Exhibit 10.1 Bond Purchase Agreement


    Exhibit
      10.1

     

    GREEN
      MOUNTAIN POWER CORPORATION

     

    $30,000,000

     

    First
      Mortgage Bonds, 6.53% Series due August 1, 2036

     

    _______________________________

     

    BOND
      PURCHASE AGREEMENT

     

    _______________________________

     

    Dated
      July 27, 2006

     

     

     

    


     

    


     


    
      
         

      

      
         

        
          

        

      

      
         

      

    



    TABLE
      OF CONTENTS

     

    

      
        	
                1.

              	
                Authorization
                  of Bonds

              	
                1

              
	
                2.

              	
                Sales
                  and Purchase of Bonds

              	
                1

              
	
                3.

              	
                Closing

              	
                1

              
	
                4.

              	
                Conditions
                  to Closing

              	
                2

              
	 	
                4.1. Conditions
                  to Purchaser’s Obligations

              	
                2

              
	 	
                4.2. Conditions
                  to Company’s Obligation

              	
                4

              
	
                5.

              	
                Representations
                  and Warranties, etc

              	
                4

              
	 	
                5.1. Incorporation,
                  Standing, etc

              	
                4

              
	 	
                5.2. Subsidiaries

              	
                5

              
	 	
                5.3. Qualification

              	
                5

              
	 	
                5.4. Business;
                  Financial Statements

              	
                5

              
	 	
                5.6. Tax
                  Returns and Payments

              	
                6

              
	 	
                5.7. Title
                  of Properties

              	
                6

              
	 	
                5.8. Property
                  Subject to the Lien of the Indentures, etc.

              	
                6

              
	 	
                5.9. Franchises,
                  etc.; Power Contracts

              	
                6

              
	 	
                5.10. Litigation,
                  etc.

              	
                7

              
	 	
                5.11. Compliance
                  with Other Instruments, etc.

              	
                8

              
	 	
                5.12. Governmental
                  Consent

              	
                8

              
	 	
                5.13. Offer
                  of Bonds

              	
                8

              
	 	
                5.14. Use
                  of Proceeds

              	
                9

              
	 	
                5.15. Federal
                  Reserve Regulations

              	
                9

              
	 	
                5.16. Compliance
                  with ERISA

              	
                9

              
	 	
                5.17. Foreign
                  Assets Control Regulations, etc.

              	
                10

              
	 	
                5.18. Bonds
                  Comply with Indentures; Rank of Bonds

              	
                11

              
	 	
                5.19. Disclosure

              	
                11

              
	 	
                5.20. Indebtedness

              	
                11

              
	
                6

              	
                Representations
                  and Warranties by Purchasers

              	
                11

              
	 	
                6.1. Purchase
                  for Investment

              	
                11

              
	 	
                6.2. Source
                  of Funds

              	
                12

              
	
                7.

              	
                Accounting,
                  Financial Statements and Other Information

              	
                13

              
	
                8.

              	
                Inspection

              	
                16

              
	
                9.

              	
                Additional
                  Agreements of the Company

              	
                16

              
	 	
                9.1. Home
                  Office Payment, etc.

              	
                16

              
	 	
                9.2. Mutilated,
                  etc., Bonds

              	
                16

              
	 	
                9.3. Power
                  Contracts

              	
                17

              
	 	
                9.4. Denomination
                  of Bonds

              	
                17

              
	 	
                9.5. Proration,
                  etc.

              	
                17

              
	
                10.

              	
                Expenses,
                  etc

              	
                17

              
	
                11.

              	
                Survival
                  of Representations and Warranties

              	
                18

              
	
                12.

              	
                Notices,
                  etc.

              	
                18

              
	
                13.

              	
                Substitution
                  of Purchaser

              	
                18

              
	
                14.

              	
                Exchange
                  of Bonds

              	
                18

              
	
                15.

              	
                Miscellaneous

              	
                19

              


      


       

    

    


    


    SCHEDULE
      A Information
      Relating to Purchasers

     

    EXHIBIT
      A Form
      of
      Supplemental Counsel for the Company

     

    EXHIBIT
      B1 Opinion
      of Special Counsel for the Company

     

    EXHIBIT
      B2 Opinion
      of Counsel for the Company

     

    EXHIBIT
      B3 Opinion
      of Special Maine Counsel for the Company

     

    EXHIBIT
      B4 Opinion
      of Special Massachusetts Counsel for the   Company

     

    EXHIBIT
      B5 Opinion
      of Special Counsel for the Purchasers

     

    


     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Green
      Mountain Power Corporation

     

    163
      Acorn Lane

     

    Colchester,
      Vermont 05446

     

    First
      Mortgage Bonds, 6.53% Series due August 1, 2036

     

    July
      27, 2006

     

    TO
      EACH
      OF THE PURCHASERS LISTED IN

    THE
      ATTACHED SCHEDULE A

     

    Dear
      Sirs:

     

    Green
      Mountain Power Corporation, a Vermont corporation (the “Company”) agrees with
      each of the purchasers listed in the attached Schedule A (such purchasers,
      together, referred to herein as “you” or the “Purchasers” and individually as a
“Purchaser”) as follows:

     

    1.  Authorization
      of Bonds.
      The
      Company has authorized the issue and sale of $30,000,000 aggregate principal
      amount of its First Mortgage Bonds, 6.53% Series due August 1, 2036 (the
“Bonds”), to be issued under and secured as provided in the Company’s Indenture
      of First Mortgage and Deed of Trust (the “Original Indenture”), dated as of
      February 1, 1955, to The Bank of New York, as successor to United States Trust
      Company of New York, successor to The Chase Manhattan Bank (National
      Association), successor to The Chase National Bank of the City of New York,
      as
      trustee (the “Trustee”), as previously supplemented and modified by seventeen
      supplemental indentures and as to be further supplemented and modified by an
      Eighteenth Supplemental Indenture (the “Eighteenth Supplemental Indenture”), to
      be dated as of July 1, 2006 and to be substantially in the form of Exhibit
      A
      attached hereto. As used herein, “Indenture” shall mean the Original Indenture,
      as previously supplemented and modified by seventeen supplemental indentures
      and
      as further supplemented and modified by the Eighteenth Supplemental Indenture.
      The Bonds shall be issuable in fully registered form only, shall mature on
      August 1, 2036, shall bear interest at the rate of 6.53% per annum, payable
      semi-annually on February 1 and August 1 of each year, commencing February
      1,
      2007, shall be subject to redemption as provided in the Eighteenth Supplemental
      Indenture and shall be in the form established pursuant to the Eighteenth
      Supplemental Indenture. As provided in the Eighteenth Supplemental Indenture,
      the Bonds originally issued to you thereunder shall be dated, and shall bear
      interest from, the date of their original issue on the date of the Closing
      referred to in section 3. References to a “Schedule” or “Exhibit”, unless
      otherwise specified, are to a Schedule or Exhibit to this
      Agreement.

     

    2.  Sale
      and Purchase of Bonds.
      Subject
      to the terms and conditions of this Agreement, the Company will issue and sell
      to each Purchaser, and each Purchaser will purchase from the Company, in two
      tranches at the Initial Closing and the Second Closing provided for in section
      3, Bonds in the principal amount specified opposite such Purchaser’s name in
      Schedule A at a purchase price equal to 100% of the face principal amount
      thereof.

     

    3.  Closings.
      The
      sale of the Bonds to be purchased by you shall take place at the offices of
      Hunton & Williams, 200 Park Avenue, New York, New York 10166, at 10:00 a.m.,
      New York City time, in two installments (i) on August 3, 2006, or on such other
      business day thereafter on or prior to August 31, 2006 as may be agreed upon
      by
      the Company and you (the "Initial Closing"), and (ii) on December 1, 2006,
      or on
      such other business day thereafter on or prior to December 31, 2006 as may
      be
      agreed upon by the Company and you (the "Second Closing" -- the Initial Closing
      and the Second Closing being sometimes herein referred to collectively as the
      "Closings" and each individually as a "Closing"). At each Closing, the
      Company will deliver to each Purchaser the Bonds in the principal amount to
      be
      purchased by each Purchaser in the form of a single Bond (or such greater number
      of Bonds as such Purchaser may request) dated the date of such Closing, duly
      authenticated by the Trustee and registered in the name of such Purchaser (or
      in
      the name of its nominee), against delivery by such Purchaser to the Company
      or
      its order of immediately available funds in the amount of the purchase price
      for
      the Bonds being purchased by such Purchaser at such Closing. If at the Closing
      the Company shall fail to tender such Bonds to you as provided in this section
      3, or any of the conditions specified in section 4.1 shall not have been
      fulfilled to your satisfaction, you shall, at your election, be relieved of
      all
      further obligations under this Agreement without thereby waiving any rights
      you
      may have by reason of such failure or such nonfulfillment.

