Exhibit 10.1

EXECUTION COPY

CREDIT AGREEMENT

 

by and among

GREEN MOUNTAIN POWER CORPORATION,

 

SOVEREIGN BANK,

KEYBANK NATIONAL ASSOCIATION

and

SOVEREIGN BANK,

AS AGENT

 

 

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$30,000,000

 

 

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Dated as of June 14, 2006

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CREDIT AGREEMENT

This CREDIT AGREEMENT, dated as of June 14, 2006, by and among GREEN MOUNTAIN
POWER CORPORATION, a Vermont corporation (the “Company”), the Signatory Banks
hereto (each, a “Bank” and, collectively, the “Banks”), and SOVEREIGN BANK, as
agent hereunder (in such capacity, the “Agent”).

1. DEFINITIONS.

1.1. Defined Terms. As used in this Agreement, terms defined in the Preamble
above have the meanings therein indicated, and the following terms have the
following meaning:

“Accountants”: Deloitte & Touche LLP, or such other firm of certified public
accountants of recognized national standing selected by the Company.

“Act” as defined in Section 17.

“Affected Loan”: as defined in Section 2.9.

“Affected Principal Amount”: (i) in the event that the Company shall fail for
any reason to borrow a Loan constituting a LIBOR Loan after it shall have
delivered a Borrowing Request to the Agent, an amount equal to the principal
amount of such LIBOR Loan; (ii) in the event that the right of the Company to
have a LIBOR Loan outstanding hereunder shall be suspended or shall terminate
for any reason prior to the last day of the Interest Period applicable thereto,
an amount equal to the principal amount of such LIBOR Loan; and (iii) in the
event that the Company shall prepay or repay all or any part of the principal
amount of a LIBOR Loan prior to the last day of the Interest Period applicable
thereto, an amount equal to the principal amount so prepaid or repaid.

“Affiliate”: a Person that directly or indirectly, or through one or more
intermediaries, controls or is controlled by or is under common control with
another Person. The term “control” means possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.

“Agent’s Fees”: as defined in Section 3.2.

“Aggregate Commitments”: the sum of the Commitments, as in effect from time to
time.

“Agreement”: this Credit Agreement, as same may be amended, supplemented or
otherwise modified from time to time.

“Alternate Base Rate”: the higher of (a) the annual rate of interest publicly
announced from time to time by the Agent at the Agent’s head office as its
“prime rate” and (b) one-half of one percent (1/2%) above the Federal Funds
Effective Rate.

 

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“Alternate Base Rate Loans”: Loans (or any portion thereof) at such time as they
(or such portions) are made or are being maintained at a rate of interest based
upon the Alternate Base Rate.

“Applicable Lending Office”: as to any Bank, such Bank’s Domestic Lending Office
or LIBOR Lending Office, as the case may be.

“Applicable Margin”: the rate per annum determined by reference to Schedule I on
Exhibit B hereto based upon the Debt Rating of the Company; provided that if the
Company has no Debt Rating, the Applicable Margin shall be the highest rate per
annum (i.e., Pricing Level IV) applicable during the relevant period.

“Authorized Signatory”: the president, any vice president, the treasurer, the
secretary, or any other duly authorized officer of the Company acceptable to
Agent.

“Bank” or “Banks”: the signatory Banks to this Credit Agreement and any other
bank or lender that becomes a signatory hereto pursuant to Section 14.6.

“Borrowing”: (a) a borrowing of principal amounts pursuant to Section 2.3.

“Borrowing Request”: as defined in Section 2.3.

“Borrowing Date”: Any date specified in a Borrowing Request delivered pursuant
to Section 2.3 as a date on which the Company requests the Banks to make Loans
hereunder.

“Business Day”: for all purposes other than as set forth in clause (ii) below,
(i) any day other than a Saturday, Sunday or other day on which commercial banks
located in New York City or Boston are authorized or required by law or other
governmental actions to close and (ii) with respect to all notices and
determinations in connection with, and payments of principal and interest on
LIBOR Loans, any day other than a Saturday, Sunday, or other day on which
commercial banks located in New York City or Boston are authorized or required
to close under the laws applicable to commercial banks located in New York City
or Boston and, if the applicable day relates to a LIBOR Loan or an interest
period for a LIBOR Loan, the day on which dealings in dollar deposits are also
carried on in the London interbank market and banks are open for business in
London.

“Code”: the Internal Revenue Code of 1986, as the same may be amended from time
to time, or any successor thereto, and the rules and regulations issued
hereunder, as from time to time in effect.

“Commitments”: as to any Bank, such Bank’s undertaking to make Revolving Credit
Loans to and issue Letters of Credit for the account of Company, subject to the
terms and conditions hereof, in an aggregate outstanding principal amount equal
to, but not exceeding, the amount set forth opposite the name of such Bank on
Exhibit A under the heading ‘Commitment’, as the same may be reduced pursuant to
Section 2.5.

“Commitment Percentage”: as to any Bank, the percentage set forth opposite the
name of such Bank on Exhibit A under the heading ‘Commitment Percentage’.

 

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“Commonly Controlled Entity”: an entity, whether or not incorporated, which is
under common control with the Company within the meaning of Section 414(b) or
414(c) of the Code.

“Consolidated”: the Company and its Subsidiaries taken as a whole.

“Consolidated Net Worth”: the means the aggregate of the capital stock and other
equity accounts (including, without limitation, retained earnings and paid-in
capital) of the Consolidated Company.

“Conversion/Continuation Request”: as defined in Section 2.7.

“Conversion Date”: the date on which a Loan of one Type is converted to a Loan
of another Type or continued as a Loan of the same Type.

“Debt Rating”: the public debt rating of the Company’s First Mortgage Bonds
according to Standard & Poor’s Corporation or Moody’s Investor Service. In the
event of a split rating, the higher of the two ratings will apply, provided that
if one rating is more than one notch above the other, than the rating to be used
for the pricing grid will be one notch above the lower rating. In the event that
neither Standard & Poor’s Corporation nor Moody’s Investor Service have a public
debt rating for the Company, the Company shall be deemed to have no Debt Rating.

“Dollars” and “$”: dollars in lawful currency of the United States of America.

“Domestic Lending Office”: as to any Bank, initially the office of such Bank
designated as such on the signature page hereof, and thereafter such other
office in the United States as reported by such Bank to the Agent, that shall be
making or maintaining Alternate Base Rate Loans.

“Effective Date”: as defined in Section 16.

“Environmental Law”: Any and all federal, state, local and foreign statutes,
laws, regulations, ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, agreements or other governmental
restrictions relating to the environment (but not including zoning and similar
land use laws and regulations which have no Material Adverse Effect on the
Company) or to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment, including, without limitation,
ambient air, surface water, ground water or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes.

“Environmental Notice”: any summons, citation, directive, information request,
notice of potential responsibility, notice of violation or deficiency, order,
claim, complaint, investigation, proceeding, judgment, letter or other
communication, written or oral, actual or threatened, from the United States
Environmental Protection Agency or other federal, state or local agency or
authority, or any other entity or individual, public or private, concerning any
intentional or unintentional act or omission which involves management of
hazardous substances or wastes on or off any property owned or leased by the
Company or any Subsidiary or Affiliate of the Company; the imposition of any
Lien on such property; and any alleged violation of or responsibility under
Environmental Laws.

 

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“ERISA”: the Employee Retirement Income Security Act of 1974, as amended from
time to time, and the rules and regulations issued thereunder, as from time to
time in effect.

“Event of Default”: any of the events specified in Section 9, provided that any
requirement for the giving of notice, the lapse of time, or both, has been
satisfied.

“Federal Funds Effective Rate”: for any day, the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers on such day, as published for the prior
day by the Federal Reserve Bank of Boston.

“Final Maturity Date”: if all required Governmental Approvals have been received
on or prior to the Effective Date or have been received not later than thirty
(30) days prior to the Initial Maturity Date, June 14, 2011.

“First Mortgage Bonds”: (a) the Company’s First Mortgage Bonds as set forth in
the Company’s 2005 Form 10-K filed on March 29, 2005 with the Securities and
Exchange Commission.

“Facility Fee”: as defined in Section 3.1.

“Financial Statements”: as defined in Section 4.8.

“Funded Debt”: all obligations of the Company evidenced by bonds (including,
without limitation, the First Mortgage Bonds), debentures, notes or other
similar instruments and all other evidences of indebtedness of the Company
(including, without limitation, Short-Term Funded Debt), and any other
instrument or arrangement which would be treated as indebtedness under GAAP,
including, without limitation, capitalized leases but excluding trade
obligations and normal accruals, including accounts payable, in the ordinary
course of business not yet due and payable, or with respect to which the Company
is contesting in good faith the amount or validity thereof by appropriate
proceedings and then only to the extent that the Company has set aside on its
books adequate reserves therefor in accordance with GAAP and such contest does
not have a Material Adverse Effect.

“GAAP”: generally accepted accounting principles from time to time followed by
companies engaged in a business similar to that of the Company, except as
otherwise required by any applicable rules, regulations or orders of the VPSB,
or other public regulatory authority having jurisdiction over the accounts of
the Company; provided that the Company may at any time contest or controvert in
good faith the validity or applicability to the Company of any such rule,
regulation or order; and provided, further, that the federal income tax
liability of the Company may be computed as if the Company were filing separate
returns notwithstanding the fact that it may file consolidated returns as part
of an affiliated group.

“Governmental Approvals”: the approval of the Credit Agreement by the VPSB.

 

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“Governmental Body”: any nation or government, any state or other political
subdivision thereof, any entity exercising executive, legislative, judicial,
regulatory, or administrative functions, of, or pertaining to, government, and
any court or arbitrator.

“Initial Maturity Date” if all required Governmental Approvals are not received
on or prior to the Effective Date, the date that is three hundred sixty-four
(364) days following the Effective Date.

“Initial Note” as defined in Section 2.4(b).

“Interest Payment Date”: (a) as to any Alternate Base Rate Loan, the last
Business Day of each March, June, September and December commencing on the first
such day to occur after such Loan is made or any LIBOR Loan is converted to an
Alternate Base Rate Loan, and the date each Alternate Base Rate Loan is paid in
full, (b) as to any overnight LIBOR Loan, or any LIBOR Loan in respect of which
the Company has selected an Interest Period of one or two weeks, or one, two or
three months, the last day of such Interest Period and (c) as to any LIBOR Loan
having an Interest Period of six months, the last day and, in addition, the
numerically corresponding day (or, if there is no numerically corresponding day,
the last day) in the calendar month that is three months after the first day, of
such Interest Period.

“Interest Period”:

(a) with respect to any LIBOR Loan, the period commencing on, as the case may
be, the Borrowing Date or a Conversion Date with respect to such LIBOR Loan, and
ending on the next day with respect to overnight LIBOR Loans or the date one
week, two weeks or one, two, three or six months thereafter, as selected by the
Company in its irrevocable Borrowing Request as provided in Section 2.3 or its
irrevocable Conversion/Continuation Request as provided in Section 2.7;.

(b) All of the foregoing provisions relating to Interest Periods set forth in
paragraph (a) above are subject to the following:

(i) if any Interest Period pertaining to a LIBOR Loan comprising the same
Borrowing would otherwise end on a day which is not a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless the
result of such extension would be to carry such Interest Period into another
calendar month, in which event such Interest Period shall end on the immediately
preceding Business Day;

(ii) if, with respect to the conversion of any Loan, the Company shall fail to
give due notice as provided in Section 2.7 for such Loan, such Loan shall be
automatically converted to an Alternate Base Rate Loan upon the expiration of
the Interest Period with respect thereto;

(iii) any Interest Period pertaining to a LIBOR Loan that begins on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of a calendar month;

 

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(iv) the Company shall select Interest Periods relating to LIBOR Loans so as not
to have more than twelve different Interest Periods relating to LIBOR Loans
outstanding at any one time; and

(v) the Company shall select Interest Periods pertaining to LIBOR Loans such
that, on the date the mandatory repayment is required to be made under
Section 2.6(b), the outstanding principal amount of all Alternate Base Rate
Loans and LIBOR Loans with Interest Periods ending on the date of such payment
shall equal the aggregate principal amount of the Loans required to be repaid on
such date.

“Issuing Bank” Sovereign Bank or such other Bank which issues a Letter of Credit
for the benefit of the Company.

“Letters of Credit”: letters of credit issued pursuant to Section 2.2.

“LIBOR”: as applicable to any LIBOR Loan, the rate per annum as determined on
the basis of the offered rates for deposits in U.S. Dollars, for a period of
time comparable to the Interest Period for such LIBOR Loan which appears on the
Telerate (or its successor’s) page 3750 as of 11:00 a.m. London time on the day
that is two (2) Business Days (as such definition relates to LIBOR Loans)
preceding the first day of such LIBOR Loan; provided, however, if the rate
described above does not appear on the Telerate (or its successor’s) system on
any applicable interest determination date, LIBOR shall be the rate (rounded
upward, if necessary, to the nearest one hundred-thousandth of a percentage
point), determined on the basis of the offered rates for deposits in U.S.
dollars for a period of time comparable to the Interest Period for such LIBOR
Loan which are offered by four major banks in the London interbank market at
approximately 11:00 a.m. London time, on the day that is two (2) Business Days
(as such definition relates to LIBOR Loans) preceding the first day of such
LIBOR Loan as selected by Agent. The principal London office of each of the four
major London banks will be requested to provide a quotation of its U.S. Dollar
deposit offered rate. If at least two such quotations are provided, the rate for
that date will be the arithmetic mean of the quotations. If fewer than two
quotations are provided as requested, the rate for that date will be determined
on the basis of the rates quoted for loans in U.S. dollars to leading European
banks for a period of time comparable to Interest Period for such LIBOR Loan
offered by major banks in New York City at approximately 11:00 a.m. New York
City time, on the day that is two (2) Business Days (as such definition relates
to LIBOR Loans) preceding the first day of such LIBOR Loan. In the event that
Agent is unable to obtain any such quotation as provided above, it will be
deemed that LIBOR pursuant to a LIBOR Loan cannot be determined. In the event
that the Board of Governors of the Federal Reserve System shall impose a Reserve
Percentage (as defined below) with respect to LIBOR deposits of member banks of
the Federal Reserve System then for any period during which such Reserve
Percentage shall apply, LIBOR shall be equal to the amount determined above
divided by an amount equal to 1 minus the Reserve Percentage. “Reserve
Percentage” shall mean the maximum aggregate reserve requirement (including all
basic, supplemental, marginal and other reserves) which is imposed on member
banks of the Federal Reserve System against “Euro-currency Liabilities” as
defined in Regulation D.

 

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“LIBOR Lending Office”: as to any Bank, initially the office of such Bank
designated as such on the signature page hereof, and thereafter such other
office as reported by such Bank to the Agent, that shall be making or
maintaining LIBOR Loans.

“LIBOR Loan”: Loans (or any portions thereof) at such time as they (or such
portions) are made or being maintained at a rate of interest based upon LIBOR.

“Lien”: any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), or preference, priority or other
security agreement or security interest of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, and the filing of any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction).

“Loan Documents”: collectively, this Agreement, the Notes, and any document and
instrument executed and/or delivered in connection herewith or therewith.

“Loans”: Revolving Credit Loans made pursuant to Section 2.1 and Letters of
Credit issued pursuant to Section 2.2(a).

“Majority Banks”: either: (a) at any time when there are fewer than three
(3) Banks party hereto, Banks having at least 100% of the Aggregate Commitments
or (b) at any time when there are three (3) or more Banks party hereto, two or
more Bank(s) having at least 66 2/3% of the Aggregate Commitments.

“Material Adverse Change”: a material adverse change in the business, assets,
liabilities, condition (financial or otherwise), results of operations or
business prospects of (a) the Company or (b) the Company and its Subsidiaries
“taken as a whole” which would reasonably be expected to render the Company
unable to perform its obligations under the Loan Documents. The term “Material
Adverse Change” shall include, without limitation, any change in any law,
regulation, treaty or directive or in the interpretation or application thereof
by any Governmental Body, charged with the administration thereof or compliance
by the Company with any request or directive from any Governmental Body, the
result of which would have a Material Adverse Effect. The term “Material Adverse
Change” shall also include, without limitation, the occurrence or failure to
occur of any event, which occurrence or failure to occur has a Material Adverse
Effect with respect to the Company.

“Material Adverse Effect”: (a) with respect to any Person (including, without
limitation, the Company), any materially adverse effect on such Person’s
business, assets, liabilities, condition (financial or otherwise), results of
operations or business prospects, (b) with respect to a group of Persons “taken
as a whole” (including, without limitation, the Company and its Subsidiaries),
any materially adverse effect on such Persons’ business, assets, liabilities,
financial conditions, results of operations or business prospects taken as a
whole on, where appropriate, a consolidated basis in accordance with GAAP, and
(c) with respect to any Loan Document, any adverse effect, WHETHER OR NOT
MATERIAL on the binding nature, validity or enforceability thereof as an
obligation of the Company.

 

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“Maturity Date”: (a) if all required Governmental Approvals have not been
received on or prior to the Effective Date, the Initial Maturity Date or (b) if
all Governmental Approvals have been received (either on the Effective Date or
no later than 30 days prior to the Initial Maturity Date), the Final Maturity
Date.

“Multiemployer Plan”: a Plan which is a multiemployer plan as defined in
Section 4001 (a)(3) of ERISA.

“Notes”: as defined in Section 2.4.

“PBGC”: the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA, or any Government Body succeeding to the
functions thereof.

“Person”: an individual, partnership, corporation, limited liability company,
limited liability partnership, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Body or any other entity
of whatever nature.

