Document:

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                           ORDINANCE NO. 00-067
                                         ------

         AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF GREENVILLE, TEXAS,
         GRANTING TO CAP ROCK ELECTRIC COOPERATIVE, INC. (A CORPORATION WITH ITS
         PRINCIPAL OFFICE IN THE CITY OF MIDLAND, MIDLAND COUNTY, TEXAS), THE
         FRANCHISE AND RIGHTS TO CONDUCT IN SAID CITY THE BUSINESS OF ACQUIRING,
         MAINTAINING, INSTALLING AND OPERATING ELECTRIC FACILITIES FOR THE
         TRANSMISSION AND DISTRIBUTION OF ELECTRICITY TO THE CITY OF GREENVILLE
         AND THE INHABITANTS THEREOF AND THE RIGHT TO USE THE STREETS, ALLEYS
         AND OTHER PUBLIC WAYS IN SAID CITY FOR SAID PURPOSES, PRESCRIBING THE
         CONDITIONS, LIMITATIONS AND RESTRICTIONS UNDER WHICH SAID PRIVILEGES
         MAY BE EXERCISED; PRESCRIBING AN ANNUAL FEE TO THE CITY; AND
         PRESCRIBING THE TERM OF SAID FRANCHISE AND RIGHTS TO BE TEN (10) YEARS;
         CONTAINING A SAVINGS AND SEVERABILITY CLAUSE; AND ORDERING PUBLICATION.

BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF GREENVILLE, TEXAS
(hereinafter referred to as "City" which said term means the corporate entity
of the City of Greenville, Texas, the City Council or the corporate limits of
the City of Greenville, whenever either of said meanings shall be appropriate
in the context of this ordinance):

         THAT Cap Rock Electric Cooperative, Inc. (hereinafter called
"Grantee"), its successors and assigns, be and it is hereby granted the
franchise, right and privilege to conduct within and only within its service
area as certified by the Public Utility' Commission of Texas, in the City the
business of acquiring, constructing, maintaining, installing and operating
electric facilities for the transmission and distribution of electricity to
the City and the inhabitants thereof, upon the following terms, provisions
and conditions, to wit:

         SECTION 1. The term of this grant shall be a period of time
commencing on December 29, 1998, and ending on December 28. 2008, and for
such additional period or extension of time as may be granted.

         SECTION 2. That the said Grantee is hereby granted the right to
construct, lay, repair, remove and replace electric light and power lines,
facilities and equipment, and to construct and install such machinery,
equipment and/or facilities as may be necessary or advisable for the proper
performance of the service to be rendered to the City and the citizens and
inhabitants thereof located within Cap Rock's service area as certified by
the Public Utility Commission of Texas, and to the best interest of the
electricity consumers (including underground conduits, poles, towers, wires
and transmission lines), in, on, over, under, along, upon and across all of
the present and/or future streets, roads, highways, alleys and public ways of
the City and controlled by the City, and to have at all times access to said
streets, alleys and public ways for the purpose of constructing, laying,
repairing,

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Cap Rock Franchise                                                   Page 1 of 8
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removing and replacing such electric light and power lines, facilities and
equipment and other appurtenances under this grant as may be needed from time
to time during the term of this franchise or any extension thereof; provided,
however, that the work done in connection with the construction, maintenance
and operation of said electric facilities and distribution system shall be
subject to and governed by the regulations, rules and ordinances now legally
in force or that may be hereafter lawfully adopted, to the extent that such
regulations, rules and ordinances are not inconsistent with the provisions of
this ordinance and do not deprive Grantee of its use and enjoyment of the
franchise rights and privileges herein granted.

         That the said Grantee is to have the right to construct electric
light and power facilities and equipment, and to construct such buildings and
install such machinery or equipment, and to sell or lease such equipment to
the citizens of the City as may be necessary or advisable in Grantee's
judgment for the proper performance of the service to be rendered to the City
and to its citizens and inhabitants to the best interest of the electricity
consumers, and to have, at all times, access to the streets and alleys of
said City for the purpose of constructing such facilities and equipment as
may be needed from time to time during the term of this franchise, or any
extensions thereof; provided that at no time shall the Grantee obstruct such
streets or alleys so as to interfere with the public use thereof for a period
of longer than twenty-four (24) hours unless approved by the City's Director
of Public Works, and that after such facilities or equipment are erected or
laid and tested the same shall be covered, if underground, and such streets
or alleys shall be replaced in the same or as good condition as before such
work was done at the sole cost and expense of the Grantee. The Grantee's
right for access and construction within the city limits is limited to the
areas within its service areas as certified by the Public Utilities
Commission of Texas.

         That this franchise is granted upon and subject to the following
provisions:

         1. Maintaining its properties, the Grantee shall not unnecessarily
or unreasonably impair or obstruct the streets, roads, highways, alleys,
sidewalks and public ways.

         2. In installing and constructing additional pole lines or
underground lines, Grantee shall, insofar as practicable, so install and
construct the same along or under the alleyways, where alleys exist, rather
than along or under streets, using the streets as necessary in connecting
from one alley to another.

         3. Grantee, at its expense, shall construct or erect and extend
electric service to any consumer within its service area as certified by the
Public Utilities Commission of Texas, in the City of Greenville, within
ninety (90) days after receiving a written request from the Greenville City
Manager, but Grantee shall not be required to extend service lines more than
three hundred (300) feet to any one consumer.

         4. Grantee covenants and agrees that it will repair any of the
City's streets and alleys that Grantee, its employees, agents, contractors
and subcontractors damages so that such streets and alleys will comply with
the City's standard specifications.

