Document:

EPC Contract - Steamboat Galena

                                    GUARANTY

          This ENGINEERING, PROCUREMENT AND CONSTRUCTION AGREEMENT GUARANTY,
made and delivered as of August 2, 2004 (this "Guaranty"), is by ORMAT
TECHNOLOGIES INC., a Delaware corporation (the "Guarantor"), in favor of ORNI 7
LLC, a Delaware limited liability company (together with its successors in such
capacity, the "Guaranteed Party").

          WHEREAS, the Guaranteed Party and Ormat Nevada Inc., a Delaware
corporation, as contractor (the "Contractor"), are parties to an Engineering,
Procurement and Construction Agreement dated as of the date hereof (as modified
and supplemented and in effect from time to time, the "EPC Agreement").
Capitalized terms used in this Guaranty but not otherwise defined herein shall
have the meanings assigned to such terms in the EPC Agreement.

          WHEREAS, the Guarantor has agreed to provide assurance for the
performance of the Contractor's obligations in connection with the EPC
Agreement; and

          WHEREAS, the execution and delivery of this Guaranty is a condition to
the Guaranteed Party's further performance of its obligations under the terms of
the EPC Agreement.

          NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the adequacy, receipt and sufficiency of which are
hereby acknowledged, the Guarantor hereby agrees as follows:

          1. Guaranty. The Guarantor hereby unconditionally and irrevocably
guarantees, as the primary obligor and not merely as surety, to and for the
benefit of the Guaranteed Party, the timely performance when due by the
Contractor of all obligations, whether financial or non-financial, required to
be performed by it under the EPC Agreement, including, without limitation, the
due and punctual payment in full by the Contractor of all amounts required to be
paid by it thereunder (the obligations guaranteed hereunder hereinafter referred
to as the "Guaranteed Obligations"). The guaranty contained herein is an
absolute, unconditional, present and continuing guaranty of payment and
performance, and not of collection, is in no way conditioned or contingent upon
any attempt to collect from or enforce payment or performance by Contractor or
upon any other event, contingency or circumstance whatsoever, and shall be
binding upon and against the Guarantor without regard to the validity or
enforceability of the EPC Agreement. If, for any reason whatsoever, the
Contractor shall fail or be unable duly, punctually and fully to pay or perform
any Guaranteed Obligation as and when the same shall become due and payable or
when such performance shall be required under the EPC Agreement, the Guarantor
shall forthwith pay, perform, cause to be paid, or cause to be performed, such
Guaranteed Obligation to the Guaranteed Party.

          2. Guaranty Absolute. The Guarantor agrees that the obligations of the
Guarantor set forth in this Guaranty shall be direct obligations of the
Guarantor, and such obligations shall be absolute and unconditional, shall not
be subject to any counterclaim, set-off, deduction, diminution, abatement,
recoupment, suspension, deferment, reduction or defense

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(other than to the extent available to Contractor under the EPC Agreement) based
upon any claim the Guarantor may have against the Guaranteed Party and shall
remain in full force and effect without regard to, and shall not be released,
discharged or in any way affected or impaired by, any circumstance or condition
whatsoever (other than full and strict compliance by the Guarantor with its
obligations hereunder as expressly provided herein, provided, however, that the
Guarantor shall be entitled to assert as a defense to performance any defenses
to performance available to Contractor under the EPC Agreement), including,
without limitation:

               (a) any amendment or modification of or supplement to or other
     change in the EPC Agreement or any exhibit attached thereto;

               (b) any failure, omission or delay on the part of the Guaranteed
     Party to conform or comply with any term of the EPC Agreement or any
     exhibit attached thereto;

               (c) any waiver, consent, extension, indulgence, compromise,
     release or other action or inaction under or in respect of the EPC
     Agreement or any obligation or liability of the Guaranteed Party, or any
     exercise or non-exercise of any right, remedy, power or privilege under or
     in respect of the EPC Agreement or any such obligation or liability,
     provided that the Guaranteed Obligations will be deemed waived, extended,
     released, terminated, liquidated or otherwise amended to the extent of an
     express agreement or consent to in writing for the same by Contractor, the
     Guaranteed Party and the Collateral Agent.

               (d) any bankruptcy, insolvency, reorganization, arrangement,
     readjustment, liquidation or similar proceeding with respect to the
     Contractor, the Guarantor, the Guaranteed Party or any of their respective
     properties, or any action taken by any trustee or receiver or by any court
     in any such proceeding;

               (e) any discharge, termination, cancellation, frustration,
     irregularity, invalidity or unenforceability, in whole or in part, of the
     EPC Agreement or any exhibit attached thereto or any term or provision
     thereof (other than as a result of the performance or payment in full of
     the Guaranteed Obligations or as a result of an express agreement or
     consent to in writing for the same by Contractor, the Guaranteed Party and
     the Collateral Agent);

               (f) any merger or consolidation of the Guarantor, the Guaranteed
     Party, or the Contractor into or with any other corporation or any sale,
     lease or transfer of all or any of the assets of the Guarantor, the
     Guaranteed Party, or the Contractor;

               (g) any change in the ownership of the Guarantor, the Guaranteed
     Party, or the Contractor; or

               (h) to the extent permitted under applicable Laws, any other
     occurrence or circumstance whatsoever, whether similar or dissimilar to the
     foregoing, which might otherwise constitute a legal or equitable defense
     available to, or discharge of

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     the liabilities of, the Contractor or the Guarantor as a guarantor or
     surety which might otherwise limit recourse against the Guarantor in
     respect of the Guaranteed Obligations, other than performance in full of
     the Guaranteed Obligations.

          The Guaranteed Obligations constitute the full recourse obligations of
the Guarantor enforceable against it to the full extent of all its assets and
properties. Without limiting the generality of the foregoing, the Guarantor
agrees that repeated and successive demands may be made and recoveries may be
had hereunder as and when, from time to time, the Contractor shall default
under, or fail to comply with, the terms of the EPC Agreement and that
notwithstanding the recovery hereunder for or in respect of any given default or
failure to so comply by the Contractor under the EPC Agreement, this Guaranty
shall remain in full force and effect and shall apply to each and every
subsequent default. If (i) an event permitting the exercise of remedies under
the EPC Agreement, as the case may be, shall at any time have occurred and be
continuing and (ii) such exercise, or any consequences thereof provided in the
EPC Agreement, shall at any time be prevented by reason of the pendency against
the Contractor of a case or proceeding under any bankruptcy or insolvency law,
the Guarantor agrees that, solely for purposes of this Guaranty and its
obligations hereunder, the EPC Agreement shall be deemed to have been declared
in default and obligations thereunder shall be deemed to be due and payable,
with all the attendant consequences as provided in such EPC Agreement as if
declaration of default and the consequence thereof had been accomplished in
accordance with the terms thereof, and the Guarantor shall, upon demand,
forthwith perform the obligations guaranteed hereunder.

          The obligations of the Guarantor hereunder are several from the
Contractor or any other person, and are primary obligations concerning which the
Guarantor is the principal obligor. There are no conditions precedent to the
enforcement of this Guaranty, except as expressly contained herein. It shall not
be necessary for the Guaranteed Party, in order to enforce payment by the
Guarantor under this Guaranty, to show any proof of the Contractor's default, to
exhaust its remedies against the Contractor, any other guarantor, or any other
person liable for the payment or performance of the Guaranteed Obligations.

          In no case shall the Guarantor be liable under this Guaranty or in
respect of the Guaranteed Obligations to an extent greater than the Guaranteed
Obligations.

          3. Waiver. The Guarantor hereby unconditionally waives, to the extent
permitted by applicable Laws:

               (a) notice of any of the matters referred to in Section 2 hereof;

               (b) all notices which may be required by Laws now or hereafter in
     effect, to preserve any rights of the Guarantor hereunder, including,
     without limitation, any demand or proof of notice of non-payment or
     non-performance of any Guaranteed Obligation;

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               (c) any right to require the enforcement, assertion or exercise
     of any right, remedy, power or privilege by the Guaranteed Party under or
     in respect of the EPC Agreement or any exhibit attached thereto;

               (d) notice of acceptance of this Guaranty and of the creation or
     existence of any of the Guaranteed Obligations; demand (other than as
     expressly required hereunder), protest, presentment, notice of default and
     any requirement of diligence;

               (e) any requirement to exhaust any remedies resulting from
     default by the Contractor under the EPC Agreements;

               (f) any requirement that suit be brought against, or any other
     action by the Guaranteed Party be taken against, or, other than as required
     under the EPC Agreement, any notice of default or other notice be given to,
     or any demand be made on, the Contractor, or that any other action be taken
     or not taken as a condition to Guarantor's liability for the Guaranteed
     Obligations under this Guaranty or as a condition to the enforcement of
     this Guaranty against Guarantor; and

               (g) any other circumstance whatsoever which might otherwise
     constitute a legal or equitable discharge, release or defense of a
     guarantor, or which might otherwise limit recourse against the Guarantor,

     all provided that Guarantor shall be entitled to assert as a defense to
     performance thereunder any defenses to performance available to the
     Contractor under the EPC Agreement.

          4. Expenses. The Guarantor agrees to pay on demand any and all costs
including reasonable legal fees, and other expenses incurred by the Guaranteed
Party in enforcing the Guarantor's obligations under this Guaranty.

          5. Subrogation. Notwithstanding any payment or payments made by the
Guarantor hereunder or any set-off or application of funds of the Guarantor by
the Guaranteed Party hereof, the Guarantor shall not be entitled to be
subrogated to any of the rights of the Contractor or of any rights of the
Guaranteed Party hereunder or any collateral, security or guaranty or right of
set-off held by the Guaranteed Party for the payment of the obligations
guaranteed hereunder, nor shall the Guarantor seek or be entitled to seek any
reimbursement from the Contractor in respect of payments made by the Guarantor
hereunder, until all amounts and performance owing to the Guaranteed Party by
the Contractor on account of the obligations guaranteed hereunder are paid and
performed in full.

          6. Reinstatement. The Guarantor agrees that this Guaranty shall be
automatically reinstated with respect to any payment made by or on behalf of the
Contractor pursuant to the EPC Agreement if and to the extent that such payment
is rescinded or must be otherwise restored, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise.

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          7. Representation and Warranties. The Guarantor represents and
warrants to the Guaranteed Party that:

               (a) The Guarantor is duly organized, validly existing and in good
     standing under the laws of the jurisdiction of its incorporation and has
     full, requisite corporate power and authorization to execute, deliver and
     perform the obligations under this Guaranty.

               (b) The execution, delivery and performance of this Guaranty by
     the Guarantor have been and remain duly authorized by all necessary
     corporate action and will not require any approval of its shareholders or
     of any other person except as has been obtained, and do not contravene any
     Law, or any judgment or order applicable to or binding on it, do not
     contravene or result in any breach of the Guarantor's certificate of
     incorporation, bylaws, or any contractual restriction binding on the
     Guarantor or its assets.

               (c) No approval from a Governmental Authority is required to be
     taken, given or obtained, as the case may be, by or from any government
     authority and no filing, recording, publication or registration in any
     public office or any other place, is necessary to authorize the execution,
     delivery and performance by the Guarantor of this Guaranty or for the
     legality, validity, binding effect or enforceability hereof.

               (d) This Guaranty has been duly executed and delivered by the
     Guarantor and constitutes the legal, valid and binding obligation of the
     Guarantor enforceable against the Guarantor in accordance with its terms,
     subject, as to enforcement, to bankruptcy, insolvency, reorganization and
     other laws of general applicability relating to or affecting creditors'
     rights generally and to general principles of equity (regardless of whether
     enforcement thereof is sought in a proceeding at law or in equity).

               (e) There is no action, suit or proceeding pending or, to the
     knowledge of the Guarantor, threatened, against or affecting the Guarantor
     or naming the Guarantor as a party that questions the validity or
     enforceability of this Guaranty or the ability (financial or otherwise) of
     the Guarantor to perform its obligations hereunder.

               (f) The Contractor is a wholly-owned subsidiary of the Guarantor.

          8. Covenants. The Guarantor agrees that, so long as this Guaranty is
in effect, the Guarantor shall:

               (a) preserve and maintain all of its material rights, privileges,
     and franchises, except where the failure to preserve and maintain any such
     right, privilege or franchise would not materially and adversely affect the
     ability of the Guarantor to perform its obligations under this Guaranty;

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               (b) comply with all the requirements of all applicable Laws,
     except where the failure to comply with any such requirement would not
     materially and adversely affect the ability of the Guarantor to perform its
     obligations under this Guaranty;

               (c) not take any action to liquidate or approve any liquidation
     of the Contractor or the Guaranteed Party; and

               (d) not institute against, or join any other person in
     instituting against the Contractor or the Guaranteed Party any proceeding
     to adjudicate the Contractor or the Guaranteed Party as bankrupt or
     insolvent, or seeking liquidation, winding up, reorganization, arrangement,
     adjustment, protection, relief or composition of the Contractor or the
     Guaranteed Party or its debts under any laws relating to bankruptcy,
     insolvency or reorganization or relief of debtors, or seeking the entry of
     an order for relief or the appointment of a receiver, trustee, custodian or
     other similar official for the Contractor or the Guaranteed Party for any
     substantial part of its property, or consent to any voluntary commencement
     by the Contractor of any such proceeding.

          9. Notices. Except in the case of notices and other communications
expressly permitted to be given by telephone, all notices and other
communications provided for herein or in connection herewith shall be in writing
and shall be delivered by hand or overnight courier service, mailed by certified
or registered mail or sent by telecopy, as follows:

          If to the Guaranteed Party:

               ORNI 7 LLC
               Attn: President
               980 Greg Street
               Sparks, Nevada 89431
               Facsimile No.: 702-356-9039
               Telephone No.: 702-356-9029

          If to the Guarantor:

               Ormat Technologies Inc.
               Attn: President
               980 Greg Street
               Sparks, Nevada 89431
               Facsimile No.: 702-356-9039
               Telephone No.: 702-356-9029

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          If to the Contractor:

               Ormat Nevada Inc.
               Attn: President
               980 Greg Street
               Sparks, Nevada 89431
               Facsimile No.: 702-356-9039
               Telephone No.: 702-356-9029

          10. Demand and Payment. Any demand by the Guaranteed Party for
performance hereunder shall be in writing and delivered to the Guarantor
pursuant to Section 9 hereof, and shall (a) reference this Guaranty and (b)
specifically identify the Contractor and the Guaranteed Obligations to be
performed. There are no other requirements of notice, presentment or demand. The
Guarantor shall perform, or cause to be performed, such Guaranteed Obligations
within five (5) Business Days of receipt of such demand. The Guarantor shall
make all payments of amounts owing pursuant to this Guaranty in immediately
available funds.