     

    4.  Conditions
      to Closing.

     

    4.1.  Conditions
      to Purchaser’s Obligations.
      Your
      obligation to purchase and pay for the Bonds to be sold to you at each Closing
      is subject to the fulfillment to your satisfaction, prior to or at each Closing,
      of the following conditions:

     

    (a)  The
      representations and warranties of the Company contained in this Agreement shall
      be correct when made and at the time of such Closing, except as affected by
      the
      consummation of such transactions.

     

    (b)  The
      Company shall have performed and complied with all agreements and conditions
      contained in this Agreement required to be performed or complied with by it
      prior to or at such Closing and at the time of such Closing the Indenture shall
      be in full force and effect and no condition or event shall exist that
      constitutes or that, after notice or lapse of time or both, would constitute
      a
“default” (as defined in the Indenture).

     

    (c)  The
      Company shall have delivered to you an Officers’ Certificate, dated the date of
      such Closing, certifying that the conditions specified in subdivisions (a)
      and
      (b) of this section 4.1 have been fulfilled. As used in this Agreement, the
      term
“Officers’ Certificate” shall mean a certificate executed on behalf of the
      Company by its President or one of its Vice Presidents or its Controller and
      its
      Treasurer or its Assistant Treasurer or (solely with respect to the Officers’
Certificate delivered pursuant to this clause (c)) its General
      Counsel.

     

    (d)  You
      shall
      have received from (i) Hunton & Williams, special counsel for the Company,
      (ii) Donald J. Rendall, Jr., Esq., general counsel for the Company, (iii)
      Verrill & Dana, special Maine counsel for the Company, (iv) Bulkey,
      Richardson and Gelinas, special Massachusetts counsel for the Company, and
      (v)
      Greenberg Traurig LLP, your special counsel in connection with the transactions
      contemplated by this Agreement, favorable opinions substantially in the forms
      set forth in Exhibits B1, B2, B3, B4 and B5, respectively, and covering such
      other matters incident to such transactions as you may reasonably request,
      each
      addressed to you, dated the date of such Closing and otherwise satisfactory
      in
      substance and form to you.

     

    (e)  The
      Company and the Trustee shall have duly authorized, executed and delivered
      the
      Eighteenth Supplemental Indenture and the Company shall have caused (i) the
      Eighteenth Supplemental Indenture to have been recorded or filed prior to the
      first Closing as a real estate mortgage in all places in the States of Vermont
      and Maine and The Commonwealth of Massachusetts in which recording is necessary
      to preserve and protect the lien of the Indenture upon any of the properties
      of
      the Company specifically described therein as subject to the lien of the
      Indenture, (ii) all financing and continuation statements under the Uniform
      Commercial Code with respect to the personal property described in the granting
      clauses of the Indenture to have been duly filed in all places necessary to
      perfect and protect the security interest granted by such Indenture to the
      extent such security can be perfected by the filing of appropriate financing
      statements, and (iii) all taxes, fees and other charges payable in connection
      with the execution, delivery and filing of the Eighteenth Supplemental Indenture
      and such financing and continuation statements and in connection with the issue
      and sale Bonds to have been paid in full.

     

    (f)  There
      shall have been issued by the Public Service Board (the “Board”) of the State of
      Vermont an order consenting to the issuance and sale of the Bonds as
      contemplated by this Agreement and such order shall be in full force and effect
      and there shall have been filed with the Department of Telecommunications and
      Energy of The Commonwealth of Massachusetts (the “MDTE”) a certification by the
      Board of the Board’s jurisdiction concerning financing of the
      Company.

     

    (g)  On
      the
      date of each Closing your purchase of and payment for the Bonds to be purchased
      by you (i) shall be permitted by the laws and regulations of each jurisdiction
      to which you are subject (but without recourse, in the case of any such
      jurisdiction, to any provision (commonly referred to as a “basket” provision)
      permitting the investment of an amount not to exceed a specified percentage
      of
      your admitted assets in investments other than those expressly permitted by
      the
      laws and regulations of such jurisdiction), (ii) shall not
      violate any applicable law or regulation (including, without limitation,
      Regulation G, T, U or X of the Board of Governors of the Federal Reserve System)
      and (iii) not subject you to any tax, penalty or liability under or pursuant
      to
      any applicable law or regulation, which law or regulation was not in effect
      on
      the date hereof.
      You
      shall have received such evidence as you may reasonably request, including
      an
      Officers’ Certificate of the Company, to enable you to determine whether such
      purchase is so permitted. The condition to closing contained in this subdivision
      (g) with respect to each Closing will be deemed satisfied upon the occurrence
      of
      each Closing.

     

    (h)  All
      corporate and other proceedings in connection with the transactions contemplated
      by this Agreement, including all proceedings under the Indenture, and all
      documents and instruments incident to such transactions shall be satisfactory
      to
      you and your special counsel, and you and your special counsel shall have
      received all such counterpart originals or certified or other copies of such
      documents as you or they may reasonably request.

     

    (i)  A
      Private
      Placement number issued by Standard & Poor's CUSIP Service Bureau (in
      cooperation with the Securities Valuation Office of the National Association
      of
      Insurance Commissioners) shall have been obtained for the Bonds.

     

    (j)  The
      Company shall not have changed its jurisdiction of incorporation or been a
      party
      to any merger or consolidation and shall not have succeeded to all or any
      substantial part of the liabilities of any other entity, at any time following
      the date of the most recent financial statements referred to in section
      5.4.

     

    4.2.  Conditions
      to Company’s Obligation.
      The
      obligation of the Company to issue, sell and deliver the Bonds to be purchased
      by you under this Agreement shall be subject to the accuracy of your
      representations contained in section 6 of this Agreement.

     

    5.  Representations
      and Warranties, etc.
      The
      Company represents and warrants that:

     

    5.1.  Incorporation,
      Standing, etc. 

     

    (a)  The
      Company is a corporation duly incorporated, validly existing and in good
      standing under the laws of the State of Vermont and has all requisite corporate
      power and authority to own and operate its properties, to carry on its business
      as now conducted and as proposed to be conducted, to enter into this Agreement
      and the Eighteenth Supplemental Indenture, to issue and sell the Bonds and
      to
      carry out the terms of this Agreement, the Indenture and the Bonds.

     

    (b)  This
      Agreement, the Eighteenth Supplemental Indenture, the Bonds and each other
      agreement and instrument executed and delivered by the Company in connection
      with the issuance, sale and delivery of the Bonds (the “Transaction Documents”)
      have been duly authorized by all necessary corporate action on the part of
      the
      Company, and this Agreement constitutes, and upon execution and delivery thereof
      each Bond and each other Transaction Document will constitute, a legal, valid
      and binding obligation of the Company enforceable against the Company in
      accordance with its terms, except as such enforceability may be limited by
      (i)
      applicable bankruptcy, insolvency, reorganization, moratorium or other similar
      laws affecting the enforcement of creditors' rights generally and (ii) general
      principles of equity (regardless of whether such enforceability is considered
      in
      a proceeding in equity or at law).

     

    5.2.  Subsidiaries.
      The
      Company has no subsidiaries, as such term is defined in Regulation S-X of the
      Securities and Exchange Commission (“Subsidiaries”), other than four
      Subsidiaries, the assets and operations of which are not significant to the
      financial or other condition or the operation of the business of the
      Company.

     

    5.3.  Qualification.
      The
      Company is duly qualified and in good standing as a foreign corporation
      authorized to do business in the State of Maine and The Commonwealth of
      Massachusetts, which are the only jurisdictions in which the nature of its
      activities or the character of the properties it owns or leases makes such
      qualification necessary.

