ex10_97.htm


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    
      	
              EXHIBIT
                10.97

            
	
              
              

              CREDIT
                AGREEMENT

               

              
              

              dated
                as of

               

              
              

              December
                28, 2007

               

              
              

              between

               

              
              

              CENTRAL
                VERMONT PUBLIC SERVICE CORPORATION,

              as
                Borrower

               

              
              

              and

               

              
              

              KEYBANK
                NATIONAL ASSOCIATION,

              as
                Lender

               

              
              

              TABLE
                OF CONTENTS

            
	 	
                                                                                                                
                Page

            
	
              ARTICLE
                I

              
              

              Definitions

            
	 	
              Section
                1.01.

            	
              Defined
                Terms                                                                                     
                

            	
               1

            	 	 
	 	
              Section
                1.02.

            	
              Classification
                of Loans and
                Borrowings                                                                                     
                

            	
               13

            	 	 
	 	
              Section
                1.03.

            	
              Terms
                Generally                                                                                     
                

            	
               13

            	 	 
	 	
              Section
                1.04.

            	
              Accounting
                Terms;
                GAAP                                                                                     
                

            	
               13

            	 	 
	 	
               

              ARTICLE
                II

              
              

              The
                Credits

            	 
	 	
              Section
                2.01.

            	
              Commitments                                                                                     
                

            	
               14

            	 	 
	 	
              Section
                2.02.

            	
              Loans
                and
                Borrowings                                                                                     
                

            	
               14

            	 	 
	 	
              Section
                2.03.

            	
              Requests
                for
                Loans                                                                                     
                

            	
               15

            	 	 
	 	
              Section
                2.04.

            	
              Letters
                of
                Credit                                                                                     
                

            	
               16

            	 	 
	 	
              Section
                2.05.

            	
              Interest
                Elections                                                                                     
                

            	
               18

            	 	 
	 	
              Section
                2.06.

            	
              Termination
                and Reduction of
                Commitments                                                                                     
                

            	
               20

            	 	 
	 	
              Section
                2.07.

            	
              Repayment
                of Loans; Evidence of
                Debt                                                                                     
                

            	
               20

            	 	 
	 	
              Section
                2.08.

            	
              Prepayment
                of Loans 

            	
               21

            	 	 
	 	
              Section
                2.09.

            	
              Fees                                                                                     
                

            	
               21

            	 	 
	 	
              Section
                2.10.

            	
              Interest                                                                                     
                

            	
               22

            	 	 
	 	
              Section
                2.11.

            	
              Alternate
                Rate of
                Interest                                                                                     
                

            	
               23

            	 	 
	 	
              Section
                2.12.

            	
              Increased
                Costs                                                                                     
                

            	
               23

            	 	 
	 	
              Section
                2.13.

            	
              Break
                Funding
                Payments                                                                                     
                

            	
               24

            	 	 
	 	
              Section
                2.14.

            	
              Taxes                                                                                     
                

            	
               24

            	 	 
	 	
              Section
                2.15.

            	
              Payments
                Generally                                                                                     
                

            	
               25

            	 	 
	 	
              Section
                2.16.

            	
              Mitigation
                Obligations                                                                                     
                

            	
               25

            	 	 
	 	
               

              ARTICLE
                III

              
              

              Representations
                and
                Warranties

            	 
	 	
              Section
                3.01.

            	
              Organization;
                Powers                                                                                     
                

            	
               26

            	 	 
	 	
              Section
                3.02.

            	
              Authorization;
                Enforceability                                                                                     
                

            	
               26

            	 	 
	 	
              Section
                3.03.

            	
              Governmental
                Approvals; No
                Conflicts                                                                                     
                

            	
               26

            	 	 
	 	
              Section
                3.04.

            	
              Financial
                Condition; No Material Adverse
                Effect                                                                                     
                

            	
               26

            	 	 
	 	
              Section
                3.05.

            	
              Properties                                                                                     
                

            	
               27

            	 	 
	 	
              Section
                3.06.

            	
              Litigation
                and Environmental
                Matters                                                                                     
                

            	
               27

            	 	 
	 	
              Section
                3.07.

            	
              Compliance
                with Laws and
                Agreements                                                                                     
                

            	
               28

            	 	 
	 	
              Section
                3.08.

            	
              Investment
                and Holding Company
                Status                                                                                     
                

            	
               28

            	 	 
	 	
              Section
                3.09.

            	
              Taxes                                                                                     
                

            	
               28

            	 	 
	 	
              Section
                3.10.

            	
              ERISA                                                                                     
                

            	
               28

            	 	 
	 	
              Section
                3.11.

            	
              Disclosure                                                                                     
                

            	
               29

            	 	 
	 	
              Section
                3.12

            	
              Bonding
                Capacity                                                                                     
                

            	
               29

            	 	 
	 	
               

              ARTICLE
                IV

              
              

              Conditions

            	 
	 	
              Section
                4.01.

            	
              Effective
                Date                                                                                     
                

            	
               29

            	 	 
	 	
              Section
                4.02.

            	
              Each
                Credit
                Event                                                                                     
                

            	
               31

            	 	 
	 	
               

              ARTICLE
                V

              
              

              Affirmative
                Covenants

            	 
	 	
              Section
                5.01.

            	
              Financial
                Statements; Ratings Change and Other Information

            	
               31

            	 	 
	 	
              Section
                5.02.

            	
              Notices
                of Material
                Events                                                                                     
                

            	
               33

            	 	 
	 	
              Section
                5.03.

            	
              Existence;
                Conduct of
                Business                                                                                     
                

            	
               33

            	 	 
	 	
              Section
                5.04

            	
              Payment
                of
                Obligations                                                                                     
                

            	
               34

            	 	 
	 	
              Section
                5.05.

            	
              Maintenance
                of Properties;
                Insurance                                                                                     
                

            	
               34

            	 	 
	 	
              Section
                5.06.

            	
              Books
                and Records; Inspection
                Rights                                                                                     
                

            	
               34

            	 	 
	 	
              Section
                5.07.

            	
              Compliance
                with
                Laws                                                                                     
                

            	
               34

            	 	 
	 	
              Section
                5.08.

            	
              Use
                of Proceeds and Letters of
                Credit                                                                                     
                

            	
               34

            	 	 
	 	
              Section
                5.09

            	
              Guaranty
                By Certain Regulated Subsidiaries

            	
               34

            	 	 
	 	
               

              ARTICLE
                VI

              
              

              Negative
                Covenants

            	 
	 	
              Section
                6.01.

            	
              Indebtedness                                                                                     
                

            	
               35

            	 	 
	 	
              Section
                6.02.

            	
              Liens                                                                                     
                

            	
               35

            	 	 
	 	
              Section
                6.03.

            	
              Fundamental
                Changes                                                                                     
                

            	
               36

            	 	 
	 	
              Section
                6.04.

            	
              Investments,
                Loans, Advances, Guarantees and Acquisitions

            	
               37

            	 	 
	 	
              Section
                6.05.

            	
              Swap
                Agreements                                                                                     
                

            	
               37

            	 	 
	 	
              Section
                6.06.

            	
              Restricted
                Payments                                                                                     
                

            	
               37

            	 	 
	 	
              Section
                6.07.

            	
              Transactions
                with
                Affiliates                                                                                     
                

            	
               38

            	 	 
	 	
              Section
                6.08.

            	
              Restrictive
                Agreements

            	
               38

            	 	 
	 	
              Section
                6.09

            	
              Total
                Debt to Total Capitalization Rate Ratio

            	
               38

            	 	 
	 	
              Section
                6.10

            	
              Interest
                Coverage Ratio

            	
               38

            	 	 
	 	
               

              ARTICLE
                VII

            	 
	 	 	
              Events
                of
                Default                                                                                     
                

            	
               38

            	 	 


    

     

    
      	
              
              

              ARTICLE
                VIII

              
              

              Miscellaneous

            
	
              Section
                8.01.

            	
              Notices                                                                                     
                

            	
               40

            
	
              Section
                8.02.

            	
              Waivers;
                Amendments                                                                                     
                

            	
               41

            
	
              Section
                8.03.

            	
              Expenses;
                Indemnity; Damage
                Waiver                                                                                     
                

            	
               42

            
	
              Section
                8.04.

            	
              Successors
                and
                Assigns                                                                                     
                

            	
               42

            
	
              Section
                8.05.

            	
              Survival                                                                                     
                

            	
               44

            
	
              Section
                8.06.

            	
              Counterparts;
                Integration;
                Effectiveness                                                                                     
                

            	
               44

            
	
              Section
                8.07.

            	
              Severability                                                                                     
                

            	
               45

            
	
              Section
                8.08.

            	
              Right
                of
                Setoff                                                                                     
                

            	
               45

            
	
              Section
                8.09.

            	
              Governing
                Law; Jurisdiction; Consent

                to
                Service of
                Process                                                                                     
                

            	
              
              

               45

            
	
              Section
                8.10.

            	
              Waiver
                of Jury
                Trial                                                                                     
                

            	
               46

            
	
              Section
                8.11.

            	
              Headings                                                                                     
                

            	
               46

            
	
              Section
                8.12.

            	
              Confidentiality                                                                                     
                

            	
               46

            
	
              Section
                8.13.

            	
              Interest
                Rate
                Limitation                                                                                     
                

            	
               46

            
	
              Section
                8.14.

            	
              USA
                Patriot
                Act                                                                                     
                

            	
               47

            


    

    


    
      	
              SCHEDULES:

              
              

              Schedule
                3.04(d) -- Guaranteed Indebtedness

              Schedule
                3.06 -- Disclosed Matters

              Schedule
                6.01(b) -- Existing Indebtedness

              Schedule
                6.02 -- Existing Liens

              Schedule
                6.08 -- Existing Restrictions

               

              
              

              EXHIBITS:

              
              

              Exhibit
                A -- Form of Promissory Notes

              Exhibit
                B -- Form of Opinion of Borrower’s Counsel

              Exhibit
                C -- Borrower’s Investment Policy

              
              

            


    

    


    
      	
              This
                CREDIT AGREEMENT, dated as
                of December 28, 2007, is made by and between CENTRAL VERMONT PUBLIC
                SERVICE CORPORATION, as Borrower, and KEYBANK NATIONAL ASSOCIATION,
                as
                Lender.

               

              
              

              Whereas,
                the Borrower has
                requested, and the Lender has agreed to extend, a revolving line
                of credit
                in the principal amount of Twenty-Five Million Dollars ($25,000,000)
                for
                short term borrowings, subject to the terms and conditions set forth
                in
                this Credit Agreement; and

               

              
              

              Whereas,
                the Borrower has
                requested, and the Lender has agreed to extend, a short-term transaction
                loan in the principal amount of up to Fifty Three Million Dollars
                ($53,000,000) for the purchase by the Borrower of Equity Interests
                in
                Vermont Transco LLC, subject to the terms and conditions set forth
                in this
                Credit Agreement; and

               

              
              

              NOW,
                THEREFORE, in consideration
                of the foregoing premises and the mutual covenants and agreements
                hereinafter contained, and for other good and valuable consideration,
                the
                receipt and sufficiency of which are hereby acknowledged, the parties
                agree as follows:

               

              ARTICLE
                I

              Definitions

              
              

              SECTION
                1.01. Defined
                Terms.  As used in this
                Agreement, the following terms have the meanings specified
                below:

               

              
              

              “ABR”,
                when used in reference to any Loan or
                Borrowing, refers to whether such Loan, or the Loans comprising such
                Borrowing, are bearing interest at a rate determined by reference
                to the
                Alternate Base Rate.

               

              
              

              “ABR
                Revolving Loan” means, when used in
                reference to any Revolving Loan or Borrowing, a Revolving Loan or
                Borrowing bearing interest at a rate determined by reference to the
                Alternate Base Rate.

               

              
              

              “ABR
                Term Loan” means, when used in
                reference to any Term Loan or Borrowing, a Term Loan or Borrowing
                bearing
                interest at a rate determined by reference to the Alternate Base
                Rate.

               

              
              

              “Act”
has
                the meaning assigned to such term
                in Section 8.14.

               

              
              

              “Adjusted
                LIBO Rate” means, with respect to
                any Eurodollar Borrowing for any Interest Period, an interest rate
                per
                annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal
                to
                (a) the LIBO Rate for such Interest Period multiplied by (b) the
                Statutory Reserve Rate.

               

              
              

              “Affiliate”
means,
                with respect to a
                specified Person, another Person that directly, or indirectly through
                one
                or more intermediaries, Controls or is Controlled by or is under
                common
                Control with the Person specified.

               

              
              

              “Alternate
                Base Rate” means, for any day, a
                rate per annum equal to the greater of (a) the Prime Rate in effect
                on such day and (b) the Federal Funds Effective Rate in effect on
                such day plus 1⁄2 of 1%.  Any change in the Alternate Base
                Rate due to a change in the Prime Rate or the Federal Funds Effective
                Rate
                shall be effective from and including the effective date of such
                change in
                the Prime Rate or the Federal Funds Effective Rate,
                respectively.