          11. No Waiver; Remedies. No failure on the part of the Guaranteed
Party to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the exercise of any
other right. The Guaranteed Party shall have all of the rights and remedies
available under applicable Laws and may proceed by appropriate court action to
enforce the terms hereof and to recover damages for the breach hereof. At the
option of the Guaranteed Party and upon notice to the Guarantor, the Guarantor
may be joined in any action or proceeding commenced by such Guaranteed Party
against the Contractor in respect of any Guaranteed Obligation and recovery may
be had against the Guarantor in such action or proceeding or in any independent
action or proceeding against the Guarantor, without any requirement that such
Guaranteed Party first assert, prosecute or exhaust any remedy or claim against
the Contractor. The remedies herein provided are cumulative and not exclusive of
any remedies provided by applicable Laws.

          12. Term; Termination. Subject to the terms and provisions of Section
6, this Guaranty shall become effective upon the execution hereof and shall
continue in full force and effect until the performance in full of all of the
Contractor's obligations under the EPC Agreement.

          13. Assignment; Successors and Assigns. The Guaranteed Party may, upon
notice to the Guarantor, assign its rights hereunder without the consent of the
Guarantor. The Guarantor may not assign its rights hereunder without the consent
of the Guaranteed Party. Subject to the foregoing, this Guaranty shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors, permitted assigns, and legal representatives.

          14. Amendments and Waivers. No amendment of this Guaranty shall be
effective unless in writing and signed by the Guarantor and the Guaranteed
Party. No waiver of any provision of this Guaranty nor consent to any departure
by the Guarantor therefrom shall in

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any event be effective unless such waiver shall be in writing and signed by the
Guaranteed Party. Any such waiver shall be effective only in the specific
instance and for the specific purpose for which it was given.

          15. Section Headings. The headings in this Guaranty have been inserted
for convenience only and shall be given no substantive meaning or significance
whatsoever in construing the terms and provisions of this Guaranty.

          16. Severability of Provisions. Any provision of this Guaranty which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition of
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

          17. Limitation by Law. All rights, remedies and powers provided in
this Guaranty may be exercised only to the extent that the exercise thereof does
not violate any applicable provision of law, and all the provisions of this
Guaranty are intended to be subject to all applicable mandatory provisions of
law that may be controlling and to be limited to the extent necessary so that
they will not render this Guaranty invalid, unenforceable, in whole or in part,
or not entitled to be recorded, registered or filed under the provisions of any
applicable law.

          18. Governing Law. This Guaranty shall be governed by, and construed
in accordance with, the law of the State of New York.

          19. Submission to Jurisdiction. The Guarantor hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York and any New York State Court acting in New York City and any appellate
courts from any thereof, in any action or proceeding arising out of or relating
to this Guaranty, or for recognition or enforcement of any judgment, and the
Guarantor hereto hereby irrevocably and unconditionally agrees that all claims
in respect of any such action or proceeding may be heard and determined in such
Nevada State or, to the extent permitted by law, in such Federal court. The
Guarantor hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Guaranty shall
affect any right the Guaranteed Party may otherwise have to bring any action or
proceeding relating to this Guaranty against the Guarantor or its properties in
the courts of any jurisdiction.

          20. Waiver of Venue. The Guarantor hereby irrevocably and
unconditionally waive, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Guaranty in
any court referred to in Section 19. The Guarantor hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

          21. SERVICE OF PROCESS. THE GUARANTOR HEREBY IRREVOCABLY DESIGNATES,
APPOINTS AND EMPOWERS CT CORPORATION AS

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ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON
ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL
PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY ACTION OR
PROCEEDING RELATING TO THIS GUARANTY. IF, FOR ANY REASON, SUCH DESIGNEE,
APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS SUCH, THE GUARANTOR
AGREES TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND AGENT IN NEW YORK CITY ON THE
TERMS AND FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO THE GUARANTEED
PARTY. THE GUARANTOR IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY
OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID TO THE GUARANTOR
AT ITS ADDRESS REFERRED TO IN SECTION 9.

          22. WAIVER OF JURY TRIAL. THE GUARANTOR HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAWS, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING IN ANY JURISDICTION DESCRIBED IN SECTION 19
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). THE GUARANTOR HERETO CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER.

          23. Entire Agreement. This Guaranty constitutes the entire agreement
and supersedes all prior agreements and understandings, both written and oral,
between the Guarantor and the Guaranteed Party with respect to the subject
matter hereof.

          IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its duly authorized officer effective as of the date
first above written.

                                         ORMAT TECHNOLOGIES INC.

                                         By: /s/ Connie Stechman
                                             -----------------------------------
                                             Name: Connie Stechman
                                             Title: Assistant Secretary

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GUARANTY AGREEMENTTHE PARTNERSHIP INTERESTS REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS. SUCH
INTERESTS HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED,
PLEDGED OR HYPOTHECATED UNLESS (i) THEY SHALL HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE SECURITIES LAW, OR (ii) IF SO
REQUESTED BY THE POLICY COMMITTEE OF THE PARTNERSHIP, THE PARTNERSHIP SHALL HAVE
BEEN FURNISHED WITH AN OPINION OF COUNSEL BY THE PARTNER PROPOSING SUCH SALE,
TRANSFER, PLEDGE OR HYPOTHECATION SATISFACTORY TO THE POLICY COMMITTEE OF THE
PARTNERSHIP THAT REGISTRATION IS NOT REQUIRED UNDER ANY OF SUCH SECURITIES LAWS;
AND THEN ONLY PURSUANT TO THE SUBSTANTIAL ADDITIONAL RESRTRICTIONS OF THIS
LIMITED PARTNERSHIP AGREEMENT.

--------------------------------------------------------------------------------

                              Amended and Restated

                        AGREEMENT OF LIMITED PARTNERSHIP

                                       OF

                              MAMMOTH-PACIFIC, L.P.

                                        A
                         CALIFORNIA LIMITED PARTNERSHIP

--------------------------------------------------------------------------------

                                TABLE OF CONTENTS

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                                    ARTICLE I

                                   Definitions

  1.1.   Definitions.....................................................     2

                                    ARTICLE II

                          Formation of the Partnership

  2.1.   Formation.......................................................    17
  2.2.   Partners........................................................    17
  2.3.   Name............................................................    17
  2.4.   Purpose.........................................................    17
  2.5.   Offices.........................................................    17
  2.6.   Registered Agent................................................    18
  2.7.   Nature of Offering..............................................    18
  2.8.   Term............................................................    18

                                   ARTICLE III

                    Capital of the Partnership; Partner Loans

  3.1.   Capital Contributions to the Partnership........................    19
  3.2.   Interest on Capital Contributions...............................    24
  3.3.   Limited Partners and Capital Contributions......................    24
  3.4    Withdrawal of Capital...........................................    25
  3.5.   Adjustments to Partnership Percentage Interests.................    25

                                   ARTICLE IV

                         Management of the Partnership

  4.1.   Policy Committee................................................    26
  4.2.   Partnership Powers..............................................    27
  4.3.   Authority, Responsibilities and Powers of Policy Committee......    28
  4.4.   No Management by Limited Partners...............................    30
  4.5.   Scope of Authority of Policy Committee..........................    31

                                      -i-

                          TABLE OF CONTENTS, Continued

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  4.6.   Liability.......................................................    32
  4.7.   Indemnification.................................................    32
  4.8.   Partnership Expenses; Compensation and Reimbursement of
         General Partners................................................    33
  4.9.   Outside Activities; Partnership Spheres of Interest.............    37
 4.10.   Tax Matters Partner.............................................    40
 4.11.   Annual Budget...................................................    41
 4.12.   Short-Term Investment of Partnership Funds......................    41
 4.13.   Rights of Limited Partners Relating to the Partnership..........    43
 4.14.   Contracts with Affiliates.......................................    45

                                    ARTICLE V

                              Proposed Transactions

  5.1.   Project Documents...............................................    47
  5.2.   Additional Financing............................................    47

                                   ARTICLE VI

                   Representations, Warranties, Covenants and
                              Closing Certificates

  6.1.   Representations, Warranties and Covenants.......................    47
  6.2.   Reports and Closing Certificates Delivered by the Partners......    49

                                   ARTICLE VII

                       Capital Accounts, Distributions and
                                   Allocations

  7.1.   Establishment of Capital Accounts...............................    50
  7.2.   Distributions of Cash Items.....................................    54
  7.3.   Allocations of Tax Items........................................    54
  7.4.   Recharacterization of Fees and Guaranteed Payments .............    57
  7.5.   Upholding of Tax Benefits.......................................    57

                                      -ii-

                            TABLE OF CONTENTS, Continued

                                                                            Page
                                                                            ----
  7.6.   Loans from Partners and Affiliates..............................    60
  7.7.   Negative Capital Accounts.......................................    60

                                  ARTICLE VIII

                   Admission, Assignment, Disability and Other
                                    Investors

  8.1.   General Conditions to Transfers of Partnership Interests and
            Admission of Partners........................................    61
  8.2.   Admission of Partners by Sale or Assignment of Partnership
            Interests....................................................    63
  8.3.   Disability of Limited Partners..................................    66
  8.4.   Disability of General Partners..................................    66
  8.5.   Withdrawal of Partners..........................................    68
  8.6.   Conversion of Partnership Interests.............................    68

                                   ARTICLE IX

                           Dissolution and Liquidation

  9.1.   Term............................................................    69
  9.2.   General.........................................................    69
  9.3.   Priority on Liquidation.........................................    69
  9.4.   Statements on Liquidation.......................................    70
  9.5.   Agreement Governing Return of Capital or Partition..............    70

                                    ARTICLE X

                             Records and Accounting

 10.1.   Books and Records...............................................    71
 10.2.   Accounting Method...............................................    71
 10.3.   Fiscal Year.....................................................    71
 10.4.   Bank Accounts...................................................    71
 10.5.   Auditors........................................................    72
 10.6.   Required Filings................................................    72

                                      -iii-

                          TABLE OF CONTENTS, Continued

                                                                            Page
                                                                            ----

                                   ARTICLE XI

                                  Miscellaneous

 11.1.   Notices.........................................................    73
 11.2.   Further Assurances..............................................    73
 11.3.   Agreement in Counterparts; Dating...............................    73
 11.4.   Captions........................................................    74
 11.5.   No Third Party Beneficiaries....................................    74
 11.6.   Successors......................................................    74
 11.7.   Amendments......................................................    74
 11.8.   Governing Law...................................................    74
 11.9.   Integration.....................................................    74
11.10.   Dispute Settlement..............................................    74
11.11.   Property, etc. Intended for the Partnership.....................    76
11.12.   Severability....................................................    76

                                      -iv-

                              Amended and Restated

                        AGREEMENT OF LIMITED PARTNERSHIP

          THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP dated as of
January 26, 1990 (this Agreement) by and among CD Mammoth Lakes I, Inc., a
Maryland corporation (CD-I), CD Mammoth Lakes II, Inc., a Maryland corporation
(CD-II), and Pacific Geothermal Company, a California corporation (PGC).

                                   WITNESSETH:

          WHEREAS, the parties hereto entered into an Agreement of Limited
Partnership dated as of December 27, 1989 (the Original Agreement) for the
purpose of creating a limited partnership to develop, design, construct, own and
operate the Mammoth - Pacific Geothermal Complex, consisting of one operating
air cooled binary cycle geothermal - electric power plant, two proposed similar
power plants, a possible expansion of the Project together with the related
geothermal resource rights, all located at Casa Diablo Hot Springs, near the
Town of Mammoth Lakes, California; and

          WHEREAS, the parties hereto desire to enter into this Agreement to
amend and restate the Original Agreement.

          NOW, THEREFORE, in order to effect the foregoing, and in consideration
of the mutual agreements herein contained, the parties hereto, intending to be
legally bound, do hereby agree as follows:

                                    ARTICLE I

                                   Definitions

          1.1. Definitions. (a) Unless the context shall otherwise require, the
following terms shall have the following meanings for all purposes hereof (such
definitions to be equally applicable to both the singular and plural forms of
the terms defined):

          Act shall mean the California Revised Limited Partnership Act, as the
same may be amended from time to time, and any successor to such act.

          Adjusted Basis, at any time relevant herein, shall mean the
Partnership's adjusted basis in any Partnership asset, as determined for Federal
income tax purposes pursuant to Section 1011 of the Code.

          Affiliate shall mean any Person that directly or indirectly controls,
is controlled by or is under common control with the Person in question. As used
in this definition of Affiliate, the term "control" (including "controlled by"
and "under common control with") means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a Person, whether through ownership of voting securities, by contract or
otherwise.

                                       -2-

          Available Cash shall mean cash available for distribution to the
Partners, excluding Capital Contributions and Net Capital Receipts, after
payment of all debt service and other expenses (including, without limitation,
payments due on or with respect to the Partner Loans, operating and maintenance
expenses, general and administration expenses, insurance costs and expenses,
property taxes and fees payable pursuant to Section 4.8), satisfaction of
liabilities as they become due and establishment of (and contributions to) such
reserves as the Policy Committee may from time to time reasonably determine to
be appropriate.

          Capital Account shall mean the account for each Partner on the books
of the Partnership created and maintained as provided in Section 7.1, with only
one Capital Account being maintained for any Person acting as both a General and
a Limited Partner.

          Capital Contribution shall mean any Cash Contribution or Contributed
Property.

          Carrying Value, as of the time of determination, shall mean (i) with
respect to Contributed Property, the Fair Market Value of such property on the
date of contribution reduced (but not below zero) by all depreciation,
depletion, amortization and similar expense charged to the Capital Accounts
pursuant to Section 7.1.2 with respect to such property and (ii) with respect to
any other property, the Adjusted Basis of such property.

                                       -3-

          Cash Contribution shall mean the amount of each cash which a Partner
contributes to the Partnership pursuant to the terms of this Agreement.

          CD Group shall mean CD-I and CD-II when referred to collectively.

          Certificate of Limited Partnership shall mean the Certificate of
Limited Partnership (Form LP-1), and any and all amendments thereto, filed on
behalf of the Partnership with the Secretary of State of the State of California
as required under the Act.

          Closing Date shall mean the date on which this Agreement is executed
by the parties hereto.

          Code shall mean the Internal Revenue Code of 1986, as amended from
time to time.