     

    5.4.  Business;
      Financial Statements.
      The
      Company has delivered to you complete and correct copies of (a) its annual
      report to stockholders for the fiscal year ended December 31, 2005 (the “Annual
      Report”), (b) its annual report on Form 10-K for such fiscal year (the “Form
      10-K”) as filed with the Securities and Exchange Commission (the “Commission”),
      (c) its quarterly report on Form 10-Q for the quarter ended March 31, 2006
      (the
“Quarterly Report”) as filed with the Commission, (d) its Current Reports on
      Form 8-K dated June 22, 2006, June 19, 2006, May 25, 2006, May 3, 2006, April
      5,
      2006, March 7, 2006, March 2, 2006, March 1, 2006 and January 4, 2006
      (collectively, the “8K Reports”) as filed in the Commission, and (e) a
      memorandum dated July 5, 2006 prepared by Sovereign Securities Corporation,
      LLC
      (the "Placement Agent") for use in connection with the Company’s private
      placement of the Bonds (such memorandum, including appendices thereto, is herein
      called the “Memorandum”). The Annual Report, the Form 10-K, the Quarterly
      Report, the 8-K Reports and the Memorandum are collectively called the "GMP
      Disclosure Documents”. The Memorandum correctly describes, as of its date, the
      business then conducted and proposed to be conducted by the Company. There
      are
      included in the Form 10-K consolidated financial statements of the Company and
      its consolidated Subsidiaries for each of the fiscal years ended December 31,
      2005 and 2004, accompanied in each case by the opinion thereon of Deloitte
&
Touché LLP, independent public accountants. All financial statements included in
      the foregoing materials delivered to you (except as otherwise specified therein)
      have been prepared in accordance with generally accepted accounting principles
      applied on a consistent basis throughout the periods specified and present
      fairly the financial position of the Company and its consolidated Subsidiaries
      as of the respective dates specified and the results of their operations and
      cash flow for the respective periods specified (subject, in the case of the
      unaudited financial statements included in the Quarterly Report, to normal
      year
      end and audit adjustments).

     

    5.5.  Changes,
      etc.
      Since
      December 31, 2005, (a) except for normal seasonal variations in the business
      of
      the Company, the occurrence of events described in the GMP Disclosure Documents
      and the consummation of the transactions contemplated by this Agreement, there
      has been no change in the assets, liabilities or financial condition of the
      Company, other than changes which have not been, either in any case or in the
      aggregate, materially adverse to the Company, (b) except for normal seasonal
      variations in the business of the Company and the occurrence of events described
      in the GMP Disclosure Documents, neither the business, operations or affairs
      nor
      any of the properties or assets of the Company have been affected by any
      occurrence or development (whether or not insured against) which has been,
      either in any case or in the aggregate, materially adverse to the Company and
      (c) the Company has not directly or indirectly declared, ordered, paid, made
      or
      set apart any sum or property for any dividend or any purchase, redemption
      or
      other retirement of any shares of stock of the Company except as permitted
      by
      the Indenture. The Company has no material obligations or liabilities,
      contingent or otherwise, except those (i) disclosed or adequately provided
      for
      by the financial statements mentioned in section 5.4, (ii) disclosed in the
      GMP
      Disclosure Documents, and (iii) relating to the consummation of the transactions
      contemplated by this Agreement.

     

    5.6.  Tax
      Returns and Payments.
      The
      Company has filed all tax returns required by law to be filed by it and has
      paid
      all taxes, assessments and other governmental charges levied upon it and any
      of
      its properties, assets, income or franchises which are due and payable, other
      than those presently payable without penalty or interest. The Federal income
      tax
      liabilities of the Company have been finally determined by the Internal Revenue
      Service and satisfied, or the time for audit has expired, for all fiscal periods
      through December 31, 2001. The charges, accruals and reserves on the books
      of
      the Company in respect of Federal and state income taxes for all fiscal periods
      are adequate in the opinion of the Company, and the Company knows of no unpaid
      assessment for additional Federal or state income taxes for any
      period.

     

    5.7.  Title
      to Properties.
      The
      Company has title in fee simple, subject only to permitted encumbrances as
      defined in the Indenture, to all the real estate described or referred to in
      the
      Indenture as being subject to the lien thereof, except (i) property heretofore
      released from the lien of the Indenture in accordance with the terms thereof,
      (ii) property held under leases and rights of way, easements, riparian rights,
      flowage rights and property of a similar character, and (iii) certain other
      properties, titles to which are subject to reservations, encumbrances and minor
      defects in titles such as are customarily encountered in the public utility
      business and which do not materially interfere with their use by the Company;
      and the Company has good and marketable title, subject only to permitted
      encumbrances as defined in the Indenture, to the other properties described
      or
      referred to in the Indenture as being subject to the lien thereof, except
      property heretofore released from the lien of the Indenture in accordance with
      the terms thereof.

     

    5.8.  Property
      Subject to the Lien of the Indenture, etc.

     

    (a)  At
      the
      Closing, the physical properties and franchises described in, and subject to
      the
      lien of, the Indenture will include all the physical properties and franchises
      owned by the Company on the date of the Closing and used or useful in its public
      utility business, except (i) such property as may have been duly released from
      the lien of the Indenture and (ii) certain other classes of property expressly
      excepted in the Indenture, and such physical properties and franchises will
      include substantially all of the physical properties and franchises from which
      the consolidated operating revenues of the Company set forth in the income
      statements referred to in section 5.4 were derived.

     

    (b)  At
      the
      Closing, the Indenture will constitute a valid first mortgage lien upon the
      real
      property then owned by the Company and described in the granting clauses of
      the
      Indenture other than classes of property expressly excepted in the Indenture,
      subject only to permitted encumbrances under the Indenture, and a valid and,
      to
      the extent that it may be perfected by filing under the Uniform Commercial
      Code,
      perfected security interest in such of the personal property of the Company
      as
      is described in the Indenture.

     

    (c)  The
      Company is not a party to or bound by any contract or agreement or subject
      to
      any charter, by-law or other contractual restriction which, in its opinion
      materially and adversely affects, or insofar as the Company now foresees will
      in
      the future materially and adversely affect its business, operations, properties
      or assets, or its financial condition.

     

    5.9.  Franchises,
      etc.; Power Contracts.

     

    (a)  The
      Company owns or possesses all franchises, permits, patents, trademarks, service
      marks, trade names, copyrights, licenses and authorizations, and all other
      operating rights, consents, authorizations and orders (collectively,
“Franchises”), and all rights with respect to the foregoing, necessary for the
      conduct of its business as now conducted; all of such Franchises are valid
      and
      subsisting and contain no unduly burdensome restriction, condition or
      limitation; and the Company is not in default in respect of any
      thereof.

     

    (b)  Each
      of
      those agreements (the “Power Contracts”) for the purchase of power listed in the
      Form 10-K under the caption “Power Resources” and in Note J of the Notes to the
      Financial Statements contained in the Form 10-K, excluding those which, by
      their
      terms as stated in the Form 10-K, have expired, has been duly authorized,
      executed and delivered by the Company and, to the best of the Company’s
      knowledge, the other parties thereto and, except as disclosed in the Form 10-K,
      is in full force and effect, with no default or breach existing thereunder
      by
      the Company or, to the best of the Company’s knowledge, by the other parties
      thereto.

     

    5.10.  Litigation,
      etc.
      There
      is no action, proceeding or investigation pending or, to the best of the
      Company’s knowledge, threatened against the Company (a) which questions the
      validity of this Agreement, the Indenture or the Bonds or any action taken
      or to
      be taken pursuant to this Agreement, the Indenture or the Bonds, or (b) except
      as disclosed under the heading “Legal Proceedings” in, and in Note H of the
      Notes to the Financial Statements contained in, the Form 10-K and under the
      heading “Environmental Matters” in the Quarterly Report, which, so far as the
      Company can now foresee, would have a substantial possibility of resulting
      either in any case or in the aggregate, in any adverse change in the business,
      operations, condition (financial or otherwise), properties or assets of the
      Company or in any liability on the part of the Company which in any such case
      would be material to the Company.

