGY. Seller has represented to Buyer and hereby does represent to
Buyer that Seller is in the process of negotiating a steam supply agreement with
a third party. Such negotiations may result in the execution of a steam purchase
or other  similar  agreement  whereby the third  party  achieves  ownership  and
control  of  the  thermal  output  of the  Project.  Accordingly,  prior  to the
execution  of any steam  agreement or other  similar  agreement  committing  the
thermal  output of the Project to any third  party,  Seller  shall  periodically
advise Buyer on the status of negotiation  of such  agreement and shall,  at the
reasonable request of Buyer,  provide Buyer with copies of the agreement that is
under  negotiation  with third  parties.  If Seller  enters  into a steam  sales
agreement with a third party  purchaser,  and the thermal energy produced by the
Project is sold to such third party,  then the Parties agree that the Net Margin
from any thermal  energy  sold from the  Project to such third party  during the
Contract  Term shall be shared  equally  between the Parties.  Buyer in its sole
discretion  shall decide  whether or not to make sales from the Project to third
parties  and  Seller  shall  not make any such  sales to third  parties  without
Buyer's  consent.  For purposes of this Article 13, the term "Net Margin"  shall
mean the Monthly gross revenues derived from the sale of the thermal energy less
(a) the Monthly actual costs of the water and natural gas inputs used to produce
the  thermal  energy and (b) any  maintenance  costs  associated  with the steam
supply system.  Amounts owed to Buyer shall be credited monthly by Seller on the
statement to be delivered by Seller to Buyer in accordance with Section 9.1.

14.      INSURANCE.

         Seller shall carry and  maintain or cause to be carried and  maintained
during the  Contract  Term  insurance  that is usual and  customary to insurance
carried by similar  companies  engaged in similar  businesses and owning similar
properties,  including  property  damage,  liability,

                                      -25-
<PAGE>

automobile and statutory  workers'  compensation.  Upon Buyer's request,  Seller
shall provide to Buyer a certificate showing Seller has obtained such insurance.

15.      MISCELLANEOUS.

15.1     NOTICES.
         --------

         Any  notice,   request,  demand  or  other  communication  required  or
permitted to be given under this Agreement shall be in writing (unless otherwise
provided herein) and shall be deemed to have been duly given and received (i) at
the time of service if served  personally,  (ii) one half hour after the time of
confirmation  of  transmission  if sent via facsimile  transmission  and written
confirmation  is  received,  (iii) on the day after  delivery  to a courier  for
overnight  delivery,  with delivery fees prepaid, or (iv) on the fifth day after
mailing  when  deposited  in the United  States Mail  (registered  or  certified
receipt  requested)  postage  prepaid by first class  mail,  in each case to the
addresses or facsimile numbers,  as applicable,  specified in Exhibit E. Notices
permitted to be delivered via telephone  under this Agreement shall be deemed to
be  received  at the time the phone  conversation  takes  place  using the phone
numbers  specified in Exhibit E. The Party delivering notice via telephone shall
provide the other Party with a written statement regarding the subject matter of
such  telephone  notice on the Business Day following  the date such  telephonic
notice was provided.

15.2     ENTIRETY.
         ---------

         This Agreement and the Exhibits hereto  constitute the entire agreement
between the Parties  related to the subject  matter  hereof and  supercedes  all
prior agreements  covering such subject.  There are no prior or  contemporaneous
agreements or representations affecting the same subject matter other than those
herein  expressed.  Except for any matters which, in accordance with the express
provisions of this Agreement,  may be resolved by verbal  agreement  between the
Parties, no amendment, modification or change herein shall be enforceable unless
reduced to writing and  executed by both  Parties.  For the  avoidance of doubt,
this Agreement does not supercede the Oncor Generation Interconnection Agreement
or any agreements for the  transmission  of energy,  all of which remain in full
force and effect.

15.3     GOVERNING LAW.
         --------------

         THIS AGREEMENT AND THE RIGHTS AND DUTIES OF THE PARTIES HEREUNDER SHALL
BE GOVERNED BY AND CONSTRUED, ENFORCED AND PERFORMED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS.

15.4     NON-WAIVER.
         -----------

         No waiver by any Party hereto of any one or more  defaults by the other
Party in the  performance of any of the  provisions of this  Agreement  shall be
construed as a waiver of any other default or defaults whether of a like kind or
different nature.