          Common Facilities shall mean that portion of the Facilities used in
connection with the operation and control of the G-l Facility which are or may
be used in connection with the operation and control of the G-2 Facility, the
G-3 Facility or any expansion of the Project, including the G-4 Facility.

          Complying General Partner shall have the meaning set forth in Section
3.1.3.

                                       -4-

          Contributed Property shall mean any property or other consideration
(other than cash) contributed by a Partner to the Partnership.

          Conveyance Agreement shall mean that Asset Purchase and Sale and
Contribution Agreement, dated as of January 26, 1990, among Pacific Geothermal
Company, a California corporation as Seller and Contributor (PGC), CD Mammoth
Lakes I, Inc. and CD Mammoth Lakes II, Inc., as Buyers and Contributors, and the
Partnership, wherein, among other matters: (i) PGC shall sell and transfer to
the CD Group, and the CD Group shall purchase, a 50% undivided interest in the
Project; and (ii) the CD Group and PGC shall each contribute to the Partnership,
and the Partnership shall accept as Contributed Property from the CD Group and
from PGC, a 50% undivided interest in the Project.

          Declined Amount shall have the meaning set forth in Section 3.1.3.

          Declining General Partner shall have the meaning set forth in Section
3.1.3.

          Disability shall mean death, adjudication of incompetency,
bankruptcy, insolvency, the making of an assignment for the benefit of creditors
or dissolution, and Disabled shall mean to be under a Disability.

                                       -5-

          ERISA shall mean the Employee Retirement Income Security Act of 1974,
as amended.

          Excess Contribution shall have the meaning set forth in Section 3.1.3.

          Facilities shall mean the Cammon Facilities and the following air
cooled binary cycle geothermal electric power plant facilities included within
the Project:

          G-l Facility, covered by FERC Order QF 83-247-000, as such FERC Order
may be from time to time amended or superceded by a similar FERC Order (and
sometimes also referred to as MP I Plant or Facility), originally placed in
service in 1984 and currently operating.

          G-2 Facility, covered by FERC Order QF 86-392-000, as such FERC Order
may be from time to time amended or superceded by a similar FERC Order (and
sometimes also referred to as MP II Plant or Facility).

          G-3 Facility, covered by FERC Order QF 86-666-000, as such FERC Order
may be from time to time amended or superceded by a similar FERC Order (and
sometimes also referred to as PLES-I Plant or Facility).

          G-4 Facility, covered by FERC Order QF 86-393-000, as such FERC Order
may be from time to time amended or superceded by a similar FERC Order (and
sometimes also referred to as MP III Plant or facility).

And a Facility shall mean any one of the Facilities.

          Fair Market Value shall mean the value of the particular asset or
interest in question determined on the basis of an arm's-length transaction for
cash between an informed and willing seller (under no compulsion to sell) and an
informed and willing purchaser (under no compulsion to purchase), taking into
account, among other things, the anticipated cash flow, taxable income and

                                       -6-

taxable loss attributable to the asset or interest in question. In the event
that the Partners seeking to determine such Fair Market Value cannot agree as to
such value between or among themselves, upon notice of any such Partner, such
Partners shall meet to appoint a mutually acceptable independent appraiser
having recognized qualifications necessary in order to make such determination
and whose fees and expenses, unless otherwise provided in this Agreement, shall
be shared equally by the Partners affected by such determination. If such
Partners shall be unable to agree on such an appraiser within 20 days of such
notice, such value shall be determined by a panel of three independent
appraisers having such qualifications selected on or prior to the 40th day of
such notice, one of whom shall be selected by the selling or transferring
Partner or Partners, another of whom shall be selected by the purchasing or
acquiring Partner or Partners, and the third of whom shall be selected by such
other two appraisers or, if such other two appraisers shall be unable to agree
upon a third appraiser within 20 days of their selection, by the American
Arbitration Association or its successors. The appraiser or appraisers appointed
pursuant to the foregoing procedure shall be instructed to determine such value
within 45 days after such appointment and such determination shall be final and
binding upon the Partners. If three appraisers shall be appointed, the
determination of the appraiser which shall differ most from the average of the
other two appraisers shall be excluded, the remaining two determinations shall
be averaged and such average shall constitute

                                       -7-

the determination of the appraisers. Unless otherwise provided in this
Agreement, in the case of a panel of three appraisers, the fees and expenses of
each of the two appraisers appointed by the respective Partners affected by such
determination shall be paid by such respective Partners and the fees and
expenses of the third appraiser shall be divided equally by and among all the
Partners affected by such determination, except in the event that such
determination is being undertaken as a result of a breach by a Partner under
this Agreement, such breaching Partner shall pay all such fees and expenses of
all appraisers.

          FERC shall mean the United States Federal Energy Regulatory Commission
or any successor agency.

          FERC Order shall mean the applicable Order Granting Application for
Certification as a Qualifying Small Power Production Facility issued with
respect to the respective Facilities forming a part of the Project as follows
(or as such FERC Orders may be amended or superceded by similar FERC Orders):

  Facility      FERC Order
------------   ------------
G-I Facility   QF83-247-000

G-2 Facility   QF86-392-000

G-3 Facility   QF86-666-000

G-4 Facility   QF86-393-000

                                       -8-

          Gain or Loss on Disposition shall mean the gain or loss for Federal
income tax purposes, as the case may be, arising from a sale, exchange or other
taxable disposition of the Project, or any material portion thereof (excluding,
however, any gain or loss from sales of services or property in the ordinary
course of the business of the Partnership).

          General Partner shall mean any Person now or hereafter becoming a
general partner in the Partnership.

          Geothermal Interests shall mean direct or indirect interests in (i)
properties suitable for, believed to be suitable for or currently the subject of
geothermal exploration, development or production including leasehold,
operating, working and royalty interests, and contract rights relating thereto;
(ii) interests in geothermal resources, wells, equipment, tanks, pipe,
processing or other plants or facilities (including, but not limited to, heat
exchangers, turbo-expanders, electric generators, air-cooled condensers), and
other items of a similar nature which are used or to be used in connection with
any such properties, including the Facilities; (iii) contract rights (including,
but not limited to, power sale agreements, including the Power Contracts),
whether real, personal or mixed, being used or proposed to be used in connection
with the exploration, development, operation or maintenance of such properties,
or being used or proposed to be used in connection with the production,
generation, transmission or marketing of electric energy; (iv) partnerships,
corporations and other associations that hold any

                                       -9-

(To Come) of the foregoing; and (v) any tangible or intangible assets or _______
incident to the foregoing, whether real, personal or mixed.

          Governmental Requirements shall mean requirements contained in any
law, ordinance, regulation, rule, order, direction or judgment promulgated by
any Federal, state, local or other body, whether legislative, executive or
judicial, or by any quasi-governmental body, in any event having jurisdiction.

          In Service Date shall mean, with respect to a Facility forming a part
of the Project, the date on which such Facility is placed in service for Federal
income tax purposes.

          Limited Partner shall mean any Person now or hereafter becoming a
limited partner in the Partnership.

          Managing General Partner shall mean PGC in its capacity as a General
Partner, or such other General Partner appointed as the Managing General Partner
of the Partnership pursuant to Section 4.3.

          Minimum Gain Attributable to Partner Nonrecourse Debt shall have the
meaning set forth in Treasury Regulation Section l.704-lT(b)(4)(iv)(h)(6).

          Minimum Gain shall have the meaning set forth in Treasury Regulation
Section l.704-lT(b)(4)(iv)(c).

          Net Agreed Value shall mean (i) in the case of cash, the amount
thereof, (ii) in the case of any Contributed Property, the Fair Market Value of
such Contributed Property at the time of contribution reduced by any
indebtedness either assumed by the Partnership upon such contribution or to
which such Contributed

                                      -10-

Property is subject when contributed and ____ in the case of any property (other
than cash) distributed to a Partner, the Fair Market Value of such property at
the time of such distribution reduced by any indebtedness either assumed by such
Partner upon such distribution or to which such property is subject at the time
of distribution.

          Net Capital Receipts shall mean the proceeds of any sale, exchange or
other disposition of the Project or any material portion thereof (excluding,
however, proceeds from sales of services or property in the ordinary course of
the business of the Partnership), the proceeds of any refinancing of any
indebtedness of the Partnership, or any insurance or condemnation proceeds, in
each instance less the amount of expenses incurred in connection therewith, any
obligations paid with the proceeds of any disposition of the Project or of any
refinanced debt, the cost of restoration and repair of any property damaged by
casualty or taken in condemnation, and the cost of construction of any
improvement for which such insurance or condemnation proceeds are used.

          Partner Loans shall mean any loan made by a Partner or an Affiliate of
a Partner to the Partnership, the proceeds of which shall not be added to, or
otherwise affect, the capital Account of such Partner.

                                      -11-

          Partner Loan with respect to Declined Amount shall mean any loan made
by a Partner or an Affiliate of a Partner to a Declining General Partner (as
defined in Section 3.1.3) or the Partnership with respect to that portion of a
request by the Policy committee for Partner Loans or an Additional Capital
contribution as to which a Partner declined to comply.

          Partner Nonrecourse Debt shall have the meaning set forth in Treasury
Regulation Section 1.704-_T(b)(4)(iv)(k)(4).

          Partners shall mean the General Partners and the Limited Partners,
collectively, and a Partner shall mean any one of the Partners.

          Partnership shall mean Mammoth-Pacific, L.P., a California limited
partnership, the subject of this Agreement.

          Partnership Percentage Interest shall mean:

          25%  in the ease of CD-I, in its capacity as General
               Partner;

          24%  in the case of CD-II, in its capacity as General Partner;

           1%  in the case of CD-II, in its capacity as Limited Partner;

          49%  in the case of PGC, in its capacity as General Partner; and

           1%  in the case of PGC, in its capacity as Limited Partner;

                                      -12-

as such percentager may be adjusted from time to time pursuant to Section 3.5.

          Person shall mean an individual or a corporation, partnership, trust,
unincorporated organization, association or other entity.

          PEn shall mean Pacific Energy, a subsidiary of Pacific Enterprises,
and parent of PGC.

          PGC shall mean Pacific Geothermal Company, a wholly owned subsidiary
of PEn.

          PGC Group shall mean PGC and any Affiliate of PGC when referred to
collectively.

          Policy Committee shall mean the Policy Committee established pursuant
to Section 4.1.

          Power Contracts shall mean the Power Purchase and Sales Agreements
with Southern California Edison Company relating to the respective Facilities as
follows and as the same may be further amended, modified or supplemented from
time to time:

          G-l Facility, the Amended and Restated Power Purchase and Sales
Agreement executed December 1, 1986.

          G-2 Facility, the Power Purchase Contract (Mammoth Pacific II Project)
as amended by Amendment No. 1 thereto executed October 27, 1989 and as further
amended by Amendment No. 2 thereto executed December 20, 1989.

          G-3 Facility, the Power Purchase Contract (PLES I Project) as amended
by Amendment No. 1 thereto executed October 27, 1989 and as further amended by
Amendment No. 2 thereto executed December 20, 1989.

                                      -13-

          G-4 facility, the ___________________________________ (To Come)
Geothermal III) effective April 15, 1985, as revised May 4, 1984 And a Power
Contract shall mean one of the Power Contracts.

          Profit or Loss shall mean the income or loss of the Partnership for
Federal income tax purposes other than Gain or Loss on Disposition.

          Project shall mean all of PGC's right, title and interest in
Geothermal Interests and Facilities at the Mammoth-Pacific Geothermal Complex
located at Casa Diablo Hot Springs, near the town of Mammoth Lakes, California,
and all real and personal property and fixtures at any time forming a part
thereof or appurtenant thereto to the extent of the interest of PGC or any of
its Affiliates (prior to the consummation of the transactions under the
Conveyance Agreement) and of the Partnership (after consummation of the
transactions under the conveyance Agreement) in any such property, and which is
the subject of the FERC Orders and the Project Documents.

          Project Closing Date shall mean the date on which the Partnership
acquires its rights and interests in the Project upon consummation of the
transactions contemplated by the Conveyance Agreement.

          Project Documents shall mean all such instruments, contracts and
agreements as relate to the development, design, engineering, construction,
development, ownership, operation or financing of the Project.

                                      -14-

          PURPA shall mean the Public Utility Regulatory ________ Act of 1976 as
amended, and the rules and regulations promulgated thereunder.

          Recapture Income shall mean any gain recognized upon the disposition
of a Partnership asset that is not capital gain because such gain represents the
recapture (under Section 1245 or 1250 of the code or otherwise) of deductions
previously taken for Federal income tax purposes with respect to such asset.

          Stipulated Rate shall mean, with respect to any Partner Loan with
respect to Declined Amount, a fluctuating rate equal to the rate of interest
publicly announced from time to time by Morgan Guaranty Trust Company of New
York as its prime rate plus 5%, in the case of the first 9 months that such
Partner Loan with respect to Declined Amount shall be outstanding, and plus 10%
thereafter, in each case compounded monthly; provided, however, that in no event
shall the Stipulated Rate exceed the highest rate permitted by applicable law.

          Transfer shall mean, with respect to a Partner's interest in the
Partnership, _ sale, assignment, conveyance, donation, exchange, transfer, gift,
bequest, pledge, hypothecation or any other manner of disposition or
encumbrance, whether for value or otherwise and whether voluntary or involuntary
(including as a result of death, transfer by foreclosure, sheriff's or other
judicial sale, an attachment, seizure or the taking or transfer by operation of
law or

                                      -15-

otherwise such as by merger, by a receiver, trustee in bankruptcy conservator or
committee for an incompetent).

          Unrealized Gain attributable to a Partnership property shall mean, as
of any date of determination, the excess, if any, of the Fair Market Value of
such property as of such date of determination over the Carrying Value of such
property as of such date of determination.

          Unrealized Loss attributable to a Partnership property shall mean, as
of any date of determination, the excess, if any, of the Carrying Value of such
property as of such date of determination over the Fair Market Value of such
property as of such date of determination.

          (b) Unless otherwise stated herein, all references to Sections and
Articles shall mean and refer to the respective Section or Article in this
Agreement.

          (c) All pronouns and all variations thereof used herein shall be
deemed to refer to the masculine, feminine or neuter, singular or plural, as the
identity of the Person or Persons or entity may require.

          (d) All references herein to Treasury Regulations shall be to the same
as in effect on the Closing Date.

                                      -16-

                                   ARTICLE II

                          Formation of the Partnership

          2.1. Formation. The parties to this Agreement hereby form and
constitute the Partnership as a California limited partnership pursuant to the
terms of the Act and this Agreement.