     

    5.11.  Compliance
      with Other Instruments, etc.
      The
      Company is not in violation of, and the execution, delivery and performance
      of
      the Transaction Documents will not violate, any term of its Restated Articles
      of
      Association, as amended, or By-Laws, and is not in violation of, and will not
      violate, any term of any agreement or instrument to which it is a party or
      by
      which it or any of its properties are bound or any term of any applicable law,
      ordinance, rule or regulation of any governmental authority or any term of
      any
      applicable order, judgment or decree of any court, arbitrator or governmental
      authority, except as disclosed in the Form 10-K and the Quarterly Report under
      the caption “Environmental Matters,” the consequences of which violation, so far
      as the Company can now foresee, would have a substantial possibility of having
      a
      materially adverse effect on the business, operations, condition (financial
      or
      otherwise), properties or assets of the Company; the execution, delivery and
      performance of the Transaction Documents will not result in any violation of
      or
      be in conflict with or constitute a default under any such term or result in
      the
      creation of (or impose any obligation on the Company to create) any lien (except
      for that created by the Indenture) upon any of the properties or assets of
      the
      Company pursuant to any such term.

     

    5.12.  Governmental
      Consent.
      No
      consent, approval or authorization of, or declaration or filing with, any
      governmental authority is required for the valid execution and delivery of
      this
      Agreement or the Eighteenth Supplemental Indenture or the valid offer, issue,
      sale and delivery of the Bonds pursuant to this Agreement and the Eighteenth
      Supplemental Indenture except (a) the issue of an order by the Board consenting
      to the issuance and sale of the Bonds, (b) the recording and filing of the
      Eighteenth Supplemental Indenture and financing statements pursuant to the
      Indenture and (c) the filing with the MDTE of a certification (the
“Certification”) by the Board of the Board’s regulatory jurisdiction concerning
      financing of the Company. An order in Docket No. 7184, dated July 13, 2006
      (the
“Order”), consenting to the issuance and sale of the Bonds has been issued by
      the Board, the Company has delivered to you complete and correct copies of
      such
      order and all supplements, amendments or other filings to or with the Order,
      the
      Order is in full force and effect, no proceeding has been instituted to review,
      suspend, limit, restrict or revoke the Order and the Company has provided you
      with a copy of a letter by the Department of Public Service of the State of
      Vermont (the “VDPS”) waiving the right of the VDPS to institute any such
      proceeding. The Certification has been filed with the MDTE and is in full force
      and effect.

     

    5.13.  Offer
      of Bonds.
      Neither
      the Company nor the Placement Agent, the only person acting on its behalf in
      connection with the offering or sale of the Bonds or any similar securities
      of
      the Company, has directly or indirectly offered the Bonds or any part thereof
      or
      any similar securities for sale to, or solicited any offer to buy any of the
      same from, or otherwise approached or negotiated in respect thereof with, anyone
      other than you and other accredited investors. Neither the Company nor anyone
      acting on its behalf will offer or sell the Bonds or any part thereof or any
      similar securities so as to subject the issuance and sale of the Bonds to the
      registration and prospectus delivery provisions of the Securities Act of 1933,
      as amended (the “Securities Act”).

     

    5.14.  Use
      of Proceeds.
      The
      Company will apply the net proceeds of the sale of the Bonds, subject to the
      provisions of section 5.15, only (i) to partially fund additional capital
      investment in Vermont Electric Power Company, which owns and operates the bulk
      transmission system in Vermont, (ii) to repay $14,000,000 of first mortgage
      bonds maturing in November and December 2006, and (iii) to repay short-term
      bank
      borrowings.

     

    5.15.  Federal
      Reserve Regulations.
      The
      Company will not, directly or indirectly, use any of the proceeds of the sale
      of
      the Bonds for the purpose, whether immediate, incidental or ultimate, of buying
      a “margin stock” or of maintaining, reducing or retiring any indebtedness
      originally incurred to purchase a stock that is currently a “margin stock”, or
      for any other purpose which might violate, in each case Regulation T, U or
      X
      issued by the Board of Governors of the Federal Reserve System, as at any time
      amended (and any successor regulation or law to any thereof), and the Company
      agrees to execute all instruments which may be necessary from time to time,
      if
      any, to comply with all the requirements of Regulation U of the Federal Reserve
      System, as at any time amended. No indebtedness being reduced or retired out
      of
      the proceeds of the sale of the Bonds was incurred for the purpose of purchasing
      or carrying any such “margin stock”.

     

    5.16.  Compliance
      with ERISA.

     

    (a)  Neither
      any employee pension benefit plan (within the meaning of section 3 of the
      Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) which is
      or has been established or maintained or to which contributions are or have
      been
      made by the Company or any trade or business, whether or not incorporated,
      which, together with the Company, is under common control, as described in
      section 414(b) or (c) of the Internal Revenue Code of 1986, as amended (the
      “Code”) (any such employee pension benefit plan being herein called a “Plan”),
      nor any trust created under any Plan, has been terminated and for which the
      Company had any liability that has not been satisfied in full. No material
      liability of the Company to the Pension Benefit Guaranty Corporation or the
      Internal Revenue Service has been or is expected by the Company to be incurred
      with respect to any Plan which is or would be materially adverse to the
      Company.

     

    (b)  The
      execution and delivery of this Agreement and the Eighteenth Supplemental
      Indenture and the issue and sale of the Bonds under the Indenture at the Closing
      will not involve any transaction which is subject to the prohibitions of section
      406 of ERISA or in connection with which a tax could be imposed pursuant to
      section 4975 of the Code. The representation by the Company in the preceding
      sentence is made in reliance upon and subject to the accuracy of your
      representation in section 6.2 of this Agreement as to the source of the funds
      used to pay the purchase price of the Bonds purchased by you.

     

    (c)  The
      Company and each trade or business (whether or not incorporated) which is under
      common control with the Company under Section 414(b), (c), (m) or (o) of the
      Code (“ERISA Affiliate”) have operated and administered each Plan in compliance
      with all applicable laws except for such instances of noncompliance as have
      not
      resulted in and could not reasonably be expected to result in a Material Adverse
      Effect. Neither the Company nor any ERISA Affiliate has incurred any material
      liability pursuant to Title I or IV of ERISA or the penalty or excise tax
      provisions of the Code relating to employee benefit plans (as defined in Section
      3 of ERISA), and no event, transaction or condition has occurred or exists
      that
      would reasonably be expected to result in the incurrence of any such liability
      by the Company or any ERISA Affiliate, or in the imposition of any Lien on
      any
      of the rights, properties or assets of the Company or any ERISA Affiliate,
      in
      either case pursuant to Title I or IV of ERISA or to such penalty or excise
      tax
      provisions or to Section 401(a)(29) or 412 of the Code, other than such
      penalties, taxes, liabilities or Liens as would not be individually or in the
      aggregate material.

     

    (d)  The
      present value of the aggregate accrued benefits under each of the Plans that
      is
      subject to Title IV of ERISA (other than Multiemployer Plans), determined as
      of
      the end of such Plan's most recently ended plan year on the basis of the
      actuarial assumptions specified for funding purposes in such Plan's most recent
      actuarial valuation report, did not exceed the aggregate current value of the
      assets of such Plan allocable to such accrued benefits. 

     

    (e)  Neither
      the Company nor its ERISA Affiliates have participated in any Multiemployer
      Plans, as defined in Section 3(37) of ERISA.

     

    5.17.  Foreign
      Assets Control Regulations, USAPatriot Act, etc.
      To the
      best knowledge of the Company, neither the
      issue
      and sale of the Bonds by the Company nor its use of the proceeds thereof will
      violate the Trading with the Enemy Act, as amended, the Foreign Assets Control
      Regulations, the Transaction Control Regulations, the Cuban Assets Control
      Regulations, the Foreign Funds Control Regulations or the Iranian Assets Control
      Regulations of the United States Treasury Department (31 C.F.R., Subtitle B,
      Chapter V, as amended) or any enabling legislation or executive order relating
      thereto. The Company is not in violation of any law, rule, regulation
      (including, without limitation under the Uniting
      and Strengthening America by Providing Appropriate Tools Required to Intercept
      and Obstruct Terrorism Act,
      the
      Trading with the Enemy Act, the foreign assets control regulations of the United
      States Treasury Department and Executive Order 13224 of September 23, 2001)
      binding upon it. 