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Cap Rock Franchise                                                   Page 2 of 8
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         5. Grantee covenants and agrees that Grantee shall, at its own
expense, repair all water lines, sewer lines, service lines and water meters
owned by the City that Grantee, its employees, agents, contractors or
subcontractors damage so that such water lines, sewer lines, service lines
and water meters shall comply with the requirements of the Greenville City
Standard Specifications.

         6. The City reserves the right to lay and permit to be laid electric
conduits, water and sewer lines and other pipelines or cables, and to do and
permit to be done any above or underground work which may be deemed necessary
or proper by the City in, across, along or under any street, alley, highway
or other public way occupied by the Grantee; and whenever by reason of
changes in the grade or width of any street, or in the location or manner of
constructing any City-owned water pipes, sewer lines or other above ground or
underground structures, it shall be deemed necessary by the City to alter,
change, adapt or conform electric service lines of Grantee in any street or
alley lawfully dedicated to public use or other public ways occupied by
Grantee, such alterations or changes shall be made by the Grantee when
ordered in writing by the City Manager or any supervisor or other
representative of the City thereof so authorized to act, and the City shall
be required to reimburse Grantee for all necessary costs and expenses.

         SECTION 3. Grantee, its successors and assigns, shall file with the
City Secretary of the City a schedule of all rates for the sale of
electricity to its general domestic and commercial customers who use
electricity win the City, which shall be the rates now in existence;
provided, however, nothing herein shall prohibit the Grantee from filing in
the future its application for increase or decrease of such rates and the
City acting thereon by ordinance.

         SECTION 4. The City, by the granting of this franchise, does not
surrender or to any extent lose, waive, imperil or lessen the lawful powers
and rights now or hereinafter vested in the City under the Constitution and
Statutes of the State of Texas and under the Charter of the City to regulate
the rates for services of Grantee; and Grantee, by its acceptance of this
franchise, agrees that all such lawful regulatory powers and rights, as the
same may from time to time be vested in the City, shall be in full force and
effect and subject to the exercise thereof by the City at any time and from
time to time.

         SECTION 5. The Grantee may require from any consumer of electricity,
before electric service is commenced or continued, a deposit of up to
one-sixth (1/6) of the estimated yearly bill, which said deposit may be
retained by the Grantee until service is discontinued and all bills therefor
have been paid, if in accordance with state or federal law. The Grantee shall
then return said deposit to the consumer, together with interest accrued
thereon (to the extent not theretofore paid or applied) at the statutory rate
from the date of said deposit. The grantee shall be entitled to apply said
deposit and/or accrued interest to any indebtedness owed the Grantee by the
consumer owning the deposit, and when said deposit has been applied in whole
or in part to any such indebtedness, the consumer may be required to restore
or increase said deposit to its proper level as a condition to the resumption
or continuation of service. The Grantee may make, from time to time, and
enforce, reasonable rules and regulations for the conduct of its business and
may require, as a condition to the commencement or continuation of its
service, the execution of a contract therefor by the consumer of such
electricity.

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Cap Rock Franchise                                                   Page 3 of 8
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         In case of default or nonpayment of any electric bill rendered at
any authorized rate, Grantee shall have the right to discontinue service to
such consumer in accordance with the laws of the United States and the State
of Texas; and in case said consumer shall make application to have service
reconnected, he may be required to pay, as a condition precedent thereto, all
amounts due to the Grantee and also a reasonable reconnecting fee.

         SECTION 6. In consideration of the grant of said privilege and
franchise by the City and as full payment for the privilege of using and
occupying the streets, alleys, highways, easements, parks and other public
places within the City, and in lieu of any and all occupation taxes,
easements and franchise taxes, and in lieu of license and inspection fees or
charges, street taxes, street or alley rentals and of all other charges,
levies, fees and rentals of whatsoever kind and character which the City may
impose or hereafter be authorized or empowered by law to levy and collect,
the Grantee shall pay to the City annually and on or before March 15 of each
year during the term hereof beginning March 15, 1999, an amount equivalent to
four percent (4%) of the gross revenues received by the Grantee, its
successors and assigns during the preceding calendar year from sales of
electricity within the corporate limits of said City. The yearly franchise
fee payment shall be made to the City at the office of the City Manager, 2821
Washington Street, Greenville, Texas 75401. The franchise fee payment shall
be exclusive of and in addition to all general municipal taxes of whatever
nature, including, but not limited to, sales and use taxes, ad valorem taxes
and special taxes and assessments for public improvements. On or before the
15th day of March of each year, a verified report shall be filed with the
City by the Grantee showing its gross revenues as aforesaid for the preceding
calendar year, and the payment made hereunder shall be based upon said
report. The payment made by Grantee on or before March 15 of each year during
the term hereof; shall be for the use during the preceding calendar year of
the City's alleys, streets and other public rights of way which are located
within the service area as certified by the Public Utilities Commission of
Texas.

         Upon the expiration of five (5) years from the date of inception of
this franchise, the City may elect to negotiate the yearly franchise fee.
Notice of the election to renegotiate shall be made in writing by the City to
Grantee sixty (60) days prior to the fifth anniversary of this franchise.
The new franchise fee, as renegotiated, shall be applicable and payable for
the remaining term of the franchise. In the event that the City and Grantee
are not able to reach an agreement for the renegotiation of the yearly
franchise fee, then the yearly franchise payment shall not be changed and
shall remain at four percent (4%) of the gross revenues received by the
Grantee.

         The City, or its duly authorized representatives, shall have the
right at all reasonable times, to review and appropriate records regarding
the sale, operations, transmission and distribution of electricity within the
City by Grantee pursuant to this Franchise Agreement.