               

              
              

              “Applicable
                Rate” means, for any day, with
                respect to any ABR Revolving Loan or Eurodollar Revolving Loan, or
                ABR
                Term Loan, or Eurodollar Term Loan, or with respect to the facility
                fees
                payable hereunder, as the case may be, the applicable rate per annum
                set
                forth below under the caption “ABR Revolving Loan Spread”, “Eurodollar
                Revolving Loan Spread” “ABR Term Loan Spread” or “Eurodollar Term Loan
                Spread”, or “Facility Fee Rate”, as the case may be, based upon the
                ratings by Moody’s or S&P, respectively, or if both are available,
                Moody’s and S&P, applicable on such date to the Index
                Debt:

            


    

    


    
      	
              
              

              Index
                Debt Rating by Moody’s or S&P

              
              

            	
              
              

              Eurodollar
                Revolving Loan Spread*

              
              

            	
              
              

              Eurodollar
                Term Loan Spread

              
              

            	
              
              

              ABR
                Revolving Loan Spread*

              
              

            	
              
              

              ABR
                Term Loan Spread

              
              

            	
              
              

              Facility
                Fee Rate

              
              

            
	
              >
A-
                or A3

            	
              0.300%

            	
              1.00%

            	
              0%

            	
              -
                1.00%

            	
              0.090%

            
	
              BBB+
                or Baa1

            	
              0.375%

            	
              1.00%

            	
              0%

            	
              -
                1.00%

            	
              0.100%

            
	
              BBB
                or Baa2

            	
              0.500%

            	
              1.00%

            	
              0%

            	
              -
                1.00%

            	
              0.125%

            
	
              BBB-
                or Baa3

            	
              0.700%

            	
              1.00%

            	
              0%

            	
              -
                1.00%

            	
              0.150%

            
	
              BB+
                or Ba1

            	
              0.900%

            	
              1.00%

            	
              0%

            	
              -
                1.00%

            	
              0.225%

            
	
              BB
                or Ba2

            	
              1.200%

            	
              1.00%

            	
              0%

            	
              -1.00%

            	
              0.325%

            
	
              <BB
                or Ba2

            	
              1.500%

            	
              1.00%

            	
              0%

            	
              -1.00%

            	
              0.450%

            


    

    


    
      	
              *Plus
                12.5 basis points for >50% utilization by Borrower of the Revolving
                Credit Commitment.

               

              
              

              For
                purposes of the foregoing,
                (i) if either Moody’s or S&P shall not have in effect
                a  rating for the Index Debt (other than by reason of the
                circumstances referred to in the last sentence of this definition)
                or in
                the absence of such, the corporate credit rating, then such rating
                agency
                shall be deemed to have established a rating of Ba3 or BB- respectively;
                (ii) if the ratings established or deemed to have been established
                by
                Moody’s and S&P for the Index Debt shall fall within different
                Categories, the Applicable Rate shall be based on the higher of the
                two
                ratings unless one of the two ratings is two or more Categories lower
                than
                the other, in which case the Applicable Rate shall be determined
                by
                reference to the Category next below that of the higher of the two
                ratings; and (iii) if the ratings established or deemed to have been
                established by Moody’s and S&P for the Index Debt shall be changed
                (other than as a result of a change in the rating system of Moody’s or
                S&P), such change shall be effective as of the date on which it is
                first announced by the applicable rating agency, irrespective of
                when
                notice of such change shall have been furnished by the Borrower to
                the
                Lender pursuant to Section 5.01 or otherwise.  Each change in
                the Applicable Rate shall apply during the period commencing on the
                effective date of such change and ending on the date immediately
                preceding
                the effective date of the next such change.  If the rating
                system of Moody’s or S&P shall change, or if either such rating agency
                shall cease to be in the business of rating corporate debt obligations,
                the Borrower and the Lender shall negotiate in good faith to amend
                this
                definition to reflect such changed rating system or the unavailability
                of
                ratings from such rating agency and, pending the effectiveness of
                any such
                amendment, the Applicable Rate shall be determined by reference to
                the
                rating most recently in effect prior to such change or
                cessation.

               

              
              

              “Approved
                Fund” has the meaning assigned to
                such term in Section 8.04.

               

              
              

              “Assessment
                Rate” means, for any day, the
                annual assessment rate in effect on such day that is payable by a
                member
                of the Bank Insurance Fund classified as “well-capitalized” and within
                supervisory subgroup “B” (or a comparable successor risk classification)
                within the meaning of 12 C.F.R. Part 327 (or any successor provision)
                to the Federal Deposit Insurance Corporation for insurance by such
                Corporation of time deposits made in dollars at the offices of such
                member
                in the United States; provided that
                if, as a result of any change in any law, rule or regulation, it
                is no
                longer possible to determine the Assessment Rate as aforesaid, then
                the
                Assessment Rate shall be such annual rate as shall be determined
                by the
                Lender to be representative of the cost of such insurance to the
                Lender.

               

              
              

              “Availability
                Period” means (a) with respect
                to Revolving Loans, the period from and including the Effective Date
                to
                but excluding the earlier of the Maturity Date and the date of termination
                of the Commitment, and (b) with respect to Term Loans, the period
                from and
                including the Effective Date to but excluding the earlier of the
                date that
                is fifteen days after the Effective Date or the date of termination
                of the
                Commitment.

               

              
              

              “Board”
means
                the Board of Governors of the
                Federal Reserve System of the United States of America.

               

              
              

              “Bonding
                Capacity” means the incremental
                amount of first mortgage bonds permitted to be issued under the Indenture,
                without violating the terms and conditions thereof.

               

              
              

              “Borrower”
means
                Central Vermont Public
                Service Corporation, a Vermont corporation.

               

              
              

              “Borrowing”
means,
                as the case may be, (a)
                Revolving Loans of the same Type, made, converted or continued on
                the same
                date and, in the case of Revolving Eurodollar Loans, as to which
                a single
                Interest Period is in effect, and (b) Term Loans of the same Type
                made,
                converted or continued on the same date and, in the case of Term
                Eurodollar Loans, as to which a single Interest Period is in
                effect.

               

              
              

              “Borrowing
                Request” means (a) in the case of
                Revolving Loans, a request by the Borrower for a Revolving Borrowing
                in
                accordance with Section 2.03(a), and (b) in the case of the Term
                Loan, a
                request by the Borrower for a Term Borrowing in accordance with Section
                2.03(b).

               

              
              

              “Business
                Day” means any day that is not a
                Saturday, Sunday or other day on which commercial banks in New York
                City
                are authorized or required by law to remain closed; provided that, when used in connection
                with
                a Eurodollar Loan, the term “Business
                Day” shall also exclude any day on which banks are not open for
                dealings in dollar deposits in the London interbank market.

               

              
              

              “Capital
                Lease Obligations” of any Person
                means the obligations of such Person to pay rent or other amounts
                under
                any lease of (or other arrangement conveying the right to use) real
                or
                personal property, or a combination thereof, which obligations are
                required to be classified and accounted for as capital leases on
                a balance
                sheet of such Person under GAAP, and the amount of such obligations
                shall
                be the capitalized amount thereof determined in accordance with
                GAAP.

               

              
              

              “Change
                in Control” means (a) the
                acquisition of ownership, directly or indirectly, beneficially or
                of
                record, by any Person or group (within the meaning of the Securities
                Exchange Act of 1934 and the rules of the Securities and Exchange
                Commission thereunder as in effect on the date hereof), of Equity
                Interests representing more than 50% of the aggregate ordinary voting
                power represented by the issued and outstanding Equity Interests
                of the
                Borrower; (b) occupation of a majority of the seats (other than vacant
                seats) on the board of directors of the Borrower by Persons who were
                neither (i) nominated by the board of directors of the Borrower nor
                (ii)
                appointed by directors so nominated; or (c) the acquisition of direct
                or
                indirect Control of the Borrower by any Person or group. 

               

              
              

              “Change
                in Law” means (a) the adoption of
                any law, rule or regulation after the date of this Agreement, (b)
                any
                change in any law, rule or regulation or in the interpretation or
                application thereof by any Governmental Authority after the date
                of this
                Agreement or (c) compliance by the Lender (or, for purposes of Section
                2.12(b), by any lending office of the Lender or by the Lender’s holding
                company, if any) with any request, guideline or directive (whether
                or not
                having the force of law) of any Governmental Authority made or issued
                after the date of this Agreement.

               

              
              

              “Charges”
has
                the meaning assigned to such
                term in Section 8.13.

               

              
              

              “Class”,
                when used in reference to any Loan
                or Borrowing, refers to whether such Loan, or the Loans comprising
                such
                Borrowing, are Revolving Loans or Term Loans.

              
              

              “Closing
                Date” means December 28,
                2007.

               

              
              

              “Code”
means
                the Internal Revenue Code of
                1986, as amended from time to time.

               

              
              

              “Commitment”
means
                the Revolving Credit
                Commitment or the Term Loan Commitment, as the case may be.

               

              
              

              “Commitment
                Fee” means the fee due for the
                extension of the Term Loan as set forth in Section 2.09.

               

              
              

              “Commitment
                Fee Rate” means fifty basis
                points (0.50%).

               

              
              

              “Control”
means
                the possession, directly or
                indirectly, of the power to direct or cause the direction of the
                management or policies of a Person, whether through the ability to
                exercise voting power, by contract or otherwise.  “Controlling” and “Controlled”
have
                meanings correlative
                thereto.

               

              
              

              “Default”
means
                any event or condition which
                constitutes an Event of Default or which upon notice, lapse of time
                or
                both would, unless cured or waived, become an Event of
                Default.

               

              
              

              “Disclosed
                Matters” means the actions, suits
                and proceedings and the environmental matters disclosed in
                Schedule 3.06.

               

              
              

              “dollars”
or
“$”
refers
                to lawful money of the United
                States of America.

               

              
              

              “Effective
                Date” means the date on which the
                conditions specified in Section 4.01 are satisfied (or waived in
                accordance with Section 8.02).

               

              
              

              “Environmental
                Laws” means all laws, rules,
                regulations, codes, ordinances, orders, decrees, judgments, injunctions,
                notices or binding agreements issued, promulgated or entered into
                by any
                Governmental Authority, relating in any way to the environment,
                preservation or reclamation of natural resources, the management,
                release
                or threatened release of any Hazardous Material or to health and
                safety
                matters.

               

              
              

              “Environmental
                Liability” means any
                liability, contingent or otherwise (including any liability for damages,
                costs of environmental remediation, fines, penalties or indemnities),
                of
                the Borrower or any Subsidiary directly or indirectly resulting from
                or
                based upon (a) violation of any Environmental Law, (b) the
                generation, use, handling, transportation, storage, treatment or
                disposal
                of any Hazardous Materials, (c) exposure to any Hazardous Materials,
                (d) the release or threatened release of any Hazardous Materials into
                the environment or (e) any contract, agreement or other consensual
                arrangement pursuant to which liability is assumed or imposed with
                respect
                to any of the foregoing.

               

              
              

              “Equity
                Interests” means shares of capital
                stock, partnership interests, membership interests in a limited liability
                company, beneficial interests in a trust or other equity ownership
                interests in a Person, and any warrants, options or other rights
                entitling
                the holder thereof to purchase or acquire any such equity
                interest.

               

              
              

              “ERISA”
means
                the Employee Retirement Income
                Security Act of 1974, as amended from time to time.

               

              
              

              “ERISA
                Affiliate” means any trade or
                business (whether or not incorporated) that, together with the Borrower,
                is treated as a single employer under Section 414(b) or (c) of the
                Code or, solely for purposes of Section 302 of ERISA and
                Section 412 of the Code, is treated as a single employer under
                Section 414 of the Code.

               

              
              

              “ERISA
                Event” means (a) any “reportable
                event”, as defined in Section 4043 of ERISA or the regulations issued
                thereunder with respect to a Plan (other than an event for which
                the
                30-day notice period is waived); (b) the existence with respect to
                any Plan of an “accumulated funding deficiency” (as defined in
                Section 412 of the Code or Section 302 of ERISA), whether or not
                waived; (c) the filing pursuant to Section 412(d) of the Code or
                Section 303(d) of ERISA of an application for a waiver of the minimum
                funding standard with respect to any Plan; (d) the incurrence by the
                Borrower or any of its ERISA Affiliates of any liability under
                Title IV of ERISA with respect to the termination of any Plan;
                (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC
                or a plan administrator of any notice relating to an intention to
                terminate any Plan or Plans or to appoint a trustee to administer
                any
                Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates
                of
                any liability with respect to the withdrawal or partial withdrawal
                from
                any Plan or Multi-employer Plan; or (g) the receipt by the Borrower
                or any ERISA Affiliate of any notice, or the receipt by any Multi-employer
                Plan from the Borrower or any ERISA Affiliate of any notice, concerning
                the imposition of Withdrawal Liability or a determination that a
                Multi-employer Plan is, or is expected to be, insolvent or in
                reorganization, within the meaning of Title IV of ERISA.

               

              
              

              “Eurodollar”,
                when used in reference to any
                Loan or Borrowing, refers to whether such Loan, or the Loans comprising
                such Borrowing, are bearing interest at a rate determined by reference
                to
                the Adjusted LIBO Rate.

               

              
              

              “Event
                of Default” has the meaning assigned
                to such term in Article VII.

               

              
              

              “Excluded
                Taxes” means, with respect to the
                Lender or any other recipient of any payment to be made by or on
                account
                of any obligation of the Borrower hereunder, (a) income or franchise
                taxes
                imposed on (or measured by) its net income by the United States of
                America, or by the jurisdiction under the laws of which such recipient
                is
                organized or in which its principal office is located or in which
                its
                applicable lending office is located and (b) any branch profits taxes
                imposed by the United States of America or any similar tax imposed
                by any
                other jurisdiction in which the Borrower is located.

               

              
              

              “Federal
                Funds Effective Rate” means, for
                any day, the weighted average (rounded upwards, if necessary, to
                the next
                1/100 of 1%) of the rates on overnight Federal funds transactions
                with
                members of the Federal Reserve System arranged by Federal funds brokers,
                as published on the next succeeding Business Day by the Federal Reserve
                Bank of New York, or, if such rate is not so published for any day
                that is a Business Day, the average (rounded upwards, if necessary,
                to the
                next 1/100 of 1%) of the quotations for such day for such transactions
                received by the Lender from three Federal funds brokers of recognized
                standing selected by it.

               

              
              

              “Financial
                Officer” means the chief
                financial officer, principal accounting officer, treasurer, assistant
                treasurer or controller of the Borrower.