          2.2. Partners. CD-I, with respect to its 25% Partnership Percentage
Interest, CD-II, with respect to its 24% Partnership Percentage Interest, and
PGC, with respect to its 49% Partnership Percentage Interest, shall each be
General Partners in the Partnership. CD-II, with respect to its 1% Partnership
Percentage Interest, and PGC, with respect to its 1% Partnership Percentage
Interest, shall each be United partners in the Partnership.

          2.3. Name. The name of the Partnership shall be Mammoth-Pacific,
L.P., a California limited partnership.

          2.4. Purpose. The purpose of the Partnership shall be to acquire, own,
develop, permit, design, engineer, construct, finance and operate the Project as
contemplated by this Agreement and the Project Documents and otherwise as
approved by the Policy Committee. The name and funds of the Partnership shall be
used only for Partnership purposes.

          2.5. Offices. The principal office of the Partnership at which shall
be kept the records, if any, required by the Act, shall be located at c/o
Pacific Energy, 6055 East Washington Boulevard, City of Commerce, California
90040, subject to change by the Policy Committee upon notice to all Partners.

                                      -17-

          2.6. Registered Agent. The registered agent Partnership for service of
process in California is PGC, subject to replacement from time to time by
direction of the Policy Committee.

          2.7. Nature of Offering. The Partnership intends that the offering of
partnership interests to any prospective Farmer be exempt from registration
under the Securities Act of 1933, as amended, and under the applicable
securities laws of all states. The partnership interests acquired hereunder may
not be Transferred unless (i) they have been registered under the Securities Act
of 1933 and any applicable state securities law, or (ii) if the Partner
intending to Transfer such partnership interest has notified the Policy
Committee in writing of its intention, and, if so requested by the Policy
Committee in writing within ten (10) business days following such notice, the
Partnership shall have been furnished by such Partner with an opinion of counsel
satisfactory to the Policy Committee that registration is not required under any
of such securities laws; and then only pursuant to the restrictions of Article
VIII to the extent that said Article, by its terms, is applicable to such
Transfer.

          2.8. Term. The Partnership shall commence upon the filing of the
Certificate of Limited Partnership (Form LP-1) in accordance with the Act and
shall continue in existence until December 31, 2039, unless earlier terminated
in accordance with any provisions of this Agreement or the Act. The General
Partners shall not cause the Partnership to incur any liabilities or to become
subject to any

                                      -18-

obligations nor shall they _____________ in any business on behalf of the
Partnership until after the Project Closing Date, other than matters necessary
or incidental to the Partnership's organization.

                                   ARTICLE III

                    Capital of the Partnership; Partner Loans

          3.1. Capital Contributions to the Partnership.

          3.1.1. On and as of the Closing Date, in consideration for their
respective Partnership Percentage Interests each of the Partners shall make a
Cash Contribution to the Partnership in an amount proportionate to such
Partner's Partnership Percentage Interest, for a total of $100.00, representing
the total of Capital Contributions to be made as of the Closing Date.

          3.1.2. On the Project Closing Date each of the Partners will make a
Capital Contribution in the form of Contributed Property (consisting of
interests in the Project) pursuant to the terms of the Conveyance Agreement as
follows:

          CD-I  - 25% undivided interest in the Project;

          CD-II - 24% undivided interest in the Project with respect to its
                  General Partner Partnership Interest;

          CD-II - 1% undivided interest in the Project with respect to its
                  Limited Partner Partnership Interest;

                                      -19-

          TGC  - ___ undivided interest in the Project with respect to its
                 General Partner Partnership Interest; and

          PGC  - 1% undivided interest in the Project with respect to its
                 Limited Partner Partnership Interest.

     All Partners agree that, notwithstanding the Carrying Value of the
     Contributed Property for any particular Partner in such Partner's Capital
     Accounts, for purposes of computing any future adjustments to Partnership
     Percentage Interests, the value of the aggregate Capital Contribution of
     the CD Group to be made pursuant to this Section, representing an aggregate
     50% undivided interest in the Project, shall be equal to the value of the
     Capital Contribution to be made by PGC pursuant to this Section, also
     representing an aggregate 50% undivided interest in the Project, with the
     Net Agreed Value of the aggregate of all Contributed Property to be
     contributed to the Partnership on the Project Closing Date as established
     by resolution of the General Partners.

          3.1.3. Subsequent to the Project Closing Date, the General Partners
shall, upon notice from the Policy Committee, make Partner Loans (or additional
Capital Contributions in lieu thereof but only if required or permitted by the
Policy Committee) to the Partnership in such amounts and for such purposes
(including, without limitation,

                                      -20-

the establishment of or the additions to ________ Committee shall specify, with
Partner Loans to bear interest at the Stipulated Rate. The obligations of the
General Partners to comply with the notice from the Policy Committee to make
Partner loans or additional Capital Contributions shall be based upon a 50%
responsibility therefor by CD-I and/or CD-II (in its capacity as General
Partner) and a 50% responsibility therefor by PGC (in its capacity as General
Partner), with such respective responsibilities to be applicable for so long as
CD-I and/or CD-II and PGC remain General Partners and regardless of their
respective Partnership Percentage Interests (or the respective aggregate
Partnership Percentage Interests of the CD Group or the PGC Group). Any Partner
Loan made pursuant to this Section shall bear interest at such rate and shall
have such other commercially reasonable terms and provisions as the Policy
Committee shall approve. In the event that a General Partner (a "Declining
General Partner") shall decline to respond to the notice from the Policy
Committee calling for Partner Loans or an additional Capital Contribution (with
the amount as to which a Declining General Partner declines being herein
referred to as the "Declined Amount"), the other General Partner(s) who have
complied with the Policy Committee's call ("Complying General Partner"): (x)
may, if the notice from the Policy Committee had originally called for an
Additional Capital Contribution, change its method of complying with the call
and make a Partner Loan in the amount for which it was originally responsible;
and (y) must also comply on

                                      -21-

behalf of a Declining General Partner by _________ _______ ________ _____ Amount
in the form of either (i) a loan (a "Partner loan with respect to Declined
Amount") to the Declining General Partner (or to the Partnership on behalf of
such Declining General Partner), which Partner Loan with respect to Declined
Amount shall bear interest at the stipulated Rate and shall have such other
terms and conditions as the lending Complying General Partner and the Policy
Committee may establish or (ii) an Additional Capital Contribution to the
Partnership (herein referred to as an "Excess Contribution") if the notice from
the Policy Committee originally called for an Additional Capital Contribution
and the Complying General Partner so elects to satisfy its obligation with
respect to the Declined Amount rather than with a Partner Loan with respect to
Declined Amount. In the event of an Excess Contribution, the Partnership
Percentage Interest of the Complying General Partner who has made such Excess
contribution and the Partnership Percentage interest of the Declining General
Partner shall each be adjusted (increased or decreased, as appropriate in
accordance with Section 3.5) by a Partnership Percentage Interest amount equal
to the percentage that the Excess Contribution bears to the total of all Capital
Contributions (including the Excess Contribution). A Declining General Partner
shall have the right for one (1) year following the making of such Excess
Contribution to reimburse the Complying General Partner who has made such Excess
Contribution the amount of such Excess contribution plus interest at the
stipulated Rate; and upon the

                                      -22-

taking of such reimbursement and the giving of __________ Partnership of such
reimbursement, the Partnership Percentage Interest of both the Declining General
Partner and the complying General Partner who had made the Excess Contribution
shall each be readjusted to eliminate the impact of the Excess Contribution. The
respective obligations to comply with the notice from the Policy Committee to
make Partner Loans or additional Capital Contributions or to provide a Declined
Amount may be satisfied: (a) in whole or in part by the General Partners
themselves; (b) by Limited Partner(s) to whom a General Partner had offered an
opportunity to participate in the making of a Partner Loan or additional Capital
Contribution or the providing of a Declined Amount and who had accepted such
offer (on terms arranged between the General Partner and such Limited Partner(s)
and not necessarily based upon such Limited Partner's Partnership Percentage
Interests): or (c) by outside third parties to whom a General Partner had
offered an opportunity to participate in the making of a Partner Loan or
additional Capital Contribution or the providing of a Declined Amount and who
had accepted such offer (on terms arranged between the General Partner and such
outside third party) and who meet the conditions of Article VIII for admission
as an additional or substitute Partner as a precondition to such participation.
No attempt to have a Limited Partner or an outside third party participate in
satisfying the Policy Committee's request for Partner Loans or additional
Capital Contributions or the requirement to provide a Declined Amount shall
relieve the General

                                      -23-

Partners of their respective responsibilities to _______ such Partner Loans or
additional Capital Contributions to be made, and such Declined Amounts to be
provided, to the Partnership.

          3.1.4. Except pursuant to Sections 3.1.1 and 3.1.2 and as permitted
or required by the Policy Committee no Capital Contributions may be made to the
Partnership. Except for the Capital Contribution made pursuant to Section 3.1.2
and as otherwise permitted by the Policy Committee, no Capital Contribution
shall be made to the Partnership in other than cash. The Policy Committee shall
not permit any Capital Contributions to be made if such Capital Contributions
would cause the Project to cease to be a qualifying small power production
facility under PURPA.

          3.1.5. Notwithstanding any other provision hereof, in no event will
any Partner be required or permitted to make additional Capital Contributions or
will the Partnership Percentage Interest of any Partner be adjusted to the
extent that the same would cause the Project to cease to be a qualifying small
power production facility under PURPA. '

          3.2. Interest on Capital Contributions. Except as otherwise provided
in Section 3.1.3, no interest shall be paid by the Partnership in respect of any
Capital Contributions or in respect of the balances in any Partner's Capital
Account.

          3.3. Limited Partners and Capital Contributions. The liability of
any limited Partner shall be limited to (i) the total amount of Capital
Contributions which the Limited Partner makes

                                      -24-

pursuant to Section 3.1____ any amounts (plus _____ any) distributed to it which
may be deemed to be a return in whole or in part of its Capital Contribution (to
the extent such amount are necessary to discharge the Partnership's liabilities
to all creditors who extended credit or whose claims arose before such return),
and (iii) any Partnership funds or property wrongfully distributed to it,
anything to the contrary herein notwithstanding, and no Limited Partner shall
have any further liability to contribute money to or in respect of the
liabilities or obligations of the Partnership, nor shall any Limited Partner, as
such, be liable for any obligation or other liability of the Partnership. Under
no circumstances shall a Limited Partner be required to make additional Capital
Contributions or Partner Loans and Limited Partners have no rights to
participate in the making of additional Capital Contributions to the
Partnership; however, Limited Partners may, at the discretion of the General
Partners, be offered an opportunity to participate in the making of an
additional Capital Contribution.

          3.4. Withdrawal of Capital. A Partner shall not be entitled to
withdraw any part of its Capital Account or to receive any distribution from the
Partnership, except as provided in this Agreement.

          3.5. Adjustments to Partnership Percentage Interests. From and after
each Capital Contribution made to the Partnership pursuant to Section 3.1.3 or
any reimbursement made by a Declining

                                      -25-

General Partner pursuant to Section _____ the Partnership __________ Interests
of each Partner shall be recomputed as follows:

     The Partnership Percentage Interest of each Partner shall be computed by
     dividing (a) the total Net Agreed Value of all Capital Contributions
     (computed as of the respective times of each such Capital Contribution)
     made by such Partner (and such Partner's predecessor(s)) pursuant to
     Sections 3.1.1, 3.1.2 or 3.1.3 (including Excess Contributions), by (b) the
     total Net Agreed Value of all Capital Contributions (computed as of the
     respective times of each such Capital Contribution) made by all Partners
     (and each of said Partners' predecessor(s)) pursuant to Sections 3.1.1,
     3.1.2 or 3.1.3 (including Excess Contributions(s)).

                                   ARTICLE IV

                          Management of the Partnership

          4.1. Policy Committee. The management of the Partnership shall be
conducted by the Policy Committee which shall initially consist of two natural
persons as members, one member appointed by the members of the CD Group, in
their respective capacities as General Partners, and one appointed by PGC, in
its capacity as General Partner. In addition, the members of the CD Group, in
their respective capacities as General Partners, and PGC, in its capacity as
General Partner, shall each appoint one or some alternates to serve as members
of the Policy Committee in the absence of the respective appointed members. All
appointments to the Policy Committee of members, alternates or replacements of
members or alternates shall be in writing with notice thereof given to each
General Partner. In the event that a General Partner should become a Declining
General Partner as a result of such General Partner's failure to comply with

                                      -26-

______ request by the Policy Committee for a Partner loan or an additional
Capital Contribution as set forth in Section 3.1.3, then the Complying General
Partner who provides (or arranges for the provision of) the Declined Amount (and
who is not an Affiliate of the Declining General Partner) shall, for so long as
the Partner Loan with respect to Declined Amount or the Excess Contribution has
not been repaid (together with interest at the Stipulated Rate) to said
Complying General Partner, have the right to designate an additional member of
the Policy Committee (which Committee, for so long as said Complying General
Partner shall have such designation right, shall consist of three members).
Except as otherwise provided in this Agreement and subject to the restrictions
set forth in Section 4.5, all decisions to be made by the Policy Committee under
this Agreement shall be by the unanimous vote of its members with the vote of
each member of the Policy Committee being equal; provided, however, that when
there are three members of the Policy Committee, all decisions (except as
otherwise provided herein) shall be by a majority vote.

          4.2. Partnership Powers. In furtherance of its purposes, the
Partnership is hereby authorized:

          (a) to acquire by purchase, lease or otherwise, any real or personal
     property, tangible or intangible, including, without limitation, any
     contract rights which may be necessary, convenient or incidental to the
     Project and to sell or otherwise dispose of all or any portion of the
     Project;

                                      -27-

          (b) to own, develop, permit, design ______ construct, place in
     service, test and start-up, operate and maintain the Project;

          (c) to borrow money and issue evidences of indebtedness, or to assume
     the same, and to secure the same by mortgage, pledge or other lien on the
     Project, its revenues, the power generated thereby to the extent not
     prohibited by any other agreement or any other assets of the Partnership
     and to borrow money on an unsecured basis;

          (d) to enter into any kind of lawful activity and to enter into,
     perform and carry out contracts of any kind in connection with the purpose
     of the Partnership described in Section 2.4 (including construction
     contracts and contracts of insurance covering risks to the Project, and
     General Partner liability); and

          (e) to prepay in whole or in part, refinance, recast, increase, renew,
     modify or extend any loan incurred or assumed by the Partnership in
     connection with the business of the Partnership.