“Plan”: any pension plan which is covered by Title IV of ERISA and in respect of
which the Company or a Commonly Controlled Entity is an “employer” as defined in
Section 3(5) of ERISA.

“Prior Credit Agreement”: the Fourth Amended and Restated Credit Agreement,
dated of June 16, 2004, as amended, by and among the Company, Bank of America,
N.A. (as successor in interest of Fleet National Bank) and Sovereign Bank.

“Property”: all types of real, personal, tangible, intangible or mixed property.

“Regulation D”: Regulation D of the Board of Governors of the Federal Reserve
System, as amended from time to time.

“Replacement Note” as defined in Section 2.4(c).

“Reportable Event”: any event described in Section 4043(b) of ERISA, other than
an event with respect to which the 30-day notice requirement has been waived.

“Responsible Officer” President, Chief Executive Officer, Vice President,
Secretary, Treasurer and Chief Financial Officer.

“Revolving Credit Loans” Loans made pursuant to Section 2.1.

“Short-Term Funded Debt”: debt with initial maturities of less than one
(1) year.

“Special Counsel”: Goulston & Storrs, or such other firm selected by the Agent.

“Subsidiary”: any corporation a majority of the voting shares of which are at
the time owned by the Company or by other subsidiaries of the Company or by the
Company and other subsidiaries of the Company.

 

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“Taxes”: any present or future income, stamp or other taxes, levies, imposts,
duties, fees, assessments, deductions, withholdings, or other like charges, now
or hereafter imposed, levied, collected, withheld, or assessed by any
Governmental Body.

“Total Capitalization”: the sum of (a) all Consolidated Net Worth plus
(b) Funded Debt.

“Type”: Loans made hereunder as Alternate Base Rate Loans or LIBOR Loans, as the
case may be.

“Usage Fee”: as defined in Section 3.6.

“VPSB”: the Vermont Public Service Board.

1.2. Other Definitional Provisions.

(a) All terms defined in this Agreement and not defined in Section 1.1 shall
have the respective meanings given them in the text of this Agreement.

(b) Accounting terms relating to the Company not defined in Section 1.1, and
accounting terms partly defined in Section 1.1, to the extent not defined, shall
have the respective meanings given to them under GAAP.

(c) The words “hereof”, “herein”, “hereto” and “hereunder” and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and paragraph, schedule and
exhibit references, contained herein shall refer to paragraphs hereof or
schedules or exhibits hereto unless otherwise expressly provided herein. The
word “or” shall not be exclusive.

2. AMOUNT AND TERMS OF LOANS AND LETTERS OF CREDIT.

2.1. Loans.

(a) Subject to the terms and conditions of this Agreement, each Bank severally
agrees to make Revolving Credit Loans to the Company from time to time on and
after the Effective Date to, but excluding the Maturity Date; provided that the
sum of the aggregate unpaid principal amount of all Revolving Credit Loans made
by or due to each Bank and such Bank’s share of the aggregate outstanding face
amount of all Letters of Credit at any one time shall not exceed an amount equal
to such Bank’s Commitment; and provided further that the sum of the aggregate
unpaid principal amount of the Revolving Credit Loans at any one time
outstanding and the aggregate outstanding face amount of all Letters of Credit
shall not exceed the lesser of (i) the Aggregate Commitments and (ii) the
aggregate outstanding principal balance of all Revolving Credit Loans and
Letters of Credit permitted to be outstanding hereunder.

(b) During the period from the Effective Date to the Maturity Date, the Company
may borrow, repay and reborrow Revolving Credit Loans hereunder, and may convert
all or any part of the Revolving Credit Loans from one Type to another Type or
continue all or any part of the Revolving Credit Loans as the same Type in
accordance with and subject to the terms and provisions hereof.

 

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2.2. Letters of Credit.

(a) Generally. Subject to and upon the terms and conditions contained herein, at
the request of Company, prior to the Maturity Date the Issuing Bank shall
provide for one or more letters of credit in the aggregate amount not to exceed
Ten Million Dollars ($10,000,000.00) for the account of Company containing terms
and conditions acceptable to the applicable Issuing Bank and the Agent (the
“Letters of Credit”). Any payments made by the Issuing Bank in connection with
the Letters of Credit shall constitute additional Loans to Company pursuant to
Section 2.1 hereof. The Letters of Credit issued hereunder and all obligations
in connection therewith shall be obligations hereunder and under the Notes.

(b) Fees. In addition to any charges, fees or expenses charged by any Issuing
Bank in connection with the Letters of Credit, Company shall pay to Agent for
the benefit of the Banks a letter of credit fee at a rate equal to the
Applicable Margin in effect with respect to LIBOR Loans per annum on the face
amount of the Letters of Credit, payable in advance upon the issuance or renewal
(including automatic renewals) of each such Letter of Credit and on each
anniversary of the date of issuance for any Letter of Credit having a term in
excess of one year (any such amount that is payable upon the issuance (or any
anniversary thereof) or renewal of such Letter of Credit is to be pro-rated for
the period from the date of such issuance or renewal through the expiration date
of such Letter of Credit), except that Company shall pay to Agent for the
benefit of the Banks such letter of credit fee, at Agent’s option, without
notice, at the Applicable Margin plus 2.0% per annum on the face amount of the
Letters of Credit for the period from and after the date of the occurrence of an
Event of Default for so long as such Event of Default is continuing, such amount
to be payable in arrears (to the extent not previously paid upon issuance or
renewal) on the first day of each month for the immediately preceding month.
Such letter of credit fee shall be calculated on the basis of a three hundred
sixty (360) day year and actual days elapsed and the obligation of Company to
pay such fee shall survive the termination or non-renewal of the Agreement. In
the event that, prior to the expiration date of any Letter of Credit, the
original of such Letter of Credit is returned to the Agent such that the Agent
no longer has any obligation thereunder, the Banks shall credit the Company
under this Agreement in an amount equal to that portion of the letter of credit
fee that is attributable to the period from the date of such return to the date
of such expiration.

(c) Availability. No Letters of Credit shall be available unless on the date of
the proposed issuance of any Letters of Credit, the principal of the outstanding
Loans does not exceed the sum of: (i) the Aggregate Commitments minus (ii) the
face amount of all undrawn outstanding Letters of Credit minus (iii) the face
amount of the proposed Letters of Credit. Except in the sole discretion of

 

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the Issuing Bank and the Agent, no Letter of Credit shall be available unless
its stated expiration date is prior to the Maturity Date. Effective on the
issuance of each Letter of Credit, the maximum amount of Loans that the Company
may request hereunder shall be reduced by the face amount of such Letter of
Credit. Upon the occurrence of and during the continuation of an Event of
Default, Company’s right to request Letters of Credit and each Issuing Bank’s
commitment to issue Letters of Credit shall terminate.

(d) Maximum. Except in Banks’ discretion, the amount of all outstanding Loans
and Letters of Credit shall not at any time exceed $30,000,000.00. At any time
an Event of Default exists or has occurred and is continuing, upon Agent’s
request, Company will either furnish cash collateral to secure the reimbursement
obligations to the Issuing Bank in connection with any Letters of Credit or
furnish cash collateral to Agent, for the benefit of the Issuing Bank, for the
Letters of Credit in an amount equal to 105% of the aggregate face amount of
such Letters of Credit.

(e) Indemnification. Company shall indemnify and hold Agent, any Issuing Bank
and the other Banks harmless from and against any and all losses, claims,
damages, liabilities, costs and expenses which Agent, any Issuing Bank or the
other Banks may suffer or incur in connection with any Letters of Credit and any
documents, drafts or acceptances relating thereto, including any losses, claims,
damages, liabilities, costs and expenses due to any action taken by any Agent or
an Issuing Bank or correspondent with respect to any Letters of Credit (except
to the extent arising from the gross negligence or willful misconduct on the
part of the Agent, such Issuing Bank or the other Banks, as the case may be).
Company assumes all risks with respect to the acts or omissions of the drawer
under or beneficiary of any Letters of Credit and for such purposes the drawer
or beneficiary shall be deemed Company’s agent. Company assumes all risks for,
and agrees to pay, all foreign, federal, state and local taxes, duties and
levies relating to any goods subject to any Letters of Credit or any documents,
drafts or acceptances thereunder. Company hereby releases and holds Agent, any
Issuing Bank and the other Banks harmless from and against any acts, waivers,
errors, delays or omissions, whether caused by Company, by any issuer or
correspondent or otherwise with respect to or relating to any Letters of Credit
(except to the extent arising from the gross negligence or willful misconduct on
the part of the Agent, such Issuing Bank or the other Banks, as the case may
be). The provisions of this Section 2.2(d) shall survive the payment of
obligations and the termination or non-renewal of this Agreement.

(f) Credit. Nothing contained herein shall be deemed or construed to grant
Company any right or authority to pledge the credit of Agent, the Issuing Bank
or any other Bank in any manner. Company shall be bound by any interpretation
made in good faith by Agent, any Issuing Bank or any other Banks under or in
connection with any Letter of Credit or any documents, drafts or acceptances
thereunder, notwithstanding that such interpretation may be inconsistent with
any instructions of Company. Agent shall have the sole and

 

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exclusive right and authority to, and Company shall not: (i) at any time an
Event of Default exists or has occurred and is continuing, (A) approve or
resolve any questions of non-compliance of documents, (B) give any instructions
as to acceptance or rejection of any documents or goods or (C) execute any and
all indemnities or delivery orders and (ii) at all times, (A) grant any
extensions of the maturity of, time of payment for, or time of presentation of,
any drafts, acceptances, or documents, and (B) agree to any amendments,
renewals, extensions, modifications, changes or cancellations of any of the
terms or conditions of any of the applications, Letters of Credit, or documents,
drafts or acceptances thereunder. Agent may take such actions either in its own
name or in Company’s name.

(g) Correspondents. Any rights, remedies, duties or obligations granted or
undertaken by Company to Agent or any correspondent in any application for any
Letter of Credit, or any other agreement in favor of Agent or any Issuing Bank
or any correspondent relating to any Letter of Credit, shall be deemed to have
been granted or undertaken by Company to Agent or such Issuing Bank. Any duties
or obligations undertaken by Company to Agent or any Issuing Bank or any
correspondent in any application for any Letter of Credit, or any other
agreement by Agent, any Issuing Bank or any other Bank in favor of Agent, any
Issuing Bank or any correspondent relating to any Letter of Credit, shall be
deemed to have been undertaken by Company to Agent, such Issuing Bank and the
other Banks and to apply in all respects to Company.

(h) Conditions Precedent. No Issuing Bank shall have an obligation to issue any
Letter of Credit hereunder unless and until all conditions precedent in Sections
5 and 6 hereof are satisfied.

(i) Events of Default. Without limiting any of the rights and remedies of the
Agent, any Issuing Bank or the other Banks hereunder or otherwise, upon the
occurrence of an Event of Default, Agent and each Issuing Bank may, at its
option, without notice, (1) cease issuing or arranging for Letters of Credit or
reduce the amounts of Letters of Credit available to Company and/or
(2) terminate any commitment providing for any future Letters of Credit to be
made available by Agent or such Issuing Bank for Company. In addition to the
foregoing, upon termination of the Agreement, neither the Agent nor any Issuing
Bank shall have any obligation or commitment to issue Letters of Credit.

(j) Fees; Reimbursement. Company shall pay all charges, fees and expenses
reasonably incurred by Agent or any Issuing Bank or charged by any Issuing Bank,
other Bank or Agent in connection with the Letters of Credit.

(k) Participations.

(i) Prior to issuance by the Issuing Bank of any Letter of Credit, the Agent
shall notify each Bank of the issuance thereof. Immediately upon the issuance by
the Issuing Bank of any Letter of

 

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Credit, each Bank shall be deemed to have irrevocably and unconditionally
purchased and received from such Issuing Bank, without recourse or warranty, an
undivided interest and participation equal to the pro rata share of such Bank in
all Letters of Credit and obligations arising in connection with such Letter of
Credit and any security therefor or guaranty pertaining thereto, but in no event
greater than an amount which, when added to such Bank’s Revolving Credit
Commitment with respect to Loans then outstanding, exceeds such Bank’s Revolving
Credit Commitment.

(ii) If the Issuing Bank makes a payment on a Letter of Credit and the Company
does not on such date repay or cause to be repaid the amount of such payment,
the Issuing Bank shall promptly notify the Agent and the Agent shall promptly
notify each Bank of such payment and each Bank shall promptly and
unconditionally pay to Agent, for the benefit of the Issuing Bank, in
immediately available funds, the amount of such Bank’s pro rata share of such
payment. If a Bank does not make its pro rata share of the amount of such
payment available to Agent, such Bank agrees to pay to Agent, for the benefit of
the Issuing Bank, forthwith on demand such amount together with interest thereon
at the Federal Funds Effective Rate. The failure of any Bank to make available
to Agent such Bank’s pro rata share shall not relieve any other Bank of its
obligation hereunder to make available to Agent its pro rata share, but no Bank
nor the Agent shall be responsible for the failure of any other Bank to make
available to Agent, for the benefit of the Issuing Bank, its pro rata share on
the date such payment is to be made.

(iii) Whenever the Agent receives a payment on account of the Letters of Credit,
including any interest thereon, as to which Agent has previously received
payments from any Bank, the Agent shall promptly pay to each Bank which has
funded its participating interest therein, in immediately available funds, an
amount equal to such Bank’s pro rata share thereof.

(iv) The obligation of each Bank to make payments to Agent, for the benefit of
the Issuing Bank, in connection with any payment under a Letter of Credit shall
be absolute, unconditional and irrevocable, not subject to any counterclaim,
setoff, qualification or exception whatsoever (other than for the gross
negligence or willful misconduct of the Agent or the Issuing Bank), and shall be
made in accordance with the terms and conditions of this Agreement under all
circumstances and irrespective of whether or not the Company may assert or have
any claim for any lack of validity or unenforceability of this Agreement or any
of the other Loan Documents; the existence of any Event of Default; any draft,
certificate or other document presented under a Letter of Credit having been
determined to be forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect; or the
existence of any setoff or defense the Company may have with respect to any of
the Loans or Letters of Credit.

 

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(v) Neither the Agent nor any Issuing Bank nor any of their respective officers,
directors, employees or agents shall be liable to any Banks for any action taken
or omitted to be taken under or in connection with any of the Letters of Credit
except as a result of gross negligence or willful misconduct on the part
thereof. The Agent and each Issuing Bank do not assume any responsibility for
any failure or delay in performance or breach by the Company or any other Person
of any of its obligations under any of the Letters of Credit or any documents,
instruments, or agreements executed or delivered in connection therewith.
Neither the Agent nor any Issuing Bank makes to Banks any express or implied
warranty, representation or guaranty with respect to the Letters of Credit or
the Company. The Agent and each Issuing Bank shall not be responsible to any
Bank for any recitals, statements, information, representations or warranties
contained in, or for the execution, validity, genuineness, effectiveness or
enforceability of or any of the Letters of Credit or any documents, instruments,
or agreements executed or delivered in connection therewith; or the assets,
liabilities, financial condition, results of operations, business,
creditworthiness or legal status of the Company. With respect to any claims by
Banks, in connection with its administration of and enforcement of rights or
remedies under any of the Letters of Credit or any documents, instruments, or
agreements executed or delivered in connection therewith, the Issuing Bank shall
be entitled to act, and shall be fully protected in acting upon, any
certification, notice or other communication in whatever form believed by such
Issuing Bank, in good faith, to be genuine and correct and to have been signed
or sent or made by a proper Person. With respect to any claims by Banks, the
Agent and any applicable Issuing Bank may consult with and employ legal counsel,
accountants and other experts and to advise it concerning its rights, powers and
privileges under the Letters of Credit and shall be entitled to act upon, and
shall be fully protected in any action taken in good faith reliance upon, any
advice given by such experts. With respect to any claims by Banks, the Agent
and/or any Issuing Bank may employ agents and attorneys-in-fact in connection
with any matter relating to the Letters of Credit and shall not be liable for
the negligence, default or misconduct of any such agents or attorneys-in-fact
selected with reasonable care. Neither the Agent nor any Issuing Bank shall have
any liability to any Bank by reason of the Agent’s or such Issuing Bank’s
refraining to take any action under any of the Letters of Credit or any
documents, instruments, or agreements executed or delivered in connection
therewith without having first received written instructions from the Majority
Banks to take such action. The Agent and each Issuing Bank will use the same
degree of care and skill in administering all matters concerning any Letters of
Credit as it exercises in the administration of similar letters of credit issued
by it in which no participations exist. The applicable Issuing Bank shall be
solely responsible for examining drawing documents presented with any drawing
under any Letter of Credit in accordance with standards it applies to other
Letters of Credit issued by it.

 

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(vi) Each Bank agrees to indemnify and defend Agent and any applicable Issuing
Bank (to the extent the Agent or such Issuing Bank is not reimbursed by Company,
but without limiting the indemnification obligations of Company under this
Agreement), on a pro rata basis, from and against any and all claims which may
be imposed on, incurred by or asserted against Agent or such Issuing Bank in any
way related to or arising out of the administration or enforcement of rights or
remedies under any of the Letters of Credit or any of the transactions
contemplated thereby (including costs and expenses which Company is obligated to
pay hereunder), provided that no Bank shall be liable to Agent or such Issuing
Bank for any of the foregoing to the extent that they result solely from the
Agent’s or such Issuing Bank’s willful misconduct or gross negligence.