15.5     SEVERABILITY.
         -------------

                                      -26-
<PAGE>

         Except as otherwise stated herein, any provision or article declared or
rendered  unlawful by a court of law or regulatory  agency or jurisdiction  over
the  Parties,  or  deemed  unlawful  because  of a  statutory  change,  will not
otherwise affect the lawful obligations that arise under this Agreement. In such
circumstances,  the  Parties  agree to  negotiate  in good faith to restore  the
agreement as near as possible to the original intent and effect.

15.6     HEADINGS; EXHIBITS.
         -------------------

         The  headings  used  for  the  sections  and  articles  herein  are for
convenience  and reference  purposes only and shall in no way affect the meaning
or  interpretation  of the  provisions of this  Agreement.  Any and all Exhibits
referred to in this Agreement are, by such  reference,  incorporated  herein and
made a part hereof for all purposes.

15.7     NO THIRD PARTY BENEFICIARIES.
         -----------------------------

         Nothing in this Agreement  shall provide any benefit to any third party
or entitle any third party to any claim, cause of action, remedy or right of any
kind,  it being the  intent of the  Parties  that  this  Agreement  shall not be
construed as a third party beneficiary contract.

15.8     COUNTERPARTS.
         -------------

         This Agreement may be executed in several  counterparts,  each of which
is an original and all of which constitute one and the same instrument.

15.9     FURTHER ASSURANCES.
         -------------------

         The Parties shall execute such  additional  documents,  and shall cause
such  additional  action to be taken as may be  required  or, in the  reasonable
judgment of any Party, may be necessary or desirable,  to effect or evidence the
provisions of this Agreement and the transactions contemplated hereby.

15.10    RENEWAL.
         --------

         The Parties may renew this  Agreement for successive  one-year  periods
commencing  January 1, 2006. A Party desiring to renew this Agreement shall give
written  notice  thereof  to the other  Party not later than June 30 of the year
preceding the then applicable Termination Date. Both Parties must agree to renew
this Agreement and any such agreement between the Parties shall be in writing.

16.      DISPUTE RESOLUTION.

         (a) Each of Seller  and Buyer  will  designate  in writing to the other
Party a  representative  who will be authorized  to resolve any dispute  arising
under this  Agreement in an equitable  manner and,  unless  otherwise  expressly
provided  herein,  to exercise the authority of such Party to make  decisions by
mutual  agreement.  If such designated  representatives  are unable

                                      -27-
<PAGE>

to resolve a dispute under this Agreement, such dispute will be referred by each
Party's representatives,  respectively, to a senior officer designated by Seller
and a senior  officer  designated  by Buyer for  resolution  upon five (5) Days'
written  notice from either  Party.  The Parties  hereto agree (i) to attempt to
resolve all disputes arising hereunder  promptly,  equitably and in a good faith
manner and (ii) to  provide  each other with  reasonable  access  during  normal
business  hours  to any and all  non-privileged  records,  information  and data
pertaining to any such dispute.

         (b) All disputes arising under, out of, or in relation to any provision
of this  Agreement  that are not  resolved by the  Parties'  representatives  as
described above,  within thirty (30) Days after either Party's receipt of notice
referring  the  dispute to the senior  officers  of Seller and Buyer (and in any
event within the time which legal or equitable  proceedings based on such claim,
dispute,  or  controversy  would  not be  barred by the  applicable  statute  of
limitations)  will be submitted upon written  request of either Party to binding
arbitration.  Each  Party  will  have the  right  to  designate  an  independent
arbitrator  of its  choice,  who  need  not be  from  the  American  Arbitration
Association  ("AAA") panel of arbitrators but who (a) will be experienced in the
independent  power  electric  generation  field and (b) will not be and will not
have been  previously an employee or agent of or consultant or counsel to either
Party and will not have a direct or  indirect  interest  in either  Party or the
subject matter of the  arbitration.  Such  designation will be made by notice to
the other  Party and to the AAA  within ten (10) Days or, in the case of payment
disputes, five (5) Days after the date of the giving of notice of the demand for
arbitration.  The  arbitrators  designated by the Parties will designate a third
independent  arbitrator,  who  will be a  retired  federal  or  state  judge  or
practicing  trial attorney (and who will act as chairman),  within ten (10) Days
or,  in the  case of  payment  disputes,  five (5)  Days  after  the date of the
designation of the last of the arbitrators to be designated by the Parties,  and
the  arbitration  will be decided by the three (3)  arbitrators.  If the two (2)
arbitrators  cannot or do not select a third independent  arbitrator within such
period,  either  Party may apply to the AAA for the  purpose of  appointing  any
person  listed  with  the AAA as the  third  independent  arbitrator  under  the
expedited  rules  of the  AAA.  Such  arbitration  will be  held in  alternating
locations  of the home  offices of the  Parties,  commencing  with  Buyer's home
office, or in any other mutually agreed upon location. The rules of the AAA will
apply to the extent not inconsistent with the rules herein specified. Each Party
will bear its own  expenses  (including  attorneys'  fees)  with  respect to the
arbitration,  unless  the  arbitrator  decides  on  a  different  allocation  of
expenses.  The arbitrators  will designate the Party to bear the expenses of the
arbitrators or the respective amounts of such expense to be borne by each Party.
The decision of the arbitrators shall be confined to the selection of either the
position  offered by Buyer or the position offered by Seller and the arbitrators
shall not be permitted to independently develop or fashion a remedy separate and
apart by one of the remedies proposed by the Parties.