          4.3. Authority, Responsibilities and Powers of Policy Committee.
Subject to the terms and conditions set forth in Section 4.5 and elsewhere in
this Agreement, the Policy Committee shall have complete authority over and
exclusive control and management of the business and affairs of the Partnership
(including the determination as to whether or not the Partnership should proceed
to expand the

                                      -28-

project to encompass the development design _______ operation of the G-4
Facility) and shall be authorized to exercise all of the rights, powers and
privileges of partners of a general partnership under the laws of the State of
California. The member of the Policy Committee shall devote such time to the
affairs of the Partnership as they may reasonably deem to be required for the
achievement of the Partnership's purposes, and, in connection therewith, the
Policy Committee may employ on behalf of the Partnership such other Persons to
perform services for the Partnership, including Affiliates of any Partner, as
the Policy Committee shall determine to be necessary or desirable. The routine
affairs of the Partnership shall be managed by the Managing General Partner. PGC
shall be the Managing General Partner, subject to the continuing approval of the
Policy Committee (by the requisite vote for action by the Policy Committee as
determined pursuant to Section 4.1), which may at any time rescind such
approval. In the event that approval of PGC shall be rescinded, the Policy
Committee shall appoint a General Partner as the Managing General Partner. If
the Policy Committee shall be unable to agree upon the General Partner to serve
as the Managing General Partner, or no General Partner shall be willing to serve
in such capacity, the Policy Committee shall perform the duties of the Managing
General Partner hereunder. The Managing General Partner, each member of the
Policy Committee, and each General Partner shall, in the performance of their
respective duties hereunder, exercise good faith in all activities relating to
the conduct of the business

                                      -29-

of the Partnership and shall undertake in good faith, and take all reasonable
steps to carry out, the development, operation and maintenance of the business
of the Partnership. The Policy Committee shall file or cause to be filed any
necessary amendments to the Certificate of Limited Partnership and other filings
and shall do all things requisite to the maintenance of the Partnership as a
limited partnership under the laws of the State of California or any other
jurisdiction. Without limiting the generality of the foregoing, the Policy
Committee shall cause to be maintained at the office referred to in Section 2.5
(i) a current list of the full name and last known address of each Partner set
forth in alphabetical order, (ii) a copy of the Certificate of Limited
Partnership filed with the Office of the Secretary of State of California, (iii)
copies of the Partnership's Federal, state and local income tax returns and
reports, if any, for the three most recent years, (iv) copies of this Agreement
and of any amendments hereto, and of any financial statements of the Partnership
for the three most recent years, and (v) the books of the Partnership, except
that such books may be kept at the principal place of business of the
Partnership if that location is not the same as that of the office referred to
in Section 2.5.

          4.4. No Management by Limited Partners. No Limited Partner in such
capacity shall be eligible to be a member of or to designate a member of the
Policy Committee or otherwise take part in, or at any time interfere in any
manner with, the management, conduct or control of the business and operations
of the Partnership, nor

                                      -30-

have any right or authority as such to act for or bind the Partnership in any
manner whatsoever.

          4.5. Scope of Authority of Policy Committee.

          4.5.1. All decisions to be made on behalf of the Partnership shall be
made by the Policy Committee and all actions to be taken or documents to be
executed on behalf of the Partnership shall be taken and executed by or at the
direction of the Policy Committee except as provided in Section 4.5.2; provided,
however, that such direction of the Policy Committee shall not be required if
such documents are executed by each General Partner. It is the intention of the
parties hereto that the Policy Committee, by resolution to be adopted on the
Project Closing Date, shall appoint and designate an "Owner's Representative" to
act on behalf of the Partnership in connection with the design, engineering,
construction testing and start-up of the Project and in particular to act on
behalf of the Partnership with respect to the Owner's rights and
responsibilities under the Engineering, Procurement and Construction Services
Contract with PEn that the Partnership intends to enter into on the Project
Closing Date.

          4.5.2. Notwithstanding the foregoing, without the written consent of
the Limited Partners, the Policy Committee shall not:

          (a) Do any act in contravention of this Agreement, the Certificate of
     Limited Partnership or the FERC Orders.

          (b) Enter into any agreement permitting any Person to confess a
     judgment against the Partnership.

                                      -31-

          (c) Do any act that would make it impossible or impracticable to carry
     on the ordinary business of the Partnership.

          (d) Admit a Person to the Partnership as a General Partner or admit a
     Person to the Partnership as a Limited Partner if such admission would
     cause the Project to cease to be a qualifying small power production
     facility under PURPA.

          (e) Possess Partnership property, or assign rights in specific
     Partnership property, for other than a Partnership purpose.

          (f) Change the purposes of the Partnership as set forth in Section
     2.4.

          (g) Dissolve the Partnership.

          4.6. Liability. If any provision herein shall, under applicable law,
subject a Limited Partner (who is not also a General Partner) to liability as a
General Partner of the Partnership, such provision shall be deemed suspended and
of no force and effect until such time as the effectiveness of such provision
does not subject such Limited Partner to such liability.

          4.7. Indemnification. The Partnership (out of assets or revenues of
the Partnership without requiring additional Capital Contributions and without
recourse to any Limited Partner) shall indemnify the General Partners and their
Affiliates and the employees, officers, directors, partners and agents of such
Persons,

                                      -32-

including the members of the Policy Committee and shall hold them harmless from
any claim, demand, judgment, cost or expense arising out of or related to any
act or omission by the General Partners or the agents, employees and contractors
of the Partnership or the Partners in respect of matters contemplated by this
Agreement, except for any act or omission which constitutes the gross negligence
or willful or wanton misconduct on the part of a General Partner or its
Affiliate (or the employees, officers, directors, partners and agents of such
Persons), or for which liability arises under the provisions of any other
agreement by and between or among any Partners or the partnership and any
General Partner or its Affiliates (or the employees, officers, directors,
partners and agents of such Persons), or, in the ease of a General Partner or
member of the Policy Committee, which constitutes a breach of its fiduciary
obligations to the Limited Partners. Notwithstanding the foregoing, any Person
claiming indemnification hereunder must have acted in good faith and in a manner
reasonably believed at the time and under the circumstances to be in or not
opposed to the best interests of the Partnership. In no event shall any General
Partner be liable to the Partnership or to any other Partner, except for its own
gross negligence or willful or wanton misconduct.

          4.8. Partnership Expenses; Compensation and Reimbursement of General
Partners.

          (a) The Partnership shall pay for all necessary and reasonable direct
     expenses of the Partnership, which

                                      -33-

     expenses may include but are not limited to _____ of borrowed money,
     assessments on the Project, costs of obtaining the necessary approvals,
     clearances or permits which may be required in connection with the
     Partnership, business, legal, audit, accounting, filing and other fees,
     fees and expenses paid to bankers, brokers, servicers, agents and
     consultants, expenses in connection with the disposition, replacement,
     alteration, repair, maintenance and operation of the Project, and costs of
     insurance in connection with the business of the Partnership.

          (b) No General Partner shall be compensated for its services as
     General Partner of the Partnership except to the extent specifically
     provided for herein. Subject to the limitations otherwise set forth in this
     Agreement and as contemplated by Section 4.__(a), a General Partner and its
     Affiliates may receive compensation for services rendered to the
     Partnership in capacities other than as General Partner. Within guidelines
     to be established by the Policy Committee, General Partners shall be
     reimbursed for direct out of pocket travel and other expenses incurred in
     connection with participation in meetings of the General Partners (and the
     Policy Committee) and other actions taken in connection with the management
     and administration of the Partnership.

                                      -34-

          (c) The Managing General Partner not ___ ____ General Partner with the
     approval of the Policy Committee) shall be reimbursed on a monthly basis
     (i) for all direct expenses it incurs or makes on behalf of the Partnership
     (including amounts paid to any Person to perform services to the
     Partnership) and (ii) for that portion of such General Partner's legal,
     accounting, geological, engineering, well supervision, telephone,
     secretarial, bookkeeping, reporting, data processing, aircraft, travel and
     entertainment fees and expenses, office rent and other office expenses,
     salaries and other compensation expenses, other administrative expenses and
     other incidental expenses necessary to the conduct of the Partnership's
     business which are incurred by such General Partner in operating the
     Partnership's business in accordance with the annual budget approved by the
     Policy Committee per Section 4.11 hereof (including, without limitation,
     expenses allocated to a General Partner by its Affiliates), and which are
     allocated to the Partnership in addition to any reimbursement as a result
     of indemnification pursuant to Section 4.7. Such General Partner shall
     determine such fees and expenses which are allocated to the Partnership in
     any reasonable manner, but the amount allocated must be reasonable in
     amount and necessary to the function of the Partnership, and shall be
     without duplication of any amounts received by

                                      -35-

     such General Partner from the Partnership, pursuant to provisions of
     operating agreements or otherwise in ___ of such activities.

          (d) Whether or not PGC shall, at the time, be a Partner, PGC shall (as
     compensation for PGC's having made certain payments to SCE pursuant to the
     G-l Facility Power Contract for the benefit of the Partnership) be entitled
     (prior to the distribution of any Available Cash to any Partners) to a
     monthly fee equal to the lesser of the Available Cash attributable to the
     month (computed prior to giving effect to the deduction for the fee herein
     provided for) or the revenues derived by the Partnership attributable to
     the sale to SCE in such month of the first 144,341 kilowatt hours of energy
     from the G-l Facility, such fee to be payable each month during the
     240-month period commencing with the month of January 1996 and ending with
     the month of December 2015; provided, however, if by December 31, 2015 the
     Partnership shall not have delivered, during said 240-month period, a total
     of 34,642,000 kilowatt hours, from the G-l Facility to SCE as to which the
     total revenues derived therefrom have been paid to PGC as aforesaid, the
     Partnership shall promptly make a payment to PGC of an amount equal to: (a)
     the difference between (x) 34,642,000 kilowatt hours and (y) the number of
     actual kilowatt hours delivered by the Partnership to SCE from the

                                      -36-

G-_ Facility during the ________ period from January 1, 1996 through December
31, 2015 (and as to which kilowatt hours the revenues therefrom have been paid
to ___), multiplied by (b) 50.03753.

     4.9. Outside Activities; Partnership Spheres of Interest.

     (a) No one or more of the General Partners, their respective Affiliates, or
any director, officer or employee of any General Partner or any of their
respective Affiliates shall be expressly or impliedly restricted or proscribed
under this Agreement from engaging in other activities for profit, whether in
the geothermal business or otherwise. The Managing General Partner shall not be
required under this Agreement to devote its financial, personnel and other
resources exclusively for the benefit or on behalf of the Partnership or on
activities in which the Partnership is participating or will participate, but
only so much of such resources as may be necessary to promote in good faith the
business of the Partnership and to exercise its responsibilities in a fiduciary
manner. Except as otherwise provided-in this Agreement, each of the General
Partners, their respective Affiliates and any director, officer or employee of
any General Partner or any of their respective Affiliates shall have the right
to acquire, explore, develop, own and produce geothermal and other mineral
properties, to develop, own and operate additional

                                      -37-

geothermal and other mineral properties acquired __ ___ time and from time to
time, and to engage in and possess an interest in other business ventures of any
and every type and description, independently or with others, including business
interests and activities in direct competition with the Partnership. Except as
otherwise provided in this Agreement, no General Partner nor any Affiliate
thereof shall have any obligation to allow the Partnership to invest in any
property of such General Partner or any Affiliate thereof. Neither the
Partnership nor any Partner shall by virtue of this Agreement have any right,
title or interest in or to such permitted independent activities or ventures.

     (b) The Partnership spheres of interest and the agreements of the Parties
with respect thereto are as follows:

          (i) The Partnership, to the exclusion of any Partner individually,
     shall have the right to develop the Geothermal Interests on properties in
     which the Partnership has an interest, including the development of the
     Geothermal Resources necessary for the eventual development of the G-4
     Facility. It is the intention of the parties to this Agreement that,
     subject to giving prudent consideration to the results of operation
     following the commencement of commercial

                                      -38-

     operation of the _______________________________________ political
     considerations with respect to the necessary approvals and permits, this
     Partnership proceed with the development of the G-4 Facility and the
     Geothermal Interests related thereto. If a General Partner is unable to
     obtain the required favorable vote of the Policy Committee for the
     development of the G-4 Facility and the related Geothermal Interests, such
     General Partner may submit the matter to the dispute settlement procedures
     set forth in Section 11.10 of this Agreement with the arbitrators being
     instructed to find in favor of directing the Partnership to proceed with
     the development of the G-4 Facility unless such arbitrators conclude that
     to do so would result in a material adverse impact on the G-l Facility, the
     G-2 Facility or the G-3 Facility or the then operations of the Partnership
     as a whole.

          (ii) The Partnership shall be the vehicle through which Partners
     shall pursue their respective interests in the development of any
     Geothermal Interest within the area designated as the "Mono-Long Valley
     Known Geothermal Resource Area", but outside of the property interests of
     the Partnership. Each Partner shall offer to the Partnership the right to
     pursue any such development of which a Partner becomes

                                      -39-

     aware ________________ Partnership ___________________ opportunity to
     develop Geothermal Interests in the Mono-Long Valley Known Geothermal
     Resource Area (or participate in the project of others), the Policy
     Committee shall decline to authorize the Partnership to proceed with such
     development, an individual Partner may proceed with such development, alone
     or with others, other than through the Partnership.

          4.10. Tax Matters Partner. PGC shall be the "tax matters partner" of
the Partnership within the meaning of Section 6231(a)(7) of the Code and shall
make such elections and other decisions for Federal income or other tax purposes
as it shall determine; provided, however, that PGC shall cause the Partnership
to: (a) Compute its depreciation deductions for Federal income tax purposes
with respect to each Partnership asset over the shortest recovery period
allowable under Section 168 of the Code and for California income tax purposes
on a straight line basis to be mutually agreed upon by all General Partners, (b)
compute its depletion allowances with respect to each geothermal deposit by the
method resulting in the largest deduction, (c) elect to deduct intangible
drilling and development costs in accordance with Section 263 (c) of the Code,
(d) elect to deduct the expenses of organizing the Partnership over a
sixty-month period as provided in Section 709 of the Code and otherwise will not
cause the Partnership to make any elections pursuant to this Section 4.10
without the consent of the other General Partner(s); and, provided,

                                      -40-

further the __________________ shall provide each of the General Partners with
timely prior notice of any elections to be made by PGC pursuant __ this Section
4.10.

          4.11. Annual Budget. Prior to January 1 of each year, the Policy
Committee shall approve an annual budget for the Partnership for such year. Not
later than October 31 of each year, the Managing General Partner shall submit a
proposed Partnership budget for the next succeeding year to the Policy Committee
for its consideration. Following approval of each such annual budget, the Policy
Committee shall provide each Partner with a copy of the same.