2.3. Procedure for Borrowings.

The Company may effect a Borrowing of a Loan on any Business Day occurring on or
after the Effective Date by giving the Agent an irrevocable written notice of
borrowing (each, a “Borrowing Request” in the form of Exhibit C) (which
Borrowing Request must be received by the Agent (a) prior to 10:00 a.m., Boston
time, three Business Days (or fewer days, if each Bank in its sole discretion
agrees) prior to the requested Borrowing Date, if the Company is requesting that
LIBOR Loans be made as part of such Borrowing, and (b) prior to 10:00 a.m.,
Boston time, one Business Day prior to the requested Borrowing Date, if the
Company is requesting that Alternate Base Rate Loans be made as part of such
Borrowing), specifying (i) the amount to be borrowed, (ii) the requested
Borrowing Date, (iii) whether such Borrowing is to consist of LIBOR Loans,
Alternate Base Rate Loans or a combination thereof, and (iv) if the Loans are to
be LIBOR Loans, the length of the initial Interest Period for each thereof.
Subject to the provisions of Sections 2.8 and 2.9, Loans may be Alternate Base
Rate Loans or LIBOR Loans, or any combination thereof. If the Borrower fails to
specify a Type of Loan in a Borrowing Request or if the Borrower fails to give a
timely notice requesting a conversion or continuation, then the applicable Loans
shall be made as, or converted to, Alternative Base Rate Loans. If the Borrower
requests a Borrowing of, conversion to or continuation of LIBOR Loans in any
Borrowing Request, but fails to specify an Interest Period, it will be deemed to
have specified an Interest Period of one month.

Each Borrowing shall be in an aggregate principal amount equal to or greater
than $100,000 or, if less, the undrawn balance of the Revolving Credit
Commitments. The principal amount of each Bank’s Revolving Credit Loan made on a
Borrowing Date shall be in an amount equal to such Bank’s Revolving Credit
Commitment Percentage of the Revolving Credit Loans made on such Borrowing Date.

Upon receipt of each Borrowing Request from the Company, the Agent shall
promptly notify each Bank thereof (such notice to be promptly confirmed in
writing). Each Bank will make the amount of its Commitment Percentage of each
Borrowing available to the

 

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Agent for the account of the Company at the office of the Agent set forth in
Section 11.1, not later than 12:00 noon (or 2:00 pm in the case of an Alternate
Base Rate Loan), Boston time on the Borrowing Date requested by the Company, in
funds immediately available to the Agent at such office. Amounts so made
available to the Agent on a Borrowing Date will, subject to the satisfaction of
the terms and conditions of this Agreement as determined by the Agent, be made
immediately available on such date to the Company by the Agent at the office of
the Agent specified in Section 11.1 by crediting the account of the Company on
the books of such office with the aggregate of said amounts, in like funds as
received by the Agent.

Unless the Agent shall have received prior notice from a Bank (by telephone or
otherwise, such notice to be promptly confirmed by telex, telecopy or other
writing) that such Bank will not make available to the Agent such Bank’s pro
rata share of the Loans requested by the Company, the Agent may assume that such
Bank has made such share available to the Agent on such Borrowing Date in
accordance with this paragraph; provided that such Bank received notice of the
proposed borrowing from the Agent, and the Agent may, in reliance upon such
assumption, make available to the Company on such Borrowing Date a corresponding
amount. If and to the extent such Bank shall not have so made such pro rata
share available to the Agent on such Borrowing Date, such Bank shall pay to the
Agent on demand (in addition to such Bank’s pro rata share of the Loans to be
funded on such Borrowing Date) an amount equal to the product of (i) the average
computed for the period referred to in clause (iii) below, of the weighted
average interest rate paid by the Agent for federal funds acquired by the Agent
during each day included in such period, times (ii) the amount of such Bank’s
Commitment Percentage of such Loans, times (iii) a fraction, the numerator of
which is the number of days that elapse from and including such Borrowing Date
to the date on which the amount of such Bank’s Commitment Percentage of such
Loans shall become immediately available to the Agent, and the denominator of
which is 365. Such Bank shall not be entitled to receive interest on its pro
rata share of the Loans for any period prior to the date it actually funds its
pro rata share. If and to the extent such Bank shall not have so made such pro
rata share available to the Agent within three (3) days following such Borrowing
Date (and if and to the extent Agent has funded Bank’s pro rata share of the
Loans), the Company shall pay to the Agent forthwith on demand (but without
duplication) an amount equal to such Bank’s Commitment Percentage of such Loans,
together with interest thereon for each day from the date such amount is made
available to the Company until the date such amount is paid to the Agent, at the
applicable interest rate for such Loans as set forth in Section 2.8. Such
payment by the Company, however, shall be without prejudice to its rights
against such Bank.

2.4. Notes.

(a) Loans made by each Bank with respect to Alternate Base Rate Loans and LIBOR
Loans shall be evidenced by a promissory note of the Company, substantially in
the form of Exhibit D, all with appropriate insertions therein (as endorsed and
as amended or otherwise modified from time to time, a “Note” and, collectively,
the “Notes”), payable to the order of such Bank and representing the obligation
of the Company to pay the aggregate unpaid principal amount of all Loans made by
such Bank, with interest thereon as prescribed or determined herein. Each Bank
is hereby authorized to record the date and amount of each Loan made by such
Bank and the other information applicable thereto, and each payment or
prepayment of principal of such Loan, on the applicable grid (and any
continuations thereof annexed to and constituting a part of its Notes. No
failure to so record or any error in so recording shall affect the obligation of
the Company to repay such Loans, with interest thereon, as herein provided.

 

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(b) If all Governmental Approvals are received by the Borrower on or prior to
the Effective Date, the Company shall issue Note to each Bank (each a “Note”).
Each Note shall (i) be dated as of the Effective Date, (ii) be stated to mature
on the Final Maturity Date and (iii) bear interest for the period from and
including the date thereof on the unpaid principal amount thereof from time to
time outstanding at the applicable interest rate per annum determined as
provided herein.

(c) If all required Government Approvals have not been received by the Borrower
on or prior to the Effective Date, then on the Effective Date the Company shall
issue a Note to each Bank (each, an “Initial Note”). Each Initial Note shall
(i) be dated as of the Effective Date, (ii) be stated to mature on the Initial
Maturity Date and (iii) bear interest for the period from and including the date
thereof on the unpaid principal amount thereof from time to time outstanding at
the applicable interest rate per annum determined as provided herein.

(d) If all Governmental Approvals were not received on the Effective Date but
are received before the date which is 30 days prior to the Initial Maturity
Date, the Company shall issue new a Note to each Bank (each a “Replacement
Note”). Each Replacement Note shall (i) be dated as of the Effective Date,
(ii) be stated to mature on the Final Maturity Date and (iii) bear interest for
the period from and including the date thereof on the unpaid principal amount
thereof from time to time outstanding at the applicable interest rate per annum
determined as provided herein. Upon each Bank’s receipt of the applicable
Replacement Note, such Bank will stamp “Cancelled” upon such Bank’s Initial Note
and return the Initial Note to the Company via overnight courier, at the sole
cost and expense of the Company.

2.5. Reductions of the Aggregate Revolving Credit Commitments.

(a) Voluntary Reductions of Revolving Credit Commitments. During the period from
the Effective Date to the Maturity Date the Company shall have the right, upon
at least two Business Days’ prior written notice to the Agent, to reduce
permanently the Aggregate Commitments in whole at any time, or in part from time
to time, without premium or penalty, provided, however, that (A) each partial
reduction of such Aggregate Commitments shall be in an amount equal to at least
$500,000 or such amount plus a whole multiple of $500,000, and (B) such
Aggregate Commitments shall not be reduced to an amount less than the aggregate
principal balance of the Loans outstanding on the date of such reduction (after
giving effect to reductions in such balance made on such date).

(b) General. Reductions of the Aggregate Commitments under clause (a) above
shall reduce each Bank’s Commitment pro rata according to the Commitment
Percentage of such Bank. The Agent shall promptly notify each Bank of each
reduction in the Aggregate Commitments under clause (a) above upon its receipt
of notice thereof, and remit to each Bank its pro rata share of any accompanying
prepayments of the Loans according to the outstanding principal balance of the
Loans. Simultaneously with each reduction of the Aggregate Commitments under
this Section 2.5, the Company shall prepay the Revolving Credit Loans in the
amount, if any, by which the aggregate unpaid principal balance of the Loans
exceeds the amount of the Aggregate Commitments as so reduced.

 

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If any prepayment is made under this Section 2.5 or Section 2.6 with respect to
any LIBOR Loans, in whole or in part, prior to the last day of the applicable
Interest Period with respect thereto, the Company agrees that it shall indemnify
the Banks in accordance with Section 2.12. After giving effect to any prepayment
with respect to LIBOR Loans, no LIBOR Loans made (whether as a result of
Borrowing or a conversion) on the same date and having the same Interest Period
shall be outstanding in an aggregate principal amount of less than $500,000.

2.6. Prepayments and Payment of Loans.

(a) Voluntary Prepayments. The Company may, at its option, prepay Alternate Base
Rate Loans or LIBOR Loans in whole or in part, without premium or penalty,
subject to its obligation to indemnify provided in Section 2.12 (in the case of
LIBOR Loans), at any time and from time to time upon at least one (1) Business
Day’s prior irrevocable written notice to the Agent with respect to Alternate
Base Rate Loans and at least three (3) Business Days prior irrevocable written
notice to the Agent with respect to LIBOR Loans, in each case specifying the
amount to be prepaid, and the date and amount of prepayment. Upon receipt of
such notice, the Agent shall promptly notify each Bank thereof. Any such notice
shall be irrevocable and the amount specified in such notice shall be due and
payable on the date specified therein, together with accrued interest to the
date of such payment on the amount being prepaid. Prepayments shall be in an
aggregate principal amount of at least Five Hundred Thousand ($500,000) Dollars,
or, if less, the outstanding principal balance of the applicable Notes,
provided, however, that after giving effect to any such prepayment, no LIBOR
Loans made (whether as the result of Borrowing or a conversion) on the same date
and having the same Interest Period shall be outstanding in an aggregate
principal amount of less than $500,000.

(b) Mandatory Repayment. On the applicable Maturity Date, (i) the Company shall
repay in full the aggregate principal balance of all Revolving Credit Loans
outstanding on such date, together with accrued interest on such amount to such
date and any Facility Fees, Closing Fees, Usage Fees, Agent’s Fees or other
amounts owing hereunder with respect to the Letters of Credit, the Revolving
Credit Loans or under the Revolving Credit Notes and (ii) with respect to any
then outstanding Letters of Credit, will either furnish cash collateral to
secure the reimbursement obligations to the Agent in connection with any Letters
of Credit or furnish cash collateral to the Agent for the Letters of Credit in
an amount equal to 105% of the aggregate face amount of such Letters of Credit
in accordance with Section 2.2(d) hereof.

2.7. Conversion Options.

(a) Conversion of Loans. The Company may elect from time to time to convert
LIBOR Loans to Alternate Base Rate Loans by giving the Agent at least one
Business Day’s prior written notice of such election (a “Conversion/Continuation
Request”) (in substantially the form of the Conversion/Continuation Request
attached hereto as Exhibit E), specifying the amount to be so converted,
provided, that any such conversion of LIBOR Loans shall only be made on the last
day of the Interest Period applicable thereto. In addition, in the absence of an
Event of Default, the Company may elect from time to time to convert Alternate
Base Rate Loans to

 

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LIBOR Loans, by giving the Agent at least three Business Day’s (or fewer days,
if each Bank in its sole discretion agrees) prior irrevocable notice of such
election, specifying the amount to be so converted and the Interest Period
selected, provided that any such conversion of Alternate Base Rate Loans to
LIBOR Loans shall only be made on a Business Day. In either case, the
Conversion/Continuation Notice shall be substantially in the form of the
Conversion/Continuation Request in the form of Exhibit E. The Agent shall
promptly provide the Banks with notice of any such election. Loans may be
converted pursuant to this Section 2.7, in whole or in part, provided that
conversions of Alternate Base Rate Loans to LIBOR Loans or LIBOR Loans to
Alternate Base Rate Loans shall each be in an aggregate principal amount of at
least $500,000. After giving effect to any such conversion, no LIBOR Loans made
(whether as the result of a borrowing or a conversion) on the same date and
having the same Interest Period shall be outstanding in an aggregate principal
amount of less than $500,000.

(b) Continuation of Loans. Any LIBOR Loans may be continued as such upon the
expiration of any Interest Period with respect thereto by the Company’s giving
irrevocable written notice (in substantially the form of the
Continuation/Conversion Request attached hereto as Exhibit E) to the Agent of
its intention to do so three Business Days (or fewer days, if each Bank in its
sole discretion agrees) prior to the last day of such Interest Period,
specifying the new Interest Period therefor, provided, however, that (i) if the
Company shall fail to give notice as provided above, the relevant LIBOR Loan
shall convert to an Alternate Base Rate Loan immediately upon the expiration of
the then current Interest Period with respect thereto, (ii) any LIBOR Loans that
are being continued as such shall be in an aggregate principal amount of at
least $500,000 and (iii) no LIBOR Loans may be continued as such when any Event
of Default has occurred and is continuing, but shall be automatically converted
to an Alternate Base Rate Loan on the last day of the Interest Period with
respect thereto during which the Agent obtained knowledge of such Event of
Default. The Agent shall notify the Banks promptly upon obtaining knowledge that
an automatic conversion will occur pursuant to clause (iii) hereof.

2.8. Interest Rate and Payment Dates for Loans.

(a) Interest Rates for Loans Prior to Maturity. (i) Loans made as Alternate Base
Rate Loans shall bear interest for the period from and including the date
thereof, or, in the case of a Loan that has been converted from a LIBOR Loan,
from the Conversion Date thereof, until maturity or until converted into LIBOR
Loans, on the unpaid principal amount thereof at the Alternate Base Rate and
(ii) Loans made as LIBOR Loans shall bear interest for each Interest Period with
respect thereto on the unpaid principal amount thereof at the sum of the
applicable rate of interest per annum based on LIBOR for each such Interest
Period plus the Applicable Margin. Any change in the Applicable Margin with
respect to any Loans resulting from a change in the Debt Rating of the Company
shall be effective as of the opening of business on the day of the change in the
Debt Rating of the Company.

(b) Overdue Amounts. If any amounts payable hereunder shall not be paid when due
(whether at the stated maturity thereof, by acceleration, notice of intention to
prepay or otherwise), such overdue amounts shall bear interest payable on demand
at a rate per annum equal to 2% above the (i) Alternate Base Rate for Alternate
Base Rate Loans at such time from the date of such nonpayment until paid in
full, and whether before or after the entry of any judgment thereon and (ii) sum
of the applicable LIBOR plus the Applicable Margin for LIBOR Loans, from the
date of such nonpayment until the end of the Interest Period with respect
thereto and whether before or after the entry of any judgment thereon.

 

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(c) General. Interest on the Loans shall be payable in arrears on each Interest
Payment Date and upon payment (including prepayment) in full thereof; provided,
however, that after an Event of Default has occurred and is continuing, interest
on all Loans shall be payable on demand made from time to time.

(d) Interest Rate Hedging. The Company and each and every Bank, each in their
individual discretion, may enter with each other into interest rate hedging
agreements or instruments with respect to the Company’s obligations under this
Agreement.

2.9. Substituted Interest Rate. In the event that the Agent shall have
reasonably determined in good faith (which determination shall be conclusive and
binding upon the Company) that by reason of circumstances affecting the London
interbank market, (i) either adequate and reasonable means do not exist for
ascertaining the applicable LIBOR applicable pursuant to Section 2.8(a) or
(ii) any Bank shall have notified the Agent that it has reasonably determined in
good faith (which determination shall be conclusive and binding on the Company)
that the applicable LIBOR will not adequately and fairly reflect the cost to
such Bank of making or maintaining its funding of a LIBOR Loan with respect to
(a) a proposed Loan that the Company has requested be made as a LIBOR Loan or
(b) a LIBOR Loan that will result from the requested conversion of any Loan into
a LIBOR Loan (any such Loan being herein called an “Affected Loan”), the Agent
shall promptly notify the Company and the Banks (by telephone or otherwise) of
such determination no later than 10:00 a.m. (Boston time) one Business Day prior
to the requested Borrowing Date for such Affected Loan, or the requested
Conversion Date of such Loan, as the case may be. If the Agent shall give such
notice, the Company may by no later than 11:00 a.m. (Boston time) on the same
Business Day, (i) cancel the Borrowing Request and/or Continuation/Conversion
Request with respect to such Affected Loan or request that such Affected Loan be
made as an Alternate Base Rate Loan in accordance with Section 2.3 hereof or
(ii) cancel its request to convert to an Affected Loan or request that any Loan
that was to have been converted to an Affected Loan be converted to an Alternate
Base Rate Loan in accordance with Section 2.7 hereof. Until such notice has been
withdrawn by the Agent (by notice to the Company promptly upon the Agent having
been notified by such Bank that circumstances would no longer render any Loan an
Affected Loan) no further Affected Loans shall be made and Company shall not
have the right to convert any Loan to an Affected Loan.

2.10. Illegality. Notwithstanding any provision hereof to the contrary, if any
change in any law, regulation, treaty or directive, or in the interpretation or
application thereof, shall make it unlawful for any Bank to make or maintain
LIBOR Loans as contemplated by this Agreement, (a) the commitment of such Bank
hereunder to make LIBOR Loans or to convert Alternate Base Rate Loans to LIBOR
Loans or to continue LIBOR Loans as such shall forthwith be suspended and
(b) such Bank’s Loans then outstanding as LIBOR Loans shall be converted to
Alternate Base Rate Loans on the last day of the then current Interest Period
applicable thereto, or within such earlier period as required by law. If the
commitment of any Bank with respect to LIBOR Loans is suspended pursuant to this
Section 2.10 and it shall once again become legal for such Bank to make or
maintain its funding of LIBOR Loans, such Bank’s commitment to make or maintain
such LIBOR Loans shall be reinstated. Each Bank agrees to promptly notify the
Company and the Agent upon learning of any change referred to above, as well as
of any reinstatement of its ability to make and maintain LIBOR Loans as
contemplated by this Agreement.

