Document:

exv10w64

 

Exhibit 10.64

BLOCKED ACCOUNT CONTROL AGREEMENT

(WITH LOCKBOX SERVICES)

Commerce Energy, Inc.

600 Anton Boulevard

Suite 2000

Costa Mesa, California 92626

Attn: Rob Gunnin

Ladies and Gentlemen:

          Please be advised that pursuant to certain agreements between Commerce Energy, Inc.
(“Company”) and Tenaska Power Services Co. (“Lender”), Company will cause all checks, drafts and
other orders of payments made payable to Company to be mailed to PO Box 644010,Cincinnati, Ohio
45264-4010 (the “Lockbox”) maintained at U.S. Bank National Association (“Depository Bank”). All
payments mailed to the Lockbox shall be deposited to deposit account
number [*] (such
account, together with all substitutions and replacements therefore, the “Deposit Account”) located
at Depository Bank, and subject to the terms of the Deposit Agreements (defined below). The Lockbox
account and the Deposit Account shall each be styled “Tenaska Power Services Co. as Pledgee of
Commerce Energy, Inc.”.

1. Deposit Agreements. The terms and conditions of this Agreement are in addition to any deposit
account agreements and other related agreements that Company has with Depository Bank, including
without limitation all agreements concerning banking products and services, treasury management
documentation, account booklets containing the terms and conditions of the Deposit Account,
signature cards, fee schedules, disclosures, specification sheets and change of terms notices
(collectively, the “Deposit Agreements”). The provisions of this Agreement shall supersede the
provisions of the Deposit Agreements only to the extent the provisions herein are inconsistent with
the Deposit Agreements, and in all other respects, the Deposit Agreements shall remain in full
force and effect; provided, however, that any claim of inconsistency or potential inconsistency
between the Deposit Agreements and this Agreement shall be resolved in favor of having this
Agreement govern. All items received at the Lockbox shall be deposited into the Deposit Account,
and shall then be processed according to the provisions of the Deposit Agreements, as amended by
this Agreement.

2. Security Interest. Company has granted to Lender a security interest in, among other property,
the Lockbox, the Deposit Account and all credits or proceeds thereto and all monies, checks and
other instruments held or deposited therein (all of which shall be included in the definition of
the “Deposit Account”). Company and Depository Bank each represents and warrants that there are no
perfected liens or encumbrances with respect to the Deposit Account and covenants with Lender that
it shall not enter into any acknowledgment or agreement that gives any other person or entity
except Lender control over, or any other security interest, lien or title in, the Deposit Account.

3. Lender’s Rights. Until such time as Depository Bank shall have received notice from Lender in a
Timely Manner, funds on deposit from time to time in the Deposit Account shall

[*]=information
redacted pursuant to a confidential treatment request. Such omitted
information has been filed separately with the Securities and
Exchange Commission.

1

 

 be disbursed as
Company may direct. As used in this Agreement, “Timely Manner” means receipt of the relevant
notice, notice revocation or instruction at a time and in a manner affording Depository Bank a
reasonable opportunity to act thereon. Lender simultaneously shall provide Company with such
notice. After Depository Bank has received a notice, and until such time as Depository Bank has
received contrary notice from Lender in a Timely Manner that a default has been waived or has
ceased to exist: (i) Lender shall have immediate access to and control over the Deposit Account and
the items deposited therein; (ii) Company shall have no control whatsoever over items deposited
into the Deposit Account; (iii) Company irrevocably authorizes Depository Bank, without
investigation, to comply with any requests of Lender with regard to deposits in and withdrawals
from the Deposit Account, including, without limitation, directions of Lender to transfer the
balance of the Deposit Account to Lender pursuant to payment, transfer and withdrawal orders and
changes to such orders given from time to time by Lender’s officers (“Transfer Orders”) without the
consent of Company; (iv) Lender shall have exclusive dominion and control of the Deposit Account
and all items deposited therein, and Depository Bank shall not comply with any directions from
Company regarding the Deposit Account unless Lender gives its written consent thereto in advance;
(v) Depository Bank is authorized and directed to supply any necessary endorsement and to deposit
all monies and instruments received by Depository Bank for the account of

Company; and (vi) Company agrees it shall not make any attempt to access the Deposit Account or
funds therein.

4. Returned Items and Fees. Company and Depository Bank acknowledge notice of and recognize
Lender’s continuing security interest in the Deposit Account and in all items deposited in the
Deposit Account and in the proceeds thereof. Depository Bank hereby disclaims any lien or security
interest in the Deposit Account and subordinates any statutory or contractual right or claim of
offset or lien resulting from any transaction which involves the Deposit Account. Notwithstanding
the foregoing, in the event any checks or other items which were deposited or credited to the
Deposit Account are returned, reversed, refunded or charged back for insufficient funds or for any
other reason (“Returned Items”), Depository Bank may charge the Deposit Account or other accounts
of Company maintained at Depository Bank. If there are insufficient funds in the Deposit Account or
any of Company’s other accounts to cover the Returned Items, Company agrees to immediately
reimburse Depository Bank for the amount of such shortfall. If Company fails to pay the amount
demanded by Depository Bank, Lender agrees to reimburse Depository Bank within three (3) business
days of demand thereof by Depository Bank for any Returned Items to the extent Lender received
payment in respect thereof pursuant to section 3. In the event that Depository Bank charges the
Deposit Account for Returned Items, or requires Lender to reimburse for Returned Items, Company
agrees to reimburse the Deposit Account within three (3) Business Days. Depository Bank shall
charge all fees and expenses (“Fees”) related to the Deposit Account to the Deposit Account.

5. Indemnity. Company agrees to defend, indemnify and hold Depository Bank and its directors,
officers, employees, attorneys, successors and assigns (collectively “Depository Bank”) harmless
from and against any and all claims, losses, liabilities, costs, damages and expenses, including,
without limitation, reasonable legal and accounting fees (collectively,
“Claims”), arising out of or in any way related to this Agreement, excepting only liability arising
out of Depository Bank’s gross negligence or willful misconduct. Without regard to Company’s

2

 

indemnification obligations to Depository Bank, Lender agrees to: (i) reimburse Depository Bank for
any Returned Items (the proceeds of which were received by Lender) and (ii) defend, indemnify and
hold Depository Bank harmless from and against any and all Claims arising out of Depository Bank’s
compliance with Lender’s instructions. Lender’s obligations to Depository Bank hereunder shall in
no way operate to release Company from its obligations to Lender and shall not impair any rights or
remedies of Lender to collect any such amounts from Company. IN NO EVENT WILL DEPOSITORY BANK BE
LIABLE FOR ANY INDIRECT DAMAGES, LOST PROFITS, SPECIAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES WHICH
ARISE OUT OF OR IN CONNECTION WITH THE SERVICES CONTEMPLATED BY THIS AGREEMENT EVEN IF DEPOSITORY
BANK HAS BEEN INFORMED OF THE POSSIBILITY OF SUCH DAMAGES.

6. Depository’s Bank’s Responsibility. The duties of Depository Bank are strictly limited to those
set forth in this Agreement and Depository Bank is not acting as a fiduciary for any party hereto.
Depository Bank shall be protected in relying on any form of instruction or other notice purporting
to be from Lender which Depository Bank, in good faith, believes to be genuine and what it purports
to be. Depository Bank shall have no duty to inquire as to the genuineness, validity, or
enforceability of any such instruction or notice even if Company notifies Depository Bank that
Lender is not legally entitled to originate any such instruction or notice. The Deposit Account and
all actions and undertakings by Depository Bank shall be subject to all rules and regulations
relating to the Deposit Account and to applicable law.

7. Termination. This Agreement shall not be terminable by Company so long as any obligations of
Company to Lender are outstanding and unpaid. This Agreement may be terminated by Depository Bank
upon thirty (30) days prior written notice to all parties; provided that no termination shall be
effective until thirty (30) days following the termination of all outstanding transactions between
Company and Lender and provided, further, that Depository Bank may terminate this Agreement
immediately in the event Lender fails to make payments to Depository Bank in accordance with
section 4 above. This Agreement may be terminated by Lender in a writing sent to Depository Bank in
which Lender releases Depository Bank from any further obligation to comply with instructions
originated by Lender with respect to the Deposit Account. Any available funds remaining in the
Deposit Account upon termination or deposited in thereafter shall be transferred in accordance with
the provisions of section 3 above after deduction for any amounts otherwise reimbursable to
Depository Bank as provided hereunder. Termination shall not affect the rights and obligations of
any party hereto with respect to any period prior to such termination.

8. Legal Process and Insolvency. In the event Depository Bank receives any form of legal process
concerning the Deposit Account, including, without limitation, court orders, levies, garnishments,
attachments, and writs of execution, or in the event Depository Bank learns of any insolvency
proceeding concerning Company, including, without limitation, bankruptcy, receivership, and
assignment for the benefit of creditors, Depository Bank will respond to such legal process or
knowledge of insolvency in the normal course or as required by law.

9. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of
the State of New York, without recourse to conflict of law or choice of law

3

 

 principles. The parties
agree that New York is the “bank’s jurisdiction” for purposes of the Uniform Commercial Code.

10. Notices. Except as otherwise provided in this Agreement, all notices and other communications
required under this Agreement shall be in writing and may be personally served or sent by United
States Mail or courier or by facsimile, and shall be deemed given when delivered in person or
received by facsimile or upon deposit in the United States Mail or with such courier at the address
specified below. Any party may change its address for notices hereunder by notice to all other
parties given in accordance with this section 10.

	 	 	 	 	 
	 

	 	Company:
	 	Commerce Energy, Inc.
	 

	 	 	 	600 Anton Blvd.
	 

	 	 	 	Suite 2000
	 

	 	 	 	Costa Mesa, California 92626
	 

	 	 	 	Attn: Rob Gunnin
	 

	 	 	 	Facsimile: (714) 259-2592
	 

	 	 	 	Telephone: (714) 259-2502
	 
	 	 	 	 
	 

	 	Lender:
	 	Tenaska Power Services Co.
	 

	 	 	 	1701 E. Lamar Blvd., Suite 100
	 

	 	 	 	Arlington, Texas 76006
	 

	 	 	 	Attn: Trudy Harper, President
	 

	 	 	 	Facsimile: (817) 462-1035
	 

	 	 	 	Telephone: (817) 462-1511
	 
	 	 	 	 
	 

	 	Depository Bank:
	 	U.S. Bank National Association
	 

	 	 	 	425 Walnut Street
	 

	 	 	 	Cincinnati, Ohio 45202
	 

	 	 	 	Attn: Jeffrey Kessler, Vice President
	 

	 	 	 	Facsimile: (513) 632-2040
	 

	 	 	 	Telephone: (513) 632-3271

11. Miscellaneous. This Agreement shall bind and benefit the parties and their respective
successors and assigns. This Agreement may be amended only with the prior written consent of all
parties hereto. None of the terms of this Agreement may be waived except as Depository Bank may
consent thereto in writing. No delay on the part of Depository Bank in exercising any right, power
or privilege hereunder shall operate as a waiver hereof, nor shall any single or partial exercise
of any right, power or privilege hereunder preclude other or further exercise thereof or the
exercise of any right, power or privilege. The rights and remedies specified herein are cumulative
and are not exclusive of any rights or remedies which Depository Bank would otherwise have.

12. Counterparts. This Agreement may be executed in any number of counterparts and by the different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together constitute one and the same
instrument.

4

 

13. Jury Trial Waiver. COMPANY, LENDER AND DEPOSITORY BANK HEREBY WAIVE ALL RIGHTS TO TRIAL BY JURY
IN ANY JUDICIAL PROCEEDING ARISING OUT OF, OR RELATING TO, THIS AGREEMENT OR SERVICES RENDERED IN
CONNECTION WITH THIS AGREEMENT.

Dated as of: August 1, 2005

	 	 	 	 	 	 	 
	 	 	Commerce Energy, Inc.  
	 
	 

	 	By:	 	/s/ R. Nick Cioll	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	R. Nick Cioll	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	V.P. Risk Management	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Tenaska Power Services Co.
	 
	 

	 	By:	 	/s/ Trudy Harper	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Trudy Harper	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	President	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	ACCEPTED:	 	U.S. BANK NATIONAL ASSOCIATION
DEPOSITORY BANK
	 
	 

	 	By:	 	/s/ Jeffrey A. Kessler	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Jeffrey A. Kessler	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	Vice President	 	 
	 

	 	 	 	 	 	 

5<PAGE>

                                                                   EXHIBIT 10.65

================================================================================

                                  Master Power

                                 Purchase & Sale

                                    Agreement

================================================================================

[*]=information redacted pursuant to a confidential treatment request.
Such omitted information has been filed separately with the Securities and
Exchange Commission.

<PAGE>
                    MASTER POWER PURCHASE AND SALES AGREEMENT

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                            <C>
COVER SHEET.................................................................................    1

GENERAL TERMS AND CONDITIONS................................................................   15

ARTICLE ONE: GENERAL DEFINITIONS............................................................   15

ARTICLE TWO: TRANSACTION TERMS AND CONDITIONS...............................................   20
    2.1   Transactions......................................................................   20
    2.2   Governing Terms...................................................................   20
    2.3   Confirmation......................................................................   20
    2.4   Additional Confirmation Terms.....................................................   21
    2.5   Recording.........................................................................   21

ARTICLE THREE: OBLIGATIONS AND DELIVERIES...................................................   21
    3.1   Seller's and Buyer's Obligations..................................................   21
    3.2   Transmission and Scheduling.......................................................   21
    3.3   Force Majeure.....................................................................   22

ARTICLE FOUR: REMEDIES FOR FAILURE TO DELIVER/RECEIVE.......................................   22
    4.1   Seller Failure....................................................................   22
    4.2   Buyer Failure.....................................................................   22

ARTICLE FIVE: EVENTS OF DEFAULT; REMEDIES...................................................   22
    5.1   Events of Default.................................................................   22
    5.2   Declaration of an Early Termination Date and Calculation of Settlement Amounts....   24
    5.3   Net Out of Settlement Amounts.....................................................   24
    5.4   Notice of Payment of Termination Payment..........................................   24
    5.5   Disputes With Respect to Termination Payment......................................   24
    5.6   Closeout Setoffs..................................................................   25
    5.7   Suspension of Performance.........................................................   25

ARTICLE SIX: PAYMENT AND NETTING............................................................   25
    6.1   Billing Period....................................................................   25
    6.2   Timeliness of Payment.............................................................   26
    6.3   Disputes and Adjustments of Invoices..............................................   26
    6.4   Netting of Payments...............................................................   26
    6.5   Payment Obligation Absent Netting.................................................   26
    6.6   Security..........................................................................   27
    6.7   Payment for Options...............................................................   27
    6.8   Transaction Netting...............................................................   27
</TABLE>

                         Version 2.1 (modified 4/25/00)
     (C)COPYRIGHT 2000 by the Edison Electric Institute and National Energy
                              Marketers Association

                                       i

<PAGE>

<TABLE>
<S>                                                                                            <C>
ARTICLE SEVEN: LIMITATIONS..................................................................   27
    7.1   Limitation of Remedies, Liability and Damages.....................................   27

ARTICLE EIGHT: CREDIT AND COLLATERAL REQUIREMENTS...........................................   28
    8.1   Party A Credit Protection.........................................................   28
    8.2   Party B Credit Protection.........................................................   30
    8.3   Grant of Security Interest/Remedies...............................................   31

ARTICLE NINE:  GOVERNMENTAL CHARGES.........................................................   32
    9.1   Cooperation.......................................................................   32
    9.2   Governmental Charges..............................................................   32

ARTICLE TEN:   MISCELLANEOUS................................................................   32
    10.1  Term of Master Agreement..........................................................   32
    10.2  Representations and Warranties....................................................   32
    10.3  Title and Risk of Loss............................................................   34
    10.4  Indemnity.........................................................................   34
    10.5  Assignment........................................................................   34
    10.6  Governing Law.....................................................................   34
    10.7  Notices...........................................................................   35
    10.8  General...........................................................................   35
    10.9  Audit.............................................................................   35
    10.10 Forward Contract..................................................................   36
    10.11 Confidentiality...................................................................   36

SCHEDULE P:  PRODUCTS AND RELATED DEFINITIONS...............................................   37

EXHIBIT A:  CONFIRMATION LETTER.............................................................   44
</TABLE>

                         Version 2.1 (modified 4/25/00)
     (C)COPYRIGHT 2000 by the Edison Electric Institute and National Energy
                              Marketers Association

                                       ii
<PAGE>
                    MASTER POWER PURCHASE AND SALE AGREEMENT
                                   COVER SHEET

This Master Power Purchase and Sale Agreement ("Master Agreement") is made as of
the following date: August 1, 2005 ("Effective Date"). The Master Agreement,
together with the exhibits, schedules and any written supplements hereto, the
Party A Tariff, if any, the Party B Tariff, if any, any designated collateral,
credit support or margin agreement or similar arrangement between the Parties
and all Transactions (including any confirmations accepted in accordance with
Section 2.3 hereto) shall be referred to as the "Agreement." The Parties to this
Master Agreement are the following:

<TABLE>
<S>                                           <C>
Name:  COMMERCE ENERGY, INC.  (CEI or         Name:  TENASKA POWER SERVICES CO.
"Party A")                                    ("Tenaska"
                                              or "Party B")
All Notices:                                  All Notices:
Street:  600 Anton Blvd., Ste. 2000           Street:  1701 E.  Lamar Blvd., Suite 100
City:  Costa Mesa, CA  92626                  City:  Arlington, Texas 76006
Zip:  92626
Attn:  Contract Administration                Attn:  Teri Brown, Contract Administration
Phone:  714.259.2558                          Phone:  (817) 303-1110
Facsimile:  714.259.2592                      Facsimile:  (817) 303-1867
Duns:  17-634-3341                            Duns:  01-501-6913
Federal Tax ID Number:  33-0769555            Federal Tax ID Number:  47-0771361

INVOICES:                                     INVOICES:
   Attn:  Nancy Remy                              Attn:  Accounts Payable
   Phone:  714.259.2531                           1044 N.  115th Street, Suite 400
   Facsimile:  714.259.2553                       Omaha, NE 68154
                                                  Phone:  (402) 691-9553
                                                  Facsimile:  (402) 938-1677

SCHEDULING:                                   SCHEDULING:
   Attn:  Blake Lasuzzo                           Attn:  Hourly Desk
   Phone:  714.259.2581                           Phone:  (817) 462-1528
   Facsimile:  714.259.2592                       Facsimile:  (817) 462-1031

CONFIRMATIONS:                                CONFIRMATIONS:
   Attn:  Tracy Morgan                            Attn:  Leanne Campbell
   Phone:  714-259-2511                           Phone:  (817) 303-1861
   Facsimile:  714-481-6584                       Facsimile:  (817) 462-1520

PAYMENTS:                                     PAYMENTS:
   Attn:  Tracy Morgan                           Attn:  Accounts Receivable
   Phone:  714-259-2511                          1044 N. 115th Street, Suite 400
   Facsimile:  714-481-6584                      Omaha, NE 68154
                                                 Phone:  (402) 691-9553
                                                 Facsimile:  (402) 938-1677

WIRE TRANSFER:                                ACH/WIRE TRANSFER:
  BNK:  Union Bank of California,                 Bank:  First National Bank of Omaha
  Irvine, CA                                      ABA No:  [*]
  ABA:   [*]                                      ACCT:    [*]
  ACCT:  [*]                                      ACCT Name:  Tenaska Power Services Co.
  ACCT Name:  Commerce Energy, Inc.
</TABLE>

[*] = Information redacted pursuant to a confidential treatment request. Such
outlined information has been filed separately with the Securities and Exchange
Commission.