          4.12. Short-Term Investment of Partnership Funds. All funds of the
Partnership held as reserves for the future payment of Partnership expenses or
held pending distribution as Available Cash may be invested as the Policy
Committee shall determine, but only in one or more of the following:

          (a) direct obligations of, or obligations the principal of and
     interest on which are unconditionally guaranteed by the United States and
     which nature within 12 months from the date of acquisition thereof;

          (b) direct obligations of any agency of the United States government
     which mature within 12 months from the date of acquisition thereof whose
     long term debt is rated not less than A by standard & Poor's Corporation or
     by Moody's Investors Service, Inc. or the equivalent rating

                                      -41-

     under any successor rating services;

          (c) commercial paper of any corporation other than any corporation
     that is an Affiliate of the Partnership or any of its Partners) with a
     maturity not in excess of 270 days from the date of acquisition thereof and
     rated an A-__ by Standard & Poor's Corporation or as P-1 by Moody's
     Investors Service, Inc. or the equivalent rating under any successor rating
     system or by any successor rating services;

          (d) negotiable or non-negotiable certificates of deposit, time
     deposits, overnight bank deposits and bankers acceptances, all with a
     maturity not in excess of 12 months from the date of the acquisition
     thereof, issued by or placed with, and money market deposit accounts issued
     or offered by, any commercial bank in the United States which has capital
     and surplus in excess of $300,000,000 or has long-term unsecured debt
     obligations rated at least A by Standard & Poor's Corporation or Moody's
     Investors Service Inc. or the equivalent rating under any successor rating
     system or by any successor rating service; and

          (e) debt obligations of any corporation with a maturity not in excess
     of 12 months from the date of acquisition thereof and rated AA by Standard
     & Poor's Corporation or Aa by Moody's Investors Services, Inc. or

                                      -42-

     (To Come) by any successor rating services.

          4.13. Rights of Limited Partners Relating to the Partnership.

          4.13.1. In addition to other rights provided by this Agreement or by
applicable law, each Limited Partner shall have the right to obtain from the
Managing General Partner, for any purpose reasonably related to such Limited
Partner's interest in the Partnership, upon reasonable request of the Managing
General Partner in writing specifying the purpose of such request and at such
Limited Partner's own expense:

          (a) true and full information regarding the status of the business and
     financial condition of the Partnership;

          (b) promptly after becoming available, a copy of the Partnership's
     Federal, state and local income tax returns for each year;

          (c) a current list of the name and last known business, residence or
     mailing address of each Partner;

          (d) a copy of this Agreement, the Certificate of Limited Partnership
     and all amendments to such documents, together with executed copies of any
     powers of attorney pursuant to which this Agreement, the Certificate of
     Limited Partnership or any amendments to such documents may have been
     executed;

                                      -43-

          (e) true and full information regarding the amount of cash and
     a description and statement of the agreed value of any other property or
     services contributed by each Partner and which each Partner has agreed to
     contribute in the future, and the date on which each became a Partner; and

          (f) such other information regarding the affairs of the Partnership as
     is just and reasonable.

          4.13.2. Promptly after it shall become aware of the same, the Policy
Committee shall send each General Partner a notice of:

          (a) any action, proceeding or investigation before any court,
     arbitration body, or governmental agency or instrumentality pending or
     threatened against or affecting the Partnership or any Partner in its
     capacity as a partner;

          (b) any material claim made against the Partnership or the
     Partnership's property by Southern California Edison Company relating to
     the Power Contracts, or by any other party to an agreement to which the
     Partnership is also a party;

          (c) any incurrence, renewal, refinancing or prepayment of any
     material indebtedness of the Partnership other than as specifically
     contemplated by the terms of this Agreement;

          (d) any material default or the occurrence of any event which with
     notice or the lapse of time or both would

                                      -44-

     constitute a material default by the Partnership under ________ material
     agreement to which the Partnership is a party; or

          (e) any other material event affecting the Partner or the Partnership.

          4.13.3. Within 120 days following the end of each fiscal year of the
Partnership, the Policy Committee shall provide each Partner with a copy of the
audited financial statements for such year. In addition, as soon as practicable
following the end of each calendar month, the Policy Committee shall provide
each Partner with an operational report for such month.

          4.14. Contracts with Affiliates.

          (a) Subject to the written approval of the Policy Committee, a General
     Partner may itself, or may enter into an agreement with any of its
     Affiliates to, render operation and maintenance services to the
     Partnership. Any operation and maintenance service rendered to the
     Partnership by a General Partner or any Affiliate thereof shall be on terms
     no less favorable than those that the Partnership could obtain from
     unaffiliated sources in the area rendering comparable services, except that
     the provisions of Section 4.14. (b) shall apply to the rendering of
     services therein contemplated. It is expressly contemplated that, in
     addition to such other arrangements that the Policy Committee may from
     time to time approve, the

                                      -45-

     Partnership shall enter into the ____________ _______________ arrangements
     with a Partner or an Affiliate of a Partner:

               (i) An Engineering, ______________ and Construction Services
          Contract with ____ for the completion of the permitting, design,
          engineering, procurement and supervision of the start-up and testing
          and construction of the Project; and

               (ii) a limited operations and maintenance arrangement with PGC,
          with terms and conditions to be established by the Policy Committee.

          (b) Except as contemplated in paragraph (a) above, no General Partner
     nor any of its Affiliates shall render to the Partnership any operation and
     maintenance or drilling services or sell or lease to the Partnership any
     equipment or related supplies unless (i) if such Person is engaged,
     independently of the Partnership and as an ordinary ongoing business, in
     the business of providing such services or selling or leasing such items to
     a substantial extent to other Persons in addition to partnerships in which
     such Person has an interest, the compensation, price or rental therefor is
     competitive with rates and prices charged by other Persons in the area
     engaged in the business of providing comparable services or items that
     could reasonably be made available to the Partnership, or (ii) if such
     Person is not engaged in such a business, the compensation,

                                      -46-

     price or rental therefor is such ________________ including actual payroll
     costs plus a reasonable fringe benefits and overhead allocation rate agreed
     to by the Policy Committee of providing such services, equipment or
     supplies or the competitive rate that could be obtained in the area,
     whichever is less.

                                    ARTICLE V

                              Proposed Transactions

          5.1. Project Documents. The Partnership's rights in and to the Project
shall be acquired in all material respects in accordance with the Conveyance
Agreement and the Project Documents.

          5.2. Additional Financing. The Policy Committee may, subject to the
terms and conditions of agreements to which the Partnership may be a party,
incur such additional financing for the Project as it may deem necessary or
advisable from time to time.

                                   ARTICLE VI

         Representations, Warranties. Covenants and Closing Certificates

          6.1. Representations, Warranties and Covenants. Each of the Partners
hereby makes the following representations, warranties and covenants to each of
the other Partners:

          6.1.1. Organization and Qualification. Such Partner is a corporation
duly organized, validly existing and in good standing under the laws of the
state of its incorporation.

                                      -47-

          6.1.2 Corporation Authority. _______________ corporate power and
authority to execute this Agreement. The execution and delivery by such Partner
of this Agreement _____ been duly authorized by all necessary corporate
action.

          6.1.3. Noncontravention. The execution and delivery of this Agreement
by such Partner do not violate any provision of its Certificate of Incorporation
or By-Laws or violate any agreement, instrument, law, ordinance, regulation,
order, arbitration award, judgment, or decree to which such Partner is a party,
or by which such Partner is bound.

          6.1.4. No Partner nor an Affiliate of such Partner has taken (or has
omitted to take) nor will take (or will omit to take) any action where the
effect of such action or omission to act is to adversely affect the status of
the Project as a qualifying small power production facility under PURPA;
provided, however, that in the event of a breach by a Partner of this Section
6.1.4, such Partner shall not be liable therefor unless the Partnership
(including such Partner) shall first have taken such action as is required or
permitted under Section 8.2.2. Each party hereto acknowledges that each of the
members of the CD Group is an Affiliate of an electric utility. Each member of
the PGC Group represents that neither it nor any of its Affiliates is an
electric utility or an electric utility holding company for purposes of PURPA.

          6.1.5. Such Partner understands and agrees: (i) that its partnership
interest is not registered under the Securities Act of

                                      -48-

______ 1933 or under any state securities laws and _______ that evaluated the
merits and risks of the purchase of a partnership interest, that it understands
it must bear the economic _______ of that investment for an indefinite period of
time because the securities have not been registered under the Securities Act of
1933 or under the securities law of any state, and, therefore, it agrees that
its partnership interest will not be sold until it is subsequently registered or
an exemption from registration is available and, if so requested by the Policy
Committee, the Partnership shall have been furnished by such Partner with an
opinion of counsel satisfactory to the Policy Committee that registration is not
required under any of such securities laws.

          6.2. Reports and Closing Certificates Delivered by the Partners. Each
Partner as of the date hereof has delivered to the Partnership or has caused its
legal counsel to deliver to the Partnership: (i) a certificate of the secretary
or other authorized officer of such corporation certifying that the
representations and warranties of such corporation set forth in this Article VI
are true and correct as of the date hereof, that there are no proceedings
pending or contemplated for the liquidation or dissolution of such corporation,
and as to its certificate of incorporation (with a copy attached), by-laws (with
a copy attached), due incorporation, good standing, the authority, incumbency
and signatures of its officers and the resolutions (with a copy attached)
adopted by its board of directors authorizing the execution of this Agreement
and (ii) a good

                                      -49-

standing certificate upon the _________________________ Partner's incorporation.

                                   ARTICLE VII

                       Capital Accounts, Distributions and
                                   Allocations

          7.1. Establishment of Capital Accounts.

          7.1.1. A separate Capital Account shall be maintained for each
Partner. The Capital Account of each Partner shall be (x) credited with the Cash
Contributions and the Net Agreed Value of any Contributed Property contributed
to the Partnership by such Partner plus all Profit, and Gain on Disposition
computed in accordance with Section 7.1.2 and allocated to the Partner pursuant
to Section 7.3, 7.4 or 7.5 (but without regard to Section 7.3.l(b) and the
proviso to Section 7.3.4) and (y) debited with the sum of (i) all Loss and Loss
on Disposition computed in accordance with Section 7.1.2 and allocated to the
Partner pursuant to Section 7.3, 7.4 or 7.5 (but without regard to Section
7.3.1(b) and the proviso to Section 7.3.4), and (ii) all cash and the Net
Agreed Value of any property distributed by the Partnership to such Partner
pursuant to Sections 7.2 and 9.3. Notwithstanding anything to the contrary
contained herein, the Capital Account of a Partner shall be determined in all
events in accordance with the rules set forth in Treasury Regulation
1.704-l(b)(2)(iv). To the extent that any provision of this Agreement is
inconsistent with the requirements of Treasury Regulation 1.704-l(b)(2)(iv),
such Treasury Regulation shall

                                      -50-

____________. Any ___________ in this Agreement to the Capital _____________ of
a Partner shall be deemed to refer to such Capital Account as the same may be
credited or debited from time to time as set forth above.

          7.1.2. For purposes of computing the amount of any item of income,
gain, loss or deduction to be reflected in Capital Accounts (including, without
limitation, all Profit, Loss, and Gain or Loss on Disposition), the
determination, recognition and classification of each such item shall be the
same as its determination, recognition and classification for Federal income tax
purposes; provided that:

          (a) Any deductions for depreciation, depletion, amortization or
     similar expense attributable to a Contributed Property (including any basis
     reduction under Section 48(q) of the Code) shall be determined as if the
     Adjusted Basis of such Partnership asset on the date it was acquired by the
     Partnership was equal to the Carrying Value of such Partnership asset as of
     such date;

          (b) The total amount of depletion deductions allocable to the Capital
     Accounts of the Partners with respect to any geothermal deposit shall not
     exceed the Partnership's initial Carrying Value in such deposit;

          (c) Any income, gain or loss attributable to the taxable disposition
     of any Partnership asset shall be determined by the Partnership as if the
     Adjusted Basis of such Partnership asset as of such date of disposition was

                                      -51-

     equal to the amount of the Carrying Value of ___ Partnership asset as of
     such date:

          (d) If the Partnership's adjusted basis in any "section 38 property"
     is reduced pursuant to Sections 48(g) or 46(b)(2) of the Code, then the
     amount of such reduction (as determined pursuant to Section 7.1.2(a)) shall
     be treated as an expense for the year in which such reduction occurs and
     shall be allocated to the Partners in the ratio in which the basis of such
     property is allocated to the Partners pursuant to Treasury Regulation
     l.46-3(f)(2)(i); and any restoration of any such reduction in adjusted
     basis shall be allocated to the Partners in the same manner and
     proportions;

          (e) In the event that the Policy Committee determines to make any
     distribution to a Partner in other than cash (including liquidating
     distributions pursuant to Section 9.3), the Capital Accounts of the
     Partners, immediately prior to such distribution, shall be appropriately
     adjusted upward or downward to reflect any Unrealized Gain or Unrealized
     Loss attributable to the distributed property (determined on the basis of
     the Fair Market Value of the property at the time of the distribution);

          (f) All fees and other expenses incurred by the Partnership to promote
     the sale of (or to sell) an interest in the Partnership that can neither be
     deducted nor

                                      -52-

     (To Come) items of deduction; and

          (g) The computation of all items of income, ____, loss and deduction
     shall be made without regard to any election under Section 754 of the Code
     which may be made by the Partnership (except to the extent required by
     Treasury Regulation 1.704-l(b)(2)(iv)(m)) and, as to those items described
     in Section 705(a)(1)(B) or Section 705(a)(2)(B) of the Code, without regard
     to the fact that such items are not includible in gross income or are
     neither currently deductible nor capitalizable for Federal income tax
     purposes.

          7.1.3. A transferee of a Partnership interest shall succeed to the
Capital Account attributable to the transferred interest, and there shall be no
adjustment to the Capital Accounts as a result of such Transfer except as
otherwise required under Treasury Regulation 1.704-1. However, if the Transfer
causes a termination of the Partnership under Section 708(b)(l)(B) of the Code,
Partnership property shall be deemed to have been distributed in liquidation of
the Partnership to the Partners existing immediately subsequent to the Transfer,
and recontributed by such Partners in reconstitution of the Partnership. Upon
such recontribution, the Partnership properties shall be treated as Contributed
Property and the Capital Accounts of the Partners in such reconstituted
Partnership shall be maintained in accordance with the principles of this
Article VII.