 

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2.11. Increased Costs.

In the event that any change in any law, regulation, treaty or directive or in
the interpretation or application thereof by any Governmental Body charged with
the administration thereof or compliance by any Bank with any request or
directive from any central bank or other Governmental Body (a “Regulatory
Change”):

(i) subjects any Bank to any tax of any kind whatsoever with respect to any
LIBOR Loan or its obligations under this Agreement to make LIBOR Loans, or
changes the basis of taxation of payments to such Bank of principal, interest or
any other amount payable hereunder in respect of its LIBOR Loans (except for
imposition of, or change in the rate of, tax on the overall net income of such
Bank);

(ii) imposes, modifies or makes applicable any reserve, special deposit,
compulsory loan, assessment or similar requirement against assets held by, or
deposits of, or advances or loans by, or other credit committed or extended by,
or any other acquisition of funds by, any office of such Bank in respect of its
LIBOR Loans which is not otherwise included in the determination of LIBOR; or

(iii) imposes on such Bank any other condition with respect to Loans hereunder,
the Commitments, or Letters of Credit;

and the result of any of the foregoing is to increase the cost to such Bank of
making, renewing, converting or maintaining its LIBOR Loans, or to reduce any
amount receivable in respect of its LIBOR Loans, then, in any such case, the
Company shall promptly pay to such Bank, upon its demand, any additional amounts
necessary to compensate such Bank for such additional cost or reduction in such
amount receivable. A statement setting forth the calculations of any additional
amounts payable pursuant to the foregoing sentence submitted by a Bank to the
Company shall be presumed to be correct absent manifest error.

2.12. Indemnity. Notwithstanding anything contained herein to the contrary, if
the Company shall fail to borrow on a Borrowing Date after it shall have given a
Borrowing Request, to the extent only that such Borrowing Request includes LIBOR
Loans, or if the right of the Company to have LIBOR Loans outstanding hereunder
shall be suspended or terminated in accordance with the provisions of this
Agreement prior to the last day of the Interest Period applicable thereto, or
if, while a LIBOR Loan is outstanding, any repayment or prepayment of the
principal amount of such LIBOR Loan is made for any reason (including, without
limitation, as a result of acceleration or illegality) on a date which is prior
to the last day of the Interest Period applicable thereto, the Company agrees to
indemnify each Bank against, and to pay on demand directly to such Bank, an
amount, if greater than zero, equal to (i):

 

A x (B-C)   x   D 

 

    365

where:

“A” equals the Affected Principal Amount;

 

22

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“B” equals LIBOR (expressed as a decimal), as the case may be, applicable to
such LIBOR Loan;

“C” equals the applicable LIBOR (expressed as a decimal), as the case may be, in
effect on the date of such failure to borrow, termination, prepayment or
repayment, based on the applicable rates offered or bid, as the case may be, on
such date (or, if no such rate is determinable on such date, the rate or rates
offered or bid, as the case may be, determinable on the date closest thereto),
for deposits in an amount equal approximately to the Affected Principal Amount
with an Interest Period equal approximately to the period commencing on the
first day of such Remaining Interest Period and ending on the last day of such
Remaining Interest Period or ending on the last day of the applicable Interest
Payment Period, as the case may be, as determined by the Bank;

“D” equals the number of days from and including the first day of the Remaining
Interest Period to but excluding the last day of such Remaining Interest Payment
Period;

and (ii) any additional amounts necessary to compensate such Bank for such
additional cost or reduction in such amount receivable and any other
out-of-pocket loss or expense (including any internal processing charge
customarily charged by such Bank) suffered by such Bank in liquidating deposits
prior to maturity in amounts which correspond to the proposed borrowing,
prepayment or repayment. The determination by each Bank of the amount of any
such loss or expense shall be presumed to be correct absent manifest error.

2.13. Use of Proceeds. The proceeds of the Loans shall be used only to refinance
the existing debt of the Company (including the obligations owed under the Prior
Credit Agreement), for working capital, capital expenditures, and other general
corporate purposes (including, without limitation, the acquisition of capital
stock of the Company to the extent otherwise permitted hereunder).

2.14. Capital Adequacy. If either (i) the introduction of, or any change or
phasing in of, any law or regulation or in the interpretation thereof by any
Governmental Body charged with the administration thereof or (ii) compliance
with any directive, guideline or request from any central bank or Governmental
Body (whether or not having the force of law) promulgated or made after the date
hereof (but including, in any event, any law, rule, regulation, interpretation,
directive, guideline or request contemplated by the report dated July 1988
entitled “International Convergence of Capital Measurement and Capital
Standards” issued by the Basle Committee on Banking Regulations and Supervisory
Practices) affects or would affect the amount of capital required or expected to
be maintained by a Bank (or any lending office of such Bank) or any

 

23

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corporation directly or indirectly owning or controlling such Bank (or any
lending office of such Bank) and such Bank shall have determined that such
introduction, change or compliance has or would have the effect of reducing the
rate of return on such Bank’s capital or the asset value to such Bank of any
Loan made by such Bank as a consequence, directly or indirectly, of its
obligations to make and maintain the funding of Loans hereunder to a level below
that which such Bank could have achieved but for such introduction, change or
compliance (after taking into account such Bank’s policies regarding capital
adequacy) by an amount deemed by such Bank to be material then, upon demand by
such Bank, the Company shall promptly pay to such Bank such additional amount or
amount as shall be sufficient to compensate such Bank for such reduction on the
rate of return. Each Bank shall calculate such amount or amounts payable to it
under this paragraph 2.14 in a manner consistent with the manner in which it
shall calculate similar amounts payable to it by other borrowers having
provisions in their credit agreements comparable to this paragraph 2.14. Each
Bank agrees to provide the Company with a certificate setting forth a
description of any such amount in respect of which it seeks payment under this
Section 2.14. Each Bank’s determination of such amount or amounts that will
compensate such Bank for such reductions shall be presumed correct absent
manifest error.

2.15. Notice of Costs: Substitution of Banks. Each Bank will notify the Company
of any event that will entitle such Bank to compensation under Sections 2.11 and
2.14 as promptly as practicable, but in any event within 45 days after an
officer of the Bank responsible for matters concerning this Agreement has
knowledge of such event. If such Bank fails to give such notice, such Bank shall
only be entitled to such compensation for the period commencing forty-five
(45) days prior to the date of the giving of such notice. Each Bank shall use
its best efforts to avoid the need to give a notice under Section 2.11 or 2.14
by designating a different Applicable Lending Office outside of the United
States if such designation would avoid the need to give such notice and will
not, in the sole opinion of such Bank, be disadvantageous to such Bank. In the
event the Company receives such notice or is otherwise required under the
provisions of Section 2.11 or 2.14 to make payments in a material amount to any
Bank, the Company may, so long as no Event of Default shall have occurred and be
continuing, elect to substitute such Bank as a party to this Agreement; provided
that, concurrently with such substitution, (i) the Company shall pay that Bank
all principal, interest and fees and other amounts (including without
limitation, amounts, if any, owed under Section 2.2, 2.11, 2.12 or 2.14) owed to
such Bank in connection with the Loans and any applicable fees in connection
with the Letters of Credit through such date of termination, (ii) another
commercial bank satisfactory to the Company and the Agent (or if the Agent is
also the Bank to be substituted, the successor Agent) shall agree, as of such
date, to become a Bank (whether by assignment or amendment) for all purposes
under this Agreement and to assume all obligations of the Bank to be substituted
as of such date, and (iii) all documents, supporting materials and fees
necessary, in the judgment of the Agent (or if the Agent is also the Bank to be
substituted, the successor Agent) to evidence the substitution of such Bank
shall have been received and approved by the Agent as of such date.

2.16. Extension of Maturity Date.

If all required Governmental Approvals are not received on or prior to the
Effective Date but are received prior to the date which is 30 days prior to the
Initial Maturity Date, and subject to (i) the terms and conditions set forth in
this Agreement (including satisfaction of the

 

24

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conditions precedent set forth in Sections 5 and 6 hereof), (ii) the receipt by
the Company of all necessary Governmental Approvals, including, without
limitation, the approval of the VPSB of the Credit Agreement, or the
determination by VPSB that its approval is not required, (iii) the payment of
the portion of the Closing Fee not paid on the Effective Date and (iv) the
receipt by each Bank of an executed Replacement Note in the form described in
Section 2.4(c) made payable to such Bank, upon the delivery of a written notice
to the Agent by the Company substantially in the form of Exhibit I hereto (an
“Extension Request”), no later than thirty (30) days prior to the Initial
Maturity Date, the aggregate principal amount of all Revolving Credit Loans
remaining outstanding on the close of the Agent’s business on the Initial
Maturity Date shall automatically convert to Revolving Loans of like amount with
a Maturity Date of June 14, 2011.

2.17. Increase in Commitments.

(a) Request for Increase. Provided there exists no Default or Event of Default,
upon notice to the Agent (which shall promptly notify the Banks), the Borrower
may, from time to time, request an increase in the Aggregate Commitments by an
amount (for all such requests) not exceeding $15,000,000.00; provided that
(i) any such request for an increase shall be in a minimum amount of $5,000,000,
(ii) the Borrower may make a maximum of three (3) such requests and (iii) each
Bank shall have a right of first refusal to increase its Commitment by an amount
equal to its Pro Rata Share of such requested increase. At the time of sending
such notice, the Borrower (in consultation with the Agent) shall specify the
time period within which each Bank is requested to respond (which shall in no
event be less than ten (10) Business Days from the date of delivery of such
notice to the Bank).

(b) Bank Elections to Increase. Each Bank shall notify the Agent in writing
within such time period whether or not it agrees to increase its Commitment by
an amount less than or equal to its Pro Rata Share of such requested increase.
Any Bank not responding within such time period shall be deemed to have declined
to increase its Commitment.

(c) Notification by Agent; Additional Banks. The Agent shall notify the Borrower
and each Bank of the Banks’ responses to each request made hereunder. To achieve
the full amount of a requested increase and subject to the approval of the Agent
(which approval shall not be unreasonably withheld), the Borrower may also
invite additional Eligible Assignees to become Banks pursuant to a joinder
agreement in form and substance reasonably satisfactory to the Agent and its
counsel.

(d) Effective Date and Allocations. If the Aggregate Commitments are increased
in accordance with this Section, the Agent and the Borrower shall determine the
effective date (the “Increase Effective Date”). The Agent shall promptly notify
the Borrower and the Banks of the Increase Effective Date.

(e) Conditions to Effectiveness of Increase. As a condition precedent to such
increase, the Borrower shall deliver to the Agent a certificate, dated as of the
Increase Effective Date signed by a Responsible Officer of the Borrower
(i) certifying and attaching the resolutions adopted by the Borrower approving
or consenting to such increase and (ii) certifying that, before and after giving
effect to such increase, (A) all Governmental Approvals required in connection

 

25

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with such increase have been received; (B) the representations and warranties
contained in Section 3 and the other Loan Documents are true and correct in all
material respects on and as of the Increase Effective Date, except to the extent
that such representations and warranties specifically refer to an earlier date,
in which case they are true and correct in all material respects as of such
earlier date and (C) no Default or Event of Default exists.

3. FEES; PAYMENTS.

3.1. Facility Fee. The Company agrees to pay to the Agent for the account of the
those Banks with Commitments or Loans outstanding a fee (the “Facility Fee”)
equal to the rate per annum determined by reference to Schedule II on Exhibit B
hereto based upon the Debt Rating of the Company multiplied by the Aggregate
Commitments, which Facility Fee shall be payable in arrears on the last day of
each March, June, September and December of each year, commencing on the first
such date following the Effective Date and continuing until the later of the
Maturity Date or the date on which all Commitments are terminated and all sums
due hereunder in respect of Loans and under the Notes are paid in full; provided
that if the Company has no Debt Rating, the Facility Fee shall be determined at
the highest rate per annum for the relevant period set forth on Exhibit B.

3.2. Fees of the Agent. The Company agrees to pay to the Agent for its own
account, such fees (the “Agent’s Fees”) for its services hereunder in such
amounts and at such times as previously agreed upon by the Company and the Agent
under that certain Agent’s Fee Letter dated as of or about the date hereof.

3.3. Computation of Interest and Fees.

(a) Interest in respect of Alternate Base Rate Loans and all other fees payable
by the Company hereunder shall be calculated on the basis of a 365-day year (or
366-day year in a leap year) for the actual number of days elapsed. Interest in
respect of LIBOR Loans shall be calculated on the basis of a 360-day year for
the actual number of days elapsed. Any change in the interest rate on a Loan
resulting from a change in the Alternate Base Rate or LIBOR shall become
effective as of the opening of business on the day on which such change shall
become effective. The Agent shall, as soon as practicable, notify the Company
and the Banks of the effective date and the amount of each such change but
failure of the Agent to do so shall not in any manner affect the obligation of
the Company to pay interest on the Loans in the amounts and on the dates
required.

(b) Each determination of the Alternate Base Rate or LIBOR by the Agent pursuant
to any provision of this Agreement shall be presumed to be correct absent
manifest error.

3.4. Pro Rata Treatment and Application of Principal Payments. Each Borrowing by
the Company from the Banks, any conversion of Loans from one Type to the same or
another Type, and any reduction of the Aggregate Commitments of the Banks, shall
be made pro rata according to the Commitment Percentage of each Bank. Subject to
the following sentence (a) prior to the occurrence of an Event of Default, all
payments (including prepayments) on account of principal and interest on Loans
shall be applied as directed by the Company; and (b) upon and following the
occurrence of an Event of Default, all payments (including

 

26

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prepayments) on account of principal, interest, fees, and charges shall be
applied to such principal, interest, fees, and charges in the order and in the
amounts determined by the Agent in its discretion. All payments (including
prepayments) to be made by the Company on account of principal and interest on
Loans comprising the same Borrowing (whether such Borrowing is selected to be
paid (or prepaid) by the Company under clause (a) of the foregoing sentence or
selected to be paid (or prepaid) by the Agent under clause (b) of the foregoing
sentence) shall be made pro rata according to the outstanding principal amount
of each Bank’s Loans. All payments by the Company on all Loans shall be made
without set-off or counterclaim and shall be made prior to 12:00 noon, Boston
time, on the date such payment is due, to the Agent for the account of the Banks
at the Agent’s office specified in Section 11.1, in each case in lawful money of
the United States of America and in immediately available funds, and, as between
the Company and the Banks, any payment by the Company to the Agent for the
account of the Banks shall be deemed to be payment by the Company to the Banks;
provided, however, that any payment received by the Agent on any Business Day
after 12:00 noon shall be deemed to have been received on the immediately
succeeding Business Day. The Agent shall distribute such payments to the Banks
promptly upon receipt in like funds as received. If any payment hereunder or on
any Note becomes due and payable on a day other than a Business Day, the
maturity thereof shall be extended to the next succeeding Business Day (unless,
in the case of LIBOR Loans, the result of such extension would be to extend such
payment into another calendar month, in which event such payment shall be made
on the immediately preceding Business Day) and, with respect to payments of
principal, interest thereon shall be payable at the then applicable rate during
such extension.

3.5. Closing Fee.

(a) If, prior to the Effective Date, the Company has received all Governmental
Approvals required for the Commitments to extend until the Final Maturity Date,
the Company agrees to pay on the Effective Date to the Agent for the account of
the Banks a closing fee (the “Closing Fee”) in an amount equal to $24,000, to be
divided among those Banks that are parties hereto as of the Effective Date, pro
rata according to the Commitment Percentage of each Bank.

(b) If, on the Effective Date, the Company has not received all Governmental
Approvals required for the Commitments to extend until the Final Maturity Date,
the Company will pay a portion of the Closing Fee in an amount equal to $9,000
on the Effective Date and will pay the remaining $15,000 of the Closing Fee once
all required Governmental Approvals are received and the Commitments are
extended until the Final Maturity Date; provided, however, if the Borrower does
not receive all necessary Governmental Approvals at least thirty (30) days prior
to the Initial Maturity Date, the Closing Fee shall be reduced to $9,000.

3.6. Usage Fee.

With respect to any period during which the sum of the unpaid aggregate
principal balance of the Revolving Credit Loans and the aggregate outstanding
face amount of all Letters of Credit exceeds fifty (50%) percent of the
Aggregate Commitments (as the same may be reduced pursuant to Section 2.5(a),
the Company agrees to pay to the Agent, for the account of the Banks, a per
annum fee equal to one-tenth of one percent (0.10%) of the sum of the unpaid
principal balance of all Revolving Credit Loans (whether consisting of Alternate
Base Rate

 

27

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Loans or LIBOR Loans) and the aggregate outstanding face amount of all Letters
of Credit, which Usage Fee shall be payable in arrears on the last Business Day
of each March, June, September and December of each year, commencing on the
first date following the Effective Date and continuing until the Maturity Date.

4. REPRESENTATIONS AND WARRANTIES. In order to induce the Agent and the Banks to
enter into this Agreement, the Company hereby represents and warrants to the
Agent and to each Bank that:

4.1. Subsidiary. The Company has only the Subsidiaries set forth in Exhibit F.
The shares of each corporate Subsidiary owned by the Company are duly
authorized, validly issued, fully paid and non-assessable and are owned free and
clear of any Liens, except Liens permitted by Section 8.2.