                                      -1-

<PAGE>

<Table>
<S>                                                <C>
     CREDIT AND COLLECTIONS:                       CREDIT AND COLLECTIONS:
       Attn:  Michael Adcock                           Attn:  Clark Teakell
       Phone:  714.259.2558                            Phone:  (817) 303-1862
       Facsimile:  714.259.2592                        Facsimile:  (817) 462-1038
     WITH ADDITIONAL NOTICES OF AN EVENT OF        WITH ADDITIONAL NOTICES OF AN EVENT OF
     DEFAULT OR POTENTIAL EVENT OF DEFAULT         DEFAULT OR POTENTIAL EVENT OF DEFAULT TO:
     TO:                                               Attn:  Norma lacovo, Associate General
        Attn:  Mike Adclock                        Counsel
        Phone:  714.259.2558                           1701 E.  Lamar Blvd., Suite 100
        Facsimile:  714.259.2592                       Arlington, TX 76006
                                                       Phone:  (817) 462-1507
     AND:                                              Facsimile:  (817) 303-1104

        Attn:  Legal Department
        Phone:  714.259.2586
        Fax:  714.481.6589
</Table>

The Parties hereby agree that the General Terms and Conditions are incorporated
herein, and to the following provisions as provided for in the General Terms and
Conditions:

Party A Tariff:  Tariff FERC Electric Rate Schedule No.  1 Dated October 7, 1997
                 Docket Number ER97-4253-008

Party B Tariff:  Third Revised FERC Rate Schedule No.  1 Dated October 13, 2004
                 Docket Number ER94-389-023

--------------------------------------------------------------------------------
 ARTICLE TWO
 Transaction Terms and   [X] Optional provision in Section 2.4.
 Conditions              If not checked, inapplicable.

--------------------------------------------------------------------------------
 ARTICLE FOUR            [X] Accelerated Payment of Damages.
 Remedies for Failure        If not checked, inapplicable.
 to Deliver or Receive

--------------------------------------------------------------------------------
 ARTICLE FIVE
 Events of Default;      [X] Cross Default for Party A:
 Remedies                [ ] Party A:                      Cross Default Amount:

                         [X] Other Entity: Commerce Energy Cross Default Amount
                         Group, Inc.                       $1,000,000.00
                         [X] Cross Default for Party B:
                         [ ] Party B:                      Cross Default Amount:
                         [X] Other Entity: Tenaska         Cross Default Amount:
                         Energy, Inc. and Tenaska Energy   $25,000,000.00
                         Holdings, LLC
                         5.6  Closeout Setoff
                              [ ]   Option A (Applicable if no other selection
                                    is made.)
                              [X]   Option B - Affiliates shall have the meaning
                                    set forth in the Agreement unless otherwise
                                    specified as follows:  With respect to
                                    Tenaska "Affiliates" shall mean Tenaska
                                    Marketing Ventures and its subsidiaries.
                              [ ]   Option C (No Setoff)

                                      -2-

<PAGE>
--------------------------------------------------------------------------------
ARTICLE 8                   8.1  Party A Credit Protection:
Credit and Collateral            (a)   Financial Information:
Requirements
                                       [ ] Option A
                                       [X] Option B Specify:  Tenaska Energy,
                                       Inc. and Tenaska Energy Holdings, LLC
                                       [ ] Option C
                                       Specify:

                                 (b) Credit Assurances:

                                       [ ] Not Applicable
                                       [X] Applicable

                                 (c) Collateral Threshold:

                                       [ ] Not Applicable
                                       [X] Applicable

                            If applicable, complete the following:

                            Party B Collateral Threshold: With respect to Party
                            B, as of any valuation date, shall mean the lowest
                            of (i) the amount set forth below under the caption
                            "Threshold Amount" with respect to Party B's
                            Guarantor, (ii) the amount of any dollar limit
                            contained in a guaranty provided by Party B's
                            Guarantor, or (iii) zero if an Event of Default with
                            respect to Party B has occurred and is continuing.

                            Threshold Amount:  3% of Shareholder's Equity

                            Party B Independent Amount:  $ -0
                            Party B Rounding Amount:  $100,000.00

                            (d)  Downgrade Event:
                                 [ ]  Not Applicable
                                 [X]  Applicable
                            If applicable, complete the following:
                                 [X]   Other:
                            Specify: It shall be a Downgrade Event for Party B
                            if a Material Adverse Change occurs in the financial
                            condition of Party B's Guarantor. "Material Adverse
                            Change" with respect to Party B shall mean (i) a
                            decrease in total shareholders' equity/members'
                            capital for Party B's Guarantor (as reported on
                            combined balance sheets of Tenaska Energy, Inc. and
                            Tenaska Energy Holdings, LLC) to below $300,000,000,
                            or (ii) the occurrence of an event or contingency
                            that, in the reasonable opinion of Party A, is
                            likely to result in a decrease in total
                            shareholders' equity/members' capital for Party B's
                            Guarantor to below $300,000,000 or would otherwise
                            materially effect the ability of Party B or its
                            Guarantor to honor financial obligations as they
                            become due."

                            (e) Guarantor for Party B:  Tenaska Energy, Inc.
                                and Tenaska Energy Holdings, LLC
                                Guarantee Amount: $1,000,000.00 (initial
                                guaranty amount) and may be increased by Party B
                                from time to time, but not to exceed the
                                Threshold Amount.

                                      -3-
<PAGE>

                            8.2  Party B Credit Protection:
                                 (a)   Financial Information:
                                       [ ] Option A
                                       [X] Option B Specify: Commerce Energy
                                           Group Inc.
                                       [ ] Option C Specify: _____________

                                 (b)   Credit Assurances:
                                       [ ] Not Applicable
                                       [X] Applicable

                                 (c)   Collateral Threshold:
                                       [ ] Not Applicable
                                       [X] Applicable

                            If applicable, complete the following:

                            Party A Collateral Threshold: With respect to Party
                            A, as of any valuation date, as long as Party A is
                            in compliance with the Security Agreement of August
                            1, 2005, between the Parties ("Security Agreement"),
                            providing all amounts of collateral and performing
                            all covenants required therein, then Party A shall
                            be deemed to be within the Collateral Threshold
                            requirements of this Master Agreement. An Event of
                            Default under the Security Agreement shall
                            constitute an Event of Default under this Master
                            Agreement. Upon termination of the Security
                            Agreement or an Event of Default thereunder,
                            "Collateral Threshold" shall mean the lowest of

                            (i)   $1,000,000.00,
                            (ii)  the amount of any dollar limit contained in a
                                  guaranty provided by Party A's Guarantor, or
                            (iii) zero if an Event of Default with respect to
                                  Party A has occurred and is continuing.
                            Party A Independent Amount: $ -0-
                            Party A Rounding Amount:    $100,000.00
                            (d)  Downgrade Event:
                                 [ ]  Not Applicable
                                 [X]  Applicable
                            If applicable, complete the following:
                                 [x]   Other:
                                       Specify: It shall be a Downgrade Event
                                       for Party A if Party A's Guarantor fails
                                       to maintain at all times a minimum Net
                                       Worth of $50,000,000 and be in compliance
                                       with the covenants set forth in the
                                       Security Agreement. (e) Guarantor for
                                       Party A: Commerce Energy Group Inc.
                                       Guarantee Amount: $1,000,000.00

--------------------------------------------------------------------------------
ARTICLE 10                  [X]  Confidentiality Applicable     If not checked,
Confidentiality                  inapplicable.
--------------------------------------------------------------------------------

SCHEDULE M                  [ ] Party A is a Governmental Entity or Public
                                Power System
                            [ ] Party B is a Governmental Entity or Public
                                Power System
                            [ ] Add Section 3.6.  If not checked, inapplicable
                            [ ] Add Section 8.6.  If not checked, inapplicable

OTHER CHANGES               Specify, if any:  SEE ADDITIONAL PROVISIONS SET
                            FORTH BELOW.

                                      -4-

<PAGE>
ADDITIONAL PROVISIONS. THE FOLLOWING PROVISIONS ARE AMENDED, ADDED OR DELETED AS
INDICATED:

ARTICLE ONE -- GENERAL DEFINITIONS

Section 1.1 is amended by adding the following to the end of the paragraph:
"With respect to Tenaska, "Affiliates" shall mean (specify Tenaska affiliates)
and its subsidiaries for purposes of Section 5.6 and Section 10.2(vi)."

Section 1.12 is amended by deleting the word "issues" and inserting the word
"issuer".

Section 1.4 Delete the first sentence and replace it to read as follows:
"Business Day" means any day except a Saturday, Sunday, the Friday immediately
following the Thanksgiving holiday or a Federal Reserve Bank Holiday.

Section 1.26 is amended by deleting the word "and" and inserting the word "or"
after the phrase "plus two percent (2%)".

Section 1.27 is amended by deleting Section 1.27 in is entirety and replacing it
with the following:

"Section 1.27 "Letter of Credit" means an irrevocable, transferable, standby
letter of credit, issued by a Qualified Institution containing such terms as are
required by issuing bank and are reasonably satisfactory to the Party in whose
favor the Letter of Credit is issued.

Section 1.50 is amended by deleting the reference to "Section 2.4" and replacing
it with "Section 2.5".

Section 1.51 is amended by (i) adding the phrase "for delivery" immediately
before the phrase "at the Delivery Point" in the second line, and (ii) deleting
in the fifth line the words "at Buyer's option" and replacing them with the
words "absent a purchase".

Section 1.53 is amended by (i) deleting the phrase "at the Delivery Point" from
the second line, (ii) deleting in the fifth line the words "at Seller's option"
and replacing them with the words "absent a sale", and (iii) ) inserting a new
sentence after the first sentence as follows: "If the Seller is unable after
using commercially reasonable efforts to resell all or a portion of the Product
not received by Buyer, the Sales Price with respect to such unsold portion
Product shall be deemed equal to zero (0)".

Section 1.62 The following definition is added as Section 1.62: ""Merger Event"
means, with respect to a Party or its Guarantor, that such Party or its
Guarantor consolidates or amalgamates with, or merges into or with, or transfers
substantially all of its assets to another entity; and (i) the resulting entity
fails to assume all of the obligations of such Party hereunder or of such
Party's Guarantor under its guaranty; or (ii) the benefits of any credit support
provided pursuant to Article 8, or any guaranty provided by such Party's
Guarantor, fail to extend to the performance by such resulting, surviving or
transferee entity of its obligations hereunder; or (iii) the resulting entity's
creditworthiness is materially weaker than that of such Party or its Guarantor
immediately prior to such action; provided, however, the creditworthiness of the
resulting entity shall not be deemed to be "materially weaker" so long as it
maintains a credit rating of at least "BBB-" with S&P or "Baa3" with Moody's."

Article Two -- Transactions Terms and Conditions

Section 2.1 is amended by adding the following to the end of the paragraph: All
payments and any Performance Assurance in the form of cash provided hereunder
shall be made in U.S. dollars.

Section 2.2 is amended by adding the following as separate paragraphs:

"Party A and Party B confirm that this Master Agreement shall supersede and
replace all prior agreements between the Parties hereto with respect to the
subject matter hereof, including the Master Power Purchase and Sale Agreement,
dated March 12, 2002, between ACN Energy, Inc. and Tenaska Power Services Co.,
and acquired by Party A by way of assignment under the Assignment Agreement,
dated July 14, 2005, between the Parties ("Assigned Agreement"). Party A and
Party B confirm the terms of those ongoing Transactions entered into under

                                      -5-
<PAGE>
the Assigned Agreement, as evidenced by the written confirmations with respect
thereto, and agree that such Transactions are, effective as of the Effective
Date, governed by this Master Agreement, and are part of this single integrated
agreement between the Parties consistent with the first paragraph of this
Section 2.2.

"The Parties agree to adhere to the operating procedures, market rules,
protocols, and product definitions of the NYISO, NEPOOL, ERCOT, PJM, MISO, SPP,
and other ISO's or RTO's as applicable and as promulgated from time to time by
such organizations or their successors."

ARTICLE THREE -- OBLIGATIONS AND DELIVERIES

Section 3.3 shall be amended by deleting from the last sentence the words
"resume performance of" and replacing them with the words "make-up".

A new Section 3.4 "ISO Delivery Point Changes shall be added as follows: "In the
event that the geographical boundaries of the Delivery Point set forth in the
Transaction are modified by the governing independent system operator ("ISO") or
its successor control area operator/regional transmission operator, the Delivery
Point as set forth in any Confirmation shall mean the hub which is within the
geographical boundary of the Delivery Point as defined on the date of the
Confirmation."

ARTICLE FOUR -- REMEDIES FOR FAILURE TO DELIVER

4.3 Suspension of Performance. Notwithstanding, and in addition to the remedies
provided pursuant to Sections 4.1 and 4.2, if Seller or Buyer fails to schedule
and/or deliver/receive all or part of the Product pursuant to a Transaction for
a period of three (3) or more consecutive days during any Delivery Period, and
such failure is not excused under the terms of the Product, by the other Party's
failure to perform or by agreement of the Parties, then upon one (1) Business
Day prior notice, and for so long as the non-performing Party fails to perform,
the performing Party shall have the right to suspend its performance under such
Transaction. In the event the performing Party suspends performance pursuant to
this Section 4.3, it shall not be obligated to resume performance until it has
received notice from the non-performing Party at least one (1) Business Day
prior to the date upon which the non-performing Party intends to resume its
performance.

ARTICLE FIVE -- EVENTS OF DEFAULT; REMEDIES

Section 5.1(b) shall be amended by adding the words "and such breach has a
material adverse effect upon the Party to whom such representation or warranty
was made".

Section 5.1(e) shall be amended by deleting the words "Article Eight hereof" and
replaced with the words "Sections 9.6 and 9.7 of the Agreement to Provide QSE
and Marketing Services between the Parties dated August 1, 2005 ("QSE
Agreement") and the Security Agreement between the Parties dated August 1, 2005
("Security Agreement"); provided however, in the event both of the referenced
agreements are terminated, then Section 5.1(e) shall revert to the original
words "Article Eight hereof".

Section 5.1(f) shall be amended in its entirety as follows: "a Merger Event
occurs with respect to such Party."

Section 5.1(g) shall be suspended and inoperable for as long as the QSE
Agreement and Security Agreement are operable, and Party A is in compliance with
Sections 9.6 and 9.7 of the QSE Agreement and the Security Agreement.

Section 5.1(h)(i) shall be amended by adding the words "and such breach has a
material adverse effect upon the Party to whom such representation or warranty
was made".

Section 5.1(h)(v), the last sentence shall be amended by adding the words "made
in connection with this Agreement" immediately after the words "any guaranty".

Section 5.1(h)(vi) shall be added as a new Section: "a Merger Event occurs with
respect to a Guarantor."