         (c) Each Party understands that this Agreement contains an agreement to
arbitrate with respect to specified disputes. After signing this Agreement, each
Party  understands  that it will not be able to bring a lawsuit  concerning  any
dispute that may arise that is covered by this arbitration provision.  Any award
of the arbitration  panel may be enforced by the Party in whose favor such award
is made in any court of competent jurisdiction.

17.  FORWARD  CONTRACT.  The Parties  acknowledge  and agree that this  contract
constitutes  a  "forward  contract"  within the  meaning  of the  United  States
Bankruptcy Code.

                                      -28-
<PAGE>

         IN WITNESS WHEREOF,  each of Buyer and Seller has caused this Agreement
to be duly executed on its behalf as of the date first above written.

                                 POWER RESOURCES, LTD.,
                                 a Texas limited partnership

                                 By its General Partner

                                 CE TEXAS RESOURCES, LLC

                                 By:   /s/ Stefan A. Bird
                                       ------------------
                                 Name:     Stefan A. Bird
                                 Title:    President

                                 ONEOK  ENERGY  MARKETING  AND
                                 TRADING  COMPANY,  L.P., a Texas limited
                                 partnership

                                 By its General Partner

                                 ONEOK ENERGY MARKETING AND
                                 TRADING COMPANY, II

                                 By:   /s/  Chris Skoog
                                       --------------------------------
                                 Name:      Chris Skoog
                                 Title:     President

                      [SIGNATURE PAGE TO TOLLING AGREEMENT]

                                      -29-

<PAGE>

                                    EXHIBIT A

                               PROJECT DESCRIPTION

         The Project is located in Howard County, at 500 East Refinery Road, Big
Spring, Texas 79720. The Project is a gas-fired, combined cycle plant containing
two  combustion  turbines;  two  heat  recovery  steam  generators,  and a steam
turbine-generator. The Project design includes the following major components:

     A.   Combustion  Turbines  - Two GE  Frame  7EA  combustion  turbines  with
          natural gas firing, and inlet air cooling.

     B.   Heat  Recovery  Steam  Generators  (HRSG's) - Two Deltak  HRSG's  with
          Supplemental   duct   firing.   Each  HRSG  is   designed   to  supply
          high-pressure steam to the steam turbine at 1200 psig / 940(Degree) F.
          The Project  design  includes  Steam  Injection to limit NOX emissions
          from the project.

     C.   Steam Turbine - The Hitachi  steam turbine is a condensing  turbine of
          approximately 75 MW (gross) with its own lube and control oil systems.
          The Project design provides that the steam turbine  receives its steam
          from the HRSGs.

     D.   Generator - Gas turbine  generator  design,  totally enclosed hydrogen
          cooled, 3600 rpm, 90,875 KVA rating,  three phase, 60 Hz design. Steam
          turbine generator design,  totally enclosed water to air cooled,  3600
          rpm, 89,000 KVA rating, three phase, 60 Hz design.