               

              
              

              “GAAP”
means
                generally accepted accounting
                principles in the United States of America.

               

              
              

              “Governmental
                Authority” means the
                government of the United States of America, any other nation or any
                political subdivision thereof, whether state or local, and any agency,
                authority, instrumentality, regulatory body, court, central bank
                or other
                entity exercising executive, legislative, judicial, taxing, regulatory
                or
                administrative powers or functions of or pertaining to
                government.

               

              
              

              “Guarantee”
of
                or by any Person (the “guarantor”) means any obligation,
                contingent or otherwise, of the guarantor guaranteeing or having
                the
                economic effect of guaranteeing any Indebtedness or other obligation
                of
                any other Person (the “primary
                obligor”) in any manner, whether directly or indirectly, and
                including any obligation of the guarantor, direct or indirect, (a) to
                purchase or pay (or advance or supply funds for the purchase or payment
                of) such Indebtedness or other obligation or to purchase (or to advance
                or
                supply funds for the purchase of) any security for the payment thereof,
                (b) to purchase or lease property, securities or services for the
                purpose of assuring the owner of such Indebtedness or other obligation
                of
                the payment thereof, (c) to maintain working capital, equity capital
                or any other financial statement condition or liquidity of the primary
                obligor so as to enable the primary obligor to pay such Indebtedness
                or
                other obligation or (d) as an account party in respect of any letter
                of
                credit or letter of guaranty issued to support such Indebtedness
                or
                obligation, including, without limitation, pledge agreements; provided, that the term Guarantee shall
                not
                include endorsements for collection or deposit in the ordinary course
                of
                business.

               

              
              

              “Guarantor”
means
                Catamount Resources
                Corporation, a Vermont corporation
                and
                C.V. Realty, Inc., a Vermont corporation and, if applicable, any
                Subsidiary corporations executing a guaranty agreement pursuant to
                Section
                5.09.

               

              
              

              “Hazardous
                Materials” means all explosive or
                radioactive substances or wastes and all hazardous or toxic substances,
                wastes or other pollutants, including petroleum or petroleum distillates,
                asbestos or asbestos containing materials, polychlorinated biphenyls,
                radon gas, infectious or medical wastes and all other substances
                or wastes
                of any nature regulated pursuant to any Environmental Law.

               

              
              

              “Income
                Tax Expense” means, for any period,
                all provisions for taxes based on net income of the Borrower (including,
                without limitation, any additions to such taxes, and any penalties
                and
                interest with respect thereto), all as determined for the Borrower
                on
                standalone basis in accordance with GAAP.

               

              
              

              “Indebtedness”
of
                any Person means, without
                duplication, (a) all obligations of such Person for borrowed money or
                with respect to deposits or advances of any kind, (b) all obligations
                of such Person evidenced by bonds, debentures, notes or similar
                instruments, (c) all obligations of such Person upon which interest
                charges are customarily paid, (d) all obligations of such Person
                under conditional sale or other title retention agreements relating
                to
                property acquired by such Person, (e) all obligations of such Person
                in respect of the deferred purchase price of property or services
                (excluding current accounts payable incurred in the ordinary course
                of
                business), (f) all Indebtedness of others secured by (or for which
                the holder of such Indebtedness has an existing right, contingent
                or
                otherwise, to be secured by) any Lien on property owned or acquired
                by
                such Person, whether or not the Indebtedness secured thereby has
                been
                assumed, (g) all Guarantees by such Person of Indebtedness of others,
                (h) all Capital Lease Obligations of such Person, (i) all
                obligations, contingent or otherwise, of such Person as an account
                party
                in respect of letters of credit and letters of guaranty and (j) all
                obligations, contingent or otherwise, of such Person in respect of
                bankers’ acceptances.  The Indebtedness of any Person shall
                include the Indebtedness of any other entity (including any partnership
                in
                which such Person is a general partner) to the extent such Person
                is
                liable therefor as a result of such Person’s ownership interest in or
                other relationship with such entity, except to the extent the terms
                of
                such Indebtedness provide that such Person is not liable
                therefor.

               

              
              

              “Indemnified
                Taxes” means Taxes other than
                Excluded Taxes.

               

              
              

              “Indemnitee”
has
                the meaning assigned to
                such term in Section 8.03.

               

              
              

              “Indenture”
means
                the Indenture of Mortgage
                dated as of October 1, 1929, between the Borrower and the trustee
                named therein, as supplemented and amended by forty-five indentures
                supplemental thereto and amendatory thereof, including the Forty-Fourth
                Supplemental Indenture dated as of June 15, 2004, entered into by the
                Borrower and U.S. Bank National Association, a national banking
                association, as trustee, which amended, supplemented and restated
                the
                Indenture and the prior supplemental indentures, and the Forty-Fifth
                Supplemental Indenture dated as of July 15, 2004.

               

              
              

              “Index
                Debt” means senior, unsecured,
                long-term indebtedness for borrowed money of the Borrower that is
                not
                guaranteed by any other Person or subject to any other credit
                enhancement.

               

              
              

              “Information”
has
                the meaning assigned to
                such term in Section 8.12.

               

              
              

              “Interest
                Election Request” means a request
                by the Borrower to convert or continue a Borrowing in accordance
                with
                Section 2.05.

               

              
              

              “Interest
                Expense” means, for any period,
                total interest expense (including, without limitation, that which
                is
                capitalized, that which is attributable to capital leases or synthetic
                leases and the pre-tax equivalent of dividends payable on redeemable
                stock) however, excluding interest on existing capital leases totaling
                $6,837,000 as of September 30, 2007 classified as an operating expense,
                of
                the Borrower on a standalone basis with respect to all outstanding
                Indebtedness of the Borrower including, without limitation, all
                commissions, discounts and other fees and charges owed with respect
                to
                letters of credit and net costs under Swap Agreements.

               

              
              

              “Interest
                Payment Date” means (a) with
                respect to any ABR Loan, and any Eurodollar Loan for an Overnight
                LIBOR
                Interest Period, the first day of each month, and (b) with respect
                to any
                Eurodollar Loan for Interest periods of one, two or three months,
                the
                first day of each month and on the last day of the Interest Period
                applicable to the Borrowing of which such Loan is a part.

               

              
              

              “Interest
                Period” means with respect to any
                Eurodollar Borrowing, the period commencing on the date of such Borrowing
                and ending on the numerically corresponding day in the calendar month
                that
                is one, two or three months thereafter, as the Borrower may elect,
                and
                provided, that (a) if any Interest
                Period would end on a day other than a Business Day, such Interest
                Period
                shall be extended to the next succeeding Business Day unless, in
                the case
                of a Eurodollar Borrowing only, such next succeeding Business Day
                would
                fall in the next calendar month, in which case such Interest Period
                shall
                end on the next preceding Business Day and (b) any Interest Period
                pertaining to a Eurodollar Borrowing that commences on the last Business
                Day of a calendar month (or on a day for which there is no numerically
                corresponding day in the last calendar month of such Interest Period)
                shall end on the last Business Day of the last calendar month of
                such
                Interest Period; and provided further
                that in the case of Overnight LIBOR, the Interest Period shall be
                the
                period commencing on the date a Eurodollar Borrowing is made, continued,
                or converted and continuing overnight, with successive periods commencing
                daily thereafter.  For purposes hereof, the date of a Borrowing
                initially shall be the date on which such Borrowing is made
                and  thereafter shall be the effective date of the most recent
                conversion or continuation of such Borrowing.

               

              
              

              “LC
                Disbursement” means a payment made by the Lender pursuant to a
                Letter of Credit.

               

              “LC
                Exposure” means, at any time, the sum of (a) the aggregate undrawn
                amount of all outstanding Letters of Credit at such time plus (b)
                the
                aggregate amount of all LC Disbursements that have not yet been reimbursed
                by or on behalf of the Borrower at such time.

               

              
              

              “Lender”
means
                KeyBank National Association
                and any other Person that shall have become a party hereto pursuant
                to an
                assignment and assumption, other than any such Person that ceases
                to be a
                party hereto pursuant to an assignment and assumption.

               

              
              

              “Letter
                of Credit” means any letter of
                credit issued pursuant to this Agreement.

               

              
              

              “LIBO
                Rate” means (a) with respect to any
                Eurodollar Borrowing for any Interest Period of one, two or three
                months,  the per annum rate of interest, determined by the
                Lender in accordance with its usual procedures (which determination
                shall
                be conclusive and binding absent manifest error) as  appearing
                on the Telerate Service Page 3750 of the Dow Jones Market Service
                (or on
                any successor or substitute page of such Service, or any successor
                to or
                substitute for such Service, providing rate quotations comparable
                to those
                currently provided on such page of such Service, as determined by
                the
                Lender from time to time for purposes of providing quotations of
                interest
                rates applicable to dollar deposits in the London interbank market)
                at
                approximately 11:00 a.m., London time, two Business Days prior to
                the
                commencement of such Interest Period, as the rate for dollar deposits
                with
                a maturity comparable to such Interest Period, and (b) with respect
                to any
                Eurodollar Borrowing for Overnight LIBOR Interest Periods, the rate
                per
                annum calculated by the Lender in good faith, which the Lender determines
                with reference to the rate per annum at which deposits in United
                States
                dollars are offered by prime banks in the London interbank eurodollar
                market on the day of determination for the applicable Overnight LIBOR
                Interest Period.  In the event that such rate is not available
                at such time for any reason, then the “LIBO
                Rate” with respect to such Eurodollar Borrowing for such Interest
                Period shall be the rate at which dollar deposits of $5,000,000 and
                for a
                maturity comparable to such Interest Period are offered in the London
                interbank market at approximately 11:00 a.m., London time, two
                Business Days prior to the commencement of such Interest Period
                as  determined by the Lender.

               

              
              

              “Lien”
means,
                with respect to any asset,
                (a) any mortgage, deed of trust, lien, pledge, hypothecation,
                encumbrance, charge or security interest in, on or of such asset,
                (b) the interest of a vendor or a lessor under any conditional sale
                agreement, capital lease or title retention agreement (or any financing
                lease having substantially the same economic effect as any of the
                foregoing) relating to such asset and (c) in the case of securities,
                any purchase option, call or similar right of a third party with
                respect
                to such securities.

               

              
              

              “Loans”
means
                the loans made by the Lender
                to the Borrower pursuant to this Agreement.

               

              
              

              “Material
                Adverse Effect” means a material
                adverse effect on (a) the business, assets, operations, prospects or
                condition, financial or otherwise, of the Borrower, the Regulated
                Subsidiaries, and the Subsidiaries taken as a whole, (b) the ability
                of the Borrower to perform any of its obligations under this Agreement
                or
                (c) the rights of or benefits available to the Lender under this
                Agreement.

               

              
              

              “Material
                Indebtedness” means Indebtedness
                (other than the Loans and Letters of Credit), or obligations in respect
                of
                one or more Swap Agreements, of any one or more of the Borrower and
                its
                Subsidiaries in an aggregate principal amount exceeding
                $2,000,000.  For purposes of determining Material Indebtedness,
                the “principal amount” of the obligations of the Borrower or any
                Subsidiary in respect of any Swap Agreement at any time shall be
                the
                maximum aggregate amount (giving effect to any netting agreements)
                that
                the Borrower or such Subsidiary would be required to pay if such
                Swap
                Agreement were terminated at such time.  Notwithstanding the
                foregoing, Material Indebtedness does not include Indebtedness or
                Swap
                Agreements of any Subsidiary that is not a Guarantor that are non-recourse
                to the Borrower, any Guarantor or any Regulated Subsidiary.

               

              
              

              “Maturity
                Date” means (a) with respect to
                the Revolving Loan, December 26, 2008; and, (b) with respect to the
                Term
                Loan, June 30, 2008.

               

              
              

              “Maximum
                Rate” has the meaning assigned to
                such term in Section 8.13.

               

              
              

              “Moody’s”
means
                Moody’s Investors Service,
                Inc.

               

              
              

              “Multi-employer
                Plan” means a multi-employer
                plan as defined in Section 4001(a)(3) of ERISA.

               

              
              

              “Net
                Income” means, for any period, the net
                income (or loss), including Borrower’s proportionate shares of the
                earnings of its non-wholly owned Subsidiaries,
                of
                the Borrower on a standalone basis for such period taken as a single
                accounting period determined in conformity with GAAP.

               

              
              

              “Net
                Worth” means, at any time, all amounts
                that, in conformity with GAAP, would be included under the caption
“total
                stockholders’ equity” (or any like caption) on a standalone balance sheet
                of the Borrower as of such date provided that, in no event shall
                Net Worth
                include any amounts in respect of mandatorily redeemable
                stock.

               

              
              

              “Other
                Taxes” means any and all present or
                future stamp or documentary taxes or any other excise or property
                taxes,
                charges or similar levies arising from any payment made hereunder
                or from
                the execution, delivery or enforcement of, or otherwise with respect
                to,
                this Agreement.

               

              
              

              “Overnight
                LIBOR” means with respect to any
                Eurodollar Borrowing, the period commencing on the date such Borrowing
                bearing interest based on the LIBO Rate is made, continued, or converted
                and continuing overnight, with successive periods commencing daily
                thereafter.

               

              
              

              “Participant”
has
                the meaning set forth in
                Section 8.04.

               

              
              

              “PBGC”
means
                the Pension Benefit Guaranty
                Corporation referred to and defined in ERISA and any successor entity
                performing similar functions.