         SECTION 7. The Grantee's undertakings shall be subject to its
ability, by use of due diligence and normal business methods, to obtain and
place in service the necessary materials and facilities. Moreover, the
Grantee shall be excused from failure or delay in performing such obligations
if; and to the extent, occasioned by act of God, fire, explosion, flood, act
of public enemy, contagion or contamination hazardous to human life or
health, legal restraints, labor difficulties, material shortages,
interruption or deficiency of electricity supply not attributable to

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Cap Rock Franchise                                                   Page 4 of 8
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default of the Grantee or, without limitation, any other cause or combination
of causes not reasonable within the Grantee's ability to anticipate or
control.

         SECTION 8. If the said Grantee shall fail to comply substantially
with the conditions of the franchise, the City shall have the right, by
ordinance duly passed therefor, to forfeit all the right and franchises
herein granted to the said Grantee, provided that the City shall give
Grantee, its successors and assigns, sixty (60) days notice in writing,
specifying the conditions claimed to have been violated, and giving full and
fair opportunity to be heard thereon before declaring such forfeiture, which
notice shall fairly and fully set out all of the conditions claimed and
complained of and shall be given by the said City, after having been properly
authorized by the Mayor and governing body of the said City; provided,
however, that the said Grantee shall have sixty (60) days after receiving
such notice in which to rectify and correct such violations and to comply
substantially with the terms and conditions of the ordinance. Should the
violations of this ordinance so complained of not have been rectified and
corrected and the terms and conditions of this ordinance substantially
complied with at the end of said sixty (60) days, then, and in that event,
the City shall have the power to forfeit this franchise on account of the
violations specified in said notice; provided, however, that upon receipt of
the above-referenced notice from the City, the Grantee, if it disputes that
it is in violation of the conditions of the franchise, shall, within thirty
(30) days of receiving such notice, notify the City, in writing, that it
disputes that it is in violation of the conditions of the franchise,
specifying the reasons that the Grantee feels it is not in violation of the
conditions of the franchise. In that event, if the parties cannot reach an
agreement on whether or not the Grantee is in violation of the conditions of
the franchise, then the matter shall be submitted to binding arbitration in
accordance with the Commercial Arbitration Rules of the American Association
then prevailing with the arbitration being conducted in Dallas, Texas, unless
the parties agree otherwise. At such time as the ruling of the arbitrator
becomes final, if Grantee is found to be in violation of the conditions of
the franchise, then the Grantee shall have sixty (60) days from the date such
ruling becomes final in which to rectify and correct such violations and to
comply substantially with the terms and conditions of the franchise as set
forth above and the City shall have the right to forfeit this franchise as
set forth above and as set forth subsequently herein.

         In case of forfeiture as herein provided, the City reserves the
right to purchase the electric facilities off the Grantee at the greater of
its appraised value or the actual book value incurred by Grantee to construct
the facilities, or to allow the Grantee to remove same within one year from
the date of such forfeiture. In the event the City chooses to allow the
Grantee to remove the electric facilities. then the Grantee shall be paid an
idled facilities charge which shall equal the actual cost of the facilities
to Grantee minus the salvage of the facilities removed.

         In lieu of forfeiture, at the option of the City, for each and every
breach or violation of any of the provisions of this ordinance by the
Grantee, it shall be liable to a civil penalty of twenty-five dollars
($25.00) and, if the breach or violation shall be a continuous one, each day
during which such breach or violation continues shall be deemed a separate
breach or violation of this ordinance.

         Pursuant to Article XI, Section 127 of the Home Rule Charter of the
City of Greenville, Texas, upon termination hereof or in the case of
forfeiture, as hereinabove provided for, the City reserves the right, and
shall have the option, to purchase this franchise, as well as any other
property

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Cap Rock Franchise                                                   Page 5 of 8
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of the Grantee within said City constituting a part of its electric
facilities and system, and upon payment of a fair valuation therefor;
provided, however, that the Grantee shall never ben entitled to any payment
of valuation because of any value derived from the franchise or the fact that
it is or may be a going concern duly installed and operated. This right to
purchase in the event of termination hereof may be exercised only after
notice in writing is given to Grantee at least 120 days before the expiration
date of this franchise.

         For the purpose of this section, the fair valuation of Grantee's
electric facilities shall mean the greater of the fair appraised value or the
actual costs to Grantee to construct the electric facilities.

         The said fair valuation shall be determined by the majority opinion
of three (3) appraisers, one to be appointed by the City, one to be appointed
by the Grantee, and the third to be selected by the two so appointed; and, in
the event they cannot agree, then the third shall be appointed by the
District Judge for Hunt County. Said appraisers shall be named in writing by
both parties hereto within ten (10) days after the City's election and notice
to Grantee to have said appraisal made, and the third is to be selected
within ten (10) days after the first two are appointed. The unanimous or
majority opinion, as the case may be, of the appraisers as to the fair
valuation of the property of Grantee shall be furnished in writing to both
parties within sixty (60) days from the date of the appointment of the third
appraiser.

         If either party, that is to say, the Grantee or the City of
Greenville, be dissatisfied with the valuation of Grantee's facilities as
determined by the unanimous or majority opinion, as the case may be, of the
appointed appraisers, said party may, within twenty (20) days after the
receipt of the appraiser's report, file suit in the District Court of Hunt
County, Texas, and the cause shall be tried de novo and determined as in
other civil causes in the District Court, with the only issue to be
determined being the amount of the compensation to be paid by the City of
Greenville to the Grantee as the fair valuation of Grantee's electrical
facilities, which compensation shall be determined by the value of the
reproduction costs new, less observed depreciation of said electric
facilities, and shall not include any value derived from the franchise or the
fact that it is or may be a going concern duly installed and operated.