     E.   Auxiliaries  -  Auxiliary  equipment  and  facilities  to support  the
          operation of the Project  including a cooling tower,  water  treatment
          equipment  and  discharge   line,  fire   protection,   back-up  power
          equipment, control and communications systems and HVAC systems.

     F.   Transmission Interconnection - The Project is interconnected at 345 kV
          to the Oncor transmission system at the site of the Project.

     G.   Gas  Interconnection  - The Project  connects to the Oneok  Westex Gas
          distribution system.

     H.   Site - The Project design leaves room at the site for the installation
          of  additional  units and  related  facilities.  For  purposes of this
          Agreement,  any such additional  units and related  facilities are not
          part of the Project.

     I.   Capacity - The Project is  designed  to have a Project  Capacity of at
          least 212,000 kW.

<PAGE>

                                    EXHIBIT B

                               FUEL SPECIFICATIONS

         Natural gas meeting the natural gas quality requirements in effect from
time to time to transport  such natural gas under the tariff of Oneok Westex Gas
Transmission Company.

         Jet A meeting the quality requirements of the turbine manufacturer.

<PAGE>

                                    EXHIBIT C

                               PROJECT CONSTRAINTS

         The Project  Constraints are the actual operational  constraints of the
Project while being operated in accordance  with Prudent  Industry  Practice and
Applicable  Requirements  including,  without  limitation,  minimum load levels,
maximum  capacity,  maximum ramp rates (up or down),  minimum time  required for
start-up and the  constraints on the ability to obtain and to change fuel supply
and transportation as set forth in the fuel supply and transportation agreements
for the Project.

         Set forth below is a description of the Project  Constraints based upon
the  operating  characteristics  of the  Project.  Seller  shall use  reasonable
efforts to cause the actual Project  Constraints to be no more  restrictive than
those set forth on this Exhibit C.

     1.   MINIMUM  LOAD   REQUIREMENTS.   As  used  herein,  the  "Minimum  Load
          Requirement"  for any gas  turbine  unit is the greater of the minimum
          level necessary to operate in compliance with the Project's air permit
          and  the  minimum   load   requirement   imposed  by  the   reasonable
          capabilities  of the Project  equipment or other  Project  Constraints
          which is 45 megawatts capacity on each gas turbine unit.

     2.   RAMP RATES.  The estimated  maximum ramp rate of each gas turbine unit
          is 8-10 MW per  minute,  assuming a warm  (less than 8 hour  shutdown)
          steam turbine/HRSG. Ramp rates without the steam turbine warm may also
          be limited by the Start-up constraints described in Section 3 below.

     3.   START-UP  TIMES.  The  estimated  time  periods from  commencement  of
          Startup to the maximum output level achievable  within 30 minutes of a
          dispatch  notice and full load operation of the Project are related to
          the off line periods, as follows:

<TABLE>
<CAPTION>
<S>                       <C>               <C>                 <C>             <C>

                          Prior off line
                          period:           Less Than 8 Hours   8 to 48 Hours   Greater than 48 Hours
                                            -----------------   -------------   ---------------------
Time to 80 MW                               30 Minutes          30 Minutes      30 Minutes

Time to Project Capacity                    2 Hours             4 Hours         6 Hours
</TABLE>

     4.   EMISSIONS CONSTRAINTS AND LIMITATIONS.  Buyer may schedule energy from
          the Project only in a manner that will allow Seller to comply with all
          state and federal  environmental  laws and  regulations in effect from
          time to time. It is currently estimated that compliance with Section 1
          above will be  sufficient  to satisfy the  requirements  of Section 4.
          Seller  will  provide  Buyer  with  copies  of all  federal  and state
          environmental  permits  relating  to the Project  upon the  reasonable
          request of Buyer.  Environmental permit limits for liquid fuel (Jet A)
          firing are 1,440 hours per turbine per year.

<PAGE>

     5.   FUEL SUPPLY AND TRANSPORTATION CONSTRAINTS.  The transportation of the
          necessary  Buyer's  Fuel  Supply  Requirement  from the Fuel  Delivery
          Point(s) to the Project is permitted in  accordance  with the terms of
          the tariff of Oneok Westex Gas Transmission Company.

     6.   REACTIVE POWER SUPPORT. Reactive Power will not be supplied outside of
          the protective limits of each Project generators.