               

              
              

              “Permitted
                Encumbrances” means:

              
              

              (a) Liens
                imposed by law for taxes that are not yet due or are being contested
                in
                compliance with Section 5.04;

              
              

              (b) carriers’,
                warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like
                Liens imposed by law, arising in the ordinary course of business
                and
                securing obligations that are not overdue by more than 30 days or
                are
                being contested in compliance with Section 5.04;

              
              

              (c) pledges
                and deposits made in the ordinary course of business in compliance
                with
                workers’ compensation, unemployment insurance and other social security
                laws or regulations;

              
              

              (d) deposits
                to secure the performance of bids, trade contracts, leases, statutory
                obligations, surety and appeal bonds, performance bonds and other
                obligations of a like nature, in each case in the ordinary course
                of
                business;

              
              

              (e) judgment
                liens in respect of judgments that do not constitute an Event of
                Default
                under clause (k) of Article VII; and

              
              

              (f) easements,
                zoning restrictions, rights-of-way and similar encumbrances on real
                property imposed by law or arising in the ordinary course of business
                that
                do not secure any monetary obligations and do not materially detract
                from
                the value of the affected property or interfere with the ordinary
                conduct
                of business of the Borrower or any Subsidiary;

              
              

              provided
                that the term “Permitted
                Encumbrances” shall not include any other Lien securing
                Indebtedness.

              
              

              “Permitted
                Investments” means:

              
              

              (a)           
                direct obligations of, or obligations the principal of and interest
                on
                which are unconditionally guaranteed by, the United States of America
                (or
                by any agency thereof to the extent such obligations are backed by
                the
                full faith and credit of the United States of America), in each case
                maturing within one year from the date of acquisition
                thereof;

              
              

              (b)           
                investments in commercial paper maturing within 270 days from the
                date of
                acquisition thereof and having, at such date of acquisition, the
                highest
                credit rating obtainable from S&P or from Moody’s;

              
              

              (c)           
                investments in certificates of deposit, banker’s acceptances and time
                deposits maturing within 180 days from the date of acquisition thereof
                issued or guaranteed by or placed with, and money market deposit
                accounts
                issued or offered by, any domestic office of any commercial bank
                organized
                under the laws of the United States of America or any state thereof
                which
                has a combined capital and surplus and undivided profits of not less
                than
                $500,000,000;

              
              

              (d)           
                fully collateralized repurchase agreements with a term of not more
                than 30
                days for securities described in clause (a) above and entered into
                with a financial institution satisfying the criteria described in
                clause (c) above;

              
              

              (e)           
                money market funds that (i) comply with the criteria set forth in
                Securities and Exchange Commission Rule 2a-7 under the Investment
                Company
                Act of 1940, (ii) are rated AA by S&P and Aa by Moody’s and (iii) have
                portfolio assets of at least $5,000,000,000;

              
              

              (f)           
                investments in accordance with the Borrower’s investment policy, attached
                hereto as Exhibit C and made a part
                hereof;

              
              

              (g)           
                instruments of federal agencies not guaranteed by the U.S. Government
                maturing within 270 days rated AA or AAA by S&P;

              
              

              (h)           
                Tax-Exempt Floating Rate Notes and Bonds maturing within 270 days
                of a
                corporation or a company carrying Aa or Aaa long-term debt rating
                and/or
                P-1 commercial paper rating from Moody’s or equivalent, or carrying a
                letter of credit from a bank meeting the same criteria; and

              
              

              (i)           
                Municipal Bonds, Taxable or Tax-Exempt, maturing within 270 days
                issued by
                Municipal or tax-exempt institution rated Aa or Aaa long-term debt
                rating
                and/or P-1 commercial paper rating and/or MIG-1 rating from Moody’s or
                equivalent, or carrying a letter of credit from a bank meeting the
                same
                criteria.

               

              
              

              “Person”
means
                any natural person,
                corporation, limited liability company, trust, joint venture, association,
                company, partnership, Governmental Authority or other entity.

               

              
              

              “Plan”
means
                any employee pension benefit
                plan (other than a Multi-employer Plan) subject to the provisions
                of
                Title IV of ERISA or Section 412 of the Code or Section 302
                of ERISA, and in respect of which the Borrower or any ERISA Affiliate
                is
                (or, if such plan were terminated, would under Section 4069 of ERISA
                be deemed to be) an “employer” as defined in Section 3(5) of
                ERISA.

               

              
              

              “Power
                Transactions” means transactions
                relating to the purchase, sale, swap, hedge, trade, option, replacement,
                scheduling, offset, claim, settlement or other agreement for the
                acquisition or disposition of electric capacity or energy or other
                products or services related thereto, including, without limitation,
                the
                transporting, delivery or transmission thereof and any collateral,
                credit
                support, margin agreements or similar arrangements.

               

              
              

              “Prime
                Rate” means that interest rate
                established by KeyBank National Association as KeyBank’s Prime
                Rate.  The Prime Rate may not necessarily be the lowest interest
                rate charged by the Lender for commercial or other extensions of
                credit.  Each change in the Prime Rate shall be effective from
                and including the date such change is publicly announced as being
                effective.

               

              
              

              “Regulated
                Subsidiary” means
                (a) a
                subsidiary of the Borrower which is regulated by the Vermont Public
                Service Board or any successor regulatory commission or agency to
                either
                and any other subsidiary that is subject to federal or state regulation
                as
                a public utility company and (b) Custom Investment Corporation and
                C.V.
                Realty, Inc.

               

              
              

              “Regulators”
means
                the Vermont Public
                Service Board, the U.S. Federal Energy Regulatory Commission, or
                any
                successor regulatory commission or agency to either.

               

              
              

              “Related
                Parties” means, with respect to any
                specified Person, such Person’s Affiliates and the respective directors,
                officers, employees, agents and advisors of such Person and such
                Person’s
                Affiliates.

               

              
              

              “Restricted
                Payment” means any dividend or
                other distribution (whether in cash, securities or other property)
                with
                respect to any Equity Interests in the Borrower or any Regulated
                Subsidiary, or any payment (whether in cash, securities or other
                property), including any sinking fund or similar deposit, on account
                of
                the purchase, redemption, retirement, acquisition, cancellation or
                termination of any such Equity Interests in the Borrower or any Regulated
                Subsidiary (unless paid to the Borrower) or any option, warrant or
                other
                right to acquire any such Equity Interests in the Borrower or any
                Regulated Subsidiary (unless paid to the Borrower).

               

              
              

              “Revolving
                Credit Commitment” means the
                commitment of the Lender to make Revolving Loans and to acquire
                participations in Letters of Credit hereunder, expressed as an amount
                representing the maximum aggregate amount of the Lender’s Revolving Credit
                Exposure hereunder, as such commitment may be (a) reduced from time
                to
                time pursuant to Section 2.06 and (b) reduced or increased from time
                to
                time pursuant to assignments by Lender pursuant to Section
                8.04.  The initial aggregate amount of the Lender’s Revolving
                Credit Commitment is Twenty-Five Million Dollars
                ($25,000,000).

               

              
              

              “Revolving
                Credit Exposure” means the sum of
                the outstanding principal amount of the Lender’s Revolving Loans and its
                LC Exposure at such time.

               

              
              

              “Revolving
                Loan” means a Loan made pursuant
                to Section 2.03(a).

               

              “Significant
                Subsidiary” means any Regulated
                Subsidiary, Catamount Resources Corporation on a standalone basis,
                and
                Eversant Corporation.

               

              
              

              “S&P”  means
                Standard &
                Poor’s.

               

              
              

              “Statutory
                Reserve Rate” means a fraction
                (expressed as a decimal), the numerator of which is the number one
                and the
                denominator of which is the number one minus the aggregate of the
                maximum
                reserve percentages (including any marginal, special, emergency or
                supplemental reserves) expressed as a decimal established by the
                Board to
                which the Lender is subject with respect to the Adjusted LIBO Rate,
                for
                eurocurrency funding (currently referred to as “Eurocurrency Liabilities”
                in Regulation D of the Board).  Such reserve percentages
                shall include those imposed pursuant to such
                Regulation D.  Eurodollar Loans shall be deemed to
                constitute eurocurrency funding and to be subject to such reserve
                requirements without benefit of or credit for proration, exemptions
                or
                offsets that may be available from time to time to any Lender under
                such
                Regulation D or any comparable regulation.  The Statutory
                Reserve Rate shall be adjusted automatically on and as of the effective
                date of any change in any reserve percentage.

               

              
              

              “subsidiary”
means,
                with respect to any
                Person (the “parent”) at any date,
                any corporation, limited liability company, partnership, association
                or
                other entity the accounts of which would be consolidated with those
                of the
                parent in the parent’s consolidated financial statements if such financial
                statements were prepared in accordance with GAAP as of such date,
                (i) as
                well as any other corporation, limited liability company, partnership,
                association or other entity (a) of which securities or other
                ownership interests representing more than 50% of the equity or more
                than
                50% of the ordinary voting power or, in the case of a partnership,
                more
                than 50% of the general partnership interests are, as of such date,
                owned,
                Controlled or held, and (b) that is, as of such date, otherwise
                Controlled, by the parent or one or more subsidiaries of the parent
                or by
                the parent and one or more subsidiaries of the parent or (ii) that
                is, as
                of such date, controlled by the parent or one or more subsidiaries
                of the
                parent, or by the parent and one or more subsidiaries of the
                parent.

               

              
              

              “Subsidiary”
means
                any subsidiary of the
                Borrower.

               

              
              

              “Swap
                Agreement” means any agreement
                with respect
                to any swap, hedge, forward, future or derivative transaction or
                option or
                similar agreement involving, or settled by reference to, one or more
                rates, currencies, commodities, equity or debt instruments or securities,
                or economic, financial or pricing indices or measures of economic,
                financial or pricing risk or value or any similar transaction or
                any
                combination of these transactions; provided
                that no phantom stock or
                similar plan providing for payments only on account of services provided
                by current or former directors, officers, employees or consultants
                of the
                Borrower or the Subsidiaries shall be a Swap Agreement.

               

              
              

              “Taxes”
means
                any and all present or future
                taxes, levies, imposts, duties, deductions, charges or withholdings
                imposed by any Governmental Authority.

               

              
              

              “Term
                Loan” means a loan made pursuant to
                Section 2.03(b).

               

              
              

              “Term
                Loan Commitment” means the commitment
                of the Lender to make the Term Loan.  The initial aggregate
                amount of the Lender’s Term Loan Commitment is Fifty-Three Million Dollars
                ($53,000,000).

               

              
              

              “Total
                Capitalization” means the sum of the
                Total Debt of Borrower plus the Borrower’s Net Worth.

               

              
              

              “Total
                Debt” means Indebtedness of the
                Borrower plus mandatorily redeemable stock and, without limitation,
                all
                contingent obligations with respect to any of the foregoing, to the
                extent
                (i) such Indebtedness matures one year or more from issuance or (ii)
                such
                Indebtedness remains outstanding one year or more from issuance under
                any
                credit facility or combination thereof.

               

              
              

              “Transactions”
means
                the execution, delivery
                and performance by the Borrower of this Agreement, the borrowing
                of Loans,
                the use of the proceeds thereof and the issuance of Letters of Credit
                hereunder.

               

              
              

              “Type”,
                when used in reference to any Loan
                or Borrowing, refers to whether the rate of interest on such Loan,
                or on
                the Loans comprising such Borrowing, is determined by reference to
                the
                Adjusted LIBO Rate or the Alternate Base Rate.

               

              
              

              “Withdrawal
                Liability” means liability to a
                Multi-employer Plan as a result of a complete or partial withdrawal
                from
                such Multi-employer Plan, as such terms are defined in Part I of
                Subtitle E of Title IV of ERISA.

               

              
              

              SECTION
                1.02. Classification
                of Loans and
                Borrowings.  For purposes of this Agreement, Loans may be
                classified and referred to by Class (e.g., a “Revolving
                Loan” or a “Term Loan”) or by Type (e.g., a “Eurodollar
                Loan”) or by Class and Type (e.g., a “Eurodollar
                Revolving Loan” or a “Eurodollar Term Loan”).

               

              
              

              SECTION
                1.03. Terms
                Generally.  The definitions
                of terms herein shall apply equally to the singular and plural forms
                of
                the terms defined.  Whenever the context may require, any
                pronoun shall include the corresponding masculine, feminine and neuter
                forms.  The words “include”, “includes” and “including” shall be
                deemed to be followed by the phrase “without limitation”.  The
                word “will” shall be construed to have the same meaning and effect as the
                word “shall”.  Unless the context requires otherwise (a) any
                definition of or reference to any agreement, instrument or other
                document
                herein shall be construed as referring to such agreement, instrument
                or
                other document as from time to time amended, supplemented or otherwise
                modified (subject to any restrictions on such amendments, supplements
                or
                modifications set forth herein), (b) any reference herein to any
                Person
                shall be construed to include such Person’s successors and assigns, (c)
                the words “herein”, “hereof” and “hereunder”, and words of similar import,
                shall be construed to refer to this Agreement in its entirety and
                not to
                any particular provision hereof, (d) all references herein to Articles,
                Section, Exhibits and Schedules shall be construed to refer to Articles
                and Section of, and Exhibits and Schedules to, this Agreement and (e)
                the words “asset” and “property” shall be construed to have the same
                meaning and effect and to refer to any and all tangible and intangible
                assets and properties, including cash, securities, accounts and contract
                rights.

               

              
              

              SECTION
                1.04. Accounting
                Terms; GAAP.  Except
                as otherwise expressly provided herein, all terms of an accounting
                or
                financial nature shall be construed in accordance with GAAP, as in
                effect
                from time to time; provided that, if
                the Borrower notifies the Lender that the Borrower requests an amendment
                to any provision hereof to eliminate the effect of any change occurring
                after the date hereof in GAAP or in the application thereof on the
                operation of such provision (or if the Lender notifies the Borrower
                that
                the Lender requests an amendment to any provision hereof for such
                purpose), regardless of whether any such notice is given before or
                after
                such change in GAAP or in the application thereof, then such provision
                shall be interpreted on the basis of GAAP as in effect and applied
                immediately before such change shall have become effective until
                such
                notice shall have been withdrawn or such provision amended in accordance
                herewith.