                                      -6-
<PAGE>
Section 5.2 shall be amended by (i) deleting the last sentence and (ii)
replacing it with the following:

"The Non-Defaulting Party shall calculate, in a commercially reasonable manner,
a Settlement Amount for each such Terminated Transaction or group of Terminated
Transactions as of the Early Termination Date (or, to the extent that in the
reasonable opinion of the Non-Defaulting Party certain of such Terminated
Transactions or group of Terminated Transactions are commercially impracticable
to liquidate and terminate or may not be liquidated and terminated under
applicable law on the Early Termination Date, then each such Transaction or
group of Terminated Transactions (individually, an "Excluded Transaction" and
collectively, the "Excluded Transactions") shall be terminated as soon
thereafter as reasonably practicable), and upon termination shall be deemed to
be a Terminated Transaction or group of Terminated Transactions and the
Termination Payment payable in connection with all such Terminated Transactions
or group of Terminated Transactions shall be calculated in accordance with
Section 5.3 below. The Gains and Losses for each Terminated Transaction or group
of Terminated Transactions shall be determined by calculating, in a commercially
reasonable manner, the amount that would be incurred or realized to replace or
to provide the economic equivalent of the remaining payments or deliveries in
respect of that Terminated Transaction or group of Terminated Transactions. The
Non-Defaulting Party (or its agent) may determine its Gains and Losses by
reference to information either available to it internally or supplied by one or
more third parties including, without limitation, quotations (either firm or
indicative) of relevant rates, prices, yields, yield curves, volatilities,
spreads or other relevant market data in the relevant markets. Third parties
supplying such information may include, without limitation, dealers in the
relevant markets, end-users of the relevant product, information vendors and
other sources of market information. Notwithstanding the foregoing, the
Non-Defaulting Party's determination of Gains and Losses for each Terminated
Transaction or group of Terminated Transactions shall be comparable to that
which would have been obtained by comparing the value of the remaining term,
transaction quantities, and transaction prices under each Terminated Transaction
or group of Terminated Transactions had it not been terminated to the equivalent
quantities and relevant market prices for the remaining term which are
reasonably expected to be available in the market under a replacement contract
for each Terminated Transaction or group of Terminated Transactions. It is
expressly agreed that the Non-Defaulting Party shall not be required to enter
into a replacement Transaction in order to determine the Settlement Amount."

Section 5.4 shall be amended by adding the following at the end:

"The Termination Payment shall bear interest at the Interest Rate from the date
upon which notice is effective until paid. Notwithstanding any provision to the
contrary contained in this Agreement, the Non-Defaulting Party shall not be
required to pay to the Defaulting Party any amount under Article 5 until the
Non-Defaulting Party receives confirmation satisfactory to it in its reasonable
discretion that all other obligations of any kind whatsoever of the Defaulting
Party to make any payments to the Non-Defaulting Party or any of its Affiliates
under this Agreement or otherwise which are due and payable as of the Early
Termination Date (including for these purposes amounts payable pursuant to
Excluded Transactions) have been fully and finally performed and that the
Defaulting Party has returned any Performance Assurance of the Non-Defaulting
Party's that is held simultaneously or before the Non-Defaulting Party makes any
Termination Payment hereunder.

ARTICLE SIX -- PAYMENT AND NETTING

Section 6.4 shall be amended by deleting in the second line the words "on the
same date" and by adding in the third line the words "during any given month"
immediately after the words "all Transactions".

ARTICLE SEVEN -- LIMITATIONS

Sec. 7.1 shall be amended by (i) deleting in the fifteenth line the words
"UNLESS EXPRESSLY HEREIN PROVIDED", (ii) adding in the nineteenth line the words
"PROVIDED, HOWEVER, NOTHING IN THIS SECTION SHALL AFFECT THE ENFORCEABILITY OF
THE PROVISIONS OF THIS AGREEMENT RELATING TO REMEDIES FOR FAILURE TO
DELIVER/RECEIVE IN SECTIONS 4.1 AND 4.2, AND CALCULATION AND PAYMENT OF THE
TERMINATION PAYMENT IN SECTIONS 5.2 AND 5.3." immediately after the words "ANY
INDEMENITY PROVISION OR OTHERWISE" and (iii) adding at the end of the last
sentence the words AND ARE NOT PENALTIES".

                                      -7-
<PAGE>
THE FOLLOWING PROVISION ADDED AS SECTION 7.2:

SEC. 7.2. UCC/DISCLAIMER OF WARRANTIES. The provisions of the applicable Uniform
Commercial Code ("UCC") shall be deemed to apply to all Transactions hereunder,
and Energy shall be deemed to be a "good" for the purposes of the UCC. PARTY A
AND PARTY B EACH ACKNOWLEDGES THAT IT HAS ENTERED INTO THIS AGREEMENT AND IS
CONTRACTING FOR THE ENERGY TO BE SUPPLIED BASED SOLELY UPON THE EXPRESS
REPRESENTATIONS AND WARRANTIES HEREIN AND, SUBJECT THERETO, ACCEPTS SUCH ENERGY
"AS-IS" AND "WITH ALL FAULTS". PARTY A AND PARTY B EACH EXPRESSLY DISCLAIMS ANY
OTHER REPRESENTATION OR WARRANTY, WRITTEN OR ORAL, EXPRESS OR IMPLIED, RELATING
TO SUCH ENERGY, INCLUDING, WITHOUT LIMITATION, ANY REPRESENTATION OR WARRANTY
WITH RESPECT TO CONFORMITY TO MODELS OR SAMPLES, MERCHANTABILITY, OR FITNESS FOR
ANY PARTICULAR PURPOSE.

ARTICLE EIGHT -- CREDIT AND COLLATERAL REQUIREMENTS

Section 8.1(a) Option B shall be amended by (i) deleting in the second line the
words "annual report containing." Delete subsection (ii) in its entirety, and
(ii) adding the following phrase to the end of the first sentence: ", subject to
a confidentiality agreement being in full force and effect".

Section 8.1(d) shall be amended by adding in the fifth line the words "or fails
to maintain such Performance Assurance or guaranty or other credit assurance for
so long as the Downgrade Event is continuing" immediately after "receipt of
notice".

Section 8.2 Party B Credit Protection:

(a) Section 8.2(d) shall be amended by adding in the fifth line the words "or
fails to maintain such Performance Assurance or guaranty or other credit
assurance for so long as the Downgrade Event is continuing" immediately after
"receipt of notice".

(b) Definitions. With respect to this Section 8.2(d) the following definitions
will apply.

"Consolidated Net Income" shall mean, for any period, the consolidated net
income (or loss) of said Person and its subsidiaries for such period determined
in accordance with GAAP; provided that there shall be excluded therefrom all
non-cash gains and losses which would be classified as extraordinary under GAAP.

"EBITDA" shall mean, for any period, the sum of (1) Consolidated Net Income for
such period, plus (2) all interest expense to the extent deducted from
Consolidated Net Income, plus (3) all income taxes to the extent deducted from
Consolidated Net Income, plus (4) all depreciation, depletion and amortization
and other non-cash charges to the extent deducted from Consolidated Net Income,
minus (5) all non-cash items of income to the extent added to or subtracted from
Consolidated Net Income.

"EBITDA Coverage Ratio" shall mean, as of any date, the ratio of (i) EBITDA for
the four fiscal quarters ending on the last day of the most recent fiscal
quarter of said Person and its subsidiaries to (ii) cash interest payments made
during such four fiscal quarters of said Person and its subsidiaries.

"FASB 133" shall mean Financial Accounting Standards Board Statement 133 as
amended or modified from time to time.

"GAAP" shall mean, with respect to any Person, accounting principles that are
generally accepted in the country in which said person is organized.

"Net Worth" shall mean, as of any date, the sum of said Person's capital stock
(which shall exclude treasury stock and any preferred stock subject to mandatory
redemption by the issuer at the option of the holder thereof) and additional
paid-in capital, plus retained earnings (minus accumulated deficit), all as
shown on the consolidated balance sheet of said Person and its subsidiaries in
accordance with GAAP.

                                      -8-
<PAGE>
"Person" shall mean any individual, partnership, firm, corporation, association,
joint venture, trust or other entity, or any government or political subdivision
or agency, department or instrumentality thereof.

Sec. 8.3 shall be amended by adding the following to the end of this section:

"Notwithstanding the foregoing, (i) such rights and remedies may only be
exercised upon Performance Assurance provided by or on behalf of the Defaulting
Party and in the possession of, or maintained for the benefit of, the
Non-Defaulting Party or its agent, (ii) the Non-Defaulting Party may not
exercise such rights and remedies against the Defaulting Party and/or
Performance Assurance provided by or on behalf of the Defaulting Party so long
as the Defaulting Party has paid all of its obligations under this Agreement
then due, and (iii) the Non-Defaulting Party may apply the proceeds of the
Performance Assurance realized upon the exercise of such rights and remedies in
such order as it may elect."

THE FOLLOWING NEW PROVISIONS ARE ADDED TO ARTICLE EIGHT:

8.4 Disputed Calculations.

(a) If the Pledging Party disputes the amount of Performance Assurance requested
by the Secured Party and such dispute relates to the amount of the Contract
Exposure claimed by the Secured Party, then the Pledging Party shall (i) notify
the Secured Party of the existence and nature of the dispute not later than
12:00 p.m. Central Prevailing Time on the first Business Day following the date
that the demand for Performance Assurance is made by the Secured Party, and (ii)
provide Performance Assurance to or for the benefit of the Secured Party in an
amount equal to the Pledging Party's own estimate, made in good faith and in a
commercially reasonable manner, of the Pledging Party's Collateral Requirement.
In all such cases, the Parties thereafter shall promptly consult with each other
in order to reconcile the two conflicting amounts. If the Parties have not been
able to resolve their dispute on or before the second Business Day following the
date that the demand is made by the Secured Party, then the Secured Party shall
obtain market quotations from two Reference Market Makers within two (2)
Business Days (taking the arithmetic average of those obtained to obtain the
average Current Mark-to-Market Value; provided, that, if only one (1) quotation
can be obtained, then that quotation shall be used and if no quotations can be
obtained, Secured Party's original calculation shall be applicable) for the
purpose of recalculating the Current Mark-to-Market Value of each Transaction in
respect of which the Parties disagree as to the Current Mark-to-Market Value
thereof, and the Secured Party shall inform the Pledging Party of the results of
such recalculation (in reasonable detail). Performance Assurance shall thereupon
be provided, returned, or reduced, if necessary, on the next Business Day in
accordance with the results of such recalculation.

(b) If the Secured Party disputes the amount of Performance Assurance to be
reduced by the Pledging Party and such dispute relates to the amount of the
Contract Exposure claimed by the Secured Party, then the Secured Party shall (i)
notify the Pledging Party of the existence and nature of the dispute not later
than 12:00 p.m. Central Prevailing Time on the first Business Day following the
date that the demand to reduce Performance Assurance is made by the Pledging
Party and (ii) effect the reduction of Performance Assurance to or for the
benefit of the Secured Party in an amount equal to the Secured Party's own
estimate, made in good faith and in a commercially reasonable manner, of the
Pledging Party's Collateral Requirement. In all such cases, the Parties
thereafter shall promptly consult with each other in order to reconcile the two
conflicting amounts. If the Parties have not been able to resolve their dispute
on or before the second Business Day following the date that the demand is made
by the Pledging Party, then the Secured Party's Contract Exposure shall be
recalculated by Secured Party requesting quotations from two (2) Reference
Market-Makers within two (2) Business Days (taking the arithmetic average of
those obtained to obtain the average Current Mark-to-Market Value; provided,
that, if only one (1) quotation can be obtained, then that quotation shall be
used and if no quotation can be obtained, Secured Party's original calculation
shall be applicable) for the purpose of recalculating the Current Mark-to-Market
Value of each Transaction in respect of which the Parties disagree as to the
Current Mark-to-Market Value thereof, and the Secured Party shall inform the
Pledging Party of the results of such recalculation (in reasonable detail).
Performance Assurance shall thereupon be provided, returned, or reduced, if
necessary, on the next Business Day in accordance with the results of such
recalculation.

(c) Definitions. With respect to this Section 8.4 the following definitions will
apply.

                                      -9-
<PAGE>
"Calculation Date" means any Business Day on which a Party chooses or is
requested by the other Party to make the determinations referred to in Sections
8.1(c), 8.2(c) and this Section 8.4.

"Collateral Requirement" means the Secured Party's Contract Exposure minus the
amount of Performance Assurance transferred to the Secured Party.

"Contract Exposure" means an amount equal to (x) the Termination Payment that
would be payable from the Providing Party to the Requesting Party, as if an
Early Termination Date had been declared pursuant to Article 5 of this Agreement
(notwithstanding whether or not an Event of Default has occurred) and all
Transactions had been terminated; (y) plus the net amount of all other payments
owed but not yet paid between the Parties, whether or not such amounts are then
due, for performance already provided pursuant to any and all Transactions
conducted under the Agreement; (z) less the amount of any Performance Assurance
then held by the Requesting Party.

"Credit Support Provider" means a third party providing a guaranty for a Party
pursuant to this Agreement.

"Current Mark-to-Market Value" of an outstanding Transaction, on any Calculation
Date, means the amount, as calculated in good faith and in a commercially
reasonable manner, which a Party to the Agreement would pay to (a negative
Current Mark-to-Market Value) or receive from (a positive Current Mark-to-Market
Value) the other Party as the Settlement Amount (calculated, only for purposes
of establishing Contract Exposure in connection with setting Performance
Assurance levels, at the mid-point between the bid price and the offer price)
for such Transaction.

"Letter of Credit Default" shall mean the occurrence of any of the following
events without Party B's prior written approval, (i) Party A or its Credit
Support Provider, as the case may be, fails to extend or replace the Secured
Party's Initial Letter of Credit or any Pledging Party Letter of Credit
delivered to support Pledging Party's Threshold Amount or as Performance
Assurance hereunder at least thirty (30) calendar days prior to its expiration
or, (ii) any Secured Party Letter of Credit or any Letter of Credit delivered by
Pledging Party hereunder shall expire, terminate, or otherwise fail to remain in
full force and effect for any reason, or (iii) the bank which issued the Secured
Party's Letter of Credit or any Pledging Party Letter of Credit hereunder fails
to maintain the requirements of a Qualified Institution and such failure is not
remedied within five (5) Business Days after written notice of such failure is
given to the Pledging Party.

"Pledging Party" means either Party, when that Party receives a demand for or is
required to transfer Performance Assurance.

"Qualified Institution" shall mean a commercial bank or trust company (which is
not an affiliate of either Party) organized under the laws of the United States
or a political subdivision thereof, or the US branch of a foreign bank (which is
not an affiliate of either Party) with (i) a Credit Rating of at least (a) "A-"
by S&P and "A3" by Moody's, if such entity is rated by either S&P or Moody's but
not both, and (ii) having a capital and surplus of at least $1,000,000,000.

"Reference Market-maker" means a leading dealer in the relevant market selected
by a Party determining its Contract Exposure in good faith from among dealers
which satisfy all the criteria that such Party applies generally at the time in
deciding whether to offer or to make an extension of credit.

"Secured Party" means either Party, when that Party makes a demand for or is
entitled to receive Performance Assurance.

"Settlement Amount" means, with respect to a Transaction and the Non-Defaulting
Party, the Losses or Gains, and Costs expressed in U.S. Dollars, which such
Party incurs as a result of the liquidation of a Terminated Transaction pursuant
to Article 5 of this Agreement.

                                      -10-
<PAGE>
8.5 LETTER OF CREDIT PROVISIONS.

With respect to Letters of Credit provided hereunder:

(A) Such Letter of Credit shall provide that a drawing may be made on the Letter
of Credit in an amount (up to the face amount for which the Letter of Credit has
been issued, less any drawing previously made, if any,) that is equal to all
amounts that are due and owing from the Pledging Party but have not been paid to
the Secured Party within the time allowed for such payments under this Agreement
(including any related notice or grace period or both). A drawing may be made on
the Letter of Credit in this instance upon submission to the bank issuing the
Letter of Credit of one or more certificates specifying the amounts due and
owing to the Secured Party in accordance with the specific requirements of the
Letter of Credit. Partial drawing and multiple drawings shall be allowed. The
Pledging Party shall remain liable for any amounts due and owing to the Secured
Party and remaining unpaid after the application of the amounts so drawn by the
Secured Party.

(B) Such Letter of Credit shall also provide that a drawing may be made of the
entire, undrawn portion of such Letter of Credit if the Pledging Party shall
fail to renew or cause the renewal of each outstanding Letter of Credit at least
ten (10) Business Days prior to the expiration of the relevant Letter of Credit.
A drawing may be made on the Letter of Credit in this instance upon submission
to the bank issuing such Letter of Credit of one or more certificates that such
failure has occurred in accordance with the specific requirements of the Letter
of Credit. The cash proceeds from any such draw on a Letter of Credit shall be
held by the Secured Party as Performance Assurance under the Agreement.
Notwithstanding the foregoing, the Secured Party shall not be entitled to make
such a drawing unless the Collateral Requirement applicable to the Pledging
Party at such time equals or exceeds the Pledging Party's Minimum Transfer
Amount.

(C) Notwithstanding the Secured Party's receipt of cash proceeds of a drawing
under the Letter of Credit, the Pledging Party shall remain liable (y) for any
failure to transfer sufficient Performance Assurance or (z) for any amounts
owing to the Secured Party and remaining unpaid after the application of the
amounts so drawn by the Secured Party.

(D) If a Pledging Party's Guarantor shall furnish a Letter of Credit hereunder,
the amount otherwise required under such Letter of Credit may at the option of
such Guarantor be reduced by the amount of any Letter of Credit established by
such Pledging Party, which complies with the terms herein of this Agreement (but
only for such time as such Pledging Party's Letter of Credit shall be in
effect). In the event a Pledging Party shall be required to furnish a Letter of
Credit hereunder, the amount otherwise required under such Letter of Credit may
at the option of such Party be reduced by the amount of any Letter of Credit
established by such Pledging Party's Guarantor, which complies with the terms
herein of this Agreement (but only for such time as such Guarantor's Letter of
Credit shall be in effect).

(E) In all cases, the costs and expenses (including but not limited to the
reasonable costs, expenses, and attorneys' fees of the Secured Party) of
establishing, renewing, substituting, canceling, and increasing the amount of a
Letter of Credit shall be borne by the Pledging Party.

ARTICLE TEN -- MISCELLANEOUS

Section 10.2 is amended by adding the following new paragraph at the end of this
Section:

(xiii) "the person signing this Master Agreement is duly authorized to execute
and deliver this Master Agreement on its behalf."