     7.   MAXIMUM  QUANTITY.  Where the  Project  Capacity  is greater  than the
          Contract  Capacity,  Buyer may dispatch the Project up to such Project
          Capacity  for  periods of time only as are  reasonably  acceptable  to
          Seller. The foregoing shall not affect Buyer's ability to dispatch the
          Project at the Contract Capacity.

     8.   PERIODIC JET A (LIQUID FUEL) PURGING.  Buyer will be  responsible  for
          the fuel  required  to  periodically  test and purge the  liquid  fuel
          system,  to  maintain  operability.  Testing is expected to be 5 to 10
          minutes per turbine on a bi-weekly basis.

     9.   START UP FUEL. The only Fuel for start up of the gas turbines shall be
          natural gas.

<PAGE>

                                    EXHIBIT D

                                 PLANNED OUTAGES

          No later than December 15 of each Calendar Year,  and commencing  with
December 15, 2003,  Seller shall deliver to Buyer a written schedule for Planned
Outages during the next succeeding Calendar Year. In preparing this schedule:

                  (i)  Seller  shall  use  reasonable  efforts  to  establish  a
         schedule that is in accordance with Prudent Industry Practice; and

                  (ii)  Seller  shall  consult  with  Buyer  regarding  Seller's
         proposed  schedule  and shall use  reasonable  efforts  to  accommodate
         Buyer's   requests  to  adjust  schedule  in  accordance  with  Buyer's
         suggestions;  provided  that Seller  shall not be required to so adjust
         the schedule if Seller reasonably determines that such adjustment would
         have an adverse effect on the Project,  Seller or the Project  operator
         or be inconsistent with Prudent Industry Practice.

          Following  the  delivery  of the  schedule  for a  Calendar  Year,  as
described  above,  if Seller  determines  that it is  necessary  to  modify  the
schedule,  Seller  shall  promptly  notify Buyer in writing.  If Buyer  requests
adjustments to such modified  schedule,  Seller shall use reasonable  efforts to
accommodate  Buyer's  requests to adjust the  schedule  for  Planned  Outages in
accordance with Buyer's suggestions,  provided that Seller shall not be required
to so adjust the schedule if Seller  reasonably  determines that such adjustment
would have an adverse  effect on the Project,  Seller or Project  operator or be
inconsistent  with Prudent Industry  Practice.  Notwithstanding  anything to the
contrary,  no Planned Outages shall be scheduled or performed  during the period
of June 1 through  September 30 of each  Calendar Year without the prior consent
of Buyer, which Buyer may withhold in Buyer's sole discretion.

          The Parties  recognize that the expected  duration of a Planned Outage
may be subject to change based upon  circumstances  that occur or are discovered
during the course of the Planned  Outage.  Seller shall keep Buyer  periodically
informed as to the status and expected duration of any Planned Outage

          Seller shall provide such information as Buyer may reasonably  request
from time to time as to the then  current  schedule  and  expected  duration  of
Planned Outages.

          The hours attributable to Planned Outages for a Combustion Inspection,
Hot Gas  Path  Inspections,  Steam  Turbine/  Generator  Maintenance  and  Major
Maintenance Overhauls will be excluded from availability  calculations.  As used
above, the terms  "Combustion  Inspection",  "Hot Gas Path  Inspection",  "Steam
Turbine/ Generator  Maintenance" and "Major  Maintenance  Overhaul" refer to the
Planned Outages of those types  specified by the  manufacturer of the combustion
turbine/generators and steam  turbine/generators  for the Project.  Seller shall
not be permitted to declare a Planned  Outage and operate the Project during the
period in which  Seller  claimed a Planned  Outage  without the consent of Buyer
except in  connection  with  testing of the Project in  accordance  with Prudent
Industry Practices.

<PAGE>

                                    EXHIBIT E

                                    ADDRESSES

If to Seller:

Power Resources Ltd.
302 South 36th Street, Suite 400
Omaha, NE  68131-3845
Attention:  General Counsel
Telephone:  402.341.4500
Facsimile:  402.231.1658

Operational Notices:

Power Resources, Ltd.
500 E. Refinery Road
P. O. Box 2700 Big Spring,  Texas  79721
Attn:  General  Manager
Phone:  (432)263-8468
Fax: (432) 267-9772

Billing Information:

Power Resources, Ltd.
P. O. Box 2700
Big Spring, Texas 79721
Fax: (432) 267-9772

Payment Information:

Name on account:  Power Resources, Ltd.
Name of bank:     US Bank
Address of bank:  1700 Farnam Street, Omaha, NE  68102
Account number:   1 508 9032 8571
ABA number:       104000029

If to Buyer:

ONEOK Energy Marketing and Trading Company, L.P.