               

              
              

              ARTICLE
                II

              The
                Credits

               

              
              

              SECTION
                2.01. Commitments.

              
              

              (a)           
                Revolving Credit
                Commitments.  Subject to the terms and conditions set
                forth herein, the Lender agrees to make Revolving Loans to the Borrower
                and to issue Letters of Credit at the request of the Borrower from
                time to
                time during the Availability Period in an aggregate principal amount
                that
                will not result in the Lender’s Revolving Credit Exposure exceeding the
                Lender’s Revolving Credit Commitment.  Within the foregoing
                limits and subject to the terms and conditions set forth herein,
                the
                Borrower may borrow, prepay and reborrow Revolving Loans and request
                to
                issue, amend, renew and extend Letters of Credit.

              
              

              (b)           
                Term Loan Commitments.  
                Subject to the terms and conditions set forth herein, the Lender
                agrees to
                make Term Loans in one or more disbursements to the Borrower at the
                request of the Borrower from time to time during the Availability
                Period
                in an aggregate principal amount that will not result in amount of
                the
                Term Loans exceeding the Lender’s Term Loan Commitment.  Within
                the foregoing limits and subject to the terms and conditions set
                forth
                herein, the Borrower may borrow the Term Loan.  Amounts repaid
                by the Borrower under the Term Loan may not be reborrowed.

              
              

               

              SECTION
                2.02. Loans
                and Borrowings.

              
              

              (a) Revolving
                Loans and
                Borrowings.

              
              

              (i) Subject
                to Section 2.11, each Revolving Loan shall be comprised entirely of
                ABR Revolving Loans or Eurodollar Revolving Loans as the Borrower
                may
                request in accordance herewith.

              
              

              (ii) At
                the commencement of each Interest Period for any Eurodollar Revolving
                Borrowing, such Borrowing shall be in an aggregate amount that is
                an
                integral multiple of $100,000 and not less than Five Hundred Thousand
                Dollars ($500,000).  At the time that each ABR Revolving
                Borrowing is made, such Borrowing shall be in an aggregate amount
                that is
                an integral multiple of $100,000 and not less than $100,000; provided that an ABR Revolving Borrowing
                may be in an aggregate amount that is equal to the entire unused
                balance
                of the total Commitment or that is required to finance the reimbursement
                of an LC Disbursement as contemplated by Section
                2.04(d).  Borrowings of more than one Type and Class may be
                outstanding at the same time; provided that there shall not at any
                time
                be more than a total of $25,000,000 Eurodollar Revolving Borrowings
                outstanding.

              
              

              (b) Term
                Loans and Borrowings.

              
              

              (i) Subject
                to Section 2.11, each Term Loan shall be comprised entirely of ABR
                Term Loans or Eurodollar Term Loans as the Borrower may request in
                accordance herewith.  Any request for a Term Loan Borrowing
                shall be made, if at all, during the Availability Period for the
                Term
                Loan.

              
              

              (ii) At
                the commencement of each Interest Period for any Eurodollar Term
                Borrowing, such Borrowing shall be in an aggregate amount that is
                an
                integral multiple of $100,000 and not less than Five Hundred Thousand
                Dollars ($500,000).  At the time that each ABR Term Borrowing is
                made, such Borrowing shall be in an aggregate amount that is an integral
                multiple of $100,000 and not less than $100,000.  Borrowings of
                more than one Type and Class may be outstanding at the same time;
provided that there shall not at any
                time
                be more than a total of $53,000,000 Term Borrowings
                outstanding.

              
              

              (c) General           Notwithstanding
                any other provision of this Agreement, the Borrower shall not be
                entitled
                to request, or to elect to convert or continue, any Borrowing if
                the
                Interest Period requested with respect thereto would end after the
                Maturity Date.

              
              

              
              

               

              SECTION
                2.03. Requests
                for Loans.

              
              

              (a) Requests
                for Revolving Loans.  To
                request a Revolving Loan, the Borrower shall notify the Lender of
                such
                request by telephone (a) in the case of a Eurodollar Borrowing, not
                later
                than 11:00 a.m., New York City time, three Business Days before the
                date of the proposed Borrowing or (b) in the case of an ABR
                Borrowing, not later than 11:00 a.m., New York City time, one
                Business Day before the date of the proposed Borrowing; provided that any such notice of an
                ABR
                Revolving Borrowing to finance the reimbursement of an LC Disbursement
                as
                contemplated by Section 2.04(d) may be given not later than 10:00
                a.m., New York City time, on the date of the proposed
                Borrowing.  Each such telephonic Borrowing Request shall be
                irrevocable and shall be confirmed promptly by hand delivery or telecopy
                to the Lender of a written Borrowing Request in a form approved by
                the
                Lender and signed by the Borrower.  Each such telephonic and
                written Borrowing Request shall specify the following information
                in
                compliance with Section 2.02:

              
              

              (i) the
                aggregate amount of the requested Borrowing;

              (ii) the
                date of such Borrowing, which shall be a Business Day;

              (iii) whether
                such Borrowing is to be an ABR Borrowing or a Eurodollar
                Borrowing;

              (iv) in
                the case of a Eurodollar Borrowing, the initial Interest Period to
                be
                applicable thereto, which shall be a period contemplated by the definition
                of the term “Interest Period”; and

              (v) the
                location and number of the Borrower’s account to which funds are to be
                disbursed.

              
              

              If
                no election as to the Type of Revolving Borrowing is specified, then
                the
                requested Revolving Borrowing shall be an ABR Borrowing.  If no
                Interest Period is specified with respect to any requested Eurodollar
                Revolving Borrowing, then the Borrower shall be deemed to have selected
                an
                Interest Period of one month’s duration.

              
              

              (b) Requests
                for Term Loans.  To
                request a Borrowing of the Term Loan, the Borrower shall notify the
                Lender
                of such request by telephone (a) in the case of a Eurodollar Term
                Borrowing for any Interest Period other than Overnight LIBOR, not
                later
                than 11:00 a.m., New York City time, three Business Days before the
                date of the proposed Borrowing or (b) in the case of an ABR Borrowing
                or Eurodollar Term Borrowing for Overnight LIBOR Interest Period,
                not
                later than 11:00 a.m., New York City time, one Business Day before
                the date of the proposed Borrowing.  Each such telephonic
                Borrowing Request shall be irrevocable and shall be confirmed promptly
                by
                hand delivery or telecopy to the Lender of a written Borrowing Request
                in
                a form approved by the Lender and signed by the Borrower.  Each
                such telephonic and written Borrowing Request shall specify the following
                information in compliance with Section 2.02:

              
              

              (i) the
                aggregate amount of the requested Borrowing;

              (ii) the
                date of such Borrowing, which shall be a Business Day during the
                Availability Period;

              (iii) whether
                such Borrowing is to be an ABR Term Borrowing or a Eurodollar Term
                Borrowing;

              (iv) in
                the case of a Eurodollar Borrowing, the initial Interest Period to
                be
                applicable thereto, which shall be a period contemplated by the definition
                of the term “Interest Period”; and

              (v) the
                location and number of the Borrower’s account to which funds are to be
                disbursed.

              
              

              If
                no election as to the Type of Term Borrowing is specified, then the
                requested Term Borrowing shall be an ABR Borrowing.  If no
                Interest Period is specified with respect to any requested Eurodollar
                Term
                Borrowing, then the Borrower shall be deemed to have selected an
                Interest
                Period of Overnight LIBOR.

              
              

               

              SECTION
                2.04. Letters
                of Credit.

              
              

              (a) General.  Subject
                to the terms
                and conditions set forth herein, the Borrower may request the issuance
                of
                Letters of Credit for its own account, in a form reasonably acceptable
                to
                the Lender, at any time and from time to time during the Availability
                Period.  In the event of any inconsistency between the terms and
                conditions of this Agreement and the terms and conditions of any
                form of
                letter of credit application or other agreement submitted by the
                Borrower
                to, or entered into by the Borrower with, the Lender relating to
                any
                Letter of Credit, the terms and conditions of this Agreement shall
                control.  The Lender may, in its discretion, arrange for one or
                more Letters of Credit to be issued by Affiliates of the Lender,
                in which
                case the term “Lender” shall include any such Affiliate with respect to
                Letters of Credit issued by such Affiliate; provided, however, such
                Affiliate must have a minimum corporate credit rating of “A-” from S&P
                or “A3” from Moody’s.

              
              

              (b) Notice
                of Issuance, Amendment, Renewal, Extension;
                Certain Conditions.  To request the issuance of a Letter
                of Credit (or the amendment, renewal or extension of an outstanding
                Letter
                of Credit), the Borrower shall hand deliver or telecopy (or transmit
                by
                electronic communication, if arrangements for doing so have been
                approved
                by the Lender) to the Lender (two business days in advance of the
                requested date of issuance, amendment, renewal or extension) a notice
                requesting the issuance of a Letter of Credit, or identifying the
                Letter
                of Credit to be amended, renewed or extended, and specifying the
                date of
                issuance, amendment, renewal or extension (which shall be a Business
                Day),
                the date on which such Letter of Credit is to expire (which shall
                comply
                with paragraph (c) of this Section), the amount of such Letter of
                Credit, the name and address of the beneficiary thereof and such
                other
                information as shall be necessary to prepare, amend, renew or extend
                such
                Letter of Credit.  If requested by the Lender, the Borrower also
                shall submit a letter of credit application on the Lender’s standard form
                in connection with any request for a Letter of Credit.  A Letter
                of Credit shall be issued, amended, renewed or extended only if (and
                upon
                issuance, amendment, renewal or extension of each Letter of Credit
                the
                Borrower shall be deemed to represent and warrant that), after giving
                effect to such issuance, amendment, renewal or extension (i) the LC
                Exposure shall not exceed Twenty-Five Million Dollars $25,000,000
                and
                (ii) the sum of the total Revolving Credit Exposures shall not exceed
                the Lender’s Revolving Credit Commitment.

              
              

              (c) Expiration
                Date.  Each Letter of
                Credit shall expire at or prior to the close of business on the earlier
                of
                (i) the date one year after the date of the issuance of such Letter
                of Credit (or, in the case of any renewal or extension thereof, one
                year
                after such renewal or extension) and (ii) the date that is five
                Business Days prior to the Maturity Date.

              
              

              (d) Reimbursement.  If
                the Lender
                shall make any LC Disbursement in respect of a Letter of Credit,
                the
                Borrower shall reimburse such LC Disbursement by paying to the Lender
                an
                amount equal to such LC Disbursement not later than 12:00 noon, New
                York
                City time, on the date that such LC Disbursement is made, if the
                Borrower
                shall have received notice of such LC Disbursement prior to 10:00
                a.m.,
                New York City time, on such date, or, if such notice has not been
                received
                by the Borrower prior to such time on such date, then not later than
                12:00
                noon, New York City time, on (i) the Business Day that the Borrower
                receives such notice, if such notice is received prior to 10:00 a.m.,
                New
                York City time, on the day of receipt, or (ii) the Business Day
                immediately following the day that the Borrower receives such notice,
                if
                such notice is not received prior to such time on the day of receipt;
                provided that, if such LC
                Disbursement is not less than $100,000, the Borrower may, subject
                to the
                conditions to borrowing set forth herein, request in accordance with
                Section 2.03 that such payment be financed with an ABR Revolving
                Borrowing
                in an equivalent amount and, to the extent so financed, the Borrower’s
                obligation to make such payment shall be discharged and replaced
                by the
                resulting ABR Revolving Borrowing.

              
              

              (e) Obligations
                Absolute.  The
                Borrower’s obligation to reimburse LC Disbursements as provided in
                paragraph (d) of this Section shall be absolute, unconditional
                and irrevocable, and shall be performed strictly in accordance with
                the
                terms of this Agreement under any and all circumstances whatsoever
                and
                irrespective of (i) any lack of validity or enforceability of any
                Letter
                of Credit or this Agreement, or any term or provision therein, (ii)
                any
                draft or other document presented under a Letter of Credit proving
                to be
                forged, fraudulent or invalid in any respect or any statement therein
                being untrue or inaccurate in any respect, (iii) payment by the Lender
                under a Letter of Credit against presentation of a draft or other
                document
                that does not comply with the terms of such Letter of Credit, or
                (iv) any
                other event or circumstance whatsoever, whether or not similar to
                any of
                the foregoing, that might, but for the provisions of this Section,
                constitute a legal or equitable discharge of, or provide a right
                of setoff
                against, the Borrower’s obligations hereunder.  Neither the
                Lender, nor any of their Related Parties, shall have any liability
                or
                responsibility by reason of or in connection with the issuance or
                transfer
                of any Letter of Credit or any payment or failure to make any payment
                thereunder (irrespective of any of the circumstances referred to
                in the
                preceding sentence), or any error, omission, interruption, loss or
                delay
                in transmission or delivery of any draft, notice or other communication
                under or relating to any Letter of Credit (including any document
                required
                to make a drawing thereunder), any error in interpretation of technical
                terms or any consequence arising from causes beyond the control of
                the
                Lender; provided that the foregoing
                shall not be construed to excuse the Lender from liability to the
                Borrower
                to the extent of any direct damages (as opposed to consequential
                damages,
                claims in respect of which are hereby waived by the Borrower to the
                extent
                permitted by applicable law) suffered by the Borrower that are caused
                by
                the Lender’s failure to exercise care when determining whether drafts and
                other documents presented under a Letter of Credit comply with the
                terms
                thereof.  The parties hereto expressly agree that, in the
                absence of gross negligence or willful misconduct on the part of
                the
                Lender (as finally determined by a court of competent jurisdiction),
                the
                Lender shall be deemed to have exercised care in each such
                determination.  In furtherance of the foregoing and without
                limiting the generality thereof, the parties agree that, with respect
                to
                documents presented which appear on their face to be in substantial
                compliance with the terms of a Letter of Credit, the Lender may,
                in its
                sole discretion, either accept and make payment upon such documents
                without responsibility for further investigation, regardless of any
                notice
                or information to the contrary, or refuse to accept and make payment
                upon
                such documents if such documents are not in strict compliance with
                the
                terms of such Letter of Credit.