Section 10.5 shall be amended by deleting clause (ii) and the portion of clause
(iii) prior to the words "provided, however", and replacing them with the
following:

"(ii) transfer or assign this Agreement to an Affiliate of such Party so long as
(x) such Affiliate's creditworthiness is equal to or higher than that of such
Party or the Guarantor as of the Effective Date, if any, for such Party, or (y)
the obligations of such Affiliate are guaranteed by such Party or its Guarantor,
if any, in accordance with a guaranty

                                      -11-
<PAGE>
agreement in form and substance satisfactory to the other Party, and (iii)
transfer or assign this Agreement to any person or entity succeeding to all or
substantially all of the assets of such Party whose creditworthiness is equal to
or higher than that of such Party or its Guarantor, if any, as of the Effective
Date; ..."

Section 10.6, first sentence: delete the phrase "NEW YORK" and substitute in
lieu thereof: "TEXAS."

Section 10.7 is amended by inserting the word "overnight" before the words
"United States mail" in the second sentence thereof.

Section 10.8 is amended by deleting the second to the last sentence in its
entirety and replacing it with the following sentences: "The indemnity
provisions of this Agreement shall survive the termination of this Agreement for
the period of the applicable statute of limitations. The audit provisions of
this Agreement shall survive the termination of this Agreement for a period of
twenty-four (24) months."

Section 10.11 shall be amended by adding to the first sentence "or the Party's
Affiliates" between "other than the Party's" and "employees". Add to the first
sentence "or to the extent such information is delivered to such third party for
the sole purpose of calculating a published index" after the phrase" or
regulatory proceeding". Add at the end of the section: "Such confidentiality
obligations shall terminate one year after termination of the related
Transaction."

THE FOLLOWING NEW PROVISIONS ARE ADDED TO ARTICLE TEN:

10.12 Market Disruption.

(a) Market Disruption Event. If a Market Disruption Event has occurred and is
continuing during the Determination Period, the Floating Price for the affected
Trading Day shall be determined pursuant to the index specified in the affected
Transaction for the first Trading Day thereafter on which no Market Disruption
Event exists; provided, however, if the Floating Price is not so determined
within three (3) Business Days after the first Trading Day on which the Market
Disruption Event occurred or existed, then the Parties shall negotiate in good
faith to agree on a Floating Price (or a method for determining a Floating
Price), and if the Parties have not so agreed on or before the twelfth Business
Day following the first Trading Day on which the Market Disruption Event
occurred or existed, then the Floating Price shall be determined by each Party
obtaining in good faith a quote from a leading dealer (other than either of the
Parties) in the relevant market and averaging the two quotes; provided, however,
that if the Parties are unable to obtain quotations within twelve (12) Business
Days thereafter, either Party shall be entitled to declare an Early Termination
Date for the affected Transactions in accordance with Section 5.2., although a
Market Disruption Event shall not constitute an Event of Default hereunder and
Tenaska shall calculate the Termination Payment with respect to the affected
Transaction(s) using the procedures set forth in Section 5.2. Notwithstanding
the foregoing, if the Parties have determined a Floating Price pursuant to this
Section and at a later date the responsible exchange, publication or market
announces or publishes the relevant Floating Price, then such Floating Price
shall be treated as a corrected price and either Party may notify the other
Party of the correction and the amount payable as a result of that correction in
accordance with Section 10.12(b) hereof.

"Determination Period" means each calendar month during the term of the relevant
Transaction; provided that if the term of the Transaction is less than one
calendar month the Determination Period shall be the term of the Transaction.

"Floating Price" means the price specified in the Transaction as being based
upon a specified index.

"Market Disruption Event" means, with respect to an index, any of the following
events: (a) the failure of the index to announce or publish information
necessary for determining the Floating Price; (b) the failure of trading to
commence or the permanent discontinuation or material suspension of trading in
the relevant options contract or commodity on the exchange or market acting as
the index; (c) the temporary or permanent discontinuance or unavailability of
the index; (d) the temporary or permanent closing of any exchange acting as the
index; or (e) a material change in the formula for or the method of determining
the Floating Price.

                                      -12-
<PAGE>
"Trading Day" means a day in respect of which the relevant price source
published the relevant price.

(b) Corrections to Published Prices. For purposes of determining the relevant
prices for any day, if the price published or announced on a given day and used
or to be used to determine a relevant price is subsequently corrected and the
correction is published or announced by the person responsible for that
publication or announcement, either Party may notify the other Party of (i) that
correction and (ii) the amount (if any) that is payable as a result of that
correction. If a Party gives notice that an amount is so payable, the Party that
originally either received or retained such amount will, not later than three
(3) Business Days after the effectiveness of that notice, pay to the other Party
that amount, together with interest at the Interest Rate for the period from and
including the day on which payment originally was (or was not) made to but
excluding the day of payment of the refund or payment resulting from that
correction."

10.13. No Challenges; Defense of Agreement. Neither Party will exercise any of
its respective rights under Section 205 or Section 206 of the Federal Power Acts
to challenge or seek to modify any of the rates or other terms and conditions of
this Agreement.

10.14. Mobile-Sierra.

(a) Absent the agreement of all parties to the proposed change, the standard of
review for changes to any portion of this Agreement or any Transaction entered
into hereunder proposed by a Party, a non-party, or the Federal Energy
Regulatory Commission acting sua sponte, shall be the "public interest" standard
of review set forth in United Gas Pipe Line Co. v. Mobile Gas Service Corp., 350
U.S. 332 (1956) and Federal Power Commission v. Sierra Pacific Power Co., 350
U.S. 348 (1956) (the "Mobile-Sierra" doctrine).

(b) The Parties agree that, if and to the extent that FERC adopts a final
Mobile-Sierra policy statement in Docket No. PL02-7-000 ("Final Policy
Statement"), which requires that, in order to exclude application of the "just
and reasonable" standard under Sections 205 and 206 of the Federal Power Act,
the Parties must agree to language which varies from that set forth in Section
10.13(a) then, without further action of either Party, such Section shall be
deemed amended to incorporate the specific language in the Final Policy
Statement that requires the "public interest" standard of review.

SCHEDULE P -- PRODUCTS AND RELATED DEFINITIONS:

The following definitions are hereby added to Schedule P:

"Other Products" If the Parties agree to a service level/product defined by
reference to a different agreement (for example, the MAPP Restated Agreement or
the WSPP Agreement) for a particular Transaction, then, unless the Parties
expressly state and agree that all the terms and conditions of such other
agreement will apply, such reference to a service level/product shall be as
defined by such other agreement, including if applicable, the regional
reliability requirements and guidelines as well as the specific excuses for
performance, Force Majeure, Uncontrollable Forces, or other such excuses
applicable to such other agreement, to the extent inconsistent with the terms of
this Agreement, but all other terms and conditions of this Agreement remain
applicable."

"CAISO Energy" means with respect to a Transaction, a Product under which the
Seller shall sell and the Buyer shall purchase a quantity of energy equal to the
hourly quantity without Ancillary Services (as defined in the Tariff) that is or
will be scheduled as a schedule coordinator to schedule coordinator transaction
pursuant to the applicable tariff and protocol provisions of the California
Independent System Operator ("CAISO") (as amended from time to time, the
"Tariff") for which the only excuse for failure to deliver or receive is an
"Uncontrollable Force" (as defined in the Tariff). A CAISO "Schedule Adjustment"
(defined as a schedule change implemented by the CAISO that is neither caused
by, or within the control of, either Party) shall not constitute an
Uncontrollable Force (as defined in the Tariff).

"WECC" means the Western Electric Coordinating Council, formerly Western Systems
Coordinating Council.

"West Firm" means with respect to a Transaction, a Product that is or will be
scheduled as firm energy consistent

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with the most recent rules adopted by the WECC for which the only excuses for
failure to deliver or receive are if an interruption is (i) due to an
Uncontrollable Force as provided in Section 10 of the WSPP Agreement; or (ii)
where applicable, to meet Seller's public utility or statutory obligations to
its customers. Notwithstanding any other provision in this Agreement, if Seller
exercises its right to interrupt to meet its public utility or statutory
obligations, Seller shall be responsible for payment of damages for failure to
deliver firm energy as provided in Article 4 of this Agreement.

"WSPP Agreement" means the Western Systems Power Pool Agreement as amended from
time to time.

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed
as of the date first above written.

COMMERCE ENERGY, INC.                   TENASKA POWER SERVICES CO.

By:     /s/ R. Nick Cioll               By:     /s/ Trudy Harper
       -----------------------------           -------------------------------
Name:   R. Nick Cioll                   Name:   Trudy Harper
       -----------------------------           -------------------------------
Title:  UP Risk Management              Title:  President
       -----------------------------           -------------------------------

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<PAGE>

                          GENERAL TERMS AND CONDITIONS

                        ARTICLE ONE: GENERAL DEFINITIONS

      1.1 "Affiliate" means, with respect to any person, any other person (other
than an individual) that, directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such person. For this purpose, "control" means the direct or indirect ownership
of fifty percent (50%) or more of the outstanding capital stock or other equity
interests having ordinary voting power.

      1.2 "Agreement" has the meaning set forth in the Cover Sheet.

      1.3 "Bankrupt" means with respect to any entity, such entity (i) files a
petition or otherwise commences, authorizes or acquiesces in the commencement of
a proceeding or cause of action under any bankruptcy, insolvency, reorganization
or similar law, or has any such petition filed or commenced against it, (ii)
makes an assignment or any general arrangement for the benefit of creditors,
(iii) otherwise becomes bankrupt or insolvent (however evidenced), (iv) has a
liquidator, administrator, receiver, trustee, conservator or similar official
appointed with respect to it or any substantial portion of its property or
assets, or (v) is generally unable to pay its debts as they fall due.

      1.4 "Business Day" means any day except a Saturday, Sunday, or a Federal
Reserve Bank holiday. A Business Day shall open at 8:00 a.m. and close at 5:00
p.m. local time for the relevant Party's principal place of business. The
relevant Party, in each instance unless otherwise specified, shall be the Party
from whom the notice, payment or delivery is being sent and by whom the notice
or payment or delivery is to be received.

      1.5 "Buyer" means the Party to a Transaction that is obligated to purchase
and receive, or cause to be received, the Product, as specified in the
Transaction.

      1.6 "Call Option" means an Option entitling, but not obligating, the
Option Buyer to purchase and receive the Product from the Option Seller at a
price equal to the Strike Price for the Delivery Period for which the Option may
be exercised, all as specified in the Transaction. Upon proper exercise of the
Option by the Option Buyer, the Option Seller will be obligated to sell and
deliver the Product for the Delivery Period for which the Option has been
exercised.

      1.7 "Claiming Party" has the meaning set forth in Section 3.3.

      1.8 "Claims" means all third party claims or actions, threatened or filed
and, whether groundless, false, fraudulent or otherwise, that directly or
indirectly relate to the subject matter of an indemnity, and the resulting
losses, damages, expenses, attorneys' fees and court costs, whether incurred by
settlement or otherwise, and whether such claims or actions are threatened or
filed prior to or after the termination of this Agreement.

      1.9 "Confirmation" has the meaning set forth in Section 2.3.

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      1.10 "Contract Price" means the price in $U.S. (unless otherwise provided
for) to be paid by Buyer to Seller for the purchase of the Product, as specified
in the Transaction.

      1.11 "Costs" means, with respect to the Non-Defaulting Party, brokerage
fees, commissions and other similar third party transaction costs and expenses
reasonably incurred by such Party either in terminating any arrangement pursuant
to which it has hedged its obligations or entering into new arrangements which
replace a Terminated Transaction; and all reasonable attorneys' fees and
expenses incurred by the Non-Defaulting Party in connection with the termination
of a Transaction.

      1.12 "Credit Rating" means, with respect to any entity, the rating then
assigned to such entity's unsecured, senior long-term debt obligations (not
supported by third party credit enhancements) or if such entity does not have a
rating for its senior unsecured long-term debt, then the rating then assigned to
such entity as an issues rating by S&P, Moody's or any other rating agency
agreed by the Parties as set forth in the Cover Sheet.

      1.13 "Cross Default Amount" means the cross default amount, if any, set
forth in the Cover Sheet for a Party.

      1.14 "Defaulting Party" has the meaning set forth in Section 5.1.

      1.15 "Delivery Period" means the period of delivery for a Transaction, as
specified in the Transaction.

      1.16 "Delivery Point" means the point at which the Product will be
delivered and received, as specified in the Transaction.

      1.17 "Downgrade Event" has the meaning set forth on the Cover Sheet.

      1.18 "Early Termination Date" has the meaning set forth in Section 5.2.

      1.19 "Effective Date" has the meaning set forth on the Cover Sheet.

      1.20 "Equitable Defenses" means any bankruptcy, insolvency, reorganization
and other laws affecting creditors' rights generally, and with regard to
equitable remedies, the discretion of the court before which proceedings to
obtain same may be pending.

      1.21 "Event of Default" has the meaning set forth in Section 5.1.

      1.22 "FERC" means the Federal Energy Regulatory Commission or any
successor government agency.

      1.23 "Force Majeure" means an event or circumstance which prevents one
Party from performing its obligations under one or more Transactions, which
event or circumstance was not anticipated as of the date the Transaction was
agreed to, which is not within the reasonable control of, or the result of the
negligence of, the Claiming Party, and which, by the exercise of due diligence,
the Claiming Party is unable to overcome or avoid or cause to be avoided. Force
Majeure shall not be based on (i) the loss of Buyer's markets; (ii) Buyer's
inability economically

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to use or resell the Product purchased hereunder; (iii) the loss or failure of
Seller's supply; or (iv) Seller's ability to sell the Product at a price greater
than the Contract Price. Neither Party may raise a claim of Force Majeure based
in whole or in part on curtailment by a Transmission Provider unless (i) such
Party has contracted for firm transmission with a Transmission Provider for the
Product to be delivered to or received at the Delivery Point and (ii) such
curtailment is due to "force majeure" or "uncontrollable force" or a similar
term as defined under the Transmission Provider's tariff; provided, however,
that existence of the foregoing factors shall not be sufficient to conclusively
or presumptively prove the existence of a Force Majeure absent a showing of
other facts and circumstances which in the aggregate with such factors establish
that a Force Majeure as defined in the first sentence hereof has occurred. The
applicability of Force Majeure to the Transaction is governed by the terms of
the Products and Related Definitions contained in Schedule P.

      1.24 "Gains" means, with respect to any Party, an amount equal to the
present value of the economic benefit to it, if any (exclusive of Costs),
resulting from the termination of a Terminated Transaction, determined in a
commercially reasonable manner.

      1.25 "Guarantor" means, with respect to a Party, the guarantor, if any,
specified for such Party on the Cover Sheet.

      1.26 "Interest Rate" means, for any date, the lesser of (a) the per annum
rate of interest equal to the prime lending rate as may from time to time be
published in The Wall Street Journal under "Money Rates" on such day (or if not
published on such day on the most recent preceding day on which published), plus
two percent (2%) and (b) the maximum rate permitted by applicable law.

      1.27 "Letter(s) of Credit" means one or more irrevocable, transferable
standby letters of credit issued by a U.S. commercial bank or a foreign bank
with a U.S. branch with such bank having a credit rating of at least A- from S&P
or A3 from Moody's, in a form acceptable to the Party in whose favor the letter
of credit is issued. Costs of a Letter of Credit shall be borne by the applicant
for such Letter of Credit.

      1.28 "Losses" means, with respect to any Party, an amount equal to the
present value of the economic loss to it, if any (exclusive of Costs), resulting
from termination of a Terminated Transaction, determined in a commercially
reasonable manner.

      1.29 "Master Agreement" has the meaning set forth on the Cover Sheet.

      1.30 "Moody's" means Moody's Investor Services, Inc. or its successor.

      1.31 "NERC Business Day" means any day except a Saturday, Sunday or a
holiday as defined by the North American Electric Reliability Council or any
successor organization thereto. A NERC Business Day shall open at 8:00 a.m. and
close at 5:00 p.m. local time for the relevant Party's principal place of
business. The relevant Party, in each instance unless otherwise specified, shall
be the Party from whom the notice, payment or delivery is being sent and by whom
the notice or payment or delivery is to be received.

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      1.32 "Non-Defaulting Party" has the meaning set forth in Section 5.2.

      1.33 "Offsetting Transactions" mean any two or more outstanding
Transactions, having the same or overlapping Delivery Period(s), Delivery Point
and payment date, where under one or more of such Transactions, one Party is the
Seller, and under the other such Transaction(s), the same Party is the Buyer.

      1.34 "Option" means the right but not the obligation to purchase or sell a
Product as specified in a Transaction.

      1.35 "Option Buyer" means the Party specified in a Transaction as the
purchaser of an option, as defined in Schedule P.

      1.36 "Option Seller" means the Party specified in a Transaction as the
seller of an option , as defined in Schedule P.

      1.37 "Party A Collateral Threshold" means the collateral threshold, if
any, set forth in the Cover Sheet for Party A.

      1.38 "Party B Collateral Threshold" means the collateral threshold, if
any, set forth in the Cover Sheet for Party B.

      1.39 "Party A Independent Amount" means the amount , if any, set forth in
the Cover Sheet for Party A.

      1.40 "Party B Independent Amount" means the amount , if any, set forth in
the Cover Sheet for Party B.

      1.41 "Party A Rounding Amount" means the amount, if any, set forth in the
Cover Sheet for Party A.

      1.42 "Party B Rounding Amount" means the amount, if any, set forth in the
Cover Sheet for Party B.

      1.43 "Party A Tariff" means the tariff, if any, specified in the Cover
Sheet for Party A.

      1.44 "Party B Tariff" means the tariff, if any, specified in the Cover
Sheet for Party B.