Mailing Address:                        Street Address:
---------------                         --------------
P.O. Box 2405                           100 West Fifth Street, 16th Floor
Tulsa, OK 74102-2405                    Tulsa, OK 74103

<PAGE>

CONTACT INFORMATION:                PAYMENT INFORMATION:
-------------------                 --------------------

Notices and Confirmations:               Wire Transfer or ACH Nos.:
-------------------------
Attn.:   Bill DeWare, Vice President     Bank of America
Phone:   (918) 591-5149                  Tulsa, OK
Fax:     (918) 591-5130                  ABA # 103000017
                                         Acct. # 032026103162

Payables and Receivables:
-------------------------
Attn.:   Accounting Department                By Mail:
Phone:   (918) 591-5151                       P.O. Box 502607
Fax:     (918) 584-7551                       St. Louis, MO  63150-2607

<PAGE>

                                    EXHIBIT F

                        ANTICIPATED CONVERSION HEAT RATE

         The following tables  illustrate the Anticipated  Conversion Heat Rates
for natural gas at the corresponding scheduling levels as shown below and at the
ambient conditions indicated.  The temperature correction for the heat rate test
will be  performed  by  interpolation  between two  representative  points given
below. The  representative  points will be those points which are closest to the
temperature measured on the calibrated plant dry bulb instrument.

                       80MW LOAD
                                           ANTICIPATED
                                            HEAT RATE
                           DRY BULB         W/ STEAM
                             TEMP          CONVERSION
        MONTH             (DEGREES F)       (BTU/KWH)
        -----             -----------      -----------
  1     January              43.7             9,366

  2     February             45.9             9,404

  3     March                59.0             9,473

  4     April                68.0             9,336

  5     May                  76.1             9,402

  6     June                 79.4             9,407

  7     July                  NA               NA

  8     August                NA               NA

  9     September            75.7             9,382

  10    October              63.5             9,339

  11    November             49.0             9,453

  12    December             42.8             9,367

        AVERAGE                               9,393
                                              -----
* The  Anticipated  Conversion  Heat Rate for 80MW load is 9,407 Btu/kWh up to a
temperature of 90 degrees F.

                       120MW LOAD
                                           ANTICIPATED
                                            HEAT RATE
                           DRY BULB         W/ STEAM
                             TEMP          CONVERSION
        MONTH             (DEGREES F)       (BTU/KWH)
        -----             -----------      -----------
  1     January              44.2             9,659

  2     February              NA               NA

  3     March                51.0             9,595

  4     April                66.8             9,457

  5     May                  72.8             9,445

  6     June                 82.0             9,394

  7     July                 80.8             9,444

  8     August               84.7             9,361

  9     September            75.5             9,457

  10    October              63.0             9,561

  11    November             49.7             9,645

  12    December             44.4             9,740

        AVERAGE                               9,523
        -------                               -----

* The  Anticipated  Conversion Heat Rate for 120MW load is 9,361 Btu/kWh up to a
temperature of 85 degrees F.

<PAGE>

                       200MW LOAD
                                           ANTICIPATED
                                            HEAT RATE
                           DRY BULB         W/ STEAM
                             TEMP          CONVERSION
        MONTH             (DEGREES F)       (BTU/KWH)
        -----             -----------      ----------
  1     January              44.0             8,675

  2     February             47.2             8,642

  3     March                55.0             8,605

  4     April                67.8             8,558

  5     May                  75.9             8,561

  6     June                 80.6             8,532

  7     July                 83.1             8,515

  8     August               86.3             8,532

  9     September            75.6             8,546

  10    October              61.7             8,606

  11    November             49.5             8,681

  12    December             43.7             8,683

        AVERAGE                               8,595
        -------                               -----

* The  Anticipated  Conversion Heat Rate for 200MW load is 8,515 Btu/kWh up to a
temperature of 95 degrees F.

<PAGE>

                                    EXHIBIT G

                            INTERCONNECTION AGREEMENT

                                   (ATTACHED)

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