              
              

              (f) Disbursement
                Procedures.  The
                Lender shall, promptly following its receipt thereof, examine all
                documents purporting to represent a demand for payment under a Letter
                of
                Credit.  The Lender shall promptly notify the Borrower by
                telephone (confirmed by telecopy) of such demand for payment and
                whether
                the Lender has made or will make an LC Disbursement thereunder; provided that any failure to give or
                delay
                in giving such notice shall not relieve the Borrower of its obligation
                to
                reimburse the Lender and the Lender with respect to any such LC
                Disbursement.

              
              

              (g) Interim
                Interest.  If the Lender
                shall make any LC Disbursement, then, unless the Borrower shall reimburse
                such LC Disbursement in full on the date such LC Disbursement is
                made, the
                unpaid amount thereof shall bear interest, for each day from and
                including
                the date such LC Disbursement is made to but excluding the date that
                the
                Borrower reimburses such LC Disbursement, at the rate per annum then
                applicable to ABR Revolving Loans; provided that, if the Borrower fails
                to
                reimburse such LC Disbursement when due pursuant to paragraph (d) of
                this Section, then Section 2.10(c) shall apply.

              
              

              (h)           
                Cash
                Collateralization.  Provided that
                Lender has requested
                that Borrower obtain, and Borrower has obtained, necessary Vermont
                Public
                Service Board approval for Borrower’s granting of the security interest,
                if any Event of Default shall occur and be continuing, on the
                Business Day, that the Borrower receives notice from the Lender (or,
                if
                the maturity of the Loans has been accelerated), demanding the deposit
                of
                cash collateral pursuant to this paragraph, the Borrower shall deposit
                in
                an account with the Lender, an amount in cash equal to the LC Exposure
                as
                of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit
                such cash collateral shall become effective immediately, and such
                deposit
                shall become immediately due and payable, without demand or other
                notice
                of any kind, upon the occurrence of any Event of Default with respect
                to
                the Borrower described in clause (h) or (i) of
                Article VII.  Such deposit shall be held by the Lender as
                collateral for the payment and performance of the obligations of
                the
                Borrower under this Agreement.  The Lender shall have exclusive
                dominion and control, including the exclusive right of withdrawal,
                over
                such account.  Other than any interest earned on the investment
                of such deposits, which investments shall be made at the option and
                sole
                discretion of the Lender and at the Borrower’s risk and expense, such
                deposits shall not bear interest.  Interest or profits, if any,
                on such investments shall accumulate in such account.  Moneys in
                such account shall be applied by the Lender to reimburse the Lender
                for LC
                Disbursements for which it has not been reimbursed and, to the extent
                not
                so applied, shall be held for the satisfaction of the reimbursement
                obligations of the Borrower for the LC Exposure at such time or,
                if the
                maturity of the Loans has been accelerated, be applied to satisfy
                other
                obligations of the Borrower under this Agreement.  If the
                Borrower is required to provide an amount of cash collateral hereunder
                as
                a result of the occurrence of an Event of Default, such amount (to
                the
                extent not applied as aforesaid) shall be returned to the Borrower
                within
                three Business Days after all Events of Default have been cured or
                waived.

              
              

              
              

               

              SECTION
                2.05. Interest
                Elections.

              
              

              (a) Each
                Revolving Borrowing initially shall be of the Type specified in the
                applicable Borrowing Request and, in the case of a Eurodollar Revolving
                Borrowing, shall have an initial Interest Period as specified in
                such
                Borrowing Request.  Each Term Loan Borrowing initially shall be
                of the Type specified in the applicable Borrowing Request and, in
                the case
                of a Eurodollar Term Loan Borrowing, shall have an initial Interest
                Period
                as specified in such Borrowing Request.

              
              

              (b) Thereafter,
                the Borrower may elect to convert such Borrowing to a different Type
                or to
                continue such Borrowing and, in the case of a Eurodollar Borrowing,
                may
                elect Interest Periods therefor, all as provided in this
                Section.  The Borrower may elect different options with respect
                to different portions of the affected Borrowing.

              
              

              (c) To
                make an election pursuant to this Section, the Borrower shall notify
                the
                Lender of such election by telephone by the time that a Borrowing
                Request
                would be required under Section 2.03 if the Borrower were requesting
                a
                Borrowing of the Type resulting from such election to be made on
                the
                effective date of such election.  Each such telephonic Interest
                Election Request shall be irrevocable and shall be confirmed promptly
                by
                hand delivery or telecopy to the Lender of a written Interest Election
                Request in a form approved by the Lender and signed by the
                Borrower.

              
              

              (d) Each
                telephonic and written Interest Election Request shall specify the
                following information in compliance with Section 2.02:

              
              

              (i) the
                Borrowing to which such Interest Election Request applies and, if
                different options are being elected with respect to different portions
                thereof, the portions thereof to be allocated to each resulting Borrowing
                (in which case the information to be specified pursuant to clauses
                (iii)
                and (iv) below shall be specified for each resulting
                Borrowing);

              (ii) the
                effective date of the election made pursuant to such Interest Election
                Request, which shall be a Business Day;

              (iii) whether
                the resulting Borrowing is to be an ABR Borrowing or a Eurodollar
                Borrowing; and

              (iv) if
                the resulting Borrowing is a Eurodollar Borrowing, the Interest Period
                to
                be applicable thereto after giving effect to such election, which
                shall be
                a period contemplated by the definition of the term “Interest
                Period”.

              
              

              If
                any such Interest Election Request requests a Eurodollar Borrowing
                but
                does not specify an Interest Period, then the Borrower shall be deemed
                to
                have selected an Interest Period of one month’s duration.

              
              

              (e) If
                the Borrower fails to deliver a timely Interest Election Request
                with
                respect to a Eurodollar Revolving Borrowing that has an Interest
                period of
                one, two or three months prior to the end of such Interest Period
                applicable thereto, then, unless such Borrowing is repaid as provided
                herein, at the end of such Interest Period such Borrowing shall be
                converted to an ABR Borrowing. If the Borrower fails to deliver a
                timely
                Interest Election Request with respect to a Eurodollar Borrowing
                that has
                an Interest period of one day, then, unless such Borrowing is repaid
                as
                provided herein, at the end of such one day Interest Period such
                Borrowing
                shall continue at the Adjusted LIBO Rate for one day Interest
                Periods.  Notwithstanding any contrary provision hereof, if an
                Event of Default has occurred and is continuing and the Lender so
                notifies
                the Borrower, then, so long as an Event of Default is continuing
                (i) no
                outstanding Revolving Borrowing may be converted to or continued
                as a
                Eurodollar Borrowing and(ii)
                unless repaid, each Eurodollar Revolving Borrowing shall be converted
                to
                an ABR Borrowing at the end of the Interest Period applicable
                thereto.

              
              

               

              SECTION
                2.06. Termination
                and Reduction of
                Commitments.

              
              

              (a) Unless
                previously terminated, the Commitments shall termi­nate on the
                Maturity Date.

              
              

              (b) The
                Borrower may at any time terminate, or from time to time reduce,
                the
                Revolving Credit Commitments; provided that (i) each reduction of
                the
                Revolving Credit Commitments shall be in an amount that is an integral
                multiple of $1,000,000 and not less than $5,000,000 and (ii) the
                Borrower
                shall not terminate or reduce the Revolving Commitments if, after
                giving
                effect to any concurrent prepayment of the Loans in accordance with
                Section 2.08, the sum of the Revolving Credit Exposures would exceed
                the
                total Revolving Commitments.

              
              

              (c) The
                Borrower shall notify the Lender of any election to terminate or
                reduce
                the Revolving Credit Commitments under paragraph (b) of this Section
                at least three Business Days prior to the effective date of such
                termination or reduction, specifying such election and the effective
                date
                thereof.  Each notice delivered by the Borrower pursuant to this
                Section shall be irrevocable; provided that a notice of termination
                of
                the Commitments delivered by the Borrower may state that such notice
                is
                conditioned upon the effectiveness of other credit facilities, in
                which
                case such notice may be revoked by the Borrower (by notice to the
                Lender
                on or prior to the specified effective date) if such condition is
                not
                satisfied.  Any termination or reduction of the Commitments
                shall be permanent.

              
              

               

              SECTION
                2.07. Repayment of
                Loans; Evidence of
                Debt.

              
              

              (a) The
                Borrower hereby unconditionally promises to pay to the Lender (a)
                the then
                unpaid principal amount of each Revolving Loan on the Maturity Date
                and
                (b) the unpaid principal amount of each Term Loan on the Maturity
                Date.

              
              

              (b) The
                Lender shall maintain in accordance with its usual practice an account
                or
                accounts evidencing the indebtedness of the Borrower to the Lender
                resulting from each Loan made by the Lender, including the amounts
                of
                principal and interest payable and paid to the Lender from time to
                time
                hereunder.

              
              

              (c) The
                Lender shall maintain accounts in which it shall record (i) the
                amount of each Loan made hereunder, the Class and Type thereof and
                the
                Interest Period applicable thereto, (ii) the amount of any principal
                or interest due and payable or to become due and payable from the
                Borrower
                to the Lender hereunder and (iii) the amount of any sum received by
                the Lender.

              
              

              (d) The
                entries made in the accounts maintained pursuant to paragraph (b)
                or (c) of this Section shall be primafacie
                evidence of the existence and amounts
                of the obligations recorded therein; provided that the failure of the Lender
                to
                maintain such accounts or any error therein shall not in any manner
                affect
                the obligation of the Borrower to repay the Loans in accordance with
                the
                terms of this Agreement.

              
              

              (e) The
                Lender may request that Loans be evidenced by a promissory
                note.  In such event, the Borrower shall prepare, execute and
                deliver to the Lender a promissory note payable to the order of the
                Lender
                (or, if requested by the Lender, to Lender and its registered assigns)
                and
                in the form of Exhibit A or any other form approved by the
                Lender.  Thereafter, the Loans evidenced by such promissory note
                and interest thereon shall at all times (including after assignment
                pursuant to Section 8.04) be represented by one or more promissory
                notes
                in such form payable to the order of the payee named therein (or,
                if such
                promissory note is a registered note, to such payee and its registered
                assigns).

              
              

               

              SECTION
                2.08. Prepayment
                of Loans.

              
              

              (a) The
                Borrower shall have the right at any time and from time to time to
                prepay
                any Borrowing in whole or in part, subject to prior notice in accordance
                with paragraph (b) of this Section.

              
              

              (b) The
                Borrower shall notify the Lender by telephone (confirmed by telecopy)
                of
                any prepayment hereunder (i) in the case of prepayment of a Eurodollar
                Revolving Borrowing that is for an Interest period of one, two or
                three
                months, not later than 11:00 a.m., New York City time, three Business
                Days
                before the date of prepayment, or (ii) in the case of prepayment
                of an ABR
                Revolving Borrowing or a Eurodollar Revolving Borrowing that is for
                an
                Interest Period of one day, not later than 11:00 a.m., New York City
                time,
                one Business Day before the date of prepayment.  Each such
                notice shall be irrevocable and shall specify the prepayment date
                and the
                principal amount of each Borrowing or portion thereof to be prepaid;
provided that, if a notice of prepayment
                is
                given in connection with a conditional notice of termination of the
                Revolving Commitments as contemplated by Section 2.06, then such
                notice of prepayment may be revoked if such notice of termination
                is
                revoked in accordance with Section 2.06.  Each partial
                prepayment of any Revolving Borrowing shall be in an amount that
                would be
                permitted in the case of an advance of a Revolving Borrowing of the
                same
                Type as provided in Section 2.02.  Each prepayment of a
                Revolving Borrowing shall be applied ratably to the Loans included
                in the
                prepaid Borrowing.  Prepayments shall be accompanied by accrued
                interest to the extent required by Section 2.10.

              
              

               

              SECTION
                2.09. Fees.

              
              

              (a) The
                Borrower agrees to pay to the Lender a facility fee, which shall
                accrue at
                the Applicable Rate on the daily amount of the unused portion of
                the
                Revolving Commitment of the Lender during the period from and including
                the Effective Date to but excluding the date on which such Commitment
                terminates; provided that, if the
                Lender continues to have any Revolving Credit Exposure after its
                Commitment terminates, then such facility fee shall continue to accrue
                on
                the daily amount of the Lender’s Revolving Credit Exposure from and
                including the date on which its Commitment terminates to but excluding
                the
                date on which the Lender ceases to have any Revolving Credit
                Exposure.  Accrued facility fees shall be payable in arrears on
                the last day of March, June, September and December of each year
                and on
                the date on which the Commitments terminate, commencing on the first
                such
                date to occur after the date hereof; provided that any facility fees accruing
                after the date on which the Commitment terminate shall be payable
                on
                demand.  All facility fees shall be computed on the basis of a
                year of 360 days and shall be payable for the actual number of days
                elapsed (including the first day but excluding the last day).

              (b) The
                Borrower agrees to pay to the Lender a Commitment Fee based on the
                principal amount of each Term Borrowing.  Such Commitment Fee
                shall be paid when invoiced by the Lender and calculated at the Commitment
                Fee Rate times the principal amount of each Term Loan
                Borrowing.