                                      -53-

          7.2. Distributions of Cash Items.

          7.2.1. Available Cash shall be distributed to the Partners in
accordance with their Partnership Percentage Interests.

          7.2.2. Net Capital Receipts, less such sums as the Policy Committee
deems necessary to be retained as a reserve for the conduct of the business of
the Partnership, shall be distributed first, to the Partners in proportion to
and to the extent of any positive balances in their respective Capital Accounts,
determined after giving effect to the allocations set forth in this Article VII,
and second, to the Partners in accordance with their then Partnership Percentage
Interests.

          7.2.3. Available Cash shall be distributed at such times and in such
amounts as the Policy Committee shall determine but not less often than
annually, and if practicable and not otherwise restricted by any agreement to
which the Partnership is a party, within 30 days after the close of each fiscal
quarter of the Partnership. Subject to the provisions of any agreement to which
the Partnership is a party, Net Capital Receipts shall be distributed as soon as
reasonably practicable after such Net Capital Receipts arise.

          7.3. Allocations of Tax Items.

          7.3.1. (a) Profit or Loss shall be allocated to the Partners each year
(subject to Section 7.3.1(b) hereof) in accordance with their Partnership
Percentage Interests. The allocation of Profit and Loss provided in this Section
7.3.1 (a), with respect to

                                      -54-

any taxable year, shall be made prior to any Loss on Disposition for such year.

          (b) In case of a Contributed Property, items of income, gain, loss,
deduction or credit attributable thereto (including depreciation on, gain or
loss with respect to the disposition of, and tax credits arising in connection
with, Contributed Property) shall be allocated, for Federal income tax purposes,
first, among the Partners in a manner that takes into account the variation
between the Fair Market Value of such property and its Adjusted Basis at the
time of contribution (in accordance with Section 704(c) of the Code) and
second, any such remaining items shall be allocated in accordance with Section
7.3.1(a), 7.3.2, 7.3.3 or 7.5, as appropriate. Each Partner contributing
Contributed Property to the Partnership shall promptly advise the Partnership as
to its Adjusted Basis in such Contributed Property at the time of contribution
to the Partnership.

          7.3.2. Subject to Section 7.3.1(b), Gain on Disposition shall be
allocated first, to the Partners in proportion to and to the extent of any
deficit balances in their respective Capital Accounts until all such Capital
Accounts shall have been restored to zero, and second, to the Partners in
accordance with their then Partnership Percentage Interests.

          7.3.3. Subject to Section 7.3.1(b), Loss on Disposition shall be
allocated first, to the Partners in proportion to and to the extent of any
positive balances in their respective Capital Accounts until such Capital
Accounts shall have been reduced to zero, and

                                      -55-

second to the General Partners in proportion to their Partnership Percentage
Interests.

          7.3.4. Investment and energy tax credits arising in connection with
the Project shall be allocated to the Partners, pursuant to Treasury Regulation
1.46-3(f)(2)(i), in accordance with their respective Partnership Percentage
Interests as of the respective in Service Dates for each Facility (or, with
respect to the energy tax credits, as of the end of the period for which such
credits are available under Section 48(m) of the Code, if earlier); provided,
however, that the principles of Section 704(c) of the Code shall be taken into
account in the allocation of the investment and energy credits.

          7.3.5. To the extent of any Recapture Income resulting from the sale
or other taxable disposition of a Partnership asset, the amount of any gain from
such disposition allocated to each of the Partners pursuant to the above
provisions shall be deemed to be Recapture Income to the extent such Partner (or
a predecessor in interest) has been allocated or has claimed any deduction, or
has been allocated a reduction in basis pursuant to Section 48(q) of the Code,
directly or indirectly giving rise to the treatment of such gain as Recapture
Income.

          7.3.6. The Partnership shall make an interim closing of the books for
purposes of determining the allocations and distributions required under this
Article VII in the event of any transfer of a Partnership interest during a
taxable year.

                                      -56-

          7.4. Recharacterization of Fees and Guaranteed Payments.
Notwithstanding the provisions of Section 7.3 in the event that any fees,
interest or other amounts paid or payable to any General Partner or any of its
Affiliates pursuant to this Agreement (including payments to be made to PGC
pursuant to Section 4.8(d)) are deducted by the Partnership in reliance on
Sections 707(a) or 707(c) of the Code, and such fees, interest or other amounts
are disallowed as deductions to the Partnership and are recharacterized as
Partnership distributions, then there shall be allocated to such General
Partner, prior to the allocations pursuant to Section 7.3, an amount of
Partnership gross income for the year in which such fees, interest or other
amounts are treated as Partnership distributions an amount equal to such fees,
interest or other amounts treated as distributions.

          7.5. Upholding of Tax Benefits.

          7.5.1. Solely for purposes of determining a Partner's Capital Account
(and the deficit amount that a Partner is required to restore pursuant to
Section 7.7) in applying the provisions of this Section 7.5, the anticipated
adjustments, allocations and distributions described in Treasury Regulation
Section 1.704-l(b)(2)(ii)(d)(4)-(6) shall be taken into account, and each
Partner (including each General Partner) shall be deemed obligated to restore
its deficit Capital Account balance to the extent of, and only to the extent of,
the sum of its share of the Minimum Gain, as determined pursuant to Treasury
Regulation Section l.704-lT(b)(4)(iv)(f), and its share of the Minimum Gain

                                      -57-

______________ to Partner ___________ Debt _____________ Treasury Regulation
(SS) 1.7(______________)(iv)(h)(5).

          7.5.2. Notwithstanding the provisions of Section 7.3, no allocation of
Loss shall be made to a Limited Partner (which is not also a General Partner) if
it would result in such Partner having a negative balance in its Capital Account
in excess of the amount it is required to restore on a liquidation of the
Partnership (or of the Partner's interest in the Partnership). Any Loss which
cannot be allocated to a Limited Partner pursuant to the restrictions contained
in this Section 7.5.2 shall be allocated to any Partner which is Affiliated with
such Limited Partner or, if no such Affiliate exists, to the other Partners of
the Partnership in accordance with the ratio of their then respective
Partnership Percentage Interests to the sum of those Interests (but, in either
event, only to the extent such allocation would not be inconsistent with the
restrictions of this section 7.5).

          7.5.3. Notwithstanding the provisions of Section 7.3. in the event any
Limited Partner (which is not also a General Partner) unexpectedly receives an
adjustment, allocation or distribution described in clause (4), (5) or (6) of
Treasury Regulation Section 1.704-1 (b)(2)(ii)(d) that results in such Partner
having a negative balance in its Capital Account in excess of the amount it is
required to restore on a liquidation of the Partnership (or of the Partner's
interest in the Partnership), such Partner shall be allocated income and gain
prior to the allocations pursuant to Section 7.3 in an

                                      -58-

(To Come) possible.

          7.5.4. In accordance with and pursuant to Treasury Regulations Section
1.704-1T(b)(4)(iv)(e) and (h)(4), if there is a not decrease in either the
Partnership's Minimum Gain or Minimum Gain Attributable to partner Nonrecourse
Debt or both during any taxable year, all Partners (including each General
Partner) with deficit Capital Account balances at the end of such year (as
determined immediately prior to the allocation of Profit and Loss for such year)
in excess of the amount they are required to restore on a liquidation of the
Partnership (or of the Partner's interest in the Partnership) shall be
allocated, before any other allocation is made of Partnership items for such
taxable year, items of income and gain for such year (and, if necessary,
subsequent years) in an amount equal to such excess or, if greater, all Partners
(including each General Partner) shall be allocated, before any other allocation
is made of Partnership items for the taxable year, items of income and gain for
such year, and, if necessary, subsequent years, in an amount equal to the
portion of such Partner's share of the net decrease in Minimum Gain or Minimum
Gain Attributable to Partner Nonrecourse Debt or both that is allocable to the
disposition of Partnership property subject to such debt, as determined pursuant
to Treasury Regulation Section 1.704-1T(b)(4)(iv)(e)(2) and (h)(4). To the
extent that the Partnership shall have insufficient income and gain in any
taxable year to make the allocations required under this Section 7.5.4 in any

                                      -59-

year in which their has been a net increase both in Minimum Gain and in Minimum
Gain Attributable to Partner Nonrecourse Debt, any such insufficiency shall be
attributed, first, to the decrease in Minimum Gain Attributable to Partner
Nonrecourse Debt, and second, to the decrease in Minimum Gain.

          7.5.5. It is the intent of the parties to this Agreement that the
chargeback provisions and the limitation on loss allocations provided herein
satisfy the "allocation of nonrecourse deduction" rules provided in Treasury
Regulation Section 1.704-lT(b)(4)(iv) and the requirements of Treasury
Regulation Section 1-704-1(b)(2)(ii)(d) (relating to the alternate test for
economic effect and "qualified income offset"). It is further intended that the
allocations under this Article VII shall effect an allocation for Federal income
tax purposes in a manner consistent with Sections 704(b) and 704(c) of the Code
and comply with any limitations or restrictions therein. If for any reason the
allocations contained in this Agreement shall conflict with the Treasury
Regulations promulgated under Section 704 of the Code, the Partners acknowledge
that such Regulations shall control.

          7.6. Loans from Partners and Affiliates. Loans by a Partner or any
Affiliate thereof (including Partner Loans) to the Partnership shall not be
treated as Capital Contributions.

          7.7. Negative capital Accounts. Notwithstanding anything to the
contrary in Section 9.5, on a liquidation of the Partnership, each General
Partner shall be required to pay to the Partnership (within the time frame
prescribed under Treasury Regulations

                                      -60-

(To Come) Account to be determined after the allocation of items provided for in
this Article VII). No Limited Partner (which is not also a General Partner)
shall be required to pay to the Partnership or to any other Partner any deficit
balance which may exist from time to time in such Partner's Capital Account.

                                  ARTICLE VIII

              Admission, Assignment, Disability and Other Investors

          8.1. General Conditions to Transfers of Partnership Interests and
Admission of Partners.

          8.l.l. No Partner may, without the unanimous consent of all General
Partners, Transfer all or any portion of its interest in the Partnership, nor
(notwithstanding anything to the contrary contained herein) shall any transferee
be admitted as a substituted Partner in the Partnership, without said consent;
provided, however, that PGC shall have the right to Transfer all or any portion
of its interest in the Partnership to no more than one (1) other Affiliate of
PEn without the need for the unanimous consent of all General Partners;
provided, further, however, the admission of any such Affiliate of PEn as a
substituted Partner in the Partnership shall be subject to the unanimous consent
of all General Partners; provided, further, however, that any purported Transfer
of an interest in the Partnership, or any portion of it, will not be effective
if the Transfer would cause the Partnership to become an association taxable

                                      -61-

is a corporation for ___________ income tax purposes. The may, however, admit
additional and substitute General and or Limited Partners to the Partnership
pursuant to the provisions of and subject to the restrictions set forth in this
Agreement upon the unanimous consent of the General Partners.

          8.1.2. No substitute or additional Partner shall be admitted to the
Partnership if the admission of such Partner would adversely affect the status
of the Project as a qualifying small power production facility under PURPA. Upon
the admission of additional Partners to the Partnership, the applicable
Partnership Percentage Interests of the Partners may not be diluted without
their consent. Additional Limited Partners may be given rights which are
different from those held by existing Limited Partners. The Partners will
promptly execute and file any amendment to this Agreement to effectuate the
provisions of this Section 8.1.

          8.1.3. Any additional or substitute Partner shall be admitted as a
Partner of the Partnership by executing, acknowledging and delivering to the
Policy Committee an instrument, satisfactory to the Policy Committee, adopting
this Agreement and agreeing to be bound by the terms and provisions hereof
(including the making of comparable representations and warranties), and such
other documents or instruments as may be required to effect such Person's
admission as a Partner; provided, however, that any such instruments purporting
to bind the Partnership shall not become effective or binding on the Partnership
until they have been executed by the General Partners.

                                      -62-

In connection with the ____________ to the ________________ any _____________
the Policy Committee shall prepare and file as soon as practicable amendment to
the Certificate of Limited Partnership, if required by applicable law, and any
other qualification document in connection with the effectuation or
documentation of the admission.

          8.2. Admission of Partners by Sale or Assignment of Partnership
Interests.

          8.2.1. Prohibited Assignments. Absent the unanimous consent of all
Partners, notwithstanding any other provision of this Agreement, under no
circumstances shall any Partner make a Transfer of all or any portion of such
Partner's interest in the Partnership if such Transfer would

               (i) result, directly or indirectly, in the termination of the
          Partnership, including termination for Federal income tax purposes,
          unless such Partner has obtained at such Partner's own expense an
          opinion of tax counsel reasonably satisfactory to the other Partners
          that such termination will not cause any material adverse tax
          consequences to the Partnership or the remaining Partners;

               (ii) result in the violation of the Securities Act of 1933 or any
          other applicable federal or state laws;

               (iii) constitute a violation of the Project Documents;

                                      -63-

               (iv) result in ____________________ transaction" or cause the
          Partnership to be or become a "party in interest," as defined in
          Section 3(14) of ERISA, or a "disqualified person," as defined in
          Section 4975 of the Code, with respect to any plan, as defined in
          Section 3(3) of ERISA and/or Section 4975 of the Code;

               (v) be a Transfer to an individual who is not legally competent
          or who has not achieved his or her majority under the law of the
          State of California (excluding trusts for the benefit of minors); or

               (vi) cause the Project to fail to satisfy the Qualifying
          Facilities Ownership Criteria specified in the regulations promulgated
          by FERC under PURPA.

Each of the parties hereto agrees that the payment of damages in connection with
the violation of any of the provisions of this Section 8.2.1 would not provide
an adequate remedy for such violation and, accordingly, each party agrees that
injunctive or other equitable remedies seeking the specific enforcement of the
provisions of this Section 8.2.1 would be appropriate and necessary.