     

    


    5.18.  Bonds
      Comply with Indenture; Rank of Bonds.
      The
      Bonds, when issued and delivered, will comply with the provisions of the
      Indenture and will be secured equally and ratably with all other bonds issued
      under the Original Indenture and any indenture supplemental thereto (except
      insofar as any sinking and improvement fund, depreciation fund or other fund
      established in accordance with the provisions of the Indenture may afford
      additional security for the bonds of any specific series).

     

    5.19.  Disclosure.
      This
      Agreement, the Memorandum and the other documents, certificates’ and instruments
      delivered to you by or on behalf of the Company in connection with the
      transactions contemplated by this Agreement, taken as a whole, do not contain
      any untrue statement of a material fact or omit to state a material fact
      necessary in order to make the statements contained therein, in light of the
      circumstances in which they were made, not misleading. There is no fact known
      to
      the Company which materially adversely affects or in the future has a
      substantial possibility (so far as the Company now foresees) of materially
      adversely affecting the business, operations, condition (financial or
      otherwise), properties or assets of the Company which has not been set forth
      in
      this Agreement or the Memorandum or in the other documents, certificates and
      instruments delivered to you by or on behalf of the Company in connection with
      the transactions contemplated by this Agreement.

     

    5.20.  Indebtedness.
      Except
      for the bonds issued under and pursuant to the Indenture, the Company has no
      indebtedness other than as disclosed in the Memorandum, the Form 10-K and the
      Quarterly Report. Neither the Company nor any Subsidiary is in default and
      no
      waiver of default is currently in effect, in the payment of any principal or
      interest on any indebtedness of the Company or any Subsidiary and no event
      or
      condition exists with respect to any indebtedness of the Company or any
      Subsidiary that would permit (or that with notice or the lapse of time, or
      both,
      would permit) one or more persons to cause such indebtedness to become due
      and
      payable before its stated maturity or before its regularly scheduled dates
      of
      payment.

     

    6.  Representations
      and Warranties by Purchasers.

     

    6.1.  Purchase
      for Investment.
      Each
      Purchaser represents that such Purchaser is purchasing the Bonds for its own
      account or for one or more separate accounts maintained by such Purchaser or
      for
      the account of one or more pension to trust funds and not with a view to the
      distribution thereof, provided that the disposition of such Purchaser’s or such
      pension or trust fund’s property shall at all times be within such Purchaser’s
      or such pension or trust fund’s control. Each Purchase represents that such
      Purchaser is (and each separate account for which such Purchaser may be acting
      is) an “accredited investor” described in Sections (1), (2), (3) or (7) of Rule
      501(a) of Regulation D of the Securities Act and that it has the ability to
      evaluate the merits and risks of an investment in the Bonds and the ability
      to
      assume the economic risks involved in such an investment. Each Purchaser
      understands that the Bonds have not been registered under the Securities Act
      and
      may be resold only if registered pursuant to the provisions of the Securities
      Act or if an exemption from registration is available, except under
      circumstances where neither such registration nor such an exemption is required
      by law, and that the Company is not required to register the Bonds. Each
      Purchaser acknowledges that each Bond will contain a legend to the foregoing
      effect and agrees that it will only transfer such Bonds in accordance with
      the
      transfer restrictions set forth in such legend.

     

    6.2.  Source
      of Funds.
      Each
      Purchaser represents that at least one of the following statements is an
      accurate representation as to each source of funds (a “Source”) to be used by
      such Purchaser to pay the purchase price of the Bonds to be purchased by such
      Purchaser hereunder:

     

    (a)  the
      Source is an “insurance company general account” within the meaning of
      Department of Labor Prohibited Transaction Exemption (“PTE”) 95-60 (issued July
      12, 1995) and there is no employee benefit plan, treating as a single plan
      all
      plans maintained by the same employer or employee organization, with respect
      to
      which the amount of the general account reserves and liabilities for all
      contracts held by or on behalf of such plan, exceeds ten percent (10%) of the
      total reserves and liabilities of such general account (exclusive of separate
      account liabilities) plus surplus, as set forth in the NAIC Annual Statement
      for
      such Purchaser most recently field with such Purchaser’s state of domcile;
      or

     

    (b)  the
      Source is either (i) an insurance company pooled separate account, within the
      meaning of PTE 90-1 (issued January 29, 1990), or (ii) a bank collective
      investment fund, within the meaning of the PTE 91-38 (issued July 12, 1991)
      and,
      except as such Purchaser has disclosed to the Company in writing pursuant to
      this paragraph (b), no employee benefit plan or group of plans maintained by
      the
      same employer or employee organization beneficially owns more than 10% of all
      assets allocated to such pooled separate account or collective investment fund;
      or

     

    (c)  the
      Source constitutes assets of an “investment fund” (within the meaning of Part V
      of the QPAM Exemption) managed by a “qualified professional asset manager” or
“QPAM” (within the meaning of Part V of the QPAM Exemption), no employee benefit
      plan’s assets that are included in such investment fund, when combined with the
      assets of all other employee benefit plans established or maintained by the
      same
      employer or by an affiliate within the meaning of Section V(c)(1) of the QPAM
      Exemption of such employer or by the same employee organization and managed
      by
      such QPAM, exceed 20% of the total client assets managed by such QPAM, the
      conditions of Part I(c) and (g) of the QPAM Exemption are satisfied, neither
      the
      QPAM nor a person controlling or controlled by the QPAM (applying the definition
      of “control” in Section V(e) of the QPAM Exemption) owns a 5% or more interest
      in the Company and (i) the identity of such QPAM and (ii) the names of all
      employee benefit plans whose assets are included in such investment fund have
      been disclosed to the Company in writing pursuant to this paragraph (c);
      or

     

    (d)  the
      Source is a governmental plan; or

     

    (e)  the
      Source constitutes assets of a "plan(s)" (within the meaning of Section IV
      of
      PTE 96-23 (the "INHAM Exemption")) managed by an "in-house asset manager" or
      "INHAM" (within the meaning of Part IV of the INHAM Exemption), the conditions
      of Part I(a), (g) and (h) of the INHAM Exemption are satisfied, neither the
      INHAM nor a person controlling or controlled by the INHAM (applying the
      definition of "control" in Section IV(d) of the INHAM Exemption) owns a 5%
      or
      more interest in the Company and (i) the identity of such INHAM and (ii) the
      name(s) of the employee benefit plan(s) whose assets constitute the Source
      have
      been disclosed to the Company in writing pursuant to this clause (e);
      or

     

    (f)  the
      Source is one or more employee benefit plans, or a separate account or trust
      fund comprised of one or more employee benefit plans, each of which has been
      identified to the Company in writing pursuant to this paragraph (e);
      or

     

    (g)  the
      Source does not include assets of any employee benefit plan, other than a plan
      exempt from the coverage of ERISA.

     

    If
      any
      Purchaser or any subsequent transferee of the Bonds indicates that such
      Purchaser or such transferee is relying on any representation contained in
      paragraph (b), (c) or (e) above, the Company shall deliver on the date of the
      applicable Closing and on the date of any applicable transfer a certificate,
      which shall either state that (i) it is neither a party in interest nor a
“disqualified person” (as defined in Section 4975(e)(2) of the Code), with
      respect to any plan identified pursuant to paragraphs (b) or (e) above, or
      (ii)
      with respect to any plan, identified pursuant to paragraph (c) above, neither
      it
      nor any “affiliate” (as defined in Section V(c) of the QPAM Exemption) has at
      such time and during the immediately preceding one year, exercised the authority
      to appoint or terminate said QPAM as manager of any plan identified in writing
      pursuant to paragraph (c) above or to negotiate the terms of said QPAM’s
      management agreement on behalf of any such identified plan. As used in this
      Section 6.2, the terms “employee
      benefit plan”,
      “governmental
      plan”,
      “party
      in interest”
and
      “separate
      account”
shall
      have the respective meanings assigned to such terms in Section 3 of
      ERISA.