      1.45 "Performance Assurance" means collateral in the form of either cash,
Letter(s) of Credit, or other security acceptable to the Requesting Party.

      1.46 "Potential Event of Default" means an event which, with notice or
passage of time or both, would constitute an Event of Default.

      1.47 "Product" means electric capacity, energy or other product(s) related
thereto as specified in a Transaction by reference to a Product listed in
Schedule P hereto or as otherwise specified by the Parties in the Transaction.

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      1.48 "Put Option" means an Option entitling, but not obligating, the
Option Buyer to sell and deliver the Product to the Option Seller at a price
equal to the Strike Price for the Delivery Period for which the option may be
exercised, all as specified in a Transaction. Upon proper exercise of the Option
by the Option Buyer, the Option Seller will be obligated to purchase and receive
the Product.

      1.49 "Quantity" means that quantity of the Product that Seller agrees to
make available or sell and deliver, or cause to be delivered, to Buyer, and that
Buyer agrees to purchase and receive, or cause to be received, from Seller as
specified in the Transaction.

      1.50 "Recording" has the meaning set forth in Section 2.4.

      1.51 "Replacement Price" means the price at which Buyer, acting in a
commercially reasonable manner, purchases at the Delivery Point a replacement
for any Product specified in a Transaction but not delivered by Seller, plus (i)
costs reasonably incurred by Buyer in purchasing such substitute Product and
(ii) additional transmission charges, if any, reasonably incurred by Buyer to
the Delivery Point, or at Buyer's option, the market price at the Delivery Point
for such Product not delivered as determined by Buyer in a commercially
reasonable manner; provided, however, in no event shall such price include any
penalties, ratcheted demand or similar charges, nor shall Buyer be required to
utilize or change its utilization of its owned or controlled assets or market
positions to minimize Seller's liability. For the purposes of this definition,
Buyer shall be considered to have purchased replacement Product to the extent
Buyer shall have entered into one or more arrangements in a commercially
reasonable manner whereby Buyer repurchases its obligation to sell and deliver
the Product to another party at the Delivery Point.

      1.52 "S&P" means the Standard & Poor's Rating Group (a division of
McGraw-Hill, Inc.) or its successor.

      1.53 "Sales Price" means the price at which Seller, acting in a
commercially reasonable manner, resells at the Delivery Point any Product not
received by Buyer, deducting from such proceeds any (i) costs reasonably
incurred by Seller in reselling such Product and (ii) additional transmission
charges, if any, reasonably incurred by Seller in delivering such Product to the
third party purchasers, or at Seller's option, the market price at the Delivery
Point for such Product not received as determined by Seller in a commercially
reasonable manner; provided, however, in no event shall such price include any
penalties, ratcheted demand or similar charges, nor shall Seller be required to
utilize or change its utilization of its owned or controlled assets, including
contractual assets, or market positions to minimize Buyer's liability. For
purposes of this definition, Seller shall be considered to have resold such
Product to the extent Seller shall have entered into one or more arrangements in
a commercially reasonable manner whereby Seller repurchases its obligation to
purchase and receive the Product from another party at the Delivery Point.

      1.54 "Schedule" or "Scheduling" means the actions of Seller, Buyer and/or
their designated representatives, including each Party's Transmission Providers,
if applicable, of notifying, requesting and confirming to each other the
quantity and type of Product to be delivered on any given day or days during the
Delivery Period at a specified Delivery Point.

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      1.55 "Seller" means the Party to a Transaction that is obligated to sell
and deliver, or cause to be delivered, the Product, as specified in the
Transaction.

      1.56 "Settlement Amount" means, with respect to a Transaction and the
Non-Defaulting Party, the Losses or Gains, and Costs, expressed in U.S. Dollars,
which such party incurs as a result of the liquidation of a Terminated
Transaction pursuant to Section 5.2.

      1.57 "Strike Price" means the price to be paid for the purchase of the
Product pursuant to an Option.

      1.58 "Terminated Transaction" has the meaning set forth in Section 5.2.

      1.59 "Termination Payment" has the meaning set forth in Section 5.3.

      1.60 "Transaction" means a particular transaction agreed to by the Parties
relating to the sale and purchase of a Product pursuant to this Master
Agreement.

      1.61 "Transmission Provider" means any entity or entities transmitting or
transporting the Product on behalf of Seller or Buyer to or from the Delivery
Point in a particular Transaction.

                  ARTICLE TWO: TRANSACTION TERMS AND CONDITIONS

      2.1 Transactions. A Transaction shall be entered into upon agreement of
the Parties orally or, if expressly required by either Party with respect to a
particular Transaction, in writing, including an electronic means of
communication. Each Party agrees not to contest, or assert any defense to, the
validity or enforceability of the Transaction entered into in accordance with
this Master Agreement (i) based on any law requiring agreements to be in writing
or to be signed by the parties, or (ii) based on any lack of authority of the
Party or any lack of authority of any employee of the Party to enter into a
Transaction.

      2.2 Governing Terms. Unless otherwise specifically agreed, each
Transaction between the Parties shall be governed by this Master Agreement. This
Master Agreement (including all exhibits, schedules and any written supplements
hereto), , the Party A Tariff, if any, and the Party B Tariff, if any, any
designated collateral, credit support or margin agreement or similar arrangement
between the Parties and all Transactions (including any Confirmations accepted
in accordance with Section 2.3) shall form a single integrated agreement between
the Parties. Any inconsistency between any terms of this Master Agreement and
any terms of the Transaction shall be resolved in favor of the terms of such
Transaction.

      2.3 Confirmation. Seller may confirm a Transaction by forwarding to Buyer
by facsimile within three (3) Business Days after the Transaction is entered
into a confirmation ("Confirmation") substantially in the form of Exhibit A. If
Buyer objects to any term(s) of such Confirmation, Buyer shall notify Seller in
writing of such objections within two (2) Business Days of Buyer's receipt
thereof, failing which Buyer shall be deemed to have accepted the terms as sent.
If Seller fails to send a Confirmation within three (3) Business Days after the
Transaction is entered into, a Confirmation substantially in the form of Exhibit
A, may be forwarded by Buyer to Seller. If Seller objects to any term(s) of such
Confirmation, Seller shall notify Buyer of such objections within two (2)
Business Days of Seller's receipt thereof, failing

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which Seller shall be deemed to have accepted the terms as sent. If Seller and
Buyer each send a Confirmation and neither Party objects to the other Party's
Confirmation within two (2) Business Days of receipt, Seller's Confirmation
shall be deemed to be accepted and shall be the controlling Confirmation, unless
(i) Seller's Confirmation was sent more than three (3) Business Days after the
Transaction was entered into and (ii) Buyer's Confirmation was sent prior to
Seller's Confirmation, in which case Buyer's Confirmation shall be deemed to be
accepted and shall be the controlling Confirmation. Failure by either Party to
send or either Party to return an executed Confirmation or any objection by
either Party shall not invalidate the Transaction agreed to by the Parties.

      2.4 Additional Confirmation Terms. If the Parties have elected on the
Cover Sheet to make this Section 2.4 applicable to this Master Agreement, when a
Confirmation contains provisions, other than those provisions relating to the
commercial terms of the Transaction (e.g., price or special transmission
conditions), which modify or supplement the general terms and conditions of this
Master Agreement (e.g., arbitration provisions or additional representations and
warranties), such provisions shall not be deemed to be accepted pursuant to
Section 2.3 unless agreed to either orally or in writing by the Parties;
provided that the foregoing shall not invalidate any Transaction agreed to by
the Parties.

      2.5 Recording. Unless a Party expressly objects to a Recording (defined
below) at the beginning of a telephone conversation, each Party consents to the
creation of a tape or electronic recording ("Recording") of all telephone
conversations between the Parties to this Master Agreement, and that any such
Recordings will be retained in confidence, secured from improper access, and may
be submitted in evidence in any proceeding or action relating to this Agreement.
Each Party waives any further notice of such monitoring or recording, and agrees
to notify its officers and employees of such monitoring or recording and to
obtain any necessary consent of such officers and employees. The Recording, and
the terms and conditions described therein, if admissible, shall be the
controlling evidence for the Parties' agreement with respect to a particular
Transaction in the event a Confirmation is not fully executed (or deemed
accepted) by both Parties. Upon full execution (or deemed acceptance) of a
Confirmation, such Confirmation shall control in the event of any conflict with
the terms of a Recording, or in the event of any conflict with the terms of this
Master Agreement.

                   ARTICLE THREE: OBLIGATIONS AND DELIVERIES

      3.1 Seller's and Buyer's Obligations. With respect to each Transaction,
Seller shall sell and deliver, or cause to be delivered, and Buyer shall
purchase and receive, or cause to be received, the Quantity of the Product at
the Delivery Point, and Buyer shall pay Seller the Contract Price; provided,
however, with respect to Options, the obligations set forth in the preceding
sentence shall only arise if the Option Buyer exercises its Option in accordance
with its terms. Seller shall be responsible for any costs or charges imposed on
or associated with the Product or its delivery of the Product up to the Delivery
Point. Buyer shall be responsible for any costs or charges imposed on or
associated with the Product or its receipt at and from the Delivery Point.

      3.2 Transmission and Scheduling. Seller shall arrange and be responsible
for transmission service to the Delivery Point and shall Schedule or arrange for
Scheduling services

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with its Transmission Providers, as specified by the Parties in the Transaction,
or in the absence thereof, in accordance with the practice of the Transmission
Providers, to deliver the Product to the Delivery Point. Buyer shall arrange and
be responsible for transmission service at and from the Delivery Point and shall
Schedule or arrange for Scheduling services with its Transmission Providers to
receive the Product at the Delivery Point.

      3.3 Force Majeure. To the extent either Party is prevented by Force
Majeure from carrying out, in whole or part, its obligations under the
Transaction and such Party (the "Claiming Party") gives notice and details of
the Force Majeure to the other Party as soon as practicable, then, unless the
terms of the Product specify otherwise, the Claiming Party shall be excused from
the performance of its obligations with respect to such Transaction (other than
the obligation to make payments then due or becoming due with respect to
performance prior to the Force Majeure). The Claiming Party shall remedy the
Force Majeure with all reasonable dispatch. The non-Claiming Party shall not be
required to perform or resume performance of its obligations to the Claiming
Party corresponding to the obligations of the Claiming Party excused by Force
Majeure.

              ARTICLE FOUR: REMEDIES FOR FAILURE TO DELIVER/RECEIVE

      4.1 Seller Failure. If Seller fails to schedule and/or deliver all or part
of the Product pursuant to a Transaction, and such failure is not excused under
the terms of the Product or by Buyer's failure to perform, then Seller shall pay
Buyer, on the date payment would otherwise be due in respect of the month in
which the failure occurred or, if "Accelerated Payment of Damages" is specified
on the Cover Sheet, within five (5) Business Days of invoice receipt, an amount
for such deficiency equal to the positive difference, if any, obtained by
subtracting the Contract Price from the Replacement Price. The invoice for such
amount shall include a written statement explaining in reasonable detail the
calculation of such amount.

      4.2 Buyer Failure. If Buyer fails to schedule and/or receive all or part
of the Product pursuant to a Transaction and such failure is not excused under
the terms of the Product or by Seller's failure to perform, then Buyer shall pay
Seller, on the date payment would otherwise be due in respect of the month in
which the failure occurred or, if "Accelerated Payment of Damages" is specified
on the Cover Sheet, within five (5) Business Days of invoice receipt, an amount
for such deficiency equal to the positive difference, if any, obtained by
subtracting the Sales Price from the Contract Price. The invoice for such amount
shall include a written statement explaining in reasonable detail the
calculation of such amount.

                   ARTICLE FIVE: EVENTS OF DEFAULT; REMEDIES

      5.1 Events of Default. An "Event of Default" shall mean, with respect to a
Party (a "Defaulting Party"), the occurrence of any of the following:

          (a)  the failure to make, when due, any payment required pursuant to
               this Agreement if such failure is not remedied within three (3)
               Business Days after written notice;

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          (b)  any representation or warranty made by such Party herein is false
               or misleading in any material respect when made or when deemed
               made or repeated;

          (c)  the failure to perform any material covenant or obligation set
               forth in this Agreement (except to the extent constituting a
               separate Event of Default, and except for such Party's
               obligations to deliver or receive the Product, the exclusive
               remedy for which is provided in Article Four) if such failure is
               not remedied within three (3) Business Days after written notice;

          (d)  such Party becomes Bankrupt;

          (e)  the failure of such Party to satisfy the
               creditworthiness/collateral requirements agreed to pursuant to
               Article Eight hereof;

          (f)  such Party consolidates or amalgamates with, or merges with or
               into, or transfers all or substantially all of its assets to,
               another entity and, at the time of such consolidation,
               amalgamation, merger or transfer, the resulting, surviving or
               transferee entity fails to assume all the obligations of such
               Party under this Agreement to which it or its predecessor was a
               party by operation of law or pursuant to an agreement reasonably
               satisfactory to the other Party;

          (g)  if the applicable cross default section in the Cover Sheet is
               indicated for such Party, the occurrence and continuation of (i)
               a default, event of default or other similar condition or event
               in respect of such Party or any other party specified in the
               Cover Sheet for such Party under one or more agreements or
               instruments, individually or collectively, relating to
               indebtedness for borrowed money in an aggregate amount of not
               less than the applicable Cross Default Amount (as specified in
               the Cover Sheet), which results in such indebtedness becoming, or
               becoming capable at such time of being declared, immediately due
               and payable or (ii) a default by such Party or any other party
               specified in the Cover Sheet for such Party in making on the due
               date therefor one or more payments, individually or collectively,
               in an aggregate amount of not less than the applicable Cross
               Default Amount (as specified in the Cover Sheet);

          (h)  with respect to such Party's Guarantor, if any:

               (i)  if any representation or warranty made by a Guarantor in
                    connection with this Agreement is false or misleading in any
                    material respect when made or when deemed made or repeated;

               (ii) the failure of a Guarantor to make any payment required or
                    to perform any other material covenant or obligation in any
                    guaranty made in connection with this Agreement and such
                    failure shall not be remedied within three (3) Business Days
                    after written notice;

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               (iii) a Guarantor becomes Bankrupt;

               (iv) the failure of a Guarantor's guaranty to be in full force
                    and effect for purposes of this Agreement (other than in
                    accordance with its terms) prior to the satisfaction of all
                    obligations of such Party under each Transaction to which
                    such guaranty shall relate without the written consent of
                    the other Party; or

               (v)  a Guarantor shall repudiate, disaffirm, disclaim, or reject,
                    in whole or in part, or challenge the validity of any
                    guaranty.

      5.2 Declaration of an Early Termination Date and Calculation of Settlement
Amounts. If an Event of Default with respect to a Defaulting Party shall have
occurred and be continuing, the other Party (the "Non-Defaulting Party") shall
have the right (i) to designate a day, no earlier than the day such notice is
effective and no later than 20 days after such notice is effective, as an early
termination date ("Early Termination Date") to accelerate all amounts owing
between the Parties and to liquidate and terminate all, but not less than all,
Transactions (each referred to as a "Terminated Transaction") between the
Parties, (ii) withhold any payments due to the Defaulting Party under this
Agreement and (iii) suspend performance. The Non-Defaulting Party shall
calculate, in a commercially reasonable manner, a Settlement Amount for each
such Terminated Transaction as of the Early Termination Date (or, to the extent
that in the reasonable opinion of the Non-Defaulting Party certain of such
Terminated Transactions are commercially impracticable to liquidate and
terminate or may not be liquidated and terminated under applicable law on the
Early Termination Date, as soon thereafter as is reasonably practicable).

      5.3 Net Out of Settlement Amounts. The Non-Defaulting Party shall
aggregate all Settlement Amounts into a single amount by: netting out (a) all
Settlement Amounts that are due to the Defaulting Party, plus, at the option of
the Non-Defaulting Party, any cash or other form of security then available to
the Non-Defaulting Party pursuant to Article Eight, plus any or all other
amounts due to the Defaulting Party under this Agreement against (b) all
Settlement Amounts that are due to the Non-Defaulting Party, plus any or all
other amounts due to the Non-Defaulting Party under this Agreement, so that all
such amounts shall be netted out to a single liquidated amount (the "Termination
Payment") payable by one Party to the other. The Termination Payment shall be
due to or due from the Non-Defaulting Party as appropriate.

      5.4 Notice of Payment of Termination Payment. As soon as practicable after
a liquidation, notice shall be given by the Non-Defaulting Party to the
Defaulting Party of the amount of the Termination Payment and whether the
Termination Payment is due to or due from the Non-Defaulting Party. The notice
shall include a written statement explaining in reasonable detail the
calculation of such amount. The Termination Payment shall be made by the Party
that owes it within two (2) Business Days after such notice is effective.

      5.5 Disputes With Respect to Termination Payment. If the Defaulting Party
disputes the Non-Defaulting Party's calculation of the Termination Payment, in
whole or in part, the Defaulting Party shall, within two (2) Business Days of
receipt of Non-Defaulting Party's calculation of the Termination Payment,
provide to the Non-Defaulting Party a detailed written

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explanation of the basis for such dispute; provided, however, that if the
Termination Payment is due from the Defaulting Party, the Defaulting Party shall
first transfer Performance Assurance to the Non-Defaulting Party in an amount
equal to the Termination Payment.

      5.6 Closeout Setoffs.

      Option A: After calculation of a Termination Payment in accordance with
Section 5.3, if the Defaulting Party would be owed the Termination Payment, the
Non-Defaulting Party shall be entitled, at its option and in its discretion, to
(i) set off against such Termination Payment any amounts due and owing by the
Defaulting Party to the Non-Defaulting Party under any other agreements,
instruments or undertakings between the Defaulting Party and the Non-Defaulting
Party and/or (ii) to the extent the Transactions are not yet liquidated in
accordance with Section 5.2, withhold payment of the Termination Payment to the
Defaulting Party. The remedy provided for in this Section shall be without
prejudice and in addition to any right of setoff, combination of accounts, lien
or other right to which any Party is at any time otherwise entitled (whether by
operation of law, contract or otherwise).