         If no suit be filed, as herein provided for, the City shall, within
ten (10) days after the expiration of the twenty (20) days for filing of
suit, exercise its option to purchase Grantee's electrical facilities by
payment of the amount determined by the appraisers, or allow the Grantee to
remove the same within one (1) year thereafter. In the event either party
shall appeal to the District Court, as herein provided for, the term of this
franchise shall be extended and it shall remain in full force and effect
until ten days after the entry of a final judgment in such cause. Within ten
(10) days after entry of said final judgment, the City shall exercise its
option to purchase Grantee's electrical facilities at the amount determined
by said judgment, or allow the Grantee to remove its facilities within one
(1) year thereafter.

         SECTION 9. The Grantee shall have the right and privilege of
assigning this franchise and all the rights and privileges granted herein,
and whenever the word "Grantee" appears herein, it shall be construed as
applying to its successors and assigns.

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Cap Rock Franchise                                                   Page 6 of 8
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         SECTION 10. It is agreed between the City and the Grantee that this
franchise agreement does not limit, in any manner, the positions the City may
take regarding its rights under Section 37.060 of the Texas Utilities Code.
This agreement may not be used to oppose any position the City may take in
any proceeding under Section 37.060.

         SECTION 11. Grantee hereby agrees that it will indemnify, save
harmless, and exempt the City, its officers, agents, servants, and employees
from and against any and all suits, actions, legal proceedings, claims,
demands, damages, costs, expenses, and attorney's fees incident to any work
done in the performance of this Franchise arising out of a willful or
negligent act or omission of the Grantee, its officers, agents, servants, and
employees; provided, however, that the Grantee shall not be liable for any
suits, actions, legal proceedings, claims, demands, damages, costs, expenses,
and attorney's fees arising out of a willful negligent act or omission of the
City, its officers, agents, servants, and employees.

         SECTION 12. If any section, paragraph, subdivision, clause, phrase
or provision hereof shall be adjudged invalid or unconstitutional, the same
shall not affect the validity hereof as a whole, or any part or provision
other than the part or provision so decided to be invalid or unconstitutional.

         SECTION 13. Grantee shall, within thirty (30) days from date of the
final passage of this ordinance by the City, file with the City Secretary a
written statement signed in its name and behalf by a duly authorized officer
of Grantee in the following form:

         The Honorable Mayor and Council of the City of Greenville: Cap Rock
         Electric Cooperative, Incorporated, for itself; its successors and
         assigns, hereby accepts the attached ordinance, finally passed by the
         City Council the 25th day of January, 2000, and agrees to be bound by
         all of its terms and provisions.

                                       CAP ROCK ELECTRIC COOPERATIVE
                                       INCORPORATED

                                       By: /s/ Ulen North
                                          --------------------------------

         Dated this, the          day of                 , 2000.
                         --------       -----------------

         SECTION 14. Any notice or communication required in the
administration of this franchise shall be sent to the City as follows: City
Manager, City of Greenville, 2821 Washington, Greenville, Texas 75401.

         Any notice or communication required in the administration of this
franchise shall be sent to the Grantee as follows: Mr. Ulen North, Executive
Vice President, Cap Rock Electric Cooperative, Incorporated, 500 West Wall
Street, Suite 400, Midland, Texas 79701.

         SECTION 15. That if any section, provision, subsection, paragraph,
sentence, clause, phrase, or word in this Ordinance or application thereof to
any person or circumstance is held invalid by any court of competent
jurisdiction, such holdings shall not affect the validity of the remaining

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Cap Rock Franchise                                                   Page 7 of 8
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portions of this Ordinance, and the City Council of the City of Greenville,
Texas, hereby declares it would have enacted such remaining portions, despite
such invalidity.

         SECTION 16. The City Secretary is hereby authorized and directed to
publish the descriptive caption of this ordinance in the manner and for the
length of time prescribed by law as an alternative method of publication.

         SECTION 17. All Ordinances or parts of Ordinances in conflict
herewith are repealed to the extent of conflict only.

PASSED AND APPROVED, on first reading the 14th day of March, 2000.

PASSED AND APPROVED, on second reading the 28th day of March, 2000.

PASSED AND APPROVED, on third reading and finally adopted on the 11th day of
April, 2000.

                                       /s/ Sue Ann Harting
                                       ----------------------------------
                                       Sue Ann Harting, Mayor
ATTEST:

/s/ Debbie Newell
-----------------------------------
Debbie Newell, City Secretary

/s/ Robert L. Scott
-----------------------------------
Robert L. Scott, City Attorney

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Cap Rock Franchise                                                   Page 8 of 8<PAGE>