     

    7.  Accounting,
      Financial Statements and Other Information.
      The
      Company will maintain a system of accounting established and administered in
      accordance with generally accepted accounting principles and will set aside
      on
      its books all such proper reserves as shall be required by generally accepted
      accounting principles. The Company will deliver to you, so long as you shall
      be
      entitled to purchase Bonds under this Agreement or you or your nominee shall
      be
      the holder of any Bonds:

     

    (a)  within
      60
      days after the end of each of the first three quarterly fiscal periods in each
      fiscal year of the Company, a consolidated balance sheet of the Company its
      consolidated Subsidiaries as at the end of such period and the related
      consolidated statements of income and cash flow, of the Company and its
      consolidated Subsidiaries for such period and (in the case of the second and
      third quarterly periods) for the period from the beginning of the current fiscal
      year to the end of such quarterly period, setting forth in each case in
      comparative form the consolidated figures for the corresponding periods of
      the
      previous fiscal year, all in reasonable detail and certified principal financial
      officer of the Company as presenting fairly, in accordance with generally
      accepted accounting principles applied (except as specifically set forth
      therein) basis consistent with such prior fiscal periods, the information
      contained therein, subject to changes resulting from normal year-end and audit
      adjustments;

     

    (b)  within
      120 days after the end of each fiscal year of the Company, a consolidated
      balance sheet of the Company and its consolidated Subsidiaries as at the end
      of
      such year
      and
      the related consolidated statements of income and cash flow of the Company
      and
      its consolidated Subsidiaries for such fiscal year, setting forth in each case
      in comparative form the consolidated figures for the previous fiscal year,
      all
      in reasonable detail and accompanied by the report thereon, not qualified as
      a
      result of limitations imposed
      by the Company on the scope of the audit or as a result of nonconformity with
      generally accepted accounting principles or auditing standards insofar as may
      be
      required by rule or order of any regulatory body having jurisdiction over the
      Company, of Deloitte & Touche or other independent accountants of recognized
      national standing selected by the Company;

     

    (c)  together
      with each delivery of financial statements pursuant to subdivisions (a) and
      (b)
      of this section 7, an Officers’ Certificate stating that the signers have
      reviewed the terms of this Agreement, the Indenture and the Bonds and have
      made,
      or caused to be made under their supervision, a review in reasonable detail
      of
      the transactions and condition of the Company and its Subsidiaries during the
      accounting period covered by such financial statements and that such review
      has
      not disclosed the existence during or at the end of such accounting period,
      and
      that the signers do not have knowledge of the existence as at the date of the
      Officers’ Certificate, of any condition or event (specifically including any
      condition or event that would violate the provisions of section 1.04 of the
      Eighteenth Supplemental Indenture) which constitutes or which, after notice
      or
      lapse of time or both, will constitute a “default” (as defined in the
      Indenture), or, if any such condition or event exists, specifying the nature
      and
      period of existence thereof and what action the Company has taken or is taking
      or proposes to take with respect thereto;

     

    (d)  together
      with each delivery of consolidated financial statements pursuant to subdivision
      (b) of this section 7, a written statement by the independent public accountants
      giving the report thereon (i) stating that their audit examination has included
      a review of the terms of this Agreement and of the Indenture and the Bonds
      relate to accounting matters and (ii) stating whether, in the course of their
      audit examination, they obtained knowledge (and whether, as of the date of
      such
      written statement, they have knowledge) of the existence of any condition or
      event which constitutes or, with or without notice or lapse of time or both,
      will, constitute a “default” (as defined in the Indenture), and, if so,
      specifying the nature and period of existence thereof;

     

    (e)  promptly
      upon receipt thereof, copies of all reports submitted to the Company by
      independent public accountants in connection with each annual, interim special
      audit of the books of the Company or any Subsidiary made by such accountants
      (excluding confidential management reports and any letters, not made available
      publicly, from the Company’s independent public accountants to management
      commenting upon the Company’s internal accounting controls);

     

    (f)  promptly
      upon their becoming available, copies of all financial statements, reports,
      notices and proxy statements sent or made available generally by the Company
      to
      its public security holders, of all regular and periodic reports and all
      registration statements and prospectuses (other than any registration statement
      or prospectus relating to (i) the offering of securities of the Company to
      stockholders of the Company pursuant to any dividend reinvestment and stock
      purchase plan or (ii) the offering of securities of the Company or of interests
      in an employee benefit plan to employees of the Company or any Subsidiary)
      filed
      by the Company or any Subsidiary with the Commission or any governmental
      authority succeeding to any of its functions (other than any of the foregoing
      or
      any portion thereof as to which the Company shall have requested confidential
      treatment from the Commission, unless and until the Commission shall have denied
      such request) and of all press releases and other statements made available
      generally by the Company to the public concerning material developments in
      the
      business of the Company and its Subsidiaries;

     

    (g)  with
      reasonable promptness, such other information and data with to respect to the
      Company or any of its Subsidiaries as from time to time may be reasonably
      requested; and

     

    (h)  with
      reasonable promptness, copies of all certificates, reports and other documents
      and information delivered by the Company or that the Company causes to be
      delivered to the Trustee customarily or periodically or pursuant to section
      9.06(b), or 9.09 of the Indenture or that you may reasonably
      request.

     

    8.  Inspection.
      The
      Company will permit any authorized representatives designated by you, so long
      as
      you shall be entitled to purchase Bonds under this Agreement or you or your
      nominee shall be the holder of any Bonds, without expense to the Company, to
      visit and inspect any of the properties of the Company or any of its
      Subsidiaries, including its and their books of account, and to make copies
      and
      take extracts therefrom, and to discuss its and their affairs, finances and
      accounts with its and their officers and independent public accountants (and
      by
      this provision the Company authorizes such accountants to discuss with such
      representatives the affairs, finances and accounts of the Company and its
      Subsidiaries), all at such reasonable times and as often as may be reasonably
      requested. Any information relating to the Company and any Subsidiary obtained
      by such inspection shall be considered confidential and you and your authorized
      representatives shall maintain the confidentiality thereof, except (i) such
      information as was in the public domain when so initially disclosed as evidenced
      by publication or otherwise, or as thereafter becomes part of the public domain
      independently of any act of the person performing such inspection, provided,
      however, that such information did not or does not become part of the public
      domain through the breach of any confidentiality obligation owing to the
      Company, (ii) any information the disclosure of which is required by any
      governmental entity or authority having or claiming jurisdiction over you or
      to
      the National Association of Insurance Commissioners or similar organizations
      or
      their successors, (iii) disclosure of information in compliance with the duly
      issued order of any court, or (iv) of such information to the prospective
      transferee in connection with any contemplated transfer by you of any
      Bond.

     

    9.  Additional
      Agreements of the Company.

     

    9.1.  Home
      Office Payment, etc.
      So long
      as you or your nominee shall be the holder of any Bond, and notwithstanding
      anything contained in such Bond and in the Indenture to the contrary, the
      Company will pay, or cause the Trustee or any other paying agent appointed
      by
      the Company to pay, all sums becoming due on such Bond for principal, premium,
      if any, and interest by the method and at the address specified for such purpose
      in Schedule A, or at such other address as you shall have from time to specified
      to the Company and the Trustee or other paying agent in writing for such
      purpose, without the presentation or surrender of such Bond or the making of
      any
      notation thereon, except that any Bond paid or redeemed in full shall thereafter
      be surrendered to the Trustee at its principal office. Prior to any sale or
      other disposition of any Bond held by you or your nominee, you will make a
      notation thereon of all principal payments previously made thereon and of the
      date to which interest has been paid or, at your option, you will surrender
      the
      same to the Trustee in exchange for a Bond or Bonds aggregating the same
      principal amount as the unpaid aggregate principal amount of the Bond
      surrendered. The Company will extend, and will cause the Trustee to extend,
      the
      benefits of Section 1.02(B) of the Supplemental Indenture to any institutional
      investor meeting the requirements of Section 15 hereof which is the direct
      or
      indirect transferee of any Bond purchased by you under this Agreement. The
      Company will cause an executed or conformed copy of this Agreement to be filed
      with the Trustee pursuant to the fourth paragraph of Section 10.04 of the
      Original Indenture.