      Option B: After calculation of a Termination Payment in accordance with
Section 5.3, if the Defaulting Party would be owed the Termination Payment, the
Non-Defaulting Party shall be entitled, at its option and in its discretion, to
(i) set off against such Termination Payment any amounts due and owing by the
Defaulting Party or any of its Affiliates to the Non-Defaulting Party or any of
its Affiliates under any other agreements, instruments or undertakings between
the Defaulting Party or any of its Affiliates and the Non-Defaulting Party or
any of its Affiliates and/or (ii) to the extent the Transactions are not yet
liquidated in accordance with Section 5.2, withhold payment of the Termination
Payment to the Defaulting Party. The remedy provided for in this Section shall
be without prejudice and in addition to any right of setoff, combination of
accounts, lien or other right to which any Party is at any time otherwise
entitled (whether by operation of law, contract or otherwise).

      Option C: Neither Option A nor B shall apply.

      5.7 Suspension of Performance. Notwithstanding any other provision of this
Master Agreement, if (a) an Event of Default or (b) a Potential Event of Default
shall have occurred and be continuing, the Non-Defaulting Party, upon written
notice to the Defaulting Party, shall have the right (i) to suspend performance
under any or all Transactions; provided, however, in no event shall any such
suspension continue for longer than ten (10) NERC Business Days with respect to
any single Transaction unless an early Termination Date shall have been declared
and notice thereof pursuant to Section 5.2 given, and (ii) to the extent an
Event of Default shall have occurred and be continuing to exercise any remedy
available at law or in equity.

                        ARTICLE SIX: PAYMENT AND NETTING

      6.1 Billing Period. Unless otherwise specifically agreed upon by the
Parties in a Transaction, the calendar month shall be the standard period for
all payments under this Agreement (other than Termination Payments and, if
"Accelerated Payment of Damages" is specified by the Parties in the Cover Sheet,
payments pursuant to Section 4.1 or 4.2 and Option premium payments pursuant to
Section 6.7). As soon as practicable after the end of each month,

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each Party will render to the other Party an invoice for the payment
obligations, if any, incurred hereunder during the preceding month.

      6.2 Timeliness of Payment. Unless otherwise agreed by the Parties in a
Transaction, all invoices under this Master Agreement shall be due and payable
in accordance with each Party's invoice instructions on or before the later of
the twentieth (20th) day of each month, or tenth (10th) day after receipt of the
invoice or, if such day is not a Business Day, then on the next Business Day.
Each Party will make payments by electronic funds transfer, or by other mutually
agreeable method(s), to the account designated by the other Party. Any amounts
not paid by the due date will be deemed delinquent and will accrue interest at
the Interest Rate, such interest to be calculated from and including the due
date to but excluding the date the delinquent amount is paid in full.

      6.3 Disputes and Adjustments of Invoices. A Party may, in good faith,
dispute the correctness of any invoice or any adjustment to an invoice, rendered
under this Agreement or adjust any invoice for any arithmetic or computational
error within twelve (12) months of the date the invoice, or adjustment to an
invoice, was rendered. In the event an invoice or portion thereof, or any other
claim or adjustment arising hereunder, is disputed, payment of the undisputed
portion of the invoice shall be required to be made when due, with notice of the
objection given to the other Party. Any invoice dispute or invoice adjustment
shall be in writing and shall state the basis for the dispute or adjustment.
Payment of the disputed amount shall not be required until the dispute is
resolved. Upon resolution of the dispute, any required payment shall be made
within two (2) Business Days of such resolution along with interest accrued at
the Interest Rate from and including the due date to but excluding the date
paid. Inadvertent overpayments shall be returned upon request or deducted by the
Party receiving such overpayment from subsequent payments, with interest accrued
at the Interest Rate from and including the date of such overpayment to but
excluding the date repaid or deducted by the Party receiving such overpayment.
Any dispute with respect to an invoice is waived unless the other Party is
notified in accordance with this Section 6.3 within twelve (12) months after the
invoice is rendered or any specific adjustment to the invoice is made. If an
invoice is not rendered within twelve (12) months after the close of the month
during which performance of a Transaction occurred, the right to payment for
such performance is waived.

      6.4 Netting of Payments. The Parties hereby agree that they shall
discharge mutual debts and payment obligations due and owing to each other on
the same date pursuant to all Transactions through netting, in which case all
amounts owed by each Party to the other Party for the purchase and sale of
Products during the monthly billing period under this Master Agreement,
including any related damages calculated pursuant to Article Four (unless one of
the Parties elects to accelerate payment of such amounts as permitted by Article
Four), interest, and payments or credits, shall be netted so that only the
excess amount remaining due shall be paid by the Party who owes it.

      6.5 Payment Obligation Absent Netting. If no mutual debts or payment
obligations exist and only one Party owes a debt or obligation to the other
during the monthly billing period, including, but not limited to, any related
damage amounts calculated pursuant to Article Four, interest, and payments or
credits, that Party shall pay such sum in full when due.

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      6.6 Security. Unless the Party benefiting from Performance Assurance or a
guaranty notifies the other Party in writing, and except in connection with a
liquidation and termination in accordance with Article Five, all amounts netted
pursuant to this Article Six shall not take into account or include any
Performance Assurance or guaranty which may be in effect to secure a Party's
performance under this Agreement.

      6.7 Payment for Options. The premium amount for the purchase of an Option
shall be paid within two (2) Business Days of receipt of an invoice from the
Option Seller. Upon exercise of an Option, payment for the Product underlying
such Option shall be due in accordance with Section 6.1.

      6.8 Transaction Netting. If the Parties enter into one or more
Transactions, which in conjunction with one or more other outstanding
Transactions, constitute Offsetting Transactions, then all such Offsetting
Transactions may by agreement of the Parties, be netted into a single
Transaction under which:

          (a)  the Party obligated to deliver the greater amount of Energy will
               deliver the difference between the total amount it is obligated
               to deliver and the total amount to be delivered to it under the
               Offsetting Transactions, and

          (b)  the Party owing the greater aggregate payment will pay the net
               difference owed between the Parties.

Each single Transaction resulting under this Section shall be deemed part of the
single, indivisible contractual arrangement between the parties, and once such
resulting Transaction occurs, outstanding obligations under the Offsetting
Transactions which are satisfied by such offset shall terminate.

                           ARTICLE SEVEN: LIMITATIONS

     7.1 Limitation of Remedies, Liability and Damages. EXCEPT AS SET FORTH
HEREIN, THERE IS NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, AND ANY AND ALL IMPLIED WARRANTIES ARE DISCLAIMED. THE PARTIES CONFIRM
THAT THE EXPRESS REMEDIES AND MEASURES OF DAMAGES PROVIDED IN THIS AGREEMENT
SATISFY THE ESSENTIAL PURPOSES HEREOF. FOR BREACH OF ANY PROVISION FOR WHICH AN
EXPRESS REMEDY OR MEASURE OF DAMAGES IS PROVIDED, SUCH EXPRESS REMEDY OR MEASURE
OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY, THE OBLIGOR'S LIABILITY SHALL
BE LIMITED AS SET FORTH IN SUCH PROVISION AND ALL OTHER REMEDIES OR DAMAGES AT
LAW OR IN EQUITY ARE WAIVED. IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY
PROVIDED HEREIN OR IN A TRANSACTION, THE OBLIGOR'S LIABILITY SHALL BE LIMITED TO
DIRECT ACTUAL DAMAGES ONLY, SUCH DIRECT ACTUAL DAMAGES SHALL BE THE SOLE AND
EXCLUSIVE REMEDY AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE
WAIVED. UNLESS EXPRESSLY HEREIN PROVIDED, NEITHER PARTY SHALL BE LIABLE FOR
CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS
OR

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OTHER BUSINESS INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR CONTRACT, UNDER ANY
INDEMNITY PROVISION OR OTHERWISE. IT IS THE INTENT OF THE PARTIES THAT THE
LIMITATIONS HEREIN IMPOSED ON REMEDIES AND THE MEASURE OF DAMAGES BE WITHOUT
REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY
PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR
PASSIVE. TO THE EXTENT ANY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE LIQUIDATED,
THE PARTIES ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO
DETERMINE, OR OTHERWISE OBTAINING AN ADEQUATE REMEDY IS INCONVENIENT AND THE
DAMAGES CALCULATED HEREUNDER CONSTITUTE A REASONABLE APPROXIMATION OF THE HARM
OR LOSS.

               ARTICLE EIGHT: CREDIT AND COLLATERAL REQUIREMENTS

      8.1 Party A Credit Protection. The applicable credit and collateral
requirements shall be as specified on the Cover Sheet. If no option in Section
8.1(a) is specified on the Cover Sheet, Section 8.l(a) Option C shall apply
exclusively. If none of Sections 8.1(b), 8.1(c) or 8.1(d) are specified on the
Cover Sheet, Section 8.1(b) shall apply exclusively.

            (a) Financial Information. Option A: If requested by Party A, Party
B shall deliver (i) within 120 days following the end of each fiscal year, a
copy of Party B's annual report containing audited consolidated financial
statements for such fiscal year and (ii) within 60 days after the end of each of
its first three fiscal quarters of each fiscal year, a copy of Party B's
quarterly report containing unaudited consolidated financial statements for such
fiscal quarter. In all cases the statements shall be for the most recent
accounting period and prepared in accordance with generally accepted accounting
principles; provided, however, that should any such statements not be available
on a timely basis due to a delay in preparation or certification, such delay
shall not be an Event of Default so long as Party B diligently pursues the
preparation, certification and delivery of the statements.

      Option B: If requested by Party A, Party B shall deliver (i) within 120
days following the end of each fiscal year, a copy of the annual report
containing audited consolidated financial statements for such fiscal year for
the party(s) specified on the Cover Sheet and (ii) within 60 days after the end
of each of its first three fiscal quarters of each fiscal year, a copy of
quarterly report containing unaudited consolidated financial statements for such
fiscal quarter for the party(s) specified on the Cover Sheet. In all cases the
statements shall be for the most recent accounting period and shall be prepared
in accordance with generally accepted accounting principles; provided, however,
that should any such statements not be available on a timely basis due to a
delay in preparation or certification, such delay shall not be an Event of
Default so long as the relevant entity diligently pursues the preparation,
certification and delivery of the statements.

      Option C: Party A may request from Party B the information specified in
the Cover Sheet.

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            (b) Credit Assurances. If Party A has reasonable grounds to believe
that Party B's creditworthiness or performance under this Agreement has become
unsatisfactory, Party A will provide Party B with written notice requesting
Performance Assurance in an amount determined by Party A in a commercially
reasonable manner. Upon receipt of such notice Party B shall have three (3)
Business Days to remedy the situation by providing such Performance Assurance to
Party A. In the event that Party B fails to provide such Performance Assurance,
or a guaranty or other credit assurance acceptable to Party A within three (3)
Business Days of receipt of notice, then an Event of Default under Article Five
will be deemed to have occurred and Party A will be entitled to the remedies set
forth in Article Five of this Master Agreement.

            (c) Collateral Threshold. If at any time and from time to time
during the term of this Agreement (and notwithstanding whether an Event of
Default has occurred), the Termination Payment that would be owed to Party A
plus Party B's Independent Amount, if any, exceeds the Party B Collateral
Threshold, then Party A, on any Business Day, may request that Party B provide
Performance Assurance in an amount equal to the amount by which the Termination
Payment plus Party B's Independent Amount, if any, exceeds the Party B
Collateral Threshold (rounding upwards for any fractional amount to the next
Party B Rounding Amount) ("Party B Performance Assurance"), less any Party B
Performance Assurance already posted with Party A. Such Party B Performance
Assurance shall be delivered to Party A within three (3) Business Days of the
date of such request. On any Business Day (but no more frequently than weekly
with respect to Letters of Credit and daily with respect to cash), Party B, at
its sole cost, may request that such Party B Performance Assurance be reduced
correspondingly to the amount of such excess Termination Payment plus Party B's
Independent Amount, if any, (rounding upwards for any fractional amount to the
next Party B Rounding Amount). In the event that Party B fails to provide Party
B Performance Assurance pursuant to the terms of this Article Eight within three
(3) Business Days, then an Event of Default under Article Five shall be deemed
to have occurred and Party A will be entitled to the remedies set forth in
Article Five of this Master Agreement.

      For purposes of this Section 8.1(c), the calculation of the Termination
Payment shall be calculated pursuant to Section 5.3 by Party A as if all
outstanding Transactions had been liquidated, and in addition thereto, shall
include all amounts owed but not yet paid by Party B to Party A, whether or not
such amounts are due, for performance already provided pursuant to any and all
Transactions.

            (d) Downgrade Event. If at any time there shall occur a Downgrade
Event in respect of Party B, then Party A may require Party B to provide
Performance Assurance in an amount determined by Party A in a commercially
reasonable manner. In the event Party B shall fail to provide such Performance
Assurance or a guaranty or other credit assurance acceptable to Party A within
three (3) Business Days of receipt of notice, then an Event of Default shall be
deemed to have occurred and Party A will be entitled to the remedies set forth
in Article Five of this Master Agreement.

            (e) If specified on the Cover Sheet, Party B shall deliver to Party
A, prior to or concurrently with the execution and delivery of this Master
Agreement a guarantee in an amount not less than the Guarantee Amount specified
on the Cover Sheet and in a form reasonably acceptable to Party A.

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      8.2 Party B Credit Protection. The applicable credit and collateral
requirements shall be as specified on the Cover Sheet. If no option in Section
8.2(a) is specified on the Cover Sheet, Section 8.2(a) Option C shall apply
exclusively. If none of Sections 8.2(b), 8.2(c) or 8.2(d) are specified on the
Cover Sheet, Section 8.2(b) shall apply exclusively.

            (a) Financial Information. Option A: If requested by Party B, Party
A shall deliver (i) within 120 days following the end of each fiscal year, a
copy of Party A's annual report containing audited consolidated financial
statements for such fiscal year and (ii) within 60 days after the end of each of
its first three fiscal quarters of each fiscal year, a copy of such Party's
quarterly report containing unaudited consolidated financial statements for such
fiscal quarter. In all cases the statements shall be for the most recent
accounting period and prepared in accordance with generally accepted accounting
principles; provided, however, that should any such statements not be available
on a timely basis due to a delay in preparation or certification, such delay
shall not be an Event of Default so long as such Party diligently pursues the
preparation, certification and delivery of the statements.

      Option B: If requested by Party B, Party A shall deliver (i) within 120
days following the end of each fiscal year, a copy of the annual report
containing audited consolidated financial statements for such fiscal year for
the party(s) specified on the Cover Sheet and (ii) within 60 days after the end
of each of its first three fiscal quarters of each fiscal year, a copy of
quarterly report containing unaudited consolidated financial statements for such
fiscal quarter for the party(s) specified on the Cover Sheet. In all cases the
statements shall be for the most recent accounting period and shall be prepared
in accordance with generally accepted accounting principles; provided, however,
that should any such statements not be available on a timely basis due to a
delay in preparation or certification, such delay shall not be an Event of
Default so long as the relevant entity diligently pursues the preparation,
certification and delivery of the statements.

      Option C: Party B may request from Party A the information specified in
the Cover Sheet.

            (b) Credit Assurances. If Party B has reasonable grounds to believe
that Party A's creditworthiness or performance under this Agreement has become
unsatisfactory, Party B will provide Party A with written notice requesting
Performance Assurance in an amount determined by Party B in a commercially
reasonable manner. Upon receipt of such notice Party A shall have three (3)
Business Days to remedy the situation by providing such Performance Assurance to
Party B. In the event that Party A fails to provide such Performance Assurance,
or a guaranty or other credit assurance acceptable to Party B within three (3)
Business Days of receipt of notice, then an Event of Default under Article Five
will be deemed to have occurred and Party B will be entitled to the remedies set
forth in Article Five of this Master Agreement.

            (c) Collateral Threshold. If at any time and from time to time
during the term of this Agreement (and notwithstanding whether an Event of
Default has occurred), the Termination Payment that would be owed to Party B
plus Party A's Independent Amount, if any, exceeds the Party A Collateral
Threshold, then Party B, on any Business Day, may request that Party A provide
Performance Assurance in an amount equal to the amount by which the Termination
Payment plus Party A's Independent Amount, if any, exceeds the Party A
Collateral

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Threshold (rounding upwards for any fractional amount to the next Party A
Rounding Amount) ("Party A Performance Assurance"), less any Party A Performance
Assurance already posted with Party B. Such Party A Performance Assurance shall
be delivered to Party B within three (3) Business Days of the date of such
request. On any Business Day (but no more frequently than weekly with respect to
Letters of Credit and daily with respect to cash), Party A, at its sole cost,
may request that such Party A Performance Assurance be reduced correspondingly
to the amount of such excess Termination Payment plus Party A's Independent
Amount, if any, (rounding upwards for any fractional amount to the next Party A
Rounding Amount). In the event that Party A fails to provide Party A Performance
Assurance pursuant to the terms of this Article Eight within three (3) Business
Days, then an Event of Default under Article Five shall be deemed to have
occurred and Party B will be entitled to the remedies set forth in Article Five
of this Master Agreement.

      For purposes of this Section 8.2(c), the calculation of the Termination
Payment shall be calculated pursuant to Section 5.3 by Party B as if all
outstanding Transactions had been liquidated, and in addition thereto, shall
include all amounts owed but not yet paid by Party A to Party B, whether or not
such amounts are due, for performance already provided pursuant to any and all
Transactions.