4.2. Corporate Existence and Power. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Vermont and
has all requisite corporate power and authority to own its Property and to carry
on its business as now conducted. The Company is in good standing and duly
qualified to do business in each jurisdiction in which the failure to so qualify
would have a Material Adverse Effect.

4.3. Corporate Authority. The Company has full corporate power and authority to
enter into, execute, deliver and carry out the terms of this Agreement and to
make the borrowings contemplated hereby, to execute, deliver and carry out the
terms of the Notes and to incur the obligations provided for herein and therein,
all of which have been duly authorized by all necessary corporate action on its
part and are in full compliance with its Charter and By-Laws, provided that the
consent of the VPSB (or a determination by the VPSB that no such consent is
required) shall be necessary for the extension of the Maturity Date pursuant to
Section 2.16. No consent or approval of, or exemption by, shareholders or any
Governmental Body is required to authorize, or is required in connection with
the execution, delivery and performance of, this Agreement and the Notes, or is
required as a condition to the validity or enforceability of this Agreement and
the Notes, except that the Company may be required to obtain the consent of the
VPSB (or a determination by the VPSB that such consent is not required) for the
extension of the Maturity Date pursuant to Section 2.16.

4.4. Binding Agreement. This Agreement constitutes, and the Notes, when issued
and delivered pursuant hereto for value received, will constitute, the valid and
legally binding obligations of the Company enforceable against the Company in
accordance with their respective terms, except as such enforceability may be
limited by equitable principles and by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally.

4.5. Litigation. On the Closing Date, and except for the matters set forth in
Schedule 4.5 hereto, there are no actions, suits or arbitration proceedings
(whether or not purportedly on behalf of the Company or any Subsidiary) pending
or to the knowledge of the Company threatened against the Company or any
Subsidiary, or maintained by the Company or

 

28

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any Subsidiary, in law or in equity before any Governmental Body which, if
decided adversely to the Company or such Subsidiary, would have a Material
Adverse Effect upon the Company after giving effect to reserves reflected in the
Financial Statements or the footnotes thereto. On the Closing Date, there are no
proceedings pending or to the knowledge of the Company threatened against the
Company which call into question the validity and enforceability of this
Agreement or the Notes.

4.6. Non Conflicting Agreements. Except for the matters set forth in Schedule
4.6 hereto, the Company is not in default under any agreement to which it is a
party or by which it or any of its Property is bound, the effect of which would
have a Material Adverse Effect upon the Company. No provision of the Charter or
By-Laws of the Company, and no provision of any existing mortgage, indenture
contract, agreement, statute (including, without limitation, any applicable
usury or similar law), rule, regulation, judgment, decree or order binding on
the Company or any Subsidiary could in any way prevent the execution, delivery
or carrying out of the terms of this Agreement and the Notes, and the taking of
any such action will not constitute a default under, or result in the creation
or imposition of, or obligation to create, any Lien not permitted by paragraph
8.2 upon the Property of the Company pursuant to the terms of any such mortgage,
indenture, contract or agreement, provided that the consent of the VPSB to the
Credit Agreement (or a determination by the VPSB that no such consent is
required) may be necessary for the Maturity Date to be extended from the Initial
Maturity Date to the Final Maturity Date.

4.7. Taxes. The Company has filed or caused to be filed all tax returns material
to the Company required by law to be filed, and has paid, or has made adequate
provision for the payment of, all taxes shown to be due and payable on said
returns or in any assessments made against it. No tax Liens have been filed and
no claims are being asserted with respect to such taxes which are required by
GAAP to be reflected in the Financial Statements and are not so reflected
therein. The Internal Revenue Service has audited and settled upon, or the
applicable statutes of limitation have run upon, all Federal income tax returns
of the Company through the tax year ended December 31, 2005, and, to the extent
required by GAAP, the results of all such audits are reflected in the Financial
Statements. The charges, accruals and reserves on the books of the Company with
respect to all taxes are considered by the management of the Company to be
adequate, and the Company knows of no unpaid assessment which is due and payable
against the Company which would have a Material Adverse Effect, except such
thereof as are being contested in good faith and by appropriate proceedings
diligently conducted and for which adequate reserves have been set aside in
accordance with GAAP.

4.8. Financial Statements. The Company heretofore delivered to each Bank
(i) copies of the Consolidated Balance Sheet at December 31, 2005, and the
related Consolidated Statements of Income, Cash Flows and Capitalization Data
for the year ended December 31, 2005 and (ii) copies of the Consolidated
quarterly report of the Company and its Subsidiaries as of March 31, 2006,
containing a Consolidated balance sheet and Consolidated statements of income
and cash flows of the Company and its Subsidiaries (the statements in (i) and
(ii) above being sometimes referred to herein as the “Financial Statements”).
The financial statements set forth in (i) above were audited and reported on by
the Accountants on March 14, 2006 and the financial statements set forth in
(ii) above were prepared by the Company. The Financial Statements fairly present
the Consolidated financial condition and the Consolidated results of operations
of the Company and its Subsidiaries as of the dates and for the periods
indicated

 

29

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therein, and have been prepared in conformity with GAAP. Except (a) as reflected
in the financial statements specified in (i) above or in the footnotes thereto,
or (b) as otherwise disclosed to the Banks in a writing specifically referring
to this paragraph 4.8, neither the Company nor any Subsidiary has any obligation
or liability of any kind (whether fixed, accrued, contingent, unmatured or
otherwise) which is material to the Company and its Subsidiaries on a
Consolidated basis and which, in accordance with GAAP, should have been shown on
such financial statements and were not, other than those incurred in the
ordinary course of their respective businesses since December 31, 2005. Since
December 31, 2005, each of the Company and each Subsidiary has conducted its
business only in the ordinary course, and as of the Effective Date, except for
the matters set forth in Schedule 4.8 hereto, there has been no Material Adverse
Change.

4.9. Compliance with Applicable Laws. Except as set forth in Schedule 4.9
hereto, neither the Company nor any Subsidiary is in default with respect to any
judgment, order, writ, injunction, decree or decision of any Governmental Body
applicable to the Company or such Subsidiary which default would have a Material
Adverse Effect upon the Company. Except as set forth in Schedule 4.9 hereto,
each of the Company and each Subsidiary is complying in all material respects
with all applicable material statutes and regulations of all Governmental
Bodies, including ERISA and all Environmental Laws, a violation of which would
have a Material Adverse Effect upon the Company.

4.10. Governmental Regulations. The Company is not an “Investment Company” as
such term is defined in the Investment Company Act of 1940, as amended.

4.11. Property. The Company has good and marketable title to all of its
Property, title to which is material to the Company, subject to no Lien, except
as permitted by Section 8.2.

4.12. Federal Reserve Regulations. The Company is not engaged principally, or as
one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any margin stock within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System, as
amended. No part of the proceeds of the Loans will be used (i) to purchase or
carry any such margin stock, (ii) to extend credit to others for the purpose of
purchasing or carrying any margin stock, (iii) for a purpose which violates the
provisions of Regulations T, U and X of the Board of Governors of the Federal
Reserve System, as amended, or (iv) for a purpose which violates any other
applicable law, rule or regulation of any Governmental Body.

4.13. No Misrepresentation. No representation or warranty contained herein and
no certificate or report furnished or to be furnished by the Company in
connection with the transactions contemplated hereby, contains or will contain a
misstatement of material fact, or omits or will omit to state a material fact
required to be stated in order to make the statements herein or therein
contained not misleading in the light of the circumstances under which made.

4.14. Pension Plans. Each Plan, and to the best of the Company’s knowledge each
Multiemployer Plan, established or maintained by the Company and its
Subsidiaries, is in material compliance with the applicable provisions of ERISA
and the Code, and the Company and its Subsidiaries have filed all material
reports required to be filed with respect to each such

 

30

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Plan by ERISA and the Code. The Company and its Subsidiaries have met all
requirements with respect to funding the Plans imposed by ERISA or the Code.
Since the effective date of ERISA, there have not been, nor are there now
existing, any events or conditions which would permit any Plan and to the best
of the Company’s knowledge any Multiemployer Plan to be terminated under
circumstances which would cause the Lien provided under Section 4068 of ERISA to
attach to the Property of the Company or any of its Subsidiaries. Since the
effective date of ERISA, no reportable event as defined in Title IV of ERISA,
which constitutes grounds for the termination of any Plan and to the best of the
Company’s knowledge any Multiemployer Plan, has occurred and no Plan or any
related trust has been terminated in whole or in part which would have a
Material Adverse Effect.

4.15. Approvals. The Company has obtained all authorizations, approvals or
consents of and made all filings or registrations with all Governmental Bodies
as are necessary to be obtained or made by the Company for the execution,
delivery or performance by the Company of this Agreement or the Notes and all
such authorizations, approvals and consents are in full force and effect,
provided that the consent of the VPSB (or a determination by the VPSB that no
such consent is required) may be necessary for the extension of the Maturity
Date pursuant to Section 2.16.

4.16. Payoff of Prior Credit Agreement. The Company shall have repaid all
obligations owed with respect to the Prior Credit Agreement.

4.17. No Adverse Change or Event. On the Effective Date, except for the matters
set forth in Schedule 4.17, no change in the business, assets, liabilities,
condition (financial or otherwise), results of operations or business prospects
of the Company has occurred, including, without limitation as a result of any
decision of any Governmental Body, and no event has occurred or failed to occur,
including, without limitation as a result of any decision of any Governmental
Body, that has had or would reasonably be expected to have, either alone or in
conjunction with all other such changes, events and failures, a Material Adverse
Effect on (a) the Company or (b) any Loan Document.

5. CONDITIONS OF BORROWING - FIRST BORROWING AND EFFECTIVE DATE. In addition to
the requirements set forth in Section 6, the obligations of the Banks to make
the first Loans on the initial Borrowing Date are subject to the fulfillment of
the conditions precedent set forth in Section 5.1 through Section 5.6 below.

5.1. Evidence of Corporate Action. The Agent shall have received a certificate,
dated the Effective Date, of the Secretary or an Assistant Secretary of the
Company (i) attaching a true and complete copy of the resolutions of its Board
of Directors (or its Executive Committee, if so authorized under the By-Laws)
and of all documents evidencing other necessary corporate action (in form and
substance satisfactory to the Agent and to Special Counsel) taken by the Company
to authorize this Agreement, the Notes and the borrowings hereunder, provided
that the consent of the VPSB (or a determination by the VPSB that no such
consent is required) may be necessary for the extension of the Maturity Date
pursuant to Section 2.16, (ii) attaching a true and complete copy of the Charter
and the By-Laws of the Company, and (iii) setting forth the incumbency of the
officer or officers of the Company who sign this Agreement and the Notes,
including therein a signature specimen of such officer or officers,

 

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together with a certificate of the Secretary of State of Vermont as to the good
standing of, and the payment of franchise taxes therein by, the Company,
together with such other documents as the Agent or Special Counsel shall
reasonably require.

5.2. Revolving Credit Notes. The Agent shall have received and be in possession
of the Revolving Credit Notes executed by the duly authorized officer or
officers of the Company.

5.3. Reserved.

5.4. Opinion of Counsel to the Company. The Agent shall have received the
opinion of Sheehey Furlong & Behm P.C., counsel to the Company, or its
successor, if any, addressed to the Banks and to the Agent, dated the Effective
Date, substantially in the form of Exhibit G.

5.5. Fees. The fees of Special Counsel and the Closing Fee shall have been paid,
together with any portion of the Agent’s Fees that is required to have been paid
on the Effective Date.

5.6. Consents, Licenses. The Agent shall have received a certificate of the
Secretary of the Company to the effect that no other consents, approvals or
licenses are necessary in connection with the borrowings hereunder, provided
that the consent of the VPSB (or a determination by the VPSB that no such
consent is required) may be necessary for the extension of the Maturity Date
pursuant to Section 2.16.

6. CONDITIONS OF BORROWING - ALL BORROWINGS. The obligations of the Banks to
make all Loans hereunder on each Borrowing Date are subject to the fulfillment
of the following conditions precedent:

6.1. Compliance. On each Borrowing Date, and after giving effect to the Loans to
be made on such date (a) the Company and each Subsidiary shall be in compliance
with all of the terms, covenants and conditions of this Agreement, (b) there
shall exist no Event of Default and (c) the representations and warranties
contained in this Agreement, or otherwise in writing made by the Company in
connection herewith shall be true and correct in all material respects with the
same effect as though such representations and warranties had been made on such
Borrowing Date (except such thereof as specifically refer to an earlier date).

6.2. Loan Closings. All documents required by Sections 4 and 5 of this Agreement
to be executed and/or delivered to the Agent on or before the applicable
Borrowing Date shall have been executed and delivered at the office of the Agent
set forth in Section 11 on or before such Borrowing Date.

6.3. Approval of Counsel. All legal matters in connection with the making of
each Loan on the Borrowing Date shall be reasonably satisfactory to such counsel
with whom the Agent may deem it necessary to consult.

 

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6.4. Borrowing Request. The Agent shall have received a Borrowing Request duly
executed by the chief financial officer (or the chief executive officer or
controller, in the absence of the chief financial officer) of the Company.

6.5. Other Documents. The Agent shall have received such other documents as the
Agent shall reasonably require.

7. AFFIRMATIVE COVENANTS.

The Company covenants and agrees that on and after the Effective Date until the
later of the termination of the Commitments or the payment in full of the Notes
and the performance by the Company of all other obligations of the Company
hereunder, unless the Agent shall otherwise consent in writing as provided in
Section 13, the Company will:

7.1. Corporate Existence. Maintain its corporate existence, in good standing in
the jurisdiction of its incorporation or organization and in each other
jurisdiction in which the character of the Property owned or leased by it
therein or the transaction of its business makes such qualification necessary,
except as otherwise expressly permitted hereunder.

7.2. Taxes. Pay and discharge when due all taxes, assessments and governmental
charges and levies upon the Company, and upon the income, profits and Property
of the Company, which if unpaid would have a Material Adverse Effect or become a
Lien not permitted under Section 8.2, unless and to the extent only that such
taxes, assessments, charges and levies, (a) shall be contested in good faith and
by appropriate proceedings diligently conducted by the Company, provided that
such reserve or other appropriate provision, if any, as shall be required in
accordance with GAAP shall have been made therefor or (b) are not in the
aggregate material to the financial condition, Property or operations of the
Company.

7.3. Insurance. Maintain insurance with financially sound insurance carriers on
such of its Property in such amounts, subject to such deductibles and
self-insured amounts and against such risks as is customarily maintained by
similar businesses, including, without limitation, public liability, workers’
compensation and employee fidelity insurance.

7.4. Payment of Indebtedness and Performance of Obligations. Pay and discharge
promptly as and when due all lawful indebtedness, obligations and claims for
labor, materials and supplies or otherwise (including, without limitation,
Funded Debt) which, if unpaid, would (a) have a Material Adverse Effect, or
(b) become a Lien not permitted by Section 8.2, provided that the Company shall
not be required to pay and discharge or cause to be paid and discharged any such
indebtedness, obligation or claim so long as the validity thereof shall be
contested in good faith and by appropriate proceedings diligently conducted by
the Company, and further provided that such reserve or other appropriate
provision as shall be required in accordance with GAAP shall have been made
therefor.

7.5. Observance of Legal Requirements; ERISA. Observe and comply, and cause each
Subsidiary to observe and comply, in all material respects with all laws
(including ERISA and all Environmental Laws), ordinances, orders, judgments,
rules, regulations, certifications, franchises, permits, licenses, directions
and requirements of all Governmental Bodies, which now or at any time hereafter
may be applicable to the Company or such

 

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Subsidiary, a violation of which would have a Material Adverse Effect upon the
Company, except such thereof as shall be contested in good faith and by
appropriate proceedings diligently conducted by the Company or such Subsidiary,
provided that such reserve or other appropriate provision, if any, as shall be
required in accordance with GAAP shall have been made therefor.