     

    9.2.  Mutilated,
      etc., Bonds.
      Notwithstanding any provision of the Indenture or the Bonds to the contrary,
      if
      any Bond of which you are the owner is mutilated, destroyed or lost, the
      affidavit of your Treasurer or any Assistant Treasurer or any Securities Officer
      setting forth the circumstances with respect to such mutilation, or loss shall
      be accepted as satisfactory evidence thereof, and no charge, payment of
      expenses, indemnity or security shall be required as a condition to the
      execution and delivery by the Company and the authentication by the Trustee
      of a
      new Bond in replacement thereof other than your written agreement to indemnify
      the Company and the Trustee under the Indenture.

     

    9.3.  Power
      Contracts.
      So long
      as you or your nominee holds any of the Bonds, the Company will not (except
      as
      permitted by the Indenture) transfer or otherwise dispose of, or create or
      incur
      or permit to be created or incurred any mortgage, lien, charge or encumbrance
      of
      any kind upon, the right, title and interest of Company in and to any of the
      Power Contracts or any other contracts for the purchase of power similar thereto
      (the “Future Power Contracts”), provided
      that the
      Company may nonetheless (a) contract for the resale of energy or capacity
      covered by such Power Contracts or Future Power Contracts to the extent not
      deemed necessary to its retail customers’ needs, (b) create or incur or permit
      to be created or incurred any mortgage, lien, charge or encumbrance of any
      kind
      upon the right, title and interest of the Company in and to any of such Power
      Contracts or Future Power Contracts to extent not deemed necessary to its retail
      customers’ needs, and (c) assign or otherwise transfer its rights to or
      interests in any Future Power Contracts to any subsidiary or affiliate of the
      Company. The Company may, in addition, without obtaining any consent or approval
      from you, such nominee or such holder, modify, amend, supplement, terminate
      or
      replace any of said Power Contracts or Future Power Contracts, provided
      that any
      modification, amendment or replacement of or supplement to any of the Power
      Contracts or the Future Power Contracts shall be deemed to be a Power Contract
      or a Future Power Contract, respectively, and subject to the provisions of
      the
      first sentence of this section 9.3.

     

    9.4.  Denomination
      of Bonds.
      At any
      time on request by you, the Company will exchange any Bond or Bonds held by
      you
      for another Bond or other Bonds, in such denominations as you may request,
      equal
      in aggregate principal amount to the aggregate principal amount of the Bond
      or
      Bonds then held by you at such time and surrendered by you to the Company.
      Notwithstanding the preceding sentence, the Company shall have no obligation
      to
      issue, transfer, exchange or sell any Bond to you or any subsequent transferee
      in a principal amount that is less than $500,000, unless you are selling all
      of
      the Bonds then held by you.

     

    9.5.  Proration,
      etc.
      The
      Company will not modify or alter or permit the modification or alteration of
      the
      provisions of Section 1.02(B) of the Eighteenth Supplemental Indenture, or
      your
      rights or the obligations of the Company and the Trustee thereunder, unless
      the
      Company has received your express written consent to such modification or
      alteration.

     

    10.  Expenses,
      etc.
      Whether
      or not the transactions contemplated by this Agreement shall be consummated,
      the
      Company will pay all reasonable expenses in connection with such transactions
      and in connection with any amendments or waivers requested by the Company
      (whether or not the same become effective) under or in respect of this
      Agreement, the Indenture or the Bonds, including, without limitation:
(a)
      the
      cost and expenses of preparing and reproducing this Agreement, the Eighteenth
      Supplemental Indenture and the Bonds, of furnishing all opinions by counsel
      for
      the Company and all certificates on behalf of the Company, the cost of obtaining
      the private placement number from Standard & Poor’s Corporation and of the
      Company’s performance of and compliance with all agreements and conditions
      contained herein on its part to be performed or complied with; (b) the fees
      and
      costs of the Trustee under the Indenture; (c) the cost of delivering to your
      principal or custodian bank, insured to your satisfaction, any Bonds sold to
      you
      hereunder and delivered to you in physical form and delivered in physical form
      upon any substitution or any exchange or transfer of the Bonds pursuant to
      the
      Indenture or section 14 and of your obtaining and delivering Bonds, insured
      to
      your satisfaction, upon any such substitution or exchange or transfer; (d)
      the
      fees and out-of-pocket costs of the Placement Agent, including the reasonable
      fees, expenses and disbursements of its counsel in connection with such
      transactions; (e) the reasonable fees, expenses and disbursements of your
      special counsel in connection with such transactions and any such amendments
      or
      waivers; (f) the reasonable out-of-pocket expenses incurred by you in connection
      with such transactions and any such amendments or waivers; (g) the costs and
      expenses incurred in enforcing or defending (or determining whether or how
      to
      enforce or defend) any rights under this Agreement or the Bonds or in responding
      to any subpoena or other legal process or informal investigative demand issued
      in connection with this Agreement or the Bonds, or by reason of being a holder
      of any Bond; and (h) the costs and expenses, including financial advisors’ fees,
      incurred in connection with the insolvency or bankruptcy of the Company or
      in
      connection with any work-out or restructuring of the transactions contemplated
      hereby and by the Bonds. The Company also will pay, and will save you and each
      holder of any Bonds harmless from any and all liabilities with respect to any
      taxes (including interest and penalties, but excluding taxes based on or
      measured by your net income) which may be payable in respect of the execution
      and delivery of this Agreement, the Eighteenth Supplemental Indenture, the
      issue
      of the Bonds and any amendment or waiver requested by the Company under or
      in
      respect of this Agreement, the Indenture or the Bonds.

     

    11.  Survival
      of Representations and Warranties.
      All
      representations and warranties contained in this Agreement or made in writing
      by
      the Company in connection with the transactions contemplated by this Agreement
      shall survive the execution and delivery of this Agreement and the Eighteenth
      Supplemental Indenture, any investigation at any time made by you or on your
      behalf, the purchase of the Bonds by you under this Agreement and any
      disposition or payment of the Bonds. All statements contained in any certificate
      or other instrument delivered by the Company pursuant to this Agreement or
      in
      the Memorandum or in connection with the transactions contemplated by this
      Agreement shall be deemed representations and warranties of the Company under
      this Agreement.

     

    12.  Notices,
      etc.
      Except
      as otherwise provided in this Agreement, notices and other communications under
      this Agreement shall be in writing and shall be delivered, or mailed by
      registered or certified mail, postage prepaid, addressed, (a) if to you, at
      the
      address set forth in Schedule A or at such other address as you shall have
      furnished to the Company in writing, except as otherwise provided in section
      9.1
      with respect to payments on Bonds held by you or your nominee, or (b) if to
      any
      other holder of any Bond, at such address as such other holder shall have
      furnished to the Company in writing, or, until any such other holder so
      furnishes to the Company an address, then to and at the address of the last
      holder of such Bond who has furnished an address to the Company, or (c) if
      to
      the Company, at its address set forth at the beginning of this Agreement, to
      the
      attention of the General Counsel, or at such other address, or to the attention
      of such other officer, as the Company shall have furnished to you in
      writing.

     

    13.  Substitution
      of Purchaser.
      You
      shall have the right to substitute any one of your “affiliates” (as defined in
      the Indenture) as the purchaser of the Bonds which you have agreed to purchase
      hereunder, by written notice to the Company, which notice shall be signed by
      both you and such affiliate, shall contain such affiliate’s agreement to be
      bound by this Agreement and shall contain a confirmation by such affiliate
      of
      the accuracy with respect to it of the representations set forth in section
      6.
      Upon receipt of such notice, wherever the word “you” is used in this Agreement
      (other than in this section 13), such word shall be deemed to refer to such
      affiliate in lieu of you. In the event that such affiliate is so substituted
      as
      a purchaser hereunder and such affiliate thereafter transfers to you all of
      the
      Bonds then held by such affiliate, upon receipt by the Company of notice of
      such
      transfer, wherever the word “you” is used in this Agreement (other than in this
      section 13), such word shall no longer be deemed to refer to such affiliate,
      but
      shall refer to you, and you shall have all the rights of an original holder
      of
      the Bonds under this Agreement.