                                                                   EXHIBIT 10.21

                                ORDINANCE NO.6598

                  AN ORDINANCE OF THE CITY OF MIDLAND, TEXAS, GRANTING TO CAP
                  ROCK ELECTRIC COOPERATIVE, INC., (A CORPORATION WITH ITS
                  PRINCIPAL OFFICE IN THE CITY OF STANTON, MARTIN COUNTY, TEXAS)
                  THE FRANCHISE AND RIGHTS TO CONDUCT IN SAID CITY THE BUSINESS
                  OF ACQUIRING, MAINTAINING, INSTALLING AND OPERATING ELECTRIC
                  FACILITIES FOR THE TRANSMISSION AND DISTRIBUTION OF
                  ELECTRICITY TO THE CITY OF MIDLAND AND THE INHABITANTS THEREOF
                  FOR LIGHT, HEAT, POWER AND OTHER PURPOSES AND THE RIGHT TO USE
                  THE STREETS, ALLEYS AND OTHER PUBLIC WAYS IN SAID CITY FOR
                  SAID PURPOSES; PRESCRIBING THE CONDITIONS, LIMITATIONS AND
                  RESTRICTIONS UNDER WHICH SAID PRIVILEGES MAY BE EXERCISED;
                  PRESCRIBING AN ANNUAL FEE TO THE CITY; AND PRESCRIBING THE
                  TERM OF SAID FRANCHISE AND RIGHTS TO BE SEVEN-TEEN (17) YEARS;
                  CONTAINING A SAVINGS AND SEVERABILITY CLAUSE; AND ORDERING
                  PUBLICATION

         BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF MIDLAND, TEXAS,
(hereinafter referred to as "City", which said term means the corporate
entity of the City of Midland, Texas, the City Council or the corporate
limits of the City of Midland, whenever either of said meanings shall be
appropriate in the context of this ordinance):

         THAT Cap Rock Electric Cooperative, Inc., (hereinafter called
"Grantee"), its successors and assigns, be and it is hereby granted the
franchise, right and privilege to conduct within its service area as
certified by the Public Utility Commission on the effective date of this
ordinance, in the City the business of acquiring, constructing, maintaining,
installing and operating electric facilities for the transmission and
distribution of electricity to the City and the inhabitants thereof for
light, heat, power, and other purposes, upon the following terms, provisions
and conditions, to wit:

         SECTION ONE. The term of this grant shall be a period of time
commencing on November 1, 1985, and ending on December 31, 2002, and for such
additional period or extension of time as may be granted.

         SECTION TWO. That the said Grantee is hereby granted the right to
construct, lay, repair, remove and replace electric light and power lines,
facilities and equipment, and to construct

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and install such machinery, equipment and/or facilities as may be necessary
or advisable in its judgment for the proper performance of the service to be
rendered to the City and the citizens and inhabitants thereof, and to the
best interest of the electricity consumers (including underground conduits,
poles, towers, wires and transmission lines, and telephone and telegraph
lines for its own use), in, on, over, under, along, upon, and across all of
the present and/or future streets, roads, highways, alleys and public ways of
the City and controlled by the City, and to have at all times access to said
streets, alleys, and public ways for the purpose of constructing, laying,
repairing, removing and replacing such electric light and power lines,
facilities and equipment and other appurtenances under this grant as may be
needed from time to time during the term of this franchise or any extension
thereof; provided, however, that the work done in connection with the
construction, maintenance and operation of said electric facilities and
distribution system shall be subject to and governed by the regulations,
rules and ordinances now legally in force or that may be hereafter lawfully
adopted, to the extent that such regulations, rules and ordinances are not
inconsistent with the provisions of this ordinance and do not deprive Grantee
of its use and enjoyment of the franchise rights and privileges herein
granted.

         That the said Grantee is to have the right to construct electric
light and power facilities and equipment, and to construct such buildings and
install such machinery or equipment, and to sell or lease such equipment to
the citizens of the City as may be necessary or advisable in Grantee's
judgment for the proper performance of the service to be rendered to the City
and to its citizens and inhabitants to the best interest of the electricity
consumers; and to have, at all times, access to the streets and alleys of
said City for the purpose of constructing such facilities and equipment as
may be needed from time to time during the term of this franchise, or any
extensions thereof,

                                      -2-
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provided that at no time shall the Grantee obstruct such streets or alleys so
as to interfere with the public use thereof for a period longer than
twenty-four hours, unless approved by the City's Director of Public Works,
and that after such facilities or equipment are erected or laid and tested
the same shall be covered, if underground, and such streets or alleys shall
be replaced in the same or as good condition as before such work was done at
the sole cost and expense of the Grantee.

         That this franchise is granted upon and subject to the following
provisions:

         1. Maintaining its properties, the Grantee shall not unnecessarily
or unreasonably impair or obstruct the streets, roads, highways, alleys,
sidewalks and public ways.

         2. The Grantee shall use reasonable precautions to avoid damage or
injury to persons or property, and shall indemnify and hold and save harmless
the City from all damages, losses, or expense caused by any negligence of the
Grantee, its agents or employees, while exercising any of the rights herein
granted.

         3. In installing and constructing additional pole lines or
underground lines, Grantee shall, insofar as practicable, so install and
construct the same along or under the alleyways, where alleys exist, rather
than along or under streets, using the streets as necessary in connecting
from one alley to another. Grantee shall give prior notice to the City's
Director of Public Works before any construction or repair work on Grantee's
lines obstructs any public street or roads.

         4. All facilities shall be so laid or erected so as to protect and
not interfere with existing paving, wire cables, water pipes, underground
wires, or sewer laterals, as directed by and to the satisfaction of the City
or the City's Director of Public Works.

         5. Grantee, at its expense, shall construct or erect and extend
electric service to any consumer within its service area in the City of
Midland within ninety (90) days after receiving a written request from the
Midland City Manager, but Grantee shall

                                      -3-
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not be required to extend service lines more than three hundred (300) feet to
any one consumer.

         6. Grantee covenants and agrees that it will repair any of the
City's streets and alleys that Grantee, its employees, agents, contractors
and subcontractors damages so that such streets and alleys will comply with
the City's Standard Specifications.