              
              

              (c) The
                Borrower agrees to pay (i) to the Lender a commission with respect
                to its
                participation in Letters of Credit, which shall accrue at the same
                Applicable Rate used to determine the interest rate applicable to
                Eurodollar Revolving Loans on the average daily amount of the Lender’s LC
                Exposure (excluding any portion thereof attributable to unreimbursed
                LC
                Disbursements) during the period from and including the Effective
                Date to
                but excluding the later of the date on which the Lender’s Commitment
                terminates and the date on which the Lender ceases to have any LC
                Exposure, and (ii) the Lender’s standard fees with respect to the
                issuance, amendment, renewal or extension of any Letter of Credit
                or
                processing of drawings thereunder.  Such commissions accrued
                through and including the last day of March, June, September and
                December
                of each year shall be payable on the third Business Day following
                such
                last day, commencing on the first such date to occur after the Effective
                Date; provided that all such
                commissions shall be payable on the date on which the Commitment
                terminate
                and any such commissions accruing after the date on which the Commitment
                terminates shall be payable on demand.  Any other fees and/or
                commissions payable to the Lender pursuant to this paragraph shall
                be
                payable within 10 days after demand.  All commissions shall be
                computed on the basis of a year of 360 days and shall be payable
                for the
                actual number of days elapsed (including the first day but excluding
                the
                last day).

              
              

              (d) The
                Borrower agrees to pay to the Lender usual and customary fees payable
                in
                the amount and at the times separately agreed upon by the Borrower
                and the
                Lender.

              
              

              (e) All
                fees and commissions payable hereunder shall be paid on the dates
                due, in
                immediately available funds, to the Lender.  Fees and
                commissions paid shall not be refundable under any
                circumstances.

              
              

               

              SECTION
                2.10. Interest.

              
              

              (a) The
                Loans comprising each ABR Borrowing shall bear interest at the
                Alternate Base Rate plus the Applicable Rate.

              
              

              (b) The
                Loans comprising each Eurodollar Borrowing shall bear interest at
                the
                Adjusted LIBO Rate for the Interest Period in effect for such Borrowing
                plus the Applicable Rate.

              
              

              (c) Notwithstanding
                the foregoing, if any principal of or interest on any Loan or any
                fee or
                other amount payable by the Borrower hereunder is not paid when due,
                whether at stated maturity, upon acceleration or otherwise, such
                overdue
                amount shall bear interest, after as well as before judgment, at
                a rate
                per annum equal to (i) in the case of overdue principal of any Loan,
                2%
                plus the rate otherwise applicable to such Loan as provided in the
                preceding paragraphs of this Section or (ii) in the case of any other
                amount, 2% plus the rate applicable to ABR Loans as provided in paragraph
                (a) of this Section.

              
              

              (d) Accrued
                interest on each Loan shall be payable in arrears on each Interest
                Payment
                Date for such Loan, upon the Maturity Date, and, in the case of Revolving
                Loans, upon termination of the Commitment; provided that (i) interest accrued
                pursuant
                to paragraph (c) of this Section shall be payable on demand, (ii) in
                the event of any repayment or prepayment of any Loan (other than
                a
                prepayment of an ABR Revolving Loan prior to the end of the Availability
                Period), accrued interest on the principal amount repaid or prepaid
                shall
                be payable on the date of such repayment or prepayment and (iii)
                in the
                event of any conversion of any Eurodollar Revolving Loan prior to
                the end
                of the current Interest Period therefor, accrued interest on such
                Loan
                shall be payable on the effective date of such conversion.

              
              

              (e) All
                interest hereunder shall be computed on the basis of a year of 360
                days,
                and in each case shall be payable for the actual number of days elapsed
                (including the first day but excluding the last day).  The
                applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall
                be
                determined by the Lender, and such determination shall be conclusive
                absent manifest error.

              
              

               

              SECTION
                2.11. Alternate
                Rate of Interest.  If
                prior to the commencement of any Interest Period for a Eurodollar
                Borrowing:

              
              

              (a) the
                Lender determines (which determination shall be conclusive absent
                manifest
                error) that adequate and reasonable means do not exist for ascertaining
                the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such
                Interest
                Period; or

              
              

              (b) the
                Lender determines that the Adjusted LIBO Rate or the LIBO Rate, as
                applicable, for such Interest Period will not adequately and fairly
                reflect the cost to the Lender of making or maintaining its Loans
                included
                in such Borrowing for such Interest Period;

              
              

              then
                the Lender shall give notice thereof to the Borrower by telephone
                or
                telecopy as promptly as practicable thereafter and, until the Lender
                notifies the Borrower that the circumstances giving rise to such
                notice no
                longer exist, (i) any Interest Election Request that requests the
                conversion of any Borrowing to, or continuation of any Borrowing
                as, a
                Eurodollar Borrowing shall be ineffective, and (ii) if any Borrowing
                Request requests a Eurodollar Borrowing, such Borrowing shall be
                made as
                an ABR Borrowing; provided that if
                the circumstances giving rise to such notice affect only one Type
                or Class
                of Borrowings, then the other Type or Class of Borrowings shall be
                permitted, as the case may be.

              
              

               

              SECTION
                2.12. Increased
                Costs.

              
              

              (a) If
                any Change in Law shall:

              
              

              (i) impose,
                modify or deem applicable any reserve, special deposit or similar
                requirement against assets of, deposits with or for the account of,
                or
                credit extended by, the Lender (except any such reserve requirement
                reflected in the Adjusted LIBO Rate); or

              (ii) impose
                on the Lender or the London interbank market any other condition
                affecting
                this Agreement or Eurodollar Loans made by the Lender or any Letter
                of
                Credit or participation therein;

              
              

              and
                the result of any of the foregoing shall be to increase the cost
                to the
                Lender of making or main­taining any Eurodollar Loan (or of
                maintaining its obligation to make any such Loan) or to increase
                the cost
                to the Lender of issuing or maintaining any Letter of Credit or to
                reduce
                the amount of any sum received or receiv­able by the Lender (whether
                of principal, interest or otherwise), then the Borrower will pay
                to the
                Lender, such additional amount or amounts as will compensate the
                Lender
                for such additional costs incurred or reduction suffered.

              
              

              (b) If
                the Lender determines that any Change in Law regarding capital
                requirements has or would have the effect of reducing the rate of
                return
                on the Lender’s capital or on the capital of the Lender’s holding company,
                if any, as a consequence of this Agreement or the Loans made by,
                or
                participations in Letters of Credit held by, the Lender, or the Letters
                of
                Credit issued by the Lender, to a level below that which the Lender
                or the
                Lender’s holding company could have achieved but for such Change in Law
                (taking into consideration the Lender’s policies and the policies of the
                Lender’s holding company with respect to capital adequacy), then from time
                to time the Borrower will pay to the Lender, as the case may be,
                such
                additional amount or amounts as will compensate the Lender or the
                Lender’s
                holding company for any such reduction suffered.

              
              

              (c) A
                certificate of a Lender setting forth the amount or amounts necessary
                to
                compensate the Lender or its holding company, as the case may be,
                as
                specified in paragraph (a) or (b) of this Section shall be
                delivered to the Borrower and shall be conclusive absent manifest
                error.  The Borrower shall pay the Lender the amount shown as
                due on any such certificate within 10 days after receipt
                thereof.

              
              

              (d) Failure
                or delay on the part of the Lender to demand compensation pursuant
                to this
                Section shall not constitute a waiver of the Lender’s right to demand
                such compensation; provided that the
                Borrower shall not be required to compensate the Lender pursuant
                to this
                Section for any increased costs or reductions incurred more than 270
                days prior to the date that the Lender notifies the Borrower of the
                Change
                in Law giving rise to such increased costs or reductions and of the
                Lender’s intention to claim compensation therefor; providedfurther
                that, if the Change in Law giving
                rise to such increased costs or reductions is retroactive, then the
                270-day period referred to above shall be extended to include the
                period
                of retroactive effect thereof.

              
              

               

              SECTION
                2.13. Break
                Funding Payments.  In the
                event of (a) the payment of any principal of any Eurodollar Loan
                other
                than on the last day of an Interest Period applicable thereto (including
                as a result of an Event of Default), (b) the conversion of any Eurodollar
                Loan other than on the last day of the Interest Period applicable
                thereto,
                (c) the failure to borrow, convert, continue or prepay any Eurodollar
                Loan
                on the date specified in any notice delivered pursuant hereto (regardless
                of whether such notice may be revoked under Section 2.08(b) and is
                revoked
                in accordance therewith), or (d) the assignment of any Eurodollar
                Loan other than on the last day of the Interest Period applicable
                thereto
                as a result of a request by the Borrower pursuant to Section 2.16,
                then, in any such event, the Borrower shall compensate the Lender
                for the
                loss, cost and expense attributable to such event.  In the case
                of a Eurodollar Loan, such loss, cost or expense to the Lender shall
                be
                deemed to include an amount determined by the Lender to be the excess,
                if
                any, of (i) the amount of interest which would have accrued on the
                principal amount of such Loan had such event not occurred, at the
                Adjusted
                LIBO Rate that would have been applicable to such Loan, for the period
                from the date of such event to the last day of the then current Interest
                Period therefor (or, in the case of a failure to borrow, convert
                or
                continue, for the period that would have been the Interest Period
                for such
                Loan), over (ii) the amount of interest which would accrue on such
                principal amount for such period at the interest rate which the Lender
                would bid were it to bid, at the commencement of such period, for
                dollar
                deposits of a comparable amount and period from other banks in the
                Eurodollar market.  A certifi­cate of the Lender setting
                forth any amount or amounts that the Lender is entitled to receive
                pursuant to this Section shall be delivered to the Borrower and shall
                be conclusive absent manifest error.  The Borrower shall pay the
                Lender the amount shown as due on any such certificate within 10
                days
                after receipt thereof.

              
              

               

              SECTION
                2.14. Taxes.

              
              

              (a) Any
                and all payments by or on account of any obligation of the Borrower
                hereunder shall be made free and clear of and without deduction for
                any
                Indemnified Taxes or Other Taxes; provided that if the Borrower shall
                be
                required to deduct any Indemnified Taxes or Other Taxes from such
                payments, then (i) the sum payable shall be increased as necessary so
                that after making all required deductions (including deductions applicable
                to additional sums payable under this Section ) the Lender receives
                an amount equal to the sum it would have received had no such deductions
                been made, (ii) the Borrower shall make such deductions and
                (iii) the Borrower shall pay the full amount deducted to the relevant
                Governmental Authority in accordance with applicable law.

              
              

              (b) In
                addition, the Borrower shall pay any Other Taxes to the relevant
                Governmental Authority in accordance with applicable law.

              
              

              (c) The
                Borrower shall indemnify the Lender within 10 days after written
                demand
                therefor, for the full amount of any Indemnified Taxes or Other Taxes
                paid
                by the Lender on or with respect to any payment by or on account
                of any
                obligation of the Borrower hereunder (including Indemnified Taxes
                or Other
                Taxes imposed or asserted on or attributable to amounts payable under
                this
                Section ) and any penalties, interest and reasonable expenses arising
                therefrom or with respect thereto, whether or not such Indemnified
                Taxes
                or Other Taxes were correctly or legally imposed or asserted by the
                relevant Governmental Authority.  A certificate as to the amount
                of such payment or liability delivered to the Borrower by the Lender
                shall
                be conclusive absent manifest error.

              
              

              (d) As
                soon as practicable after any payment of Indemnified Taxes or Other
                Taxes
                by the Borrower to a Governmental Authority, the Borrower shall deliver
                to
                the Lender the original or a certified copy of a receipt issued by
                such
                Governmental Authority evidencing such payment, a copy of the return
                reporting such payment or other evidence of such payment reasonably
                satisfactory to the Lender.

              
              

              (e) If
                the Lender determines, in its sole discretion, that it has received
                a
                refund of any Taxes or Other Taxes as to which it has been indemnified
                by
                the Borrower or with respect to which the Borrower has paid additional
                amounts pursuant to this Section 2.14, it shall pay over such refund
                to
                the Borrower (but only to the extent of indemnity payments made,
                or
                additional amounts paid, by the Borrower under this Section 2.14
                with
                respect to the Taxes or Other Taxes giving rise to such refund),
                net of
                all out-of-pocket expenses of the Lender and without interest (other
                than
                any interest paid by the relevant Governmental Authority with respect
                to
                such refund); provided, that the Borrower, upon the request of the
                Lender,
                agrees to repay the amount paid over to the Borrower (plus any penalties,
                interest or other charges imposed by the relevant Governmental Authority)
                to the Lender in the event the Lender is required to repay such refund
                to
                such Governmental Authority. This Section shall not be construed to
                require the Lender to make available its tax returns (or any other
                information relating to its taxes which it deems confidential) to
                the
                Borrower or any other Person.

              
              

               

              SECTION
                2.15. Payments
                Generally.

              
              

              (a) The
                Borrower shall make each payment required to be made by it hereunder
                (whether of principal, interest, fees or reimbursement of LC
                Disbursements, or of amounts payable under Section 2.12, 2.13 or
                2.14, or
                otherwise) prior to 2:00 p.m., New York City time, on the date when
                due,
                in immediately available funds, without set-off or
                counterclaim.  Any amounts received after such time on any date
                may, in the discretion of the Lender, be deemed to have been received
                on
                the next succeeding Business Day for purposes of calculating interest
                thereon.  All such payments shall be made to the Lender at its
                offices at 149 Bank Street, Burlington, Vermont 05401.  If any
                payment hereunder shall be due on a day that is not a Business Day,
                the
                date for payment shall be extended to the next succeeding Business
                Day,
                and, in the case of any payment accruing interest, interest thereon
                shall
                be payable for the period of such extension.  All payments
                hereunder shall be made in U.S. dollars.

              
              

              (b) If
                at any time insufficient funds are received by and available to the
                Lender
                to pay fully all amounts of principal, unreimbursed LC Disbursements,
                interest and fees then due hereunder, such funds shall be applied
                (i)
                first, towards payment of interest and fees then due hereunder, and
                (ii)
                second, towards payment of principal and unreimbursed LC Disbursements
                then due hereunder.