7.6. Financial Statements and Other Information. Furnish to the Agent and the
Banks:

(a) as soon as available, but in no event more than ninety (90) days after the
close of each fiscal year of the Company, copies of its audited Consolidated
Balance Sheet and the related audited Consolidated Statements of Income,
Shareholders’ Equity and Changes in Financial Position for such fiscal year
setting forth in each case in comparative form the corresponding figures for the
preceding fiscal year all reported by the Accountants which report shall state
that said financial statements fairly present the financial position and results
of operations of the Company as at the end of and for such fiscal year except as
specifically stated therein, as of and through the end of such fiscal year,
prepared in accordance with GAAP and accompanied by a report with respect
thereto of the Accountants, together with a certificate signed on behalf of the
Company by the principal financial officer thereof to the effect that having
read this Agreement, and based upon an examination which in the opinion of such
officer was sufficient to enable such officer to make an informed statement,
(x) such statements fairly present the financial position and results of the
operations of the Company and its Subsidiaries on a Consolidated basis to the
best of such officer’s knowledge, and (y) nothing came to such officer’s
attention which caused such officer to believe that an Event of Default has
occurred, or if an Event of Default has occurred, stating the facts with respect
thereto and whether the same has been cured prior to the date of such
certificate, and, if not, what action is proposed to be taken with respect
thereto;

(b) as soon as available, but in no event more than forty five (45) days after
the close of each quarter (except the last quarter) of each fiscal year of the
Company a Consolidated Balance Sheet and Consolidated Statements of Income and
Changes in Financial Position of the Company and its Subsidiaries as of and
through the end of such quarter, together with a certificate signed on behalf of
the Company by the principal financial officer thereof to the effect that having
read this Agreement, and based upon an examination which in the opinion of such
officer was sufficient to enable such officer to make an informed statement,
(x) such statements fairly present the financial position and results of the
operations of the Company and its Subsidiaries on a Consolidated basis to the
best of such officer’s knowledge, and (y) nothing came to such officer’s
attention which caused such officer to believe that an Event of Default has
occurred, or if an Event of Default has occurred, stating the facts with respect
thereto and whether the same has been cured prior to the date of such
certificate, and, if not, what action is proposed to be taken with respect
thereto;

(c) prompt notice if: (x) any obligation of the Company (other than its
obligations under this Agreement or the Notes) for a payment in excess of
$500,000 of any Funded Debt is not paid when due or within any grace period for
the payment thereof or is declared or shall become due and payable prior to its
stated maturity, or (y) to the knowledge of any Authorized Signatory of the
Company there shall occur and be continuing an event which constitutes, or which
with the giving of notice or the lapse of time, or both, would constitute an
event of default (or, in the case of this Agreement, an Event of Default) under
any agreement with respect to Funded Debt of the Company (including this
Agreement);

 

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(d) prompt written notice in the event that (i) the Company or any Subsidiary
shall fail to make any payments when due and payable under any Plan or
Multiemployer Plan, or (ii) the Company or any Subsidiary shall receive notice
from the Internal Revenue Service or the Department of Labor that the Company or
such Subsidiary shall have failed to meet the minimum funding requirements of
any Plan or Multiemployer Plan, including therewith a copy of such notice;

(e) promptly upon becoming available, copies of all regular, periodic or special
reports or other material which may be filed with or delivered by the Company to
the Securities and Exchange Commission, or any other Governmental Body
succeeding to the functions thereof;

(f) prompt written notice in the event the Debt Rating of the Company shall
change or the Company shall have no Debt Rating;

(g) prompt written notice and a copy of any Environmental Notice excluding,
however, any such Environmental Notices relating to the Pine Street canal site
in Burlington, Vermont (the “Pine Street Site”) if the effect of such
Environmental Notice relating to the Pine Street Site (i) does not change the
status of the Pine Street Site as it exists as of the date hereof as it relates
to the Company and (ii) would not have a Material Adverse Effect;

(h) a certificate of the Company, dated the date of each such annual report or
quarterly report required pursuant to Sections 7.6(a) and (b), and signed on
behalf of the Company by the President, chief financial officer, chief
accounting officer or Treasurer, which sets forth all relevant calculations
needed to determine whether the Company is in compliance with Section 8.8
hereof, which calculations are based on the most recent fiscal quarter required
to be supplied pursuant to Sections 7.6(a) and (b); and

(i) such other information and reports relating to the affairs of the Company
and its Subsidiaries, as the Agent or any Bank at any time or from time to time
may reasonably request.

7.7. Inspection. Permit representatives of the Agent or any Bank to visit the
offices of the Company, to examine the books and records thereof and to make
copies or extracts therefrom, and to discuss the affairs of the Company with the
officers, including the financial officers, thereof, at reasonable times, at
reasonable intervals and with reasonable prior notice.

7.8 Use of Proceeds. Use the proceeds of the Loans only to refinance the
existing debt of the Company (including the obligations owed under the Prior
Credit Agreement), for working capital, capital expenditures, and other general
corporate purposes (including, without limitation, the acquisition of capital
stock of the Company to the extent otherwise permitted hereunder).

7.9 Further Assurances. Cooperate with the Agent and the other Banks and execute
such further instruments and documents as the Agent or the Banks shall
reasonably request to carry out to their satisfaction the transactions
contemplated by this Agreement.

 

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8. NEGATIVE COVENANTS. The Company covenants and agrees that from the Effective
Date until the later of the termination of all of the Commitments or the payment
in full of all of the Notes and the performance by the Company of all other
obligations of the Company hereunder, unless the Agent shall otherwise consent
in writing as provided in Section 13, the Company will not:

8.1. Funded Debt. Create, incur, assume, guarantee or suffer to exist any
Short-Term Funded Debt (excluding the Loans) in excess of $500,000, individually
or in the aggregate, excluding, however, the Company’s payment obligations
meeting the capital lease accounting requirements under SFAS 13 pursuant to
certain thirty-year support agreements among the Company, VELCO and other New
England Power Pool members and Hydro-Quebec in connection with the construction
of the second phase of the interconnection between the New England electric
systems and that of Hydro-Quebec, other than Short-Term Funded Debt permitted or
allowed in connection with the provisions of the First Mortgage Bonds
specifically relating to restrictions on Funded Debt, which provisions are
incorporated by reference herein as if fully set forth herein.

8.2. Liens. Create, incur, assume or suffer to exist any Lien upon any of its
Property, whether now owned or hereafter acquired, to secure any indebtedness or
other obligation, except for (i) Liens existing as of the Effective Date and
(ii) Liens arising in connection with the First Mortgage Bonds, except for the
following:

(i) materialmens’, mechanics’, suppliers’, tax and other like Liens arising in
the ordinary course of business securing obligations which are not overdue, or
if overdue are being contested in good faith by appropriate proceedings and then
only to the extent that the Company has set aside on its books adequate reserves
therefor in accordance with GAAP and such contest does not have a Material
Adverse Effect; Liens arising in connection with workers’ compensation,
unemployment insurance, and appeal and release bonds, and other Liens incident
to the conduct of business or the operation of property and assets and not
incurred in connection with the obtaining of any advance or credit and which
Liens do not, or would not, have a Material Adverse Effect;

(ii) Liens arising out of judgments or awards against the Company with respect
to which at the time an appeal or proceeding for review is being prosecuted in
good faith and with respect to which there shall have been secured a stay of
execution pending such appeal or proceeding for review and which Liens do not,
or would not, have a Material Adverse Effect; and

(iii) any other Liens, including, without limitation, Liens incurred in
connection with any leases or the sale of any assets, not in excess of
$10,000,000 in the aggregate.

8.3. Mergers and Consolidations. Consolidate with or merge into any other Person
without the prior written consent of the Agent and the other Banks, such consent
not to be unreasonably withheld.

 

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8.4. Sale of Property. Sell, lease or otherwise dispose of any significant part
of its Property (including, without limitation, the right to receive income),
except (i) in the ordinary course of business and (ii) obsolete or worn out
Property which is no longer used or useful to the Company.

8.5. Dividends; Distributions. Declare or pay any dividends (other than
dividends payable in shares of common stock of the Company) on, or make any
other distribution in respect of, any shares of any class of capital stock of
the Company, or apply any of its property or assets to, or set aside any sum
for, the payment, purchase, redemption or other acquisition or retirement of,
any shares of any class of capital stock of the Company, if, after giving effect
to such dividend or other distribution, the result of such dividend or other
distribution would have a Material Adverse Effect.

8.6. Guaranties. Except as set forth in the Financial Statements, guarantee,
endorse or otherwise in any way become or be responsible for obligations of any
other Person (including without limitation any officer, director, employee or
stockholder of the Company) in excess of $500,000 in the aggregate, whether by
agreement to purchase the indebtedness of any other Person or through the
purchase of goods, supplies or services, or maintenance of working capital or
other balance sheet covenants or conditions, or by way of stock purchase,
capital contribution, advance or loan for the purpose of paying or discharging
any indebtedness or obligation of such other Person or otherwise, unless the
same is permitted or allowed in connection with the provisions of the First
Mortgage Bonds specifically relating to the same, which provisions are
incorporated by reference herein as if fully set forth herein.

8.7. Amendment of Charter or By-Laws. Amend its Charter or By-Laws or change its
fiscal year end if the result of any such amendment or change in its fiscal year
end would adversely affect or otherwise impair the rights and remedies of the
Banks hereunder or under any other Loan Document.

8.8. Funded Debt to Capitalization Test. Permit the total amount of Consolidated
Funded Debt to exceed sixty percent (60%) of Consolidated Total Capitalization.

9. EVENTS OF DEFAULT. The following shall each constitute an Event of Default
hereunder:

(a) the failure of the Company to pay (i) any amounts of principal due hereunder
or under the Notes when such amounts are due or declared due, or (ii) any other
amounts, including interest and fees, due hereunder or under the Notes within
five (5) Business Days after such amounts are due or declared due, in any case
whether at stated maturity by acceleration or otherwise; or

(b) the failure of the Company to observe or perform any covenant or agreement
contained in Section 8 and, with respect to Section 8.2 only, such failure shall
have continued unremedied for a period of five (5) Business Days after the
Company knows, or should have known, of such default; or

(c) the failure of the Company to observe or perform any other term, covenant,
or agreement contained in this Agreement and such failure shall have continued
unremedied for a period of ten (10) days after written notice, specifying such
failure and requiring it to be remedied, shall have been given to the Company by
the Agent; or

 

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(d) any material representation or warranty made herein or in any certificate,
report, or notice delivered or to be delivered by the Company pursuant hereto,
shall prove to have been incorrect in any material respect when made; or

(e) if the Company shall default (as principal or guarantor, surety or other
obligor) in the payment of any principal of, or premium, if any, or interest on
any Funded Debt in excess of $1,000,000 (other than its obligations under this
Agreement and the Notes), or with respect to any of the terms of any evidence of
such indebtedness or of any agreement relating thereto, and such default shall
entitle the holder of such indebtedness to accelerate the maturity thereof,
unless, in the case of any non-payment default, such default has been
affirmatively waived by or on behalf of the holder of such indebtedness; or

(f) the Company shall (i) make an assignment for the benefit of creditors,
(ii) admit in writing its inability to pay its debts as they become due or
generally fail to pay its debts as they become due, (iii) file a voluntary
petition in bankruptcy, (iv) become insolvent (however such insolvency shall be
evidenced), (v) file any petition or answer seeking for itself any
reorganization, arrangement, composition, readjustment of debt, liquidation or
dissolution or similar relief under any present or future statute, law or
regulation of any jurisdiction, (vi) petition or apply to any tribunal for any
trustee, receiver, custodian, liquidator or fiscal agent for any substantial
part of its Property, (vii) be the subject of any proceeding referred to in
clause (vi) above or an involuntary bankruptcy petition filed against it which
remains undischarged for a period of 60 days, (viii) file any answer admitting
or not contesting the material allegations of any such petition filed against
it, or of any order, judgment or decree approving such petition in any such
proceeding, (ix) seek, approve, consent to, or acquiesce in any such proceeding,
or in the appointment of any trustee, receiver, custodian, liquidator, or fiscal
agent for it, or any substantial part of its Property, or an order is entered
appointing any such trustee, receiver, custodian, liquidator or fiscal agent and
such order remains in effect for 60 days, (x) take any formal action for the
purpose of effecting any of the foregoing or looking to the liquidation or
dissolution of the Company or (xi) suspend or discontinue its business (except
as otherwise expressly permitted herein); or

(g) an order for relief is entered under the United States bankruptcy laws or
any other decree or order is entered by a court having jurisdiction
(i) adjudging the Company a bankrupt or insolvent, or (ii) approving as properly
filed a petition seeking reorganization, liquidation, arrangement, adjustment or
composition of or in respect of the Company under the United States bankruptcy
laws or any other applicable Federal or state law, or (iii) appointing a
trustee, receiver, custodian, liquidator, or fiscal agent (or other similar
official) of the Company or of any substantial part of its Property, or
(iv) ordering the winding up or liquidation of the affairs of the Company; or

(h) judgments or decrees against the Company in excess of $3,000,000 in the
aggregate (excluding such judgments or decrees which are insured and as to which
the insurer has admitted liability) or for an aggregate amount in excess of
$6,000,000 (whether or not insured) shall remain unpaid, unstayed on appeal,
undischarged, unbonded or undismissed for a period of 30 days; or

 

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(i) any fact or circumstance, including any Reportable Event as defined in Title
IV of ERISA, at a time when there exists an underfunding of the Plan in an
amount in excess of $500,000, which constitutes grounds for the termination of
any Plan by the PBGC or for the appointment of a trustee to administer any Plan,
shall have occurred and be continuing for a period of 30 days; or

(j) the occurrence of any Event of Default (other than an Event of Default which
is waived by the party or parties entitled to take remedial action upon the
occurrence of such Event of Default) under any of the other Loan Documents, or
any other document or instrument evidencing, securing or relating to the
liabilities or obligations of the Company to the Banks hereunder or thereunder.

Upon the occurrence and during the continuance of an Event of Default under this
Section 9, the Agent, upon the request of the Majority Banks, shall notify the
Company that the Commitments have been terminated and that the Notes, all
accrued interest thereon and all other amounts owing under this Agreement are
immediately due and payable, provided that upon the occurrence of an event
specified in Sections 9(f) or 9(g), the Commitments shall automatically
terminate and the Notes (with accrued interest thereon) and all other amounts
owing under this Agreement shall become immediately due and payable without
notice to the Company. Except for any notice expressly provided for in this
Section 9, the Company hereby expressly waives any presentment, demand, protest,
notice of protest or other notice of any kind. The Company hereby further
expressly waives and covenants not to assert any appeasement, valuation, stay,
extension, redemption or similar laws, now or at any time hereafter in force
which might delay, prevent or otherwise impede the performance or enforcement of
this Agreement or the Notes.

In the event that the unpaid principal balance of the Notes, all accrued
interest thereon and all other amounts owing under this Agreement shall have
been declared due and payable pursuant to the provisions of this Section 9, the
Agent may, and, upon (i) the request of the Majority Banks and (ii) the
providing by all of the Banks to the Agent of an indemnity in form and substance
satisfactory to the Agent in accordance with Section 10.3 against all expenses
and liabilities, shall, proceed to enforce the rights of the holders of the
Notes by suit in equity, action at law and/or other appropriate proceedings,
whether for payment or the specific performance of any covenant or agreement
contained in this Agreement or the Notes. The Agent shall be justified in
failing or refusing to take any action hereunder and under the Notes unless it
shall be indemnified to its reasonable satisfaction by the Banks pro rata
according to the aggregate outstanding principal balance of the Notes against
any and all liabilities and expenses which may be incurred by it by reason of
taking or continuing to take any such action. In the event that the Agent,
having been so indemnified, or not being indemnified to its reasonable
satisfaction, shall fail or refuse so to proceed, any Bank shall be entitled to
take such action as it shall deem appropriate to enforce its rights hereunder
and under its Notes with the consent of the Majority Banks, it being understood
and intended that no one or more of the holders of the Notes shall have any
right to enforce payment thereof except as provided in this Section 9 and in
Section 12.

 

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If an Event of Default shall have occurred and shall be continuing, the Agent
may, and at the request of the Majority Banks shall, notify the Company (by
telephone or otherwise) that all or such lesser amount as the Majority Banks
shall designate of the outstanding LIBOR Loans automatically shall be converted
to Alternate Base Rate Loans, in which event such LIBOR Loans automatically
shall be converted to Alternate Base Rate Loans on the date such notice is
given. If such notice is given, notwithstanding anything in Section 2.7 to the
contrary, no Alternate Base Rate Loan may be converted to a LIBOR Loan if an
Event of Default has occurred and is continuing at the time the Company shall
notify the Agent of its election to so convert.

10. THE AGENT. The Banks and the Agent agree by and among themselves that:

10.1. Appointment. Sovereign Bank is hereby irrevocably designated the Agent by
each of the other Banks to perform such duties on behalf of the other Banks and
itself, and to have such powers, as are set forth herein and as are reasonably
incidental thereto.

10.2. Delegation of Duties, Etc. The Agent may execute any duties and perform
any powers hereunder by or through agents or employees, and shall be entitled to
consult with legal counsel and any accountant or other professional selected by
it. Any action taken or omitted to be taken or suffered in good faith by the
Agent in accordance with the opinion of such counsel or accountant or other
professional shall be full justification and protection to the Agent.

10.3. Indemnification. The Banks agree to indemnify the Agent in its capacity as
such, to the extent not reimbursed by the Company, pro rata according to their
respective Commitments, from and against any and all claims, liabilities,
obligations, losses, damages, penalties, actions, judgment, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against the Agent in any way relating to or arising
out of this Agreement or the Notes or any action taken or omitted to be taken or
suffered in good faith by the Agent hereunder or thereunder, provided that no
Bank shall be liable for any portion of any of the foregoing items resulting
from the gross negligence or willful misconduct of the Agent. Without limitation
of the foregoing, each Bank agrees to reimburse the Agent promptly for its
pro-rata share of any reasonable out-of-pocket expenses (including counsel fees)
incurred by the Agent in connection with the preparation, execution,
administration or enforcement of, or legal advice in respect of rights or
responsibilities under, this Agreement and the Notes, to the extent that the
Agent, having sought reimbursement for such expenses from the Company, is not
promptly reimbursed by the Company. Any reference herein and in any document
executed in connection herewith, to the Banks providing an indemnity in form and
substance reasonably satisfactory to the Agent prior to the Agent taking any
action hereunder shall be satisfied by the Banks executing an agreement
confirming their agreement to promptly indemnify the Agent in accordance with
this Section 10.3.