          8.2.2. Regulatory Restrictions. Notwithstanding anything to the
contrary herein, in the event that the ownership criteria specified in the
regulations promulgated by FERC under PURPA are amended causing a Partner's then
Partnership Percentage Interest to

                                      -64-

be more than the _____________ of equity amended FERC regulations, or in the
event that provisions of any other applicable statute or regulation (including,
without limitation, any statute or regulation relating to Affiliates of banks)
shall be amended, that a new statute shall be enacted, or that new regulations
shall be adopted, in any such case with the result being that a Partner's then
Partnership Percentage Interest is more than that permitted by such amended or
new statute or regulation, such Partner shall have the right to require the
Partnership to purchase and the Partnership shall have the right to require such
Partner to sell that portion of such Partner's Partnership Percentage Interest
necessary for the Project to meet the applicable ownership criteria, for an
amount equal to the Fair Market Value thereof. In the case of such a purchase by
the Partnership, the purchase price shall be paid in cash, or, at the option of
the Partnership, by means of a non recourse note or notes in the amount of the
Fair Market Value payable solely out of, and secured by, the proceeds of future
distributions that would otherwise be payable in respect of the purchased
interest of such Partner in the Partnership. Such note or notes shall bear a
rate of interest equal to the Stipulated Rate. Such Partner shall pay all costs
and expenses associated with the determination of such Fair Market Value,
including, without limitation, appraisers' fees and reasonable attorneys' fees.
If the Project shall fail to meet any of the other criteria for qualifying small
power production facilities specified in the regulations promulgated by FERC
under

                                      -65-

PURPA, or if a purchase by the Partnership of ______________________ by this
Section 8.2.2 would cause the Project to lose its status as such a qualifying
small power production facility, the Policy Committee (exclusive of any member
of the Policy Committee that has taken any action under Section 6.1.4 which
adversely affects the status of the Project as a qualifying small power
production facility under PURPA) shall take whatever action with respect to the
Project that it deems advisable in its sole discretion.

          8.3. Disability of Limited Partners. The Disability of a Limited
Partner shall not terminate or dissolve the Partnership. In the event of the
Disability of a Limited Partner, the executor, administrator, guardian,
committee, trustee or other legal representative of such Limited Partner shall
have all the rights and liabilities of an assignee Limited Partner having the
same interests in Partnership distributions and allocations under Article VII as
the Disabled Limited Partner, and, upon compliance with the provisions of
Section 8.1 (including consent of the Nonaffective General Partners), shall be
admitted as a substitute Limited Partner.

          8.4. Disability of General Partners.

          8.4.1. The Disability of a General Partner shall not dissolve the
Partnership, unless (i) such Disabled General Partner was the sole surviving
General Partner, in which event the Partnership shall terminate unless
reconstituted and continued as provided in Section 8.4.2, or (ii) the Disability
of such General Partner would cause the Project, notwithstanding the provisions
of section 8.2.2 or

                                      -66-

the admission of a new _________ to cease to be a ____________ power production
facility under PURPA, in either of which events the Partnership shall terminate.

          8.4.2. In the event of a dissolution of the Partnership pursuant to
Section 8.4.1. the remaining Limited Partners may unanimously elect in writing
(provided that such dissolution did not result from the bankruptcy or insolvency
of the sole surviving General Partner), within 90 days after such Disabling
event, to continue the Partnership as a partnership upon the same terms and
conditions as are set forth in this Agreement. Any such election to continue
the Partnership will not require the amendment of this Agreement or the
execution of an amended agreement. In exercising such election, the Partners
shall designate a new General Partner or General Partners.

          8.4.3. In the event of any election to continue the Partnership which
requires amendment of this Agreement, the amended agreement shall be as similar
in form and substance to this Agreement as practicable, and the new or successor
partnership shall engage in the same business as the Partnership, employing the
assets and name of the Partnership to the maximum extent possible.

          8.4.4. The personal representative of, or the successor in interest
to, any Disabled General Partner shall not become a General Partner unless
agreed to by such personal representative or successor and the other Partners,
but shall become an assignee Partner having the same interest in Partnership
distributions and allocations under

                                      -67-

Article VII hereof as the Disabled General Partner _______________ rights as a
General Partner. Any provision requiring the act or consent of any named Partner
shall be deemed deleted as to such Partner upon its Disability. In lieu of any
such personal representative of or the successor in interest to, a Disabled
General Partner becoming an assignee Partner as hereinabove provided, at the
option of the Policy Committee, the Partnership shall purchase such Disabled
General Partner's interest in the Partnership from such personal representative
or successor at the then Fair Market Value of such interest.

          8.5. Withdrawal of Partners. No Partner may withdraw from the
Partnership except upon the transfer of its Partnership interest permitted under
the provisions of this Agreement.

          8.6. Conversion of Partnership Interests. From and after the date as
of which both the G-2 Facility and the G-3 Facility are in service for Federal
income tax purposes and for the six (6) month period thereafter, (a) any General
Partner shall have the right to convert all or a portion of its interest in the
Partnership to that of a Limited Partner; provided, however that no such
conversion may be made by any General Partner in connection with a dissolution
of the Partnership; and provided, further, however, no such conversion may be
made if it would cause the Partnership not to have a General Partner(s) with
Partnership Percentage Interest(s) aggregating 1.0% or more; and provided,
further, however that the proposed conversion by a General Partner of all or a
portion of its interest in the

                                      -68-

Partnership to that of a Limited Partner will not be effective if it would
cause the Partnership to become an association taxable as a corporation for
Federal income tax purposes; and (b) any Limited Partner shall have the right to
convert all or a portion of its interest in the Partnership to that of a General
Partner.

                                   ARTICLE IX

                           Dissolution and Liquidation

          9.1. Term. If not sooner terminated pursuant to this Agreement, this
Partnership shall terminate and the Partnership shall dissolve upon the
expiration of the Term of this Partnership.

          9.2. General. Upon dissolution of the partnership (unless it is
reconstituted pursuant to Section 8.4.2), the Partnership shall be liquidated in
accordance with this Article IX. The dissolution and liquidation of the
Partnership shall be conducted and supervised by the Policy Committee. The
Policy Committee shall have all of the rights and powers with respect to the
assets and liabilities of the Partnership, in connection with the liquidation
and dissolution of the Partnership, which the Policy Committee has with respect
to the assets and liabilities of the Partnership during the term of the
Partnership_ and the Policy Committee is hereby authorized and empowered to
execute any and all documents necessary or desirable to effectuate the
dissolution and liquidation of the Partnership and the transfer of any property
of the Partnership.

          9.3. Priority on Liquidation. The Policy Committee shall, to the
extent feasible, liquidate the assets of the Partnership as

                                      -69-

promptly as shall be practicable. The proceeds of such liquidation shall be
applied first, to the payment of the matured debts and liabilities of the
Partnership (including principal and accrued interest on any Partner Loans and
the costs and expenses of dissolution and liquidation of the Partnership),
second, to the setting up of any reserves which the Policy Committee may deem
reasonably necessary for contingent or unforeseen liabilities of the
Partnership, and third, to the Partners in the manner provided for Net Capital
Receipts pursuant to Section 7.2.2 (and within the time frame prescribed under
Treasury Regulation 1.704-l(b)(2)(ii)(g)).

          9.4. Statements on Liquidation. Each of the Partners shall be
furnished with a statement which shall set forth the assets and liabilities of
the Partnership as at the date of dissolution and as at the date of complete
liquidation, the share of each Partner thereof, and a reasonably detailed report
of the manner of disposition of the assets of the Partnership. Upon compliance
with the foregoing distribution plan the Partnership shall be terminated and the
Policy Committee shall cause the cancellation of the Certificate of Limited
Partnership and all qualifications of the Partnership as a foreign limited
partnership in jurisdictions other than the State of California and shall take
such other action as may be necessary to terminate the Partnership.

          9.5. Agreement Governing Return of Capital or Partition. No Partner
shall have any right to receive its Capital Contribution or any profit of the
Partnership or to obtain a partition of assets

                                      -70-

of the Partnership other than as provided in this Agreement. Except as provided
in Section 7.7, General Partners shall not be personally liable for the return
of the Capital Contributions of the Partners, or any portion thereof, it being
expressly understood that any such return shall be made solely, from Partnership
assets.

                                    ARTICLE X

                             Records and Accounting

          10.1. Books and Records. At all times during the continuance of the
Partnership, the Policy Committee shall keep or cause to be kept books of
account in which shall be entered fully and accurately each transaction of the
Partnership. The books of account, records and all documents and other writings
of the Partnership shall be kept and maintained at the principal office of the
Partnership or of the Policy Committee. Each Partner and its representatives
shall, upon reasonable notice to the Policy Committee, have access to such
books, records and documents during reasonable business hours and may inspect
and make copies of any of then at its own expense.

          10.2. Accounting Method. The Partnership shall adopt the accrual
method of accounting for financial reporting and Federal income tax purposes.

          10.3. Fiscal Year. The fiscal year of the Partnership for financial
reporting and Federal income tax purposes shall be the calendar year.

          10.4. Bank Accounts. The Policy Committee shall open and maintain on
behalf and in the name of the Partnership a bank account

                                      -71-

or accounts with such depositaries in the United States as the Policy Committee
shall determine in which all monies received by or on behalf of the Partnership
shall be deposited. In no event shall any Partnership funds be commingled with
the funds of any Partner. All withdrawals, from Partnership accounts shall be
made upon the signature of such individual or individuals as the Policy
Committee may from time to time designate.

          10.5. Auditors. The auditors for the Partnership shall be selected by
the Policy Committee.

          10.6. Required Filings. The Policy Committee shall cause the
Partnership to file, on or before the dates the same may be due, giving effect
to extensions obtained, all reports, returns and applications which may be
required by any taxing authority or other governmental or quasi-governmental
body having jurisdiction. The Policy Committee shall timely deliver to each of
the Partners, but in any event within 90 days after the end of each taxable
year, such information as may be necessary for the completion by such Partner of
its Federal, state or other income tax or information returns, including Forms
K-l.

                                      -72-

                                   ARTICLE XI

                                  Miscellaneous

          11.1. Notices. All notices, demands or other communications hereunder
shall be in writing and shall be sent, if to the Partnership, at the address set
forth in Section 2.5, or if to a Partner, at the address set forth on the
signature page hereof for such Partner, or at such other addresses as such
parties may designate by notice to the Partnership and the other Partners.
Notices hereunder shall be deemed to have been given or made on receipt both in
the case of a notice delivered by hand and in the case of a notice sent by mail,
registered, return receipt requested, postage prepaid.

          11.2. Further Assurances. The Partners will execute and deliver such
further instruments and do such further acts and things as may be required to
carry out the intent and purposes of this Agreement.

          11.3. Agreement in Counterparts: Dating. This Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed shall be an original, but all such counterparts shall together
constitute but one and the same instrument. Although this Agreement is dated as
of the date first above written for convenience, the actual dates of execution
hereof by the parties hereto are respectively the dates set forth under the
signatures hereto, and the Agreement shall not be binding upon any of the
parties hereto until the latest of such dates.

                                      -73-

          11.4. Captions. Captions contained in this Agreement are inserted as a
matter of convenience and in no way define, limit, extend or describe the scope
of this Agreement or the intent of any provision hereof.

          11.5. No Third Party Beneficiaries. None of the provisions of this
Agreement shall be for the benefit of or be enforceable by any creditor of the
Partnership or of any Partner or by any third party.

          11.6. Successors. Except as otherwise expressly provided in this
Agreement, all provisions of this Agreement shall be binding upon, inure to the
benefit of, and be enforceable by or against the successors and permitted
assigns of the parties hereto.

          11.7. Amendments. This Agreement may be modified or amended only upon
the written agreement of each of the General Partners and, but only to the
extent that such agreement is required by law, each of the Limited Partners.

          11.8. Governing Law. This Agreement and the rights and obligations of
the Partners shall be governed by and construed in accordance with the law of
the State of California.

          11.9. Integration. This Agreement constitutes the entire agreement
among the Parties hereto pertaining to the subject matter hereof and supersedes
all prior agreements (oral or written) and understandings pertaining thereto.

          11.10. Dispute Settlement. The Policy Committee shall exercise its
best efforts to arrive at an amicable settlement of any

                                      -74-

dispute (including any deadlock(s) which may arise ____________________ matters
contemplated by this Agreement. If, however, no such settlement is reached in
connection with such dispute, then upon written notice by any Partner, a four
member panel comprised of two directors or members of management of the CD Group
and two directors or members of management of the PEn Group shall be formed and
such panel shall exercise its best efforts to arrive at an amicable settlement
of such dispute. If, however, no such settlement is reached, then upon written
notice by any Partner, said dispute shall be finally settled by arbitration in
accordance with the Rules of the American Arbitration Association by arbitrators
nominated in accordance with such Rules with each Partner hereby agreeing that
any such submission to arbitration shall be accompanied by a request that the
arbitrators be knowledgeable in the field of Geothermal Interests and the small
power production facility industry; provided, however, that the fact that an
arbitrator shall not possess such particular knowledge shall not disquality such
arbitrator's power and authority under such Rules to act as an arbitrator. Any
such arbitration shall take place in Chicago (or such other location as the
parties may agree). The decision of the arbitrators, rendered in writing, shall
be final and conclusive (absent manifest error) and binding on the parties
hereto, and judgment upon such decision may be entered in any court having
jurisdiction thereof. Each party shall pay its own expenses in connection with
the arbitration. The arbitrators' fee shall be borne equally by the parties to
such dispute.

                                      -75-

          l1.l1. Property, etc. Intended for the Partnership. Any Partner
holding property, rights or choses in action intended by the terms of this
Agreement to be held by the Partnership will hold such property or right or
chose in action solely for the benefit of the Partnership.

          11.12. Severability. The invalidity of any article, section,
subsection, clause or provision of this Agreement shall not affect the validity
of the remaining articles, sections, subsections, clauses or provisions hereof.
To the extent permitted by applicable law, each party hereto waives any
provision of law which renders any provision hereof prohibited or unenforceable
in any respect.

                                      -76-

          IN WITNESS WHEREOF, the parties hereto have each caused this Agreement
to be duly executed by their respective officers duly authorized, as of the
dates set forth below.

                                           CD MAMMOTH LAKES I, INC.

                                           By: /s/ Illegible
                                               ---------------------------------
                                           Title: President
                                           Date: 1/26/90

                                           Address: c/o Constellation
                                                    Development, Inc.
                                                    250 West Platt Street
                                                    23rd Floor
                                                    Baltimore, MD 21201-2423
                                                    Attention: Secretary

                                           CD MAMMOTH LAKES II, INC.

                                           By: /s/ Illegible
                                               ---------------------------------
                                           Title: President
                                           Date: 1/26/90

                                           Address: c/o Constellation
                                                    Development, Inc.
                                                    250 West Platt Street
                                                    23rd Floor
                                                    Baltimore, MD 21201-2423
                                                    Attention: Secretary

                                      -77-

                                           PACIFIC GEOTHERMAL COMPANY,

                                           By: Illegible
                                               ---------------------------------
                                           Title: Vice President
                                           Date: 1/26/90

                                           Address: c/o Pacific Energy
                                                    6055 East Washington Blvd.
                                                    City of Commerce,
                                                    California 90040-0092

                                      -78-

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