     

    14.  Exchange
      of Bonds.
      The
      Company may require you, at the option and
      sole
      expense of the Company, to exchange any Bonds paid or redeemed in part for
      such
      denominations as you may request (subject to the provisions of section 9.4),
      of
      the appropriate aggregate unpaid principal amount, provided
      that the
      Company may require you to make such an exchange of partially paid or redeemed
      Bonds only if (i) Company desires to use Bond Credits (as defined in the
      Indenture) reflected by the portions of such Bonds that have been paid or
      redeemed as a basis for the issuance bonds under the Indenture, and (ii) the
      Trustee requires the exchange of such Bonds a condition to permitting the
      Company to use the Bond Credits reflected by the paid or redeemed portions
      of
      such Bonds as a basis for the issuance of other bonds.

     

    15.  Miscellaneous.
      This
      Agreement shall inure to the benefit of and be binding upon the successors
      and
      assigns of each of the parties hereto, including any of Bonds acquired by you
      pursuant to this Agreement. Except as stated in section 11, this Agreement
      embodies the entire agreement and understanding between you and the Company
      and
      supercedes all prior agreements and understandings relating to the subject
      matter hereof. This Agreement shall be construed and enforced in accordance
      with
      and governed by the law of the State of New York. The headings in this Agreement
      are for purposes of reference only and shall not limit or otherwise affect
      the
      meaning hereof. This Agreement may be executed in any number of counterparts,
      each of which shall be an original, but all of which together shall constitute
      one instrument.

     

    (Remainder
      of Page Intentionally Left Blank)

    



    
      
         

      

      
         

        
          

        

      

      
         

      

    



    If
      you
      are in agreement with the foregoing, please sign the form of agreement on the
      accompanying counterparts of this letter and return one of the same to the
      Company, whereupon this letter shall become a binding agreement between you
      and
      the Company.

     

    Very
      truly yours,

     

    GREEN
      MOUNTAIN POWER CORPORATION

     

    By: /s/Donald
      J. Rendall, Jr.    

    Name:
      Donald J. Rendall, Jr.

    Title:
      Vice President, General Counsel and Secretary

     

    The
      foregoing Agreement is hereby agreed to as of the date hereof.

     

    CONNECTICUT
      GENERAL LIFE INSURANCE COMPANY

     

    By: CIGNA
      Investments, Inc. (authorized agent)

     

    By: /s/David
      M. Cass   

    Name: David
      M.
      Cass

    Title: Managing
      Director

     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    If
      you
      are in agreement with the foregoing, please sign the form of agreement on the
      accompanying counterparts of this letter and return one of the same to the
      Company, whereupon this letter shall become a binding agreement between you
      and
      the Company.

     

    Very
      truly yours,

     

    GREEN
      MOUNTAIN POWER CORPORATION

     

    By: /s/Donald
      J. Rendall, Jr.                

    Name:
      Donald J. Rendall, Jr.

    Title:
      Vice President, General Counsel and Secretary

     

    The
      foregoing Agreement is hereby agreed to as of the date hereof.

     

    HARTFORD
      LIFE INSURANCE COMPANY

     

    By: Hartford
      Investment Management Company,

     

    Its
      Agent
      and Attorney-in-Fact

     

    By: /s/Ronald
      A. Mendel          

    Name: Ronald
      M.
      Mendel

    Title: Managing
      Director

     

    


     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


     


    SCHEDULE
      A

     

    INFORMATION
      RELATING TO PURCHASERS

     

    
      	
              Name
                And Address Of Purchaser

               

              Connecticut
                General Life Insurance Company

              Nominee
                Name: CIG & Co.

              c/o
                CIGNA Investments, Inc.

              Attention:
                Fixed Income Securities, H16B

              Hartford,
                CT 06103

              Fax:
                860-727-1904

               

              Tax
                Identification No. 13-3574027

              (1) All
                payments by wire transfer

              of
                immediately available funds to:

              J.P.
                Morgan Chase Bank

              BNF=CIGNA
                Private Placements/AC=9009001802

              ABA#
                021000021

               

              With
                each payment identified as follows:

               

              Green
                Mountain Power Corporation

              First
                Mortgage Bonds,

              6.53%
                Series due August 1, 2036

              PPN: 393154
                AC 3

              Principal
                or Interest

               

              (2) Address
                for Notices Related to Payments:

              CIG
                & Co.

              c/o
                CIGNA Investments, Inc.

              Attention:
                Fixed Income Securities, H16B

              Hartford,
                CT 06103

              Fax:
                860-727-8024

               

              with
                a copy to:

              J.P.
                Morgan Chase Bank

              14201
                Dallas Parkway, 13th
                Floor

              Dallas,
                TX 75254

              Attention:
                Karen Mote, Mail Code 300-116

              Fax:
                469-477-1904

               

              (3) Address
                for All Other Notices:

              CIG
                & Co.

              c/o
                CIGNA Investments, Inc.

              Attention:
                Fixed Income Securities, H16B

              Hartford,
                CT 06103

              Fax:
                860-727-1904

            	 	
              Principal
                Amount of

              Bonds
                to be Purchased

               

              At
                Initial Closing:

               

              $3,500,000

              $2,000,000

               

              At
                Second Closing:

               

              $6,500,000

              $3,000,000

            	 	
              Purchase
                Price

               

               

              At
                Initial Closing:

               

              $3,500,000

              $2,000,000

               

              At
                Second Closing:

               

              $6,500,000

              $3,000,000

               

               

            


    

    


     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    


     

    SCHEDULE
      A

    


    INFORMATION
      RELATING TO PURCHASERS

     

    
      	
              Name
                And Address Of Purchaser

               

              Hartford
                Life Insurance Company

              Hartford
                Investment Management Company

              c/o
                Investment Department-Private Placements

              Regular
                Mailing Address:

              P.O.
                Box 1744

              Hartford,
                CT 06144-1744

              Overnight
                Mailing Address:

              55
                Farmington Avenue

              Hartford,
                CT 06105

              Fax.:
                860-297-8884

               

              Tax
                Identification No. 06-0974148

              (1) All
                payments by wire transfer

              of
                immediately available funds to:

              JP
                Morgan Chase

              4
                New York Plaza

              New
                York, NY 10004

              Bank
                ABA# 021000021

              Chase
                NYC/Cust

              A/C#
                900-9-000200 for F/C/T

              G10056-LC2

              Attn:
                Bond Interest/Principal - Green
                Mountain Power Corp. - 6.53% Due August 2036

              PPN
                # 393154 AC 3 Prin $______ Int $______

              With
                each payment identified as follows:

               

              Green
                Mountain Power Corporation

              First
                Mortgage Bonds,

              6.53%
                Series due August 1, 2036

              PPN: 393154
                AC 3

              Principal
                or Interest

               

              (2) Address
                for Notices Related to Payments:

              Hartford
                Investment Management Company

              c/o
                Portfolio Support

              Regular
                Mailing Address:

              P.O.
                Box 1744

              Hartford,
                CT 06144-1744

              Overnight
                Mailing Address:

              55
                Farmington Avenue

              Hartford,
                CT 06105

              Fax.:
                860-297-8875/8876

               

              (3) Address
                for All Other Notices:

              Hartford
                Life Insurance Company

              Hartford
                Investment Management Company

              c/o
                Investment Department-Private Placements

              Regular
                Mailing Address:

              P.O.
                Box 1744

              Hartford,
                CT 06144-1744

              Overnight
                Mailing Address:

              55
                Farmington Avenue

              Hartford,
                CT 06105

              Fax.:
                860-297-8884

            	 	
              Principal
                Amount of

              Bonds
                to be Purchased

               

              At
                Initial Closing:

               

              $5,500,000

               

              At
                Second Closing:

               

              $5,000,000

              $4,500,000

            	 	
              Purchase
                Price

               

               

              At
                Initial Closing:

               

              $5,500,000

               

              At
                Second Closing:

               

              $5,000,000

              $4,500,000

               

            


    

    


     


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    


     

    Exhibit
      A

    


    [FORM
      OF EIGHTEENTH SUPPLEMENTAL INDENTURE]