         7. Grantee covenants and agrees that Grantee shall, at its own
expense, repair all water lines, sewer lines, service lines and water meters
owned by the City that Grantee, its employees, agents, contractors,
subcontractors, damage so that such water lines, sewer lines and water meters
shall comply with the requirements of the Midland City Standard
Specifications.

         8. Before the Grantee seeks bids on any phase of the repair of City
streets, alleys, water lines, sewer lines or any other City owned utility,
the plans and specifications shall be approved by the City's Director of
Public Works.

         9. The Grantee shall indemnify and save and hold harmless the City
and all of its officers, employees, and agents from all suits, actions,
claims, damages, losses, attorney's fees and expenses of any character
whatsoever, brought for or on account of any injuries or damages received or
sustained by any person, persons or property, on account of any act of the
Grantee, its employees, agents, officers, or their contractors,
subcontractors and their employees arising directly or indirectly or in any
way connected with the placement, construction, operation, repair,
maintenance, replacement or removal of any part of the Grantee's system, and
the Grantee will be required to pay any final judgment with costs which may
be obtained against the Grantee or any of its officers, agents or employees,
including attorney's fees.

         City shall not be liable for any damage caused to the Grantee's
system by reason of any subsequent construction authorized or permitted by
the City in its streets, alleys or public rights of way.

                                      -4-
<PAGE>

         The City reserves the right to lay and permit to be laid electric
conduits, water and sewer lines and other pipelines or cables, and to do and
permit to be done any above or underground work which may be deemed necessary
or proper by the City in, across, along or under any street, alley, highway,
or other public way occupied by the Grantee; and whenever by reason of
changes in the grade or width of any street, or in the location or manner of
constructing any City-owned water pipes, sewer lines or other above ground or
under-ground structures, it shall be deemed necessary by the City to alter,
change, adapt or conform electric service lines of Grantee in any street or
alley lawfully dedicated to public use or other public ways occupied by
Grantee, such alterations or changes shall be made by the Grantee when
ordered in writing by the City Manager or any supervisor or other
representative of the City thereof so authorized to act, without any claim
for reimbursement for damages against the City; provided, however, that
Grantee shall at all times be entitled to receive from appropriate
governmental bodies, excluding the City, payments for relocation of its
facilities to which it may be lawfully entitled to under applicable federal
law or laws of the State of Texas with respect to relocation payments where
highway construction or reconstruction is involved.

         SECTION THREE. The Grantee shall not discriminate against any
person, corporation, firm or association in the charge for electric service
or in the services rendered under like circumstance to customers of the same
classification. The Grantee will not directly or indirectly grant any
discount, rebate, or give things of value to circumvent the rate schedule.

         SECTION FOUR. Grantee, its successors and assigns, shall file with
the City Secretary of the City a schedule of all rates for the sale of
electricity to its general domestic and commercial customers who use
electricity within the City, which shall be the rates now in existence;
provided, however, nothing herein shall prohibit the Grantee from filing in
the future its applica-

                                      -5-
<PAGE>

tion for increase or decrease of such rates and the City acting thereon by
ordinance.

         SECTION FIVE. The City, by the granting of this franchise, does not
surrender or to any extent lose, waive, imperil or lessen the lawful powers
and rights now or hereinafter vested in the City under the Constitution and
Statutes of the State of Texas and under the Charter of the City to regulate
the rates for services of Grantee; and Grantee, by its acceptance of this
franchise, agrees that all such lawful regulatory power and rights, as the
same may from time to time be vested in the City, shall be in full force and
effect and subject to the exercise thereof by the City at any time and from
time to time.

         SECTION SIX. The Grantee may require from any consumer of
electricity, before electric service is commenced or continued, a deposit of
up to one/sixth (1/6) of the estimated yearly bill, which said deposit may be
retained by the Grantee until service is discontinued and all bills therefor
have been paid, if in accordance with state or federal law. The Grantee shall
then return said deposit to the consumer, together with interest accrued
thereon (to the extent not theretofore paid or applied) at the statutory rate
from the date of said deposit. The Grantee shall be entitled to apply said
deposit and/or accrued interest to any indebtedness owed the Grantee by the
consumer owning the deposit, and when said deposit has been applied in whole
or in part to any such indebtedness, the consumer may be required to restore
or increase said deposit to its proper level as a condition to the resumption
or continuation of service. The Grantee may make, from time to time, and
enforce, reasonable rules and regulations for the conduct of its business and
may require, as a condition to the commencement or continuation of its
service, the execution of a contract therefor by the consumer of such
electricity.

         In case of default or nonpayment of any electric bill rendered at
any authorized rate, Grantee shall have the right to

                                      -6-
<PAGE>

discontinue service to such consumer in accordance with the laws of the
United States and the State of Texas; and in case said consumer shall make
application to have service reconnected, he may be required to pay, as a
condition precedent thereto, all amounts due to the Grantee and also, a
reasonable reconnecting fee.