10.4. Exculpatory Provisions. Neither Agent, nor any of its officers, directors,
employees or agents, shall be liable for any action taken or omitted to be taken
or suffered by it or them hereunder or under the Notes, or in connection
herewith or therewith, including without limitation any action taken or omitted
to be taken in connection with any telephonic communication pursuant to
Section 2.3 hereof, except that the Agent shall be liable for its own gross
negligence or willful misconduct. The Agent shall not be liable in any manner
for the

 

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effectiveness, enforceability, collectibility, genuineness, validity or the due
execution of this Agreement or the Notes, or for the due authorization,
authenticity or accuracy of the representations and warranties contained herein
or in any other certificate, report, notice, consent, opinion, statement, or
other document furnished or to be furnished hereunder, and the Agent shall be
entitled to rely upon any of the foregoing believed by it to be genuine and
correct and to have been signed and sent or made by the proper Person. The Agent
shall not be under any duty or responsibility to any Bank to ascertain or to
inquire into the performance or observance by the Company or any Subsidiary of
any of the provisions hereof or of the Notes or of any document executed and
delivered in connection herewith or therewith. Each Bank expressly acknowledges
that the Agent has not made any representations or warranties to it and that no
act taken by the Agent shall be deemed to constitute any representation or
warranty by the Agent to any Bank. Each Bank acknowledges that it has taken and
will continue to take such action and has made and will continue to make such
investigation as it deems necessary to inform itself of the affairs of the
Company and each Subsidiary, and each Bank acknowledges that it has made and
will continue to make its own independent investigation of the creditworthiness
and the business and operations of the Company and its Subsidiaries, and that,
in entering into this Agreement, and in agreeing to make its Loans, it has not
relied and will not rely upon any information or representations furnished or
given by the Agent or any other Bank.

10.5. Agent in its Individual Capacity. With respect to its Loans and any
renewals, extensions or deferrals of the payment thereof and any Note issued to
or held by it, the Agent shall have the same rights and powers hereunder as any
Bank, and may exercise the same as though it were not the Agent, and the term
“Bank” or “Banks” shall, unless the context otherwise requires, include the
Agent in its individual capacity. Sovereign Bank and its affiliates may accept
deposits from, lend money to, act as trustee or other fiduciary in connection
with transactions, including, without, limitation, interest rate hedging
agreements or instruments, involving, and otherwise engage in any business with
the Company and its affiliates and any Person who may do business with or own
securities of the Company or any affiliate of the Company, all as if Sovereign
Bank were not the Agent hereunder and without any obligation to account or
report therefor to any Bank.

10.6. Knowledge of Default. It is expressly understood and agreed that the Agent
shall be entitled to assume that no Event of Default has occurred and is
continuing, unless the offices of the Agent who are responsible for matters
concerning this Agreement shall have actual knowledge of such occurrence or
shall have been notified in writing by a Bank that such Bank considers that an
Event of Default has occurred and is continuing and specifying the nature
thereof.

In the event the Agent shall have acquired actual knowledge of any Event of
Default, it shall promptly give notice thereof to the Banks.

10.7. Resignation of Agent. If at any time the Agent deems it advisable, in its
sole discretion, it may submit to each of the Banks a written notification of
its resignation as Agent under this Agreement, such resignation to be effective
on the earlier to occur of (a) the forty-fifth (45th) day after the date of such
notice or (b) the date upon which a successor Agent accepts its appointment as
successor Agent. If the Agent resigns hereunder, the Company shall have the
right to appoint, with the prior written approval of the Banks, which approval
shall not be

 

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unreasonably withheld, a successor Agent hereunder, provided, however that upon
the occurrence and during the continuance of an Event of Default, the Banks
shall have the right to appoint such successor Agent hereunder without the
consent or approval of the Company. The successor Agent shall be a commercial
bank or other financial institution organized under the laws of the United
States of America or of any State thereof and having a combined capital and
surplus of at least $100,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the Agent hereunder, and the retiring Agent shall be discharged from any
further duties and obligations under this Agreement. The Company and the Banks
agree to execute such documents as shall be necessary to effect such
appointment. After the retiring Agent’s resignation or removal hereunder, the
provisions of this Section 10 shall inure to its benefit as to any actions taken
or omitted to be taken by it while the Agent under this Agreement. If at any
time hereunder there shall not be a duly appointed and acting Agent, the Company
agrees to make each payment due hereunder and under the Notes directly to the
Banks entitled thereto.

10.8. Requests to the Agent. Whenever the Agent is authorized and empowered
hereunder on behalf of the Banks to give any approval or consent, or to make any
request, or to take any other action on behalf of the Banks, the Agent shall be
required to give such approval or consent, or to make such request or to take
such other action only when so requested in writing by the Majority Banks
subject, however, to the provisions of Section 13.

11. NOTICES.

11.1. Manner of Delivery. Except as otherwise specifically provided herein, all
notices and demands shall be in writing and shall be mailed by certified mail
return receipt requested or sent by telegram, telecopy or telex or delivered in
person or by nationally recognized overnight courier, and all statements,
reports, documents, consents, waivers, certificates and other papers required to
be delivered hereunder shall be mailed by first-class mail or delivered in
person, in each case to the respective parties to this Agreement as follows:

 

42

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if to the Company, to:

Green Mountain Power Corporation

163 Acorn Lane

Colchester, VT 05446-6611

Attention: Dawn Bugbee, Chief Financial Officer

Telephone: 802-655-8768

Telecopy: 802-655-8550

with a copy to:

Richard Kozlowski, Esq.

Sheehey Furlong & Behm P.C.

30 Main Street

P.O. Box 66

Burlington, Vermont 05402

Telephone: (802) 864-9891

Telecopy: (802) 864-6815]

if to the Agent, to:

Sovereign Bank

75 State Street, MA1 SST 04-10

Boston, Massachusetts 02109

Attention: Robert D. Lanigan, Senior Vice President

Telephone: (617) 346-7384

Telecopy: (617) 346-7350

with a copy to:

Philip A. Herman, Esq.

Goulston & Storrs

400 Atlantic Avenue

Boston, MA 02110

Telephone: (617) 574-4114

Telecopy: (617) 574-7592

if to the Banks, to:

Sovereign Bank

75 State Street, MA1 SST 04-10

Boston, Massachusetts 02109

Attention: Robert D. Lanigan, Senior Vice President

Telephone: (617) 346-7384

Telecopy: (617) 346-7350

 

43

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with a copy to:

Philip A. Herman, Esq.

Goulston & Storrs

400 Atlantic Avenue

Boston, MA 02110

Telephone: (617) 574-4114

Telecopy: (617) 574-7592

and:

KeyBank National Association

149 Bank Street,

Burlington, VT 05401

Attention: Tony F. Martin, Vice President

Telephone: (802) 660-4477

Telecopy: (802) 660-4228

or to such other Person or address as a party hereto shall designate to the
other parties hereto from time to time in writing forwarded in like manner. Any
notice or demand given in accordance with the provisions of this Section 11.1
shall be effective when received and any consent, waiver or other communication
given in accordance with the provisions of this Section 11.1 shall be
conclusively deemed to have been received by a party hereto and to be effective
on the day on which received by such party at its address specified above or, if
sent by first class mail, on the third Business Day after the day when deposited
in the mail, postage prepaid, and addressed to such party at such address,
provided that a notice of change of address shall be deemed to be effective when
actually received.

11.2. Distribution of Copies. Whenever the Company is required to deliver any
statement, report, document, certificate or other paper (other than Borrowing
Request or Conversion/Continuation Request) to the Agent, the Company shall
simultaneously deliver a copy thereof to each Bank.

11.3. Notices by the Agent or a Bank. In the event that the Agent or any Bank
takes any action or gives any consent or notice provided for by this Agreement,
notice of such action, consent or notice shall be given forthwith to all the
Banks by the Agent or the Bank taking such action or giving such consent or
notice, provided that the failure to give any such notice shall not invalidate
any such action, consent or notice in respect of the Company.

12. RIGHT OF SET-OFF. Regardless of the adequacy of any collateral, upon the
occurrence and during the continuance of any Event of Default, each Bank is
hereby expressly and irrevocably authorized by the Company at any time and from
time to time, without notice to the Company, to set-off, appropriate, and apply
all moneys, securities and other Property and the proceeds thereof now or
hereafter held or received by or in transit to such Bank from or for the account
of the Company, whether for safekeeping, pledge, transmission, collection or
otherwise, and also upon any and all deposits (general and special), account
balances and credits of the Company with such Bank at any time existing against
any and all obligations of the Company to

 

44

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the Banks and to each of them arising under this Agreement, the Letters of
Credit, and the Notes, and the Company shall continue to be liable to each Bank
for any deficiency with interest at the rate or rates set forth in Subsection
2.8(b). Each of the Banks agrees with each other Bank that (a) if an amount to
be set off is to be applied to any obligations of the Company to such Bank,
other than obligations evidenced by the Notes held by such Bank, such amount
shall be applied ratably to such other obligations and to the obligations
evidenced by all such Notes held by such Bank and (b) if such Bank shall receive
from the Company, whether by voluntary payment, exercise of the right of setoff,
counterclaim, cross action, enforcement of the claim evidenced by the Notes held
by such Bank by proceedings against the Company at law or in equity or by proof
thereof in bankruptcy, reorganization, liquidation, receivership or similar
proceedings, or otherwise, and shall retain and apply to the payment of the Note
or Notes held by such Bank any amount in excess of its ratable portion of the
payments received by all of the Banks with respect to the Notes held by all of
the Banks, such Bank will make such disposition and arrangements with the other
Banks with respect to such excess, either by way of distribution, pro tanto
assignment of claims, subrogation or otherwise as shall result in each Bank
receiving in respect of the Notes held by each Bank, its proportionate payment
as contemplated by this Agreement; provided that if all or any part of such
excess payment is thereafter recovered from such Bank, such disposition and
arrangements shall be rescinded and the amount restored to the extent of such
recovery, but without interest.

13. AMENDMENTS WAIVERS AND CONSENTS. Except as otherwise expressly set forth
herein, with the written consent of the Majority Banks, the Agent shall, subject
to the provisions of this Section 13, from time to time enter into agreements
amendatory or supplemental hereto with the Company for the purpose of changing
any provisions of this Agreement or the Notes, or changing in any manner the
rights of the Banks, the Agent or the Company hereunder and thereunder, or
waiving compliance with any provision of this Agreement or consenting to the
non-compliance thereof. Notwithstanding the foregoing, the consent of all of the
Banks shall be required with respect to any amendment, waiver or consent
(i) increasing the Aggregate Commitments or the Commitment of any Bank,
(ii) postponing or extending the Maturity Date (other than such extension from
the Initial Maturity Date to the Final Maturity Date), or the time of payment of
interest on or principal of, or the principal amount of any Loan, or the time of
payment of any fees hereunder, (iii) decreasing the rate of interest on or the
amount of any fees hereunder or (iv) modifying this Section 13 or the definition
of “Majority Banks”. Any such amendment or supplemental agreement, waiver or
consent shall apply equally to each of the Banks and shall be binding on the
Company and all of the Banks and the Agent. Any waiver or consent shall be for
such period and subject to such conditions or limitations as shall be specified
therein, but no waiver or consent shall extend to any subsequent or other Event
of Default, or impair any right or remedy consequent thereupon. In the case of
any waiver or consent, the rights of the Company, the Banks and the Agent under
this Agreement and the Notes shall be otherwise unaffected. Nothing contained
herein shall be deemed to require the Agent to obtain the consent of any Bank
with respect to any change in the amount or terms of payment of the Agent’s
Fees. The Company shall be entitled to rely upon the provisions of any such
amendatory or supplemental agreement, waiver or consent if it shall have
obtained any of the same in writing from the Agent who therein shall have
represented that such agreement, waiver or consent has been authorized in
accordance with the provisions of this Section 13.

 

45

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14. OTHER PROVISIONS.

14.1. No Waiver of Rights by the Banks. No failure on the part of the Agent or
of any Bank to exercise, and no delay in exercising, any right or remedy
hereunder or under the Notes shall operate as a waiver thereof, except as
provided in Section 13, nor shall any single or partial exercise by the Agent or
any Bank of any right, remedy or power hereunder or under the Notes preclude any
other or future exercise thereof, or the exercise of any other right, remedy or
power. The rights, remedies and powers provided herein and in the Notes are
cumulative and not exclusive of any other rights, remedies or powers which the
Agent or the Banks or any holder of a Note would otherwise have. Notice to or
demand on the Company in any circumstance in which the terms of this Agreement
or the Notes do not require notice or demand to be given shall not entitle the
Company to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Agent or any Bank or
the holder of any Note to take any other or further action in any circumstances
without notice or demand.

14.2. Headings; Plurals. Paragraph and subparagraph headings have been inserted
herein for convenience only and shall not be construed to be a part of this
Agreement. Unless the context otherwise requires, words in the singular number
include the plural, and words in the plural include the singular.

14.3. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original and all of which shall
constitute one agreement. It shall not be necessary in making proof of this
Agreement or of any document required to be executed and delivered in connection
herewith or therewith to produce or account for more than one counterpart.

14.4. Severability. Every provision of this Agreement and the Notes is intended
to be severable, and if any term or provision hereof or thereof shall be
invalid, illegal or unenforceable for any reason, the validity, legality and
enforceability of the remaining provisions hereof or thereof shall not be
affected or impaired thereby, and any invalidity, illegality or unenforceability
in any jurisdiction shall not affect the validity, legality or enforceability of
any such term or provision in any other jurisdiction.

14.5. Integration. All exhibits to this Agreement shall be deemed to be a part
of this Agreement. This Agreement, the exhibits hereto and the Notes embody the
entire agreement and understanding between the Company, the Agent and the Banks
with respect to the subject matter hereof and thereof and supersede all prior
agreements and understandings between the Company, the Agent and the Banks with
respect to the subject matter hereof and thereof.

14.6. Sales and Participations in Loans and Notes; Successors and Assigns,
Survival of Representations and Warranties.

(a) Each Bank shall have the right with the prior written consent of the Company
(which consent shall not be unreasonably withheld or delayed), provided,
however, that no such consent shall be required after and during the continuance
of an Event of Default, upon written notice to the Agent and the Company to
sell, assign, transfer or negotiate all or any part (but not less than
$5,000,000, unless it is such Bank’s entire Commitment) of the Loans and the
Notes and its

 

46

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Commitment to one or more commercial banks or other financial institutions
including, without limitation, the Banks. In the case of any sale, assignment,
transfer or negotiation of all or any such part of the Loans, the Notes, or
interests in respect of Letters of Credit authorized under this Section 14.6(a),
the assignee or transferee shall have, to the extent of such sale, assignment,
transfer or negotiation, the same rights, benefits and obligations as it would
if it were a Bank hereunder and a holder of such Note or interests in respect of
Letters of Credit, including, without limitation, (x) the right to approve or
disapprove of actions which in accordance with the terms hereof, require the
approval of the Majority Banks (y) the obligation to fund Loans directly to the
Agent pursuant to Section 2.3; and (z) obligations in respect of Letters of
Credit under Section 2.2.

(b) Notwithstanding Section 14.6(a), each Bank may grant participations in all
or any part of its Loans, Notes, and interests in respect of Letters of Credit
to one or more commercial banks, insurance companies, or other financial
institutions, pension funds or mutual funds; provided that (i) any such
disposition shall not, without the prior written consent of the Company, require
the Company to file a registration statement with the Securities and Exchange
Commission or apply to qualify the Loans, Notes, interests in respect of Letters
of Credit under the blue sky laws of any state and (ii) the holder of any such
participation, other than an Affiliate of such Bank, shall not have any rights
or obligations hereunder and shall not be entitled to require such Bank to take
or omit to take any action hereunder except action directly affecting the
extension of the maturity of any portion of the principal amount of, or interest
on, the Loan allocated to such participation, or a reduction of the principal
amount of, or the rate of interest payable on, such Loans or interests in
respect of Letters of Credit.

(c) Notwithstanding the foregoing provisions of this Section 14.6, each Bank may
at any time and from time to time sell, assign, transfer, or negotiate all or
any part of the Loans or interests in respect of Letters of Credit to any
Affiliate of such Bank; provided that an Affiliate to whom such disposition has
been made shall not be considered a “Bank”, and the assigning Bank shall be
considered not to have disposed of any Loans or interests in respect of Letters
of Credit so assigned for purposes of determining the Majority Banks under any
provision hereof, but such Affiliate shall otherwise be considered a “Bank”, and
the assigning Bank shall otherwise be considered to have disposed of any Loans
or interests in respect of Letters of Credit so assigned, for purposes hereof,
including, without limitation, Sections 3.1 and 12 hereof.

(d) In addition, notwithstanding anything to the contrary contained in this
Section 14.6, any Bank may at any time and from time to time pledge or assign
all or any portion of its rights under this Agreement with respect to its Loans,
its Commitments, interests in respect of Letters of Credit and its Notes to any
of the twelve (12) Federal Reserve Banks. No such pledge or assignment or
enforcement thereof shall release the assignor Bank from its obligations
hereunder.

(e) No Bank shall, as between the Company and such Bank, be relieved of any of
its obligations hereunder as a result of granting participations in all or any
part of the Loans or interests in respect of Letters of Credit and the Notes of
such Bank or other obligations owed to such Bank.

 

47

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(f) This Agreement shall be binding upon and inure to the benefit of the Banks,
the Agent and the Company and their respective successors and assigns. All
covenants, agreements, warranties and representations made herein, and in all
certificates or other documents delivered in connection with this Agreement by
or on behalf of the Company shall survive the execution and delivery hereof and
thereof, and all such covenants, agreements, representations and warranties
shall inure to the respective successors and assigns of the Banks and the Agent
whether or not so expressed.

(g) The Agent shall maintain a copy of each assignment delivered to it and a
register or similar list for the recordation of the names and addresses of the
Banks and the Commitment Percentages of the Banks and the principal amount of
the Loans, Notes, and interests in respect of Letters of Credit assigned from
time to time. The entries in such register shall be conclusive, in the absence
of manifest error and provided that any required consent of the Company has been
obtained, and the Company, the Agent and the Banks may treat each Person whose
name is recorded in such register as a Bank hereunder for all purposes of this
Agreement. Upon each such recordation, the assigning Bank agrees to pay to the
Agent a registration fee in the sum of Three Thousand Five Hundred Dollars
($3,500).