            (d) Downgrade Event. If at any time there shall occur a Downgrade
Event in respect of Party A, then Party B may require Party A to provide
Performance Assurance in an amount determined by Party B in a commercially
reasonable manner. In the event Party A shall fail to provide such Performance
Assurance or a guaranty or other credit assurance acceptable to Party B within
three (3) Business Days of receipt of notice, then an Event of Default shall be
deemed to have occurred and Party B will be entitled to the remedies set forth
in Article Five of this Master Agreement.

            (e) If specified on the Cover Sheet, Party A shall deliver to Party
B, prior to or concurrently with the execution and delivery of this Master
Agreement a guarantee in an amount not less than the Guarantee Amount specified
on the Cover Sheet and in a form reasonably acceptable to Party B.

      8.3 Grant of Security Interest/Remedies. To secure its obligations under
this Agreement and to the extent either or both Parties deliver Performance
Assurance hereunder, each Party (a "Pledgor") hereby grants to the other Party
(the "Secured Party") a present and continuing security interest in, and lien on
(and right of setoff against), and assignment of, all cash collateral and cash
equivalent collateral and any and all proceeds resulting therefrom or the
liquidation thereof, whether now or hereafter held by, on behalf of, or for the
benefit of, such Secured Party, and each Party agrees to take such action as the
other Party reasonably requires in order to perfect the Secured Party's
first-priority security interest in, and lien on (and right of setoff against),
such collateral and any and all proceeds resulting therefrom or from the
liquidation thereof. Upon or any time after the occurrence or deemed occurrence
and during the continuation of an Event of Default or an Early Termination Date,
the Non-Defaulting Party may do any one or more of the following: (i) exercise
any of the rights and remedies of a Secured Party with respect to all
Performance Assurance, including any such rights and remedies under law then in
effect; (ii) exercise its rights of setoff against any and all property of the
Defaulting Party in the possession of the Non-Defaulting Party or its agent;
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Letter of Credit issued for its benefit; and (iv) liquidate all Performance
Assurance then held by or for the benefit of the Secured Party free from any
claim or right of any nature whatsoever of the Defaulting Party, including any
equity or right of purchase or redemption by the Defaulting Party. The Secured
Party shall apply the proceeds of the collateral realized upon the exercise of
any such rights or remedies to reduce the Pledgor's obligations under the
Agreement (the Pledgor remaining liable for any amounts owing to the Secured
Party after such application), subject to the Secured Party's obligation to
return any surplus proceeds remaining after such obligations are satisfied in
full.

                       ARTICLE NINE: GOVERNMENTAL CHARGES

      9.1 Cooperation. Each Party shall use reasonable efforts to implement the
provisions of and to administer this Master Agreement in accordance with the
intent of the parties to minimize all taxes , so long as neither Party is
materially adversely affected by such efforts.

      9.2 Governmental Charges. Seller shall pay or cause to be paid all taxes
imposed by any government authority("Governmental Charges") on or with respect
to the Product or a Transaction arising prior to the Delivery Point. Buyer shall
pay or cause to be paid all Governmental Charges on or with respect to the
Product or a Transaction at and from the Delivery Point (other than ad valorem,
franchise or income taxes which are related to the sale of the Product and are,
therefore, the responsibility of the Seller). In the event Seller is required by
law or regulation to remit or pay Governmental Charges which are Buyer's
responsibility hereunder, Buyer shall promptly reimburse Seller for such
Governmental Charges. If Buyer is required by law or regulation to remit or pay
Governmental Charges which are Seller's responsibility hereunder, Buyer may
deduct the amount of any such Governmental Charges from the sums due to Seller
under Article 6 of this Agreement. Nothing shall obligate or cause a Party to
pay or be liable to pay any Governmental Charges for which it is exempt under
the law.

                           ARTICLE TEN: MISCELLANEOUS

      10.1 Term of Master Agreement. The term of this Master Agreement shall
commence on the Effective Date and shall remain in effect until terminated by
either Party upon (thirty) 30 days' prior written notice; provided, however,
that such termination shall not affect or excuse the performance of either Party
under any provision of this Master Agreement that by its terms survives any such
termination and, provided further, that this Master Agreement and any other
documents executed and delivered hereunder shall remain in effect with respect
to the Transaction(s) entered into prior to the effective date of such
termination until both Parties have fulfilled all of their obligations with
respect to such Transaction(s), or such Transaction(s) that have been terminated
under Section 5.2 of this Agreement.

      10.2 Representations and Warranties. On the Effective Date and the date of
entering into each Transaction, each Party represents and warrants to the other
Party that:

            (i)   it is duly organized, validly existing and in good standing
                  under the laws of the jurisdiction of its formation;

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            (ii)  it has all regulatory authorizations necessary for it to
                  legally perform its obligations under this Master Agreement
                  and each Transaction (including any Confirmation accepted in
                  accordance with Section 2.3);

            (iii) the execution, delivery and performance of this Master
                  Agreement and each Transaction (including any Confirmation
                  accepted in accordance with Section 2.3) are within its
                  powers, have been duly authorized by all necessary action and
                  do not violate any of the terms and conditions in its
                  governing documents, any contracts to which it is a party or
                  any law, rule, regulation, order or the like applicable to it;

            (iv)  this Master Agreement, each Transaction (including any
                  Confirmation accepted in accordance with Section 2.3), and
                  each other document executed and delivered in accordance with
                  this Master Agreement constitutes its legally valid and
                  binding obligation enforceable against it in accordance with
                  its terms; subject to any Equitable Defenses.

            (v)   it is not Bankrupt and there are no proceedings pending or
                  being contemplated by it or, to its knowledge, threatened
                  against it which would result in it being or becoming
                  Bankrupt;

            (vi)  there is not pending or, to its knowledge, threatened against
                  it or any of its Affiliates any legal proceedings that could
                  materially adversely affect its ability to perform its
                  obligations under this Master Agreement and each Transaction
                  (including any Confirmation accepted in accordance with
                  Section 2.3);

            (vii) no Event of Default or Potential Event of Default with respect
                  to it has occurred and is continuing and no such event or
                  circumstance would occur as a result of its entering into or
                  performing its obligations under this Master Agreement and
                  each Transaction (including any Confirmation accepted in
                  accordance with Section 2.3);

            (viii) it is acting for its own account, has made its own
                  independent decision to enter into this Master Agreement and
                  each Transaction (including any Confirmation accepted in
                  accordance with Section 2.3) and as to whether this Master
                  Agreement and each such Transaction (including any
                  Confirmation accepted in accordance with Section 2.3) is
                  appropriate or proper for it based upon its own judgment, is
                  not relying upon the advice or recommendations of the other
                  Party in so doing, and is capable of assessing the merits of
                  and understanding, and understands and accepts, the terms,
                  conditions and risks of this Master Agreement and each
                  Transaction (including any Confirmation accepted in accordance
                  with Section 2.3);

            (ix)  it is a "forward contract merchant" within the meaning of the
                  United States Bankruptcy Code;

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            (x)   it has entered into this Master Agreement and each Transaction
                  (including any Confirmation accepted in accordance with
                  Section 2.3) in connection with the conduct of its business
                  and it has the capacity or ability to make or take delivery of
                  all Products referred to in the Transaction to which it is a
                  Party;

            (xi)  with respect to each Transaction (including any Confirmation
                  accepted in accordance with Section 2.3) involving the
                  purchase or sale of a Product or an Option, it is a producer,
                  processor, commercial user or merchant handling the Product,
                  and it is entering into such Transaction for purposes related
                  to its business as such; and

            (xii) the material economic terms of each Transaction are subject to
                  individual negotiation by the Parties.

      10.3 Title and Risk of Loss. Title to and risk of loss related to the
Product shall transfer from Seller to Buyer at the Delivery Point. Seller
warrants that it will deliver to Buyer the Quantity of the Product free and
clear of all liens, security interests, claims and encumbrances or any interest
therein or thereto by any person arising prior to the Delivery Point.

      10.4 Indemnity. Each Party shall indemnify, defend and hold harmless the
other Party from and against any Claims arising from or out of any event,
circumstance, act or incident first occurring or existing during the period when
control and title to Product is vested in such Party as provided in Section
10.3. Each Party shall indemnify, defend and hold harmless the other Party
against any Governmental Charges for which such Party is responsible under
Article Nine.

      10.5 Assignment. Neither Party shall assign this Agreement or its rights
hereunder without the prior written consent of the other Party, which consent
may be withheld in the exercise of its sole discretion; provided, however,
either Party may, without the consent of the other Party (and without relieving
itself from liability hereunder), (i) transfer, sell, pledge, encumber or assign
this Agreement or the accounts, revenues or proceeds hereof in connection with
any financing or other financial arrangements, (ii) transfer or assign this
Agreement to an affiliate of such Party which affiliate's creditworthiness is
equal to or higher than that of such Party, or (iii) transfer or assign this
Agreement to any person or entity succeeding to all or substantially all of the
assets whose creditworthiness is equal to or higher than that of such Party;
provided, however, that in each such case, any such assignee shall agree in
writing to be bound by the terms and conditions hereof and so long as the
transferring Party delivers such tax and enforceability assurance as the
non-transferring Party may reasonably request.

      10.6 Governing Law. THIS AGREEMENT AND THE RIGHTS AND DUTIES OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED, ENFORCED AND PERFORMED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW. EACH PARTY WAIVES ITS RESPECTIVE RIGHT TO ANY JURY TRIAL
WITH RESPECT TO ANY LITIGATION ARISING UNDER OR IN CONNECTION WITH THIS
AGREEMENT.

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      10.7 Notices. All notices, requests, statements or payments shall be made
as specified in the Cover Sheet. Notices (other than scheduling requests) shall,
unless otherwise specified herein, be in writing and may be delivered by hand
delivery, United States mail, overnight courier service or facsimile. Notice by
facsimile or hand delivery shall be effective at the close of business on the
day actually received, if received during business hours on a Business Day, and
otherwise shall be effective at the close of business on the next Business Day.
Notice by overnight United States mail or courier shall be effective on the next
Business Day after it was sent. A Party may change its addresses by providing
notice of same in accordance herewith.

      10.8 General. This Master Agreement (including the exhibits, schedules and
any written supplements hereto), the Party A Tariff, if any, the Party B Tariff,
if any, any designated collateral, credit support or margin agreement or similar
arrangement between the Parties and all Transactions (including any Confirmation
accepted in accordance with Section 2.3) constitute the entire agreement between
the Parties relating to the subject matter. Notwithstanding the foregoing, any
collateral, credit support or margin agreement or similar arrangement between
the Parties shall, upon designation by the Parties, be deemed part of this
Agreement and shall be incorporated herein by reference. This Agreement shall be
considered for all purposes as prepared through the joint efforts of the parties
and shall not be construed against one party or the other as a result of the
preparation, substitution, submission or other event of negotiation, drafting or
execution hereof. Except to the extent herein provided for, no amendment or
modification to this Master Agreement shall be enforceable unless reduced to
writing and executed by both Parties. Each Party agrees if it seeks to amend any
applicable wholesale power sales tariff during the term of this Agreement, such
amendment will not in any way affect outstanding Transactions under this
Agreement without the prior written consent of the other Party. Each Party
further agrees that it will not assert, or defend itself, on the basis that any
applicable tariff is inconsistent with this Agreement. This Agreement shall not
impart any rights enforceable by any third party (other than a permitted
successor or assignee bound to this Agreement). Waiver by a Party of any default
by the other Party shall not be construed as a waiver of any other default. Any
provision declared or rendered unlawful by any applicable court of law or
regulatory agency or deemed unlawful because of a statutory change (individually
or collectively, such events referred to as "Regulatory Event") will not
otherwise affect the remaining lawful obligations that arise under this
Agreement; and provided, further, that if a Regulatory Event occurs, the Parties
shall use their best efforts to reform this Agreement in order to give effect to
the original intention of the Parties. The term "including" when used in this
Agreement shall be by way of example only and shall not be considered in any way
to be in limitation. The headings used herein are for convenience and reference
purposes only. All indemnity and audit rights shall survive the termination of
this Agreement for twelve (12) months. This Agreement shall be binding on each
Party's successors and permitted assigns.

      10.9 Audit. Each Party has the right, at its sole expense and during
normal working hours, to examine the records of the other Party to the extent
reasonably necessary to verify the accuracy of any statement, charge or
computation made pursuant to this Master Agreement. If requested, a Party shall
provide to the other Party statements evidencing the Quantity delivered at the
Delivery Point. If any such examination reveals any inaccuracy in any statement,
the necessary adjustments in such statement and the payments thereof will be
made promptly and shall bear interest calculated at the Interest Rate from the
date the overpayment or underpayment was made until paid; provided, however,
that no adjustment for any statement or payment will be

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made unless objection to the accuracy thereof was made prior to the lapse of
twelve (12) months from the rendition thereof, and thereafter any objection
shall be deemed waived.

      10.10 Forward Contract. The Parties acknowledge and agree that all
Transactions constitute "forward contracts" within the meaning of the United
States Bankruptcy Code.

      10.11 Confidentiality. If the Parties have elected on the Cover Sheet to
make this Section 10.11 applicable to this Master Agreement, neither Party shall
disclose the terms or conditions of a Transaction under this Master Agreement to
a third party (other than the Party's employees, lenders, counsel, accountants
or advisors who have a need to know such information and have agreed to keep
such terms confidential) except in order to comply with any applicable law,
regulation, or any exchange, control area or independent system operator rule or
in connection with any court or regulatory proceeding; provided, however, each
Party shall, to the extent practicable, use reasonable efforts to prevent or
limit the disclosure. The Parties shall be entitled to all remedies available at
law or in equity to enforce, or seek relief in connection with, this
confidentiality obligation.

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                  SCHEDULE P: PRODUCTS AND RELATED DEFINITIONS

      "Ancillary Services" means any of the services identified by a
Transmission Provider in its transmission tariff as "ancillary services"
including, but not limited to, regulation and frequency response, energy
imbalance, operating reserve-spinning and operating reserve-supplemental, as may
be specified in the Transaction.

      "Capacity" has the meaning specified in the Transaction.

      "Energy" means three-phase, 60-cycle alternating current electric energy,
expressed in megawatt hours.

      "Firm (LD)" means, with respect to a Transaction, that either Party shall
be relieved of its obligations to sell and deliver or purchase and receive
without liability only to the extent that, and for the period during which, such
performance is prevented by Force Majeure. In the absence of Force Majeure, the
Party to which performance is owed shall be entitled to receive from the Party
which failed to deliver/receive an amount determined pursuant to Article Four.

      "Firm Transmission Contingent - Contract Path" means, with respect to a
Transaction, that the performance of either Seller or Buyer (as specified in the
Transaction) shall be excused, and no damages shall be payable including any
amounts determined pursuant to Article Four, if the transmission for such
Transaction is interrupted or curtailed and (i) such Party has provided for firm
transmission with the transmission provider(s) for the Product in the case of
the Seller from the generation source to the Delivery Point or in the case of
the Buyer from the Delivery Point to the ultimate sink, and (ii) such
interruption or curtailment is due to "force majeure" or "uncontrollable force"
or a similar term as defined under the applicable transmission provider's
tariff. This contingency shall excuse performance for the duration of the
interruption or curtailment notwithstanding the provisions of the definition of
"Force Majeure" in Section 1.23 to the contrary.

      "Firm Transmission Contingent - Delivery Point" means, with respect to a
Transaction, that the performance of either Seller or Buyer (as specified in the
Transaction) shall be excused, and no damages shall be payable including any
amounts determined pursuant to Article Four, if the transmission to the Delivery
Point (in the case of Seller) or from the Delivery Point (in the case of Buyer)
for such Transaction is interrupted or curtailed and (i) such Party has provided
for firm transmission with the transmission provider(s) for the Product, in the
case of the Seller, to be delivered to the Delivery Point or, in the case of
Buyer, to be received at the Delivery Point and (ii) such interruption or
curtailment is due to "force majeure" or "uncontrollable force" or a similar
term as defined under the applicable transmission provider's tariff. This
transmission contingency excuses performance for the duration of the
interruption or curtailment, notwithstanding the provisions of the definition of
"Force Majeure" in Section 1.23 to the contrary. Interruptions or curtailments
of transmission other than the transmission either immediately to or from the
Delivery Point shall not excuse performance

      "Firm (No Force Majeure)" means, with respect to a Transaction, that if
either Party fails to perform its obligation to sell and deliver or purchase and
receive the Product, the Party to which performance is owed shall be entitled to
receive from the Party which failed to perform an

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amount determined pursuant to Article Four. Force Majeure shall not excuse
performance of a Firm (No Force Majeure) Transaction.

      "Into ______________ (the "Receiving Transmission Provider"), Seller's
Daily Choice" means that, in accordance with the provisions set forth below, (1)
the Product shall be scheduled and delivered to an interconnection or interface
("Interface") either (a) on the Receiving Transmission Provider's transmission
system border or (b) within the control area of the Receiving Transmission
Provider if the Product is from a source of generation in that control area,
which Interface, in either case, the Receiving Transmission Provider identifies
as available for delivery of the Product in or into its control area; and (2)
Seller has the right on a daily prescheduled basis to designate the Interface
where the Product shall be delivered. An "Into" Product shall be subject to the
following provisions:

      1. Prescheduling and Notification. Subject to the provisions of Section 6,
not later than the prescheduling deadline of 11:00 a.m. CPT on the Business Day
before the next delivery day or as otherwise agreed to by Buyer and Seller,
Seller shall notify Buyer ("Seller's Notification") of Seller's immediate
upstream counterparty and the Interface (the "Designated Interface") where
Seller shall deliver the Product for the next delivery day, and Buyer shall
notify Seller of Buyer's immediate downstream counterparty.