         SECTION SEVEN. In consideration of the grant of said privilege and
franchise by the City and as full payment for the privilege of using and
occupying the streets, alleys, highways, easements, parks and other public
places within the City, and in lieu of any and all occupation taxes,
easements and franchise taxes, and in lieu of license and inspection fees or
charges, street taxes, street or alley rentals and of all other charges,
levies, fees and rentals of whatsoever kind and character which the City may
impose or hereafter be authorized or empowered by law to levy and collect,
the Grantee shall pay to the City annually and on or before March 15 of each
year during the term hereof beginning March 15, 1986, an amount equivalent to
three percent (3%) of the gross revenues received by the Grantee, its
successors and assigns during the preceding calendar year from sales of
electricity within the corporate limits of said City. Grantee's failure to
make the payment within thirty (30) days after the payment is due shall
constitute a late payment and Grantee shall pay the Grantee a late charge of
five percent (5%) of the payment due. The yearly franchise fee payment shall
be made to the City at the office of the Director of Finance, 300 North
Loraine, P. O. Box 1152, Midland, Texas, 79702. The franchise fee payment
shall be exclusive of and in addition to all general municipal taxes of
whatever nature, including, but not limited to sales and use taxes, ad
valorem taxes and special taxes and assessments for public improvements. On
or before the 15th day of March of each year a verified report shall be filed
with the City by the Grantee showing its gross revenues as aforesaid for the
preceding calendar year, and the payment made

                                      -7-
<PAGE>

hereunder shall be based upon said report. The payment made by Grantee on or
before March 15 of each year during the term hereof, shall be for the use
during the preceding calendar year of the City's alleys, streets and other
public rights of way.

         Provided, however, that if at any time during the term of this
franchise agreement the Legislature of the State of Texas or any duly
authorized and empowered agency of the Legislature authorized or directs a
greater franchise fee (by whatever name known, such as gross receipts fee,
street and alley rental, etc.), for Midland in particular or home rule cities
in general, than that provided herein, then and in that event the fee to be
paid by Grantee to City hereunder shall automatically be and become the
greatest amount so authorized or directed beginning with the first full
calendar year following the effective date of any such legislation and
provided further that said fee is subject to adjustment by mutual agreement
of the City and Grantee at all times. In any event, the percentage of gross
receipts paid to City shall not be less than the greatest percentage paid by
Grantee to any other city served by it.

         The City, or its duly authorized representatives, shall have -the
right at all reasonable times, to inspect the books and records of the
Grantee whether located in the City of Midland or elsewhere.

         SECTION EIGHT. The Grantee's undertakings shall be subject to its
ability, by use of due diligence and normal business methods, to obtain and
place in service the necessary materials and facilities. Moreover, the
Grantee shall be excused from failure or delay in performing such obligations
if, end to the extent, occasioned by act of God, firs, explosion, flood, act
of public enemy, contagion or contamination hazardous to human life or
health, legal restraints, labor difficulties, material shortages,
interruption or deficiency of electricity supply not attributable to default
of the Grantee or, without limitation,

                                      -8-
<PAGE>

any other cause or combination of causes not reasonable within the Grantee's
ability to anticipate or control.

         SECTION NINE. The Grantee, its successors or assigns, shall prepare
and file with the City's Director of Public Works a set of maps setting forth
its underground distribution system located within the City, which maps shall
be corrected and brought up to date from time to time thereafter. Grantee's
maps of its over-head distribution system shall be kept current and available
to said Director of Public Works at all times.

         SECTION TEN. If the said Grantee shall fail to comply substantially
with the conditions of the franchise, the City shall have the right, by
ordinance duly passed therefor, to forfeit all the right and franchises
herein granted to the said Grantee; provided that the City shall give
Grantee, its successors and assigns, sixty (60) days notice in writing,
specifying the conditions claimed to have been violated, and giving full and
fair opportunity to be heard thereon before declaring such forfeiture, which
notice shall fairly and fully set out all of the conditions claimed and
complained of and shall be given by the said City, after having been properly
authorized by the Mayor and governing body of the said City; provided,
however, that the said Grantee shall have sixty (60) days after receiving
such notice in which to rectify and correct such violations and to comply
substantially with the terms and conditions of the ordinance; should the
violations of this ordinance so complained of not have been rectified and
corrected and the terms and conditions of this ordinance substantially
complied with at the end of said sixty (60) days, then, and in that event,
the City shall have the power to forfeit this franchise on account of the
violations specified in said notice. In case of forfeiture as herein
provided, the City reserves the right to purchase the electric facilities of
the Grantee at its fair appraised value or to allow the Grantee to remove
same within one year from the date of such forfeiture; provided that, before
any of said property may be

                                      -9-
<PAGE>

removed, the Grantee shall be required to give to the City a good and
sufficient bond that the streets and alleys will be placed and left in as
good condition as found.

         In lieu of forfeiture, at the option of the City, for each and every
breach or violation of any of the provisions of this ordinance by the
Grantee, it shall be liable to a civil penalty of Twenty-Five Dollars
($25.00) and, if the breach or violation shall be a continuous one, each day
during which such breach or violation continues shall be deemed a separate
breach or violation of this ordinance.

         Pursuant to Article III, Section 18(c), of the Home Rule Charter of
the City of Midland, Texas, upon termination hereof or in the case of
forfeiture, as hereinabove provided for, the City reserves the right, and
shall have the option, to purchase this franchise, as well as any other
property of the Grantee within said City constituting a part of its electric
facilities and system, and upon payment of a fair valuation therefor;
provided, however, that the Grantee shall never be entitled to any payment of
valuation because of any value derived from the franchise or the fact that it
is or may be a going concern duly installed and operated. This right to
purchase in the event of termination hereof may be exercised only after
notice in writing is given to Grantee at least 120 days before the expiration
date of this franchise.

         For the purpose of this section, the fair valuation of Grantee's
electric facilities shall be determined by the value of the Reproduction Cost
New, less-observed depreciation of the said electric facilities.

         The said fair valuation shall be determined by the majority opinion
of three (3) appraisers, one to be appointed by the City, one to be appointed
by the Grantee, and the third to be selected by the two so appointed; and, in
the event they cannot agree, then the third shall be appointed by the
District Judge for Midland County. Said appraisers shall be named in writing
by

                                      -10-
<PAGE>

both parties hereto within ten days after the City's election and notice to
Grantee to have said appraisal made; and the third is to be selected within
ten days after the first two are appointed. The unanimous or majority
opinion, as the case may be, of the appraisers as to the fair valuation of
the property of Grantee shall be furnished in writing to both parties within
sixty (60) days from the date of the appointment of the third appraiser.