14.7. Applicable Law. This Agreement and the Notes are being delivered in and
are intended to be performed in The Commonwealth of Massachusetts and shall be
construed and enforceable in accordance with, and be governed by, the internal
laws of The Commonwealth of Massachusetts without regard to its principles of
conflict of laws.

14.8. Interest. At no time shall the interest rate payable on the Loans and
Notes, together with the Facility Fee, the Closing Fee, the Usage Fee, the
Agent’s Fees and any other fee in connection with the Letters of Credit, and all
other fees and amounts payable hereunder, to the extent same are construed to
constitute interest, exceed the maximum rate of interest permitted by law. The
Company acknowledges that to the extent interest payable on the Loans and Notes
is based on the Alternate Base Rate, such rate is only one of the bases for
computing interest on loans made by the Banks, and by basing interest payable on
the Loans and Notes on the Alternate Base Rate, the Banks have not committed to
charge, and the Company has not in any way bargained for, interest based on a
lower or the lowest rate at which the Banks may now or in the future make loans
to other borrowers.

14.9. Accounting Terms and Principles. All accounting terms not herein defined
by being capitalized shall be interpreted in accordance with GAAP, unless the
context otherwise expressly requires.

14.10. WAIVER OF TRIAL BY JURY. THE COMPANY HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES (TO THE FULLEST EXTENT PERMITTED OR NOT PROHIBITED BY
APPLICABLE LAW) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THE LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED THEREIN. FURTHER, THE COMPANY HEREBY ACKNOWLEDGES THAT
NO REPRESENTATIVE OF THE AGENT OR THE BANKS OR COUNSEL TO THE AGENT OR THE BANKS
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE AGENT OR THE BANKS WOULD NOT,
IN THE EVENT OF

 

48

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SUCH LITIGATION, SEEK TO ENFORCE SUCH WAIVER. THE COMPANY ACKNOWLEDGES THAT THE
AGENT AND THE BANKS HAVE BEEN INDUCED TO ENTER INTO THE LOAN DOCUMENTS BY, INTER
ALIA, THE PROVISIONS OF THIS PARAGRAPH.

14.11. CONSENT TO JURISDICTION. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY COURT OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL
COURT SITTING IN THE COMMONWEALTH OF MASSACHUSETTS OVER ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THE LOAN DOCUMENTS. THE COMPANY HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED OR NOT PROHIBITED BY
APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH A
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE COMPANY HEREBY AGREES THAT
A FINAL JUDGMENT IN ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH A
COURT, AFTER ALL APPROPRIATE APPEALS, SHALL BE CONCLUSIVE AND BINDING UPON IT.

14.12. SERVICE OF PROCESS. PROCESS MAY BE SERVED IN ANY SUIT, ACTION,
COUNTERCLAIM OR PROCEEDING OF THE NATURE REFERRED TO IN PARAGRAPH 14.11 BY
MAILING COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, RETURN
RECEIPT REQUESTED, TO THE ADDRESS OF THE COMPANY SET FORTH IN PARAGRAPH 11.1 OR
TO ANY OTHER ADDRESS OF WHICH THE COMPANY SHALL HAVE GIVEN WRITTEN NOTICE TO THE
AGENT. THE COMPANY HEREBY AGREES THAT SUCH SERVICE (I) SHALL BE DEEMED IN EVERY
RESPECT EFFECTIVE SERVICE OF PROCESS UPON IT IN ANY SUCH SUIT, ACTION,
COUNTERCLAIM OR PROCEEDING, AND (II) SHALL TO THE FULLEST EXTENT PERMITTED OR
NOT PROHIBITED BY APPLICABLE LAW, BE TAKEN AND HELD TO BE VALID PERSONAL SERVICE
UPON AND PERSONAL DELIVERY TO IT.

14.13. NO LIMITATION ON SERVICE OR SUIT. NOTHING IN THE LOAN DOCUMENTS, OR ANY
MODIFICATION, WAIVER, OR AMENDMENT THERETO, SHALL AFFECT THE RIGHT OF THE AGENT
OR ANY BANK TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR LIMIT THE
RIGHT OF THE AGENT OR ANY BANK TO BRING PROCEEDINGS AGAINST THE COMPANY IN THE
COURTS OF ANY OTHER JURISDICTION OR JURISDICTIONS.

15. OTHER OBLIGATIONS OF THE COMPANY.

15.1. Taxes and Fees. Should any tax (other than a tax based upon the net income
of any Bank), recording or filing fee become payable in respect of this
Agreement or the Notes or any amendment, modification or supplement hereof or
thereof, the Company agrees to pay the same together with any interest or
penalties thereon and agrees to hold the Agent and the Banks harmless with
respect thereto.

 

49

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15.2. Expenses. Whether or not the transactions contemplated by this Agreement
shall be consummated, the Company agrees to pay the reasonable out-of-pocket
expenses of the Agent (including the reasonable fees and expenses of counsel to
the Agent and, without limitation, Special Counsel) in connection with the
preparation, reproduction, execution and delivery of this Agreement and the
Notes and the other exhibits annexed hereto, and any modifications, waivers,
consents or amendments hereto and thereto, and the Company further agrees to pay
the reasonable out-of-pocket expenses of the Agent and the Banks (including the
reasonable fees and expenses of their respective counsel) incurred in connection
with the interpretation and enforcement of any provision of this Agreement or
collection under the Notes, whether or not suit is instituted.

15.3. Indemnification.

The Company shall indemnify, defend, and hold the Banks and Agent and any of
their respective employees, officers, or agents (each, an “Indemnified Person”)
harmless of and from any claim brought or threatened against any Indemnified
Person by the Company, any guarantor or endorser of the liabilities obligations
of the Company hereunder or under the Notes, or any other Person (as well as
from attorneys’ reasonable fees, expenses, and disbursements in connection
therewith) on account of the relationship of the Company or of any other
guarantor or endorser of the liabilities and obligations of the Company
hereunder or under the Notes (each of claims which may be defended, compromised,
settled, or pursued by the Indemnified Person with counsel of the Banks’ or
Agent’s selection, but at the expense of the Company) other than any claim as to
which a final determination is made in a judicial proceeding (in which the Banks
or Agent and any other Indemnified Person has had an opportunity to be heard),
which determination includes a specific finding that the Indemnified Person
seeking indemnification had acted in a grossly negligent manner or in actual bad
faith. This indemnification shall survive payment of the liabilities and
obligations of the Company hereunder or under the Notes and/or any termination,
release, or discharge executed by the Banks or Agent in favor of the Company,
other than a termination, release, or discharge duly executed on behalf of the
Banks or Agent which makes specific reference to this Section 15.3.

15.4. Lost Notes. Upon receipt of an affidavit of an officer of any Bank as to
the loss, theft, destruction or mutilation of any Note and, in the case of any
such loss, theft, destruction or mutilation, upon cancellation of such Note or
other security document, Company will issue, in lieu thereof, a replacement note
in the same principal amount thereof and otherwise of like tenor.

16. EFFECTIVE DATE. This Agreement shall be effective as an instrument under
seal as of the date first set forth above (the “Effective Date”).

17. USA PATRIOT ACT NOTICE. Each Bank that is subject to the Act (as hereinafter
defined) and the Agent (for itself and not on behalf of any Bank) hereby
notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act
(Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it
is required to obtain, verify and record information that identifies the
Borrower, which information includes the name and address of the Borrower and
other information that will allow such Bank or the Agent, as applicable, to
identify the Borrower in accordance with the Act.

 

50

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

 

GREEN MOUNTAIN POWER CORPORATION By:  

/s/ Dawn D. Bugbee

Name:   Dawn D. Bugbee Title:   Chief Financial Officer SOVEREIGN BANK,
Individually and as Agent By:  

/s/ Robert D. Lanigan

Name:   Robert D. Lanigan Title:   Senior Vice President KEYBANK NATIONAL
ASSOCIATION By:  

/s/ Tony F. Martin

Name:   Tony F. Martin Title:   Vice President

Signature Page to Credit Agreement

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EXHIBIT A

REVOLVING CREDIT COMMITMENTS

 

Bank

   Revolving Credit
Commitment    Revolving Credit
Commitment Percentage  

Sovereign Bank

   $ 20,000,000    66 %

KeyBank National Association

   $ 10,000,000    34 %

Aggregate Revolving Credit Commitments

   $ 30,000,000    100 %

 

A-1

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EXHIBIT B

PRICING GRID/FACILITY FEE

SCHEDULE I

Green Mountain Power Corporation Loan Pricing Grid*

 

Level

  

Senior Secured

Debt Rating

  

Applicable

LIBOR Margin

  

Applicable

Base Rate

Margin

I

  

³A-/A3

  

 35.0 bps

  

0 bps

II

  

BBB+/Baa1

  

 40.0 bps

  

0 bps

III

  

BBB/Baa2

  

 55.0 bps

  

0 bps

IV

  

BBB-/Baa3

  

 75.0 bps

  

0 bps

V

  

< BBB-/Baa3

  

150.0 bps

  

0 bps

 

* The applicable pricing level is based upon the Debt Rating.

 

** Expressed as basis points.

 

B-1

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SCHEDULE II

Green Mountain Power Corporation Facility Fee Grid***

 

Level

 

Senior Secured

Debt Rating

 

Facility Fee

I

 

³A-/A3

 

  7.5 bps

II

 

BBB+/Baa1

 

 10.0 bps

III

 

BBB/Baa2

 

 12.5 bps

IV

 

BBB-/Baa3

 

 20.0 bps

V

 

< BBB-/Baa3

 

37.5 bps

 

*** Based upon the Debt Rating.

 

**** Expressed in basis points.

 

B-2

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EXHIBIT C

FORM OF BORROWING REQUEST

                    ,         

Sovereign Bank

75 State Street

Boston, Massachusetts 02109

 

Attention:   

Robert D. Lanigan, Senior Vice President

Telephone: (617) 346-7384

Telecopy: (617) 346-7350

 

Re: Credit Agreement, dated as of June 14, 2006, as further amended from time to
time, by and among Green Mountain Power Corporation, the signatory Banks thereto
and Sovereign Bank, as Agent (the “Agreement”)

Capitalized terms used herein without definition which are defined in the
Agreement shall have the meanings therein defined.

Pursuant to Section 2.1 of the Agreement, the Company hereby gives notice of its
intention to effect a Borrowing as a Revolving Credit Loan in the amount of
$             on             ,             .

Pursuant to Section 2.3 of the Agreement, the Company has elected to have the
following portions of such Borrowing be subject to the Type and Interest
Period(s) set forth below:

 

Type

   Amount   

Interest

Period

1.

     

2.

     

3.

     

4.

     

5.

     

The Company hereby certifies that on the date hereof and on the Borrowing Date
set forth above, and after giving effect to the Loans to be made on such
Borrowing Date:

(a) The Company is and shall be in compliance with all the terms, covenants and
conditions of the Agreement.

 

C-1

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(b) There exists and there shall exist no Event of Default under the Agreement.

(c) The Company represents and warrants that each of the material
representations and warranties contained in the Agreement is and shall be true
and correct in all material respects with the same force and effect as if made
on and as of the date hereof and as of the Borrowing Date, except such
representations and warranties as specifically refer to an earlier date.

The Company hereby certifies that on the date hereof the Debt Rating of the
Company is              according to Standard & Poor’s Corporation and
             according to Moody’s Investor Service.

The undersigned hereby certifies that he/she is the chief financial officer of
the Company.

[Remainder of page intentionally left blank.]

 

C-2

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IN WITNESS WHEREOF, the undersigned has caused this Borrowing Request and
certification to be executed as of the date and year first above written.

 

GREEN MOUNTAIN POWER CORPORATION By:  

 

Name:   Title:   Chief Financial Officer

 

Signature Page to Borrowing Request

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EXHIBIT D

FORM OF NOTE

 

  Boston, Massachusetts $                       June 14, 2006

For value received, GREEN MOUNTAIN POWER CORPORATION, a Vermont corporation (the
“Company”), hereby promises to pay to the order of
                                         (the “Bank”) at the offices of
SOVEREIGN BANK (the “Agent”), 75 State Street, Boston, Massachusetts, 02109, in
lawful money of the United Sates of America, the principal amount of each
Revolving Credit Loan made by the Bank to the Company pursuant to the Credit
Agreement, dated as of June 14, 2006, by and among the Company, the signatory
Banks thereto and the Agent (as the same may be further amended from time to
time the “Agreement”), on the Maturity Date, together with interest on the
unpaid principal amount of each Revolving Credit Loan, from the date of each
Revolving Credit Loan until such principal amount is paid in full, at such
interest rates, and payable at such times, as is provided or determined under
the Agreement. In no event shall the interest rate payable hereon exceed the
maximum rate of interest permitted by law. Capitalized terms used herein without
definition which are defined in the Agreement shall have the meanings therein
defined.

The principal amount of each Revolving Credit Loan made by the Bank to the
Company, and all prepayments made on account of such principal by the Company
shall be recorded by the Bank on the schedule attached hereto. The aggregate
unpaid principal balance of all Loans made by the Bank and set forth in such
schedule shall be presumptive evidence of the principal balance owing and unpaid
on this Note. The Bank may attach one or more continuations to such schedule as
and when required.

This Note is one of the Notes referred to in the Agreement and is entitled to
the benefits of, and is subject to the terms set forth in the Agreement. The
principal of this Note is prepayable in the amounts and under the circumstances,
and its maturity is subject to acceleration upon the terms, set forth in the
Agreement. All payments on this Note shall be made in funds immediately
available in Boston, Massachusetts, by 12:00 noon, Boston time, on the due date
for such payment. Except as otherwise expressly provided in the Agreement, if
any payment on this Note becomes due and payable on a day which is not a
Business Day, the maturity thereof shall be extended to the next Business Day
and interest shall be payable at the rate or rates specified in the Agreement
during such extension period.

Presentment for payment, demand, notice of dishonor, protest, notice of protest
and all other demands and notices in connection with the delivery, performance
and enforcement of this Note are hereby waived, except as specifically otherwise
provided in Section 9 of the Agreement.

 

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This note is being delivered under seal in, is intended to be performed in,
shall be construed and enforceable in accordance with, and be governed by the
internal laws of, the Commonwealth of Massachusetts without regard to principles
of conflict of laws.

This note may be amended only an instrument in writing executed pursuant to the
provisions of Section 13 of the Agreement.

[Remainder of page intentionally left blank.]

 

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IN WITNESS WHEREOF, the undersigned has caused this Note to be duly executed as
of the date first above written.

 

GREEN MOUNTAIN POWER CORPORATION By:  

 

Name:   Title:  

 

Signature Page to Note

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GRID

 

Date

 

Amount of Loan

 

Amount of

Principal Repaid

 

Notation

Made By

 

 

 

 

 

 

 

 

 

 

 

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EXHIBIT E

FORM OF CONVERSION/CONTINUATION REQUEST

Sovereign Bank

75 State Street

Boston, Massachusetts 02109

 

Attention: Robert D. Lanigan, Senior Vice President

Telephone: (617) 346-7384

Telecopy: (617) 346-7350

 

Re: Credit Agreement dated as of June 14, 2006, as further amended from time to
time, by and among Green Mountain Power Corporation, the signatory Banks thereto
and Sovereign Bank, as Agent (the “Agreement”)

Capitalized terms used herein without definition which are defined in the
Agreement shall have the meanings therein defined.

Pursuant to Section 2.7 of the Agreement, the Company hereby gives notice of its
intention to effect a [continuation][conversion] of a Borrowing under
Section 2.1 as [a LIBOR Loan][an Alternate Base Rate Loan] in the amount of
$             on             ,             .

Pursuant to Section 2.3 of the Agreement, the Company has elected to have the
following portions of such Borrowing be subject to the Type and Interest
Period(s) set forth below:

 

           Interest

Loan

   Type    Amount    Period

1.

        

2.

        

3.

        

4.

        

5.

        

The Company hereby certifies that on the date hereof and on the date of
conversion/continuation set forth above, and after giving effect to the Loans to
be converted and/or continued:

(a) The Company is and shall be in compliance with all the terms, covenants and
conditions of the Agreement;

(b) There exists and there shall exist no Event of Default under the Agreement;
and

(c) The Company represents and warrants that each of the material
representations and warranties contained in the Agreement is and shall be true
and correct in all

 

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material respects with the same force and effect as if made on and as of the
date hereof and as of the Borrowing Date, except such representations and
warranties as specifically refer to an earlier date.

The Company hereby certifies that on the date hereof the Debt Rating of the
Company is              according to Standard & Poor’s Corporation and
             according to Moody’s Investor Service.

The undersigned hereby certifies that he/she is the chief financial officer of
the Company.

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IN WITNESS WHEREOF, the undersigned has caused this Notice of
Conversion/Continuation and certification to be executed as of the date and year
first above written.

 

GREEN MOUNTAIN POWER CORPORATION By:  

 

Name:   Title:   Chief Financial Officer

Signature Page to Conversion/Continuation Request

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EXHIBIT F

SUBSIDIARIES

 

Name of Subsidiary

 

State of Incorporation

Green Mountain Power Investment Company

  Vermont

GMP Real Estate Corporation

  Vermont

Northern Water Resources, Inc. (formerly Mountain Energy, Inc.)

  Vermont

 

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EXHIBIT G

FORM OF LEGAL OPINION

See attached.

 

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