      2. Availability of "Firm Transmission" to Buyer at Designated Interface;
"Timely Request for Transmission," "ADI" and "Available Transmission." In
determining availability to Buyer of next-day firm transmission ("Firm
Transmission") from the Designated Interface, a "Timely Request for
Transmission" shall mean a properly completed request for Firm Transmission made
by Buyer in accordance with the controlling tariff procedures, which request
shall be submitted to the Receiving Transmission Provider no later than 30
minutes after delivery of Seller's Notification, provided, however, if the
Receiving Transmission Provider is not accepting requests for Firm Transmission
at the time of Seller's Notification, then such request by Buyer shall be made
within 30 minutes of the time when the Receiving Transmission Provider first
opens thereafter for purposes of accepting requests for Firm Transmission.

      Pursuant to the terms hereof, delivery of the Product may under certain
circumstances be redesignated to occur at an Interface other than the Designated
Interface (any such alternate designated interface, an "ADI") either (a) on the
Receiving Transmission Provider's transmission system border or (b) within the
control area of the Receiving Transmission Provider if the Product is from a
source of generation in that control area, which ADI, in either case, the
Receiving Transmission Provider identifies as available for delivery of the
Product in or into its control area using either firm or non-firm transmission,
as available on a day-ahead or hourly basis (individually or collectively
referred to as "Available Transmission") within the Receiving Transmission
Provider's transmission system.

      3. Rights of Buyer and Seller Depending Upon Availability of/Timely
Request for Firm Transmission.

            A. Timely Request for Firm Transmission made by Buyer, Accepted by
      the Receiving Transmission Provider and Purchased by Buyer. If a Timely
      Request for Firm Transmission is made by Buyer and is accepted by the
      Receiving Transmission Provider

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      and Buyer purchases such Firm Transmission, then Seller shall deliver and
      Buyer shall receive the Product at the Designated Interface.

                  i. If the Firm Transmission purchased by Buyer within the
            Receiving Transmission Provider's transmission system from the
            Designated Interface ceases to be available to Buyer for any reason,
            or if Seller is unable to deliver the Product at the Designated
            Interface for any reason except Buyer's non-performance, then at
            Seller's choice from among the following, Seller shall: (a) to the
            extent Firm Transmission is available to Buyer from an ADI on a
            day-ahead basis, require Buyer to purchase such Firm Transmission
            from such ADI, and schedule and deliver the affected portion of the
            Product to such ADI on the basis of Buyer's purchase of Firm
            Transmission, or (b) require Buyer to purchase non-firm
            transmission, and schedule and deliver the affected portion of the
            Product on the basis of Buyer's purchase of non-firm transmission
            from the Designated Interface or an ADI designated by Seller, or (c)
            to the extent firm transmission is available on an hourly basis,
            require Buyer to purchase firm transmission, and schedule and
            deliver the affected portion of the Product on the basis of Buyer's
            purchase of such hourly firm transmission from the Designated
            Interface or an ADI designated by Seller.

                  ii. If the Available Transmission utilized by Buyer as
            required by Seller pursuant to Section 3A(i) ceases to be available
            to Buyer for any reason, then Seller shall again have those
            alternatives stated in Section 3A(i) in order to satisfy its
            obligations.

                  iii. Seller's obligation to schedule and deliver the Product
            at an ADI is subject to Buyer's obligation referenced in Section 4B
            to cooperate reasonably therewith. If Buyer and Seller cannot
            complete the scheduling and/or delivery at an ADI, then Buyer shall
            be deemed to have satisfied its receipt obligations to Seller and
            Seller shall be deemed to have failed its delivery obligations to
            Buyer, and Seller shall be liable to Buyer for amounts determined
            pursuant to Article Four.

                  iv. In each instance in which Buyer and Seller must make
            alternative scheduling arrangements for delivery at the Designated
            Interface or an ADI pursuant to Sections 3A(i) or (ii), and Firm
            Transmission had been purchased by both Seller and Buyer into and
            within the Receiving Transmission Provider's transmission system as
            to the scheduled delivery which could not be completed as a result
            of the interruption or curtailment of such Firm Transmission, Buyer
            and Seller shall bear their respective transmission expenses and/or
            associated congestion charges incurred in connection with efforts to
            complete delivery by such alternative scheduling and delivery
            arrangements. In any instance except as set forth in the immediately
            preceding sentence, Buyer and Seller must make alternative
            scheduling arrangements for delivery at the Designated Interface or
            an ADI under Sections 3A(i) or (ii), Seller shall be responsible for
            any additional transmission purchases and/or associated congestion
            charges incurred by Buyer in connection with such alternative
            scheduling arrangements.

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            B. Timely Request for Firm Transmission Made by Buyer but Rejected
      by the Receiving Transmission Provider. If Buyer's Timely Request for Firm
      Transmission is rejected by the Receiving Transmission Provider because of
      unavailability of Firm Transmission from the Designated Interface, then
      Buyer shall notify Seller within 15 minutes after receipt of the Receiving
      Transmission Provider's notice of rejection ("Buyer's Rejection Notice").
      If Buyer timely notifies Seller of such unavailability of Firm
      Transmission from the Designated Interface, then Seller shall be obligated
      either (1) to the extent Firm Transmission is available to Buyer from an
      ADI on a day-ahead basis, to require Buyer to purchase (at Buyer's own
      expense) such Firm Transmission from such ADI and schedule and deliver the
      Product to such ADI on the basis of Buyer's purchase of Firm Transmission,
      and thereafter the provisions in Section 3A shall apply, or (2) to require
      Buyer to purchase (at Buyer's own expense) non-firm transmission, and
      schedule and deliver the Product on the basis of Buyer's purchase of
      non-firm transmission from the Designated Interface or an ADI designated
      by the Seller, in which case Seller shall bear the risk of interruption or
      curtailment of the non-firm transmission; provided, however, that if the
      non-firm transmission is interrupted or curtailed or if Seller is unable
      to deliver the Product for any reason, Seller shall have the right to
      schedule and deliver the Product to another ADI in order to satisfy its
      delivery obligations, in which case Seller shall be responsible for any
      additional transmission purchases and/or associated congestion charges
      incurred by Buyer in connection with Seller's inability to deliver the
      Product as originally prescheduled. If Buyer fails to timely notify Seller
      of the unavailability of Firm Transmission, then Buyer shall bear the risk
      of interruption or curtailment of transmission from the Designated
      Interface, and the provisions of Section 3D shall apply.

            C. Timely Request for Firm Transmission Made by Buyer, Accepted by
      the Receiving Transmission Provider and not Purchased by Buyer. If Buyer's
      Timely Request for Firm Transmission is accepted by the Receiving
      Transmission Provider but Buyer elects to purchase non-firm transmission
      rather than Firm Transmission to take delivery of the Product, then Buyer
      shall bear the risk of interruption or curtailment of transmission from
      the Designated Interface. In such circumstances, if Seller's delivery is
      interrupted as a result of transmission relied upon by Buyer from the
      Designated Interface, then Seller shall be deemed to have satisfied its
      delivery obligations to Buyer, Buyer shall be deemed to have failed to
      receive the Product and Buyer shall be liable to Seller for amounts
      determined pursuant to Article Four.

            D. No Timely Request for Firm Transmission Made by Buyer, or Buyer
      Fails to Timely Send Buyer's Rejection Notice. If Buyer fails to make a
      Timely Request for Firm Transmission or Buyer fails to timely deliver
      Buyer's Rejection Notice, then Buyer shall bear the risk of interruption
      or curtailment of transmission from the Designated Interface. In such
      circumstances, if Seller's delivery is interrupted as a result of
      transmission relied upon by Buyer from the Designated Interface, then
      Seller shall be deemed to have satisfied its delivery obligations to
      Buyer, Buyer shall be deemed to have failed to receive the Product and
      Buyer shall be liable to Seller for amounts determined pursuant to Article
      Four.

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      4. Transmission.

            A. Seller's Responsibilities. Seller shall be responsible for
      transmission required to deliver the Product to the Designated Interface
      or ADI, as the case may be. It is expressly agreed that Seller is not
      required to utilize Firm Transmission for its delivery obligations
      hereunder, and Seller shall bear the risk of utilizing non-firm
      transmission. If Seller's scheduled delivery to Buyer is interrupted as a
      result of Buyer's attempted transmission of the Product beyond the
      Receiving Transmission Provider's system border, then Seller will be
      deemed to have satisfied its delivery obligations to Buyer, Buyer shall be
      deemed to have failed to receive the Product and Buyer shall be liable to
      Seller for damages pursuant to Article Four.

            B. Buyer's Responsibilities. Buyer shall be responsible for
      transmission required to receive and transmit the Product at and from the
      Designated Interface or ADI, as the case may be, and except as
      specifically provided in Section 3A and 3B, shall be responsible for any
      costs associated with transmission therefrom. If Seller is attempting to
      complete the designation of an ADI as a result of Seller's rights and
      obligations hereunder, Buyer shall co-operate reasonably with Seller in
      order to effect such alternate designation.

      5. Force Majeure. An "Into" Product shall be subject to the "Force
Majeure" provisions in Section 1.23.

      6. Multiple Parties in Delivery Chain Involving a Designated Interface.
Seller and Buyer recognize that there may be multiple parties involved in the
delivery and receipt of the Product at the Designated Interface or ADI to the
extent that (1) Seller may be purchasing the Product from a succession of other
sellers ("Other Sellers"), the first of which Other Sellers shall be causing the
Product to be generated from a source ("Source Seller") and/or (2) Buyer may be
selling the Product to a succession of other buyers ("Other Buyers"), the last
of which Other Buyers shall be using the Product to serve its energy needs
("Sink Buyer"). Seller and Buyer further recognize that in certain Transactions
neither Seller nor Buyer may originate the decision as to either (a) the
original identification of the Designated Interface or ADI (which designation
may be made by the Source Seller) or (b) the Timely Request for Firm
Transmission or the purchase of other Available Transmission (which request may
be made by the Sink Buyer). Accordingly, Seller and Buyer agree as follows:

            A. If Seller is not the Source Seller, then Seller shall notify
      Buyer of the Designated Interface promptly after Seller is notified
      thereof by the Other Seller with whom Seller has a contractual
      relationship, but in no event may such designation of the Designated
      Interface be later than the prescheduling deadline pertaining to the
      Transaction between Buyer and Seller pursuant to Section 1.

            B. If Buyer is not the Sink Buyer, then Buyer shall notify the Other
      Buyer with whom Buyer has a contractual relationship of the Designated
      Interface promptly after Seller notifies Buyer thereof, with the intent
      being that the party bearing actual responsibility to secure transmission
      shall have up to 30 minutes after receipt of the Designated Interface to
      submit its Timely Request for Firm Transmission.

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            C. Seller and Buyer each agree that any other communications or
      actions required to be given or made in connection with this "Into
      Product" (including without limitation, information relating to an ADI)
      shall be made or taken promptly after receipt of the relevant information
      from the Other Sellers and Other Buyers, as the case may be.

            D. Seller and Buyer each agree that in certain Transactions time is
      of the essence and it may be desirable to provide necessary information to
      Other Sellers and Other Buyers in order to complete the scheduling and
      delivery of the Product. Accordingly, Seller and Buyer agree that each has
      the right, but not the obligation, to provide information at its own risk
      to Other Sellers and Other Buyers, as the case may be, in order to effect
      the prescheduling, scheduling and delivery of the Product

      "Native Load" means the demand imposed on an electric utility or an entity
by the requirements of retail customers located within a franchised service
territory that the electric utility or entity has statutory obligation to serve.

      "Non-Firm" means, with respect to a Transaction, that delivery or receipt
of the Product may be interrupted for any reason or for no reason, without
liability on the part of either Party.

      "System Firm" means that the Product will be supplied from the owned or
controlled generation or pre-existing purchased power assets of the system
specified in the Transaction (the "System") with non-firm transmission to and
from the Delivery Point, unless a different Transmission Contingency is
specified in a Transaction. Seller's failure to deliver shall be excused: (i) by
an event or circumstance which prevents Seller from performing its obligations,
which event or circumstance was not anticipated as of the date the Transaction
was agreed to, which is not within the reasonable control of, or the result of
the negligence of, the Seller; (ii) by Buyer's failure to perform; (iii) to the
extent necessary to preserve the integrity of, or prevent or limit any
instability on, the System; (iv) to the extent the System or the control area or
reliability council within which the System operates declares an emergency
condition, as determined in the system's, or the control area's, or reliability
council's reasonable judgment; or (v) by the interruption or curtailment of
transmission to the Delivery Point or by the occurrence of any Transmission
Contingency specified in a Transaction as excusing Seller's performance. Buyer's
failure to receive shall be excused (i) by Force Majeure; (ii) by Seller's
failure to perform, or (iii) by the interruption or curtailment of transmission
from the Delivery Point or by the occurrence of any Transmission Contingency
specified in a Transaction as excusing Buyer's performance. In any of such
events, neither party shall be liable to the other for any damages, including
any amounts determined pursuant to Article Four.

      "Transmission Contingent" means, with respect to a Transaction, that the
performance of either Seller or Buyer (as specified in the Transaction) shall be
excused, and no damages shall be payable including any amounts determined
pursuant to Article Four, if the transmission for such Transaction is
unavailable or interrupted or curtailed for any reason, at any time, anywhere
from the Seller's proposed generating source to the Buyer's proposed ultimate
sink, regardless of whether transmission, if any, that such Party is attempting
to secure and/or has purchased for the Product is firm or non-firm. If the
transmission (whether firm or non-firm) that Seller or Buyer is attempting to
secure is from source to sink is unavailable, this contingency excuses
performance for the entire Transaction. If the transmission (whether firm or
non-firm) that Seller

                         Version 2.1 (modified 4/25/00)
(C) COPYRIGHT 2000 by the Edison Electric Institute and National Energy
                           Marketers Association

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<PAGE>

or Buyer has secured from source to sink is interrupted or curtailed for any
reason, this contingency excuses performance for the duration of the
interruption or curtailment notwithstanding the provisions of the definition of
"Force Majeure" in Article 1.23 to the contrary.

      "Unit Firm" means, with respect to a Transaction, that the Product subject
to the Transaction is intended to be supplied from a generation asset or assets
specified in the Transaction. Seller's failure to deliver under a "Unit Firm"
Transaction shall be excused: (i) if the specified generation asset(s) are
unavailable as a result of a Forced Outage (as defined in the NERC Generating
Unit Availability Data System (GADS) Forced Outage reporting guidelines) or (ii)
by an event or circumstance that affects the specified generation asset(s) so as
to prevent Seller from performing its obligations, which event or circumstance
was not anticipated as of the date the Transaction was agreed to, and which is
not within the reasonable control of, or the result of the negligence of, the
Seller or (iii) by Buyer's failure to perform. In any of such events, Seller
shall not be liable to Buyer for any damages, including any amounts determined
pursuant to Article Four.

                         Version 2.1 (modified 4/25/00)
(C) COPYRIGHT 2000 by the Edison Electric Institute and National Energy
                             Marketers Association

                                       43
<PAGE>

                                                                       EXHIBIT A

                    MASTER POWER PURCHASE AND SALE AGREEMENT
                               CONFIRMATION LETTER

      This confirmation letter shall confirm the Transaction agreed to on
___________, ___ between __________________________ ("Party A") and
_____________________ ("Party B") regarding the sale/purchase of the Product
under the terms and conditions as follows:

Seller:
         _____________________________________________________________________

Buyer:
         _____________________________________________________________________

Product:

[]    Into _________________, Seller's Daily Choice

[]    Firm (LD)

[]    Firm (No Force Majeure)

[]    System Firm

      (Specify System:                                                        )
                          ____________________________________________________

[]    Unit Firm

      (Specify Unit(s):                                                       )
                          ____________________________________________________

[]    Other
             _________________________________________________________________

[]    Transmission Contingency (If not marked, no transmission contingency)

      []    FT-Contract Path Contingency [] Seller [] Buyer

      []    FT-Delivery Point Contingency [] Seller [] Buyer

      []    Transmission Contingent [] Seller [] Buyer

      []    Other transmission contingency

      (Specify:                                                               )
                  ____________________________________________________________

Contract Quantity:
                    __________________________________________________________

Delivery Point:
                 _____________________________________________________________

Contract Price:

Energy Price:
               _______________________________________________________________

Other Charges:
                ______________________________________________________________

                         Version 2.1 (modified 4/25/00)
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                           Marketers Association

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Confirmation Letter
Page  2

Delivery Period:
                  ____________________________________________________________

Special Conditions:
                 ____________________________________________________________

Scheduling:
             ________________________________________________________________

Option Buyer:
               ______________________________________________________________

Option Seller:
                _____________________________________________________________

      Type of Option:

                       ______________________________________________________

      Strike Price:
                    _________________________________________________________

      Premium:
                    _________________________________________________________

      Exercise Period:
                          ___________________________________________________

         This confirmation letter is being provided pursuant to and in
accordance with the Master Power Purchase and Sale Agreement dated
______________ (the "Master Agreement") between Party A and Party B, and
constitutes part of and is subject to the terms and provisions of such Master
Agreement. Terms used but not defined herein shall have the meanings ascribed to
them in the Master Agreement.

[Party A]                                     [Party B]

Name:                                    Name:
     _____________________________            _______________________________

Title:                                   Title:
       _____________________________            _____________________________

Phone No:                                Phone No:
           _____________________________            _________________________

Fax:                                     Fax:
     _____________________________            _______________________________

                         Version 2.1 (modified 4/25/00)
(C) COPYRIGHT 2000 by the Edison Electric Institute and National Energy
                             Marketers Association

                                       45

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