         If either party, that is to say, the Grantee or the City of Midland
be dissatisfied with the valuation of Grantee's facilities as determined by
the unanimous or majority opinion, as the case may be, of the appointed
appraisers, said party may, within twenty (20) days after the receipt of the
appraiser's report, file suit in the District Court of Midland County, Texas,
and the cause shall be tried de novo and determined as in other civil causes
in the District Court with the only issue to be determined being the amount
of the compensation to be paid by the City of Midland to the Grantee as the
fair valuation of Grantee's electrical facilities, which compensation shall
be determined by the value of the reproduction costs new, less observed
depreciation of said electric facilities, and shall not include any value
derived from the franchise or the fact that it is or may be a going concern
duly installed and operated.

         If no suit be filed, as herein provided for, the City shall within
ten (10) days after the expiration of the twenty (20) days for filing of
suit, exercise its option to purchase Grantee's electrical facilities by
payment of the amount determined by the appraisers, or allow the Grantee to
remove the same, within one (l) year thereafter. In the event either party
shall appeal to the District Court, as herein provided for, the term of this
franchise shall be extended and it shall remain in full force and effect
until ten days after the entry of a final judgment in such cause. Within ten
(10) days after entry of said final judgment, the City shall exercise its
option to purchase Grantee's electrical facilities at the amount determined
by said judgment, or

                                      -11-
<PAGE>

allow the Grantee to remove its facilities within one (1) year thereafter.

         SECTION ELEVEN. The Grantee shall have the right and privilege of
assigning this franchise and all the rights and privileges granted herein,
and wherever the word "Grantee" appears herein it shall be construed as
applying to its successors and assigns.

         SECTION TWELVE. If any section, paragraph, subdivision, clause,
phrase, or provision hereof shall be adjudged invalid or unconstitutional,
the same shall not affect the validity hereof as a whole, or any part or
provision other than the part or provision so decided to be invalid or
unconstitutional.

         SECTION THIRTEEN. Grantee shall, within thirty (30) days from date
of the final passage of this ordinance by the City, file with the City
Secretary a written statement signed in its name and behalf by a duly
authorized officer of Grantee in the following form:

         "The Honorable Mayor and Council of the City of Midland: "Cap Rock
         Electric Cooperative, Incorporated, for itself, its successors and
         assigns, hereby accepts the attached ordinance finally passed by the
         City Council the 12TH day of NOVEMBER, 1985, and agrees to be bound
         by all of its terms and provisions.

                                       "CAP ROCK ELECTRIC COOPERATIVE,
                                        INCORPORATED

                                       "By /s/ David W. Pruitt
                                          ----------------------------------

         "Dated this, the  23 day  JANUARY, 1987."

         SECTION FOURTEEN. Any notice or communication required in the
administration of this franchise shall be sent to the City as follows: City
Manager, City of Midland, 300 North Loraine, P. O. Box 1152, Midland, Texas,
79702.

         Any notice or communication required in the administration of this
franchise shall be sent to the Grantee as follows: Mr. David W. Pruitt,
Assistant Manager, Cap Rock Electric Cooperative, Incorporated, P. O. Box
700, Stanton, Texas, 79782.

                                      -12-
<PAGE>

         SECTION FIFTEEN. If any section, subsection, ,sentence, clause or
phrase of this ordinance is, for any reason, held to be unconstitutional or
invalid, such holding shall not affect the validity of the remaining portions
of this ordinance. The Council of the City of Midland hereby declares that it
would have passed this ordinance and each section, subsection, sentence,
clause, or phrase hereof irrespective of the fact that any one or more
sections, subsections, sentences, clauses or phrases be declared
unconstitutional or invalid.

         SECTION SIXTEEN. The City Secretary is hereby authorized and
directed to publish the descriptive caption of this ordinance in the manner
and for the length of time prescribed by law as an alternative method of
publication.

         On motion of Council member GODFREY, seconded by Council member
HECK, the foregoing ordinance was passed on first reading on the 8TH day of
OCTOBER, A.D., 1985, by the following vote:

         Council members voting "AYE": Godfrey, Heck, Hotchkiss, and
                                       Corrales

         Council members voting "NAY": None

         On motion of Council member HOTCHKISS, seconded by Council member
HECK, the foregoing ordinance was passed on second reading the 22ND day of
OCTOBER, A.D., 1985, by the following vote:

         Council members voting "AYE": Hotchkiss, Heck, Corrales, Davidson,
                                       Marcum, Godfrey and Akins

         Council members voting "NAY": None

         On motion of Council member CORRALES, seconded by Council member
GODFREY, the foregoing ordinance was passed on third reading this 12TH day of
NOVEMBER, A.D., 1985, by the following vote:

         Council members voting "AYE": Corrales, Godfrey, Hotchkiss, Akins,
                                       Marcum and Davidson

         Council members voting "NAY": None

                                      -13-
<PAGE>

         PASSED AND APPROVED THIS 12TH day of NOVEMBER, A.D., 1985.

                                                      /s/ G. Thane Akins
                                                  -----------------------------
                                                      G. Thane Akins, Mayor

ATTEST:

/s/ B. C. Clanton
-------------------------------
B. C. Clanton, City Secretary

APPROVED AS TO FORM:

/s/ David W. Reagan
-------------------------------
David W. Reagan, City Attorney

                                      -14-

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