              
              

               

              SECTION
                2.16. Mitigation
                Obligations.  If the
                Lender requests compensation under Section 2.12, or if the
                Borrower is required to pay any additional amount to the Lender or
                any
                Governmental Authority for the account of the Lender pursuant to
                Section 2.14, then the Lender shall use reasonable efforts to
                designate a different lending office for funding or booking its Loans
                hereunder or to assign its rights and obligations hereunder to another
                of
                its offices, branches or affiliates, if, in the judgment of the Lender,
                such designation or assignment (i) would eliminate or reduce amounts
                payable pursuant to Section 2.12 or 2.14, as the case may be, in
                the
                future and (ii) would not subject the Lender to any unreimbursed
                cost or
                expense and would not otherwise be disadvantageous to the
                Lender.  The Borrower hereby agrees to pay all reasonable costs
                and expenses incurred by the Lender in connection with any such
                designation or assignment.

              
              

               

              ARTICLE
                III

              Representations
                and Warranties

               

              
              

              The
                Borrower represents and
                warrants to the Lender that:

              
              

               

              SECTION
                3.01. Organization;
                Powers.  Each of
                the Borrower and its Regulated Subsidiaries is duly organized, validly
                existing and in good standing under the laws of the jurisdiction
                of its
                organization, has all requisite power and authority to carry on its
                business as now conducted and, except where the failure to do so,
                individually or in the aggregate, could not reasonably be expected
                to
                result in a Material Adverse Effect, is qualified to do business
                in, and
                is in good standing in, every juris­diction where such qualification
                is required.

              
              

               

              SECTION
                3.02. Authorization;
                Enforceability.  The Transactions are within the
                Borrower’s corporate powers and have been duly authorized by all necessary
                corporate and, if required, stockholder action.  This Agreement
                has been duly executed and delivered by the Borrower and constitutes
                a
                legal, valid and binding obligation of the Borrower, enforceable
                in
                accordance with its terms, subject to applicable bankruptcy, insolvency,
                reorganization, moratorium or other laws affecting creditors’ rights
                generally and subject to general principles of equity, regardless
                of
                whether considered in a proceeding in equity or at law.

              
              

               

              SECTION
                3.03. Governmental
                Approvals; No
                Conflicts.  The Transactions (a) do not require any
                consent or approval of, registration or filing with, or any other
                action
                by, any Governmental Authority, except such as have been obtained
                or made
                and are in full force and effect, (b) will not violate any applicable
                law
                or regulation or the charter, by-laws or other organizational documents
                of
                the Borrower or any of its Regulated Subsidiaries (and, to the best
                of
                Borrower’s knowledge, all of its other Subsidiaries, except where any such
                violation would not result in a Material Adverse Effect) or any order
                of
                any Governmental Authority, (c) will not violate or result in a default
                under any indenture, agreement or other instrument binding upon the
                Borrower or any of its Regulated Subsidiaries (and, to the best of
                Borrower’s knowledge, all of its other Subsidiaries, except where any such
                violation or breach would not result in a Material Adverse Effect)
                or its
                assets, or give rise to a right thereunder to require any payment
                to be
                made by the Borrower or any of its Regulated Subsidiaries (and, to
                the
                best of Borrower’s knowledge, all of its other Subsidiaries, except where
                any such right would not result in a Material Adverse Effect) and
                (d) will
                not result in the creation or imposition of any Lien on any asset
                of the
                Borrower or any of its Regulated Subsidiaries.

              
              

               

              SECTION
                3.04. Financial
                Condition; No Material Adverse
                Effect.

              
              

              (a) The
                Borrower has heretofore furnished to the Lender its consolidated
                balance
                sheet and statements of income, stockholders equity and cash flows
                (i) as
                of and for the fiscal year ended December 31, 2006, reported on by
                Deloitte & Touche, LLP, independent public accountants, and (ii) as of
                and for the fiscal quarter and the portion of the fiscal year ended
                September 30, 2007, certi­fied by its Chief Financial
                Officer.  Such financial state­ments present fairly, in all
                material respects, the financial position and results of operations
                and
                cash flows of the Borrower and its consolidated Subsidiaries as of
                such
                dates and for such periods in accordance with GAAP, subject to year-end
                audit adjustments and the absence of footnotes in the case of the
                statements referred to in clause (ii) above.

              
              

              (b) The
                Borrower has heretofore furnished to the Lender its unaudited balance
                sheet, statements of income, and stockholders equity of the Borrower
                on a
                standalone basis (i) as of and for the fiscal year ended December
                31,
                2006, and (ii) as of and for the fiscal quarter and the portion of
                the
                fiscal year ended September 30, 2007, all being certi­fied by its
                Chief Financial Officer.  Such financial state­ments present
                fairly, in all material respects, the financial position and results
                of
                operations and cash flows of the Borrower on a standalone basis as
                of such
                dates and for such periods in accordance with GAAP, subject to year-end
                audit adjustments and the absence of footnotes.

              
              

              (c) Since
                September 30, 2007, there has been no change in the business, assets,
                operations, prospects or condition, financial or otherwise, of the
                Borrower and its Regulated Subsidiaries, taken as a whole, as of
                the
                Closing Date, or subsequently that has not been publicly disclosed,
                except
                changes that individually or in the aggregate could not reasonably
                be
                expected to have a Material Adverse Effect.

              
              

              (d) Each
                of the Borrower and Guarantor are not liable for any Indebtedness
                of their
                respective subsidiaries except as set forth on Schedule 3.04(d) hereof,
                and except as allowed by Article VI hereof.

              
              

               

              SECTION
                3.05. Properties.

              
              

              (a) Each
                of the Borrower and its Regulated Subsidiaries (and, to the best
                of
                Borrower’s knowledge, all of its other Subsidiaries, except where any such
                failure would not result in a Material Adverse Effect) has good title
                to,
                or valid leasehold interests in, all its real and personal property
                material to its business, except for Permitted Encumbrances and minor
                defects in title that do not interfere with its ability to conduct
                its
                business as currently conducted or to utilize such properties for
                their
                intended purposes.

              
              

              (b) Each
                of the Borrower and its Regulated Subsidiaries and, to the best of
                Borrower’s knowledge, all of its other Subsidiaries, owns, or is licensed
                to use, all trademarks, tradenames, copyrights, patents and other
                intellectual property material to its business, and the use thereof
                by the
                Borrower and its Regulated Subsidiaries and, to the best of Borrower’s
                knowledge, all of its other Subsidiaries, does not infringe upon
                the
                rights of any other Person, except for any such infringements that,
                individually or in the aggregate, could not reasonably be expected
                to
                result in a Material Adverse Effect.

              
              

               

              SECTION
                3.06. Litigation
                and Environmental
                Matters.

              
              

              Other
                than as disclosed in the Company’s most recent Form 10-K,
                Form 10-Q and Forms 8-K published since the most recent Form 10-K and
                Form 10-Q:

              
              

              (a) There
                are no actions, suits or proceedings by or before any arbitrator
                or
                Governmental Authority pending against or, to the knowledge of the
                Borrower, threatened against or affecting the Borrower or any of
                its
                Regulated Subsidiaries and, to the best of Borrower’s knowledge, all of
                its other Subsidiaries, (i) as to which there is a reasonable
                possi­bility of an adverse determination and that, if adversely
                deter­mined, could reasonably be expected, individually or in the
                aggregate, to result in a Material Adverse Effect (other than Schedule
                3.06, Disclosed Matters) or (ii) that involve this Agreement or the
                Transactions.

              
              

              (b) Except
                for the Disclosed Matters and except with respect to any other matters
                that, individually or in the aggregate, could not reasonably be expected
                to result in a Material Adverse Effect, neither the Borrower nor
                any of
                its Regulated Subsidiaries and, to the best of Borrower’s knowledge, all
                of its other Subsidiaries, (i) has failed to comply with any
                Environmental Law or to obtain, maintain or comply with any permit,
                license or other approval required under any Environmental Law,
                (ii) has become subject to any Environmental Liability,
                (iii) has received notice of any claim with respect to any
                Environmental Liability or (iv) knows of any basis for any Environmental
                Liability.

              
              

              (c) Since
                the date of this Agreement, there has been no change in the status
                of the
                Disclosed Matters that, individually or in the aggregate, has resulted
                in,
                or materially increased the likelihood of, a Material Adverse
                Effect.

              
              

               

              SECTION
                3.07. Compliance
                with Laws and
                Agreements.  Each of the Borrower and its Regulated
                Subsidiaries and, to the best of Borrower’s knowledge, all its other
                Subsidiaries is in compliance with all laws, regulations and orders
                of any
                Governmental Authority applicable to it or its property and all
                indentures, agreements and other instruments binding upon it or its
                property, except where the failure to do so, individually or in the
                aggregate, could not reasonably be expected to result in a Material
                Adverse Effect.  No Default has occurred and is
                continuing.

              
              

               

              SECTION
                3.08. Investment
                and Holding Company
                Status.  (a)  Neither the Borrower nor any of
                its Regulated Subsidiaries is an “investment company” as defined in, or
                subject to regulation under, the Investment Company Act of 1940;
                (b) no
                Regulated Subsidiary is a “holding company” as defined in, or subject to
                regulation under, the Public Utility Holding Company Act of 1935
                (the
                “Holding Company
                Act”);  (c) the Borrower is a holding company as defined
                in the Public Utility Holding Company Act  of 2005 (the
                "Holding Company
                Act") which is exempt from all the provisions of the Holding
                Company Act and the General Rules and Regulations under the Holding
                Company Act (the “Holding Company
                Rules”); and (d) the Borrower has not taken any action and will
                not
                take any action unless required by law which could cause Lender to
                become,
                solely by reason of the Transactions, subject to regulation under
                the
                Holding Company Act.

              
              

               

              SECTION
                3.09. Taxes.  Each
                of the Borrower and
                its Regulated Subsidiaries and, to the best of Borrower’s knowledge, all
                its other Subsidiaries, has timely filed or caused to be filed all
                Tax
                returns and reports required to have been filed and has paid or caused
                to
                be paid all Taxes required to have been paid by it, except (a) Taxes
                that are being contested in good faith by appropriate proceedings
                and for
                which the Borrower or such Regulated Subsidiary, as applicable, has
                set
                aside on its books adequate reserves, in accordance with GAAP, or
                (b) to the extent that the failure to do so could not reasonably be
                expected to result in a Material Adverse Effect.

              
              

               

              SECTION
                3.10. ERISA.  As
                of the Closing Date,
                and subsequently, other than as disclosed in the Company’s most recent
                Form 10-K, Form 10-Q and Forms 8-K published since the most
                recent Form 10-K and Form 10-Q, no ERISA Event has occurred or is
                reasonably expected to occur that, when taken together with all other
                such
                ERISA Events for which liability is reasonably expected to occur,
                could
                reasonably be expected to result in a Material Adverse
                Effect.  As of the Closing Date, the present value of all
                accumulated benefit obligations under each Plan (based on the assumptions
                used for purposes of Statement of Financial Accounting Standards
                No. 87) did not, as of the date of the September 30, 2004 actuarial
                valuation date reflecting such amounts, exceed by more than $17,200,000
                the fair market value of the assets of such Plan, and the present
                value of
                all accumulated benefit obligations of all underfunded Plans (based
                on the
                assumptions used for purposes of Statement of Financial Accounting
                Standards No. 87) did not, as of the September 30, 2004 actuarial
                valuation date reflecting such amounts, exceed by more than $17,200,000
                the fair market value of the assets of all such underfunded
                Plans.

              
              

               

              SECTION
                3.11. Disclosure.  The
                Borrower has
                disclosed to the Lender all agreements, instruments and corporate
                or other
                restrictions to which it or any of its Regulated Subsidiaries and,
                to the
                best of Borrower’s knowledge, all of its other Subsidiaries, is subject,
                and all other matters known to it, that, individually or in the aggregate,
                could reasonably be expected to result in a Material Adverse
                Effect.  No reports, financial statements, certificates or other
                information furnished by or on behalf of the Borrower to the Lender
                in
                connection with the negotiation of this Agreement or delivered hereunder
                (as modified or supplemented by other information so furnished) contains
                any material misstatement of fact or omits to state any material
                fact
                necessary to make the statements therein, in the light of the
                circumstances under which they were made, not misleading; provided that, with respect to projected
                financial information, the Borrower represents only that such information
                was prepared in good faith based upon assumptions believed to be
                reasonable at the time.

              
              

               

              SECTION
                3.12. Bonding
                Capacity.  The Borrower
                has Bonding Capacity under the Indenture in excess of $60,000,000
                as of
                the Closing Date and subsequently in excess of the greater of $30,000,000
                or the aggregate amount of unsecured Indebtedness.

               

              
              

               ARTICLE
                IV

              Conditions

               

              
              

              SECTION
                4.01. Effective
                Date.  The obligations
                of the Lender to make Loans and to issue Letters of Credit hereunder
                shall
                not become effective until the date on which each of the following
                conditions is satisfied (or waived in accordance with Section
                8.02):

              
              

              (a) The
                Lender (or its counsel) shall have received from the Borrower either
                (i) a counterpart of this Agreement signed on behalf of such party or
                (ii) written evidence satisfactory to the Lender (which may include
                telecopy transmission of a signed signature page of this Agreement)
                that
                the Borrower has signed a counterpart of this Agreement.

              
              

              (b) The
                Lender shall have received all promissory notes required by Lender
                fully
                executed, all in form and substance satisfactory to the Lender and
                its
                counsel.

              
              

              (c) The
                Lender shall have received a favorable written opinion (addressed
                to the
                Lender and dated the Effective Date) of Kenneth C. Picton, Assistant
                General Counsel for the Borrower, substantially in the form of Exhibit
                B,
                and covering such other matters relating to the Borrower and this
                Agreement or the Transactions as the Lender shall reasonably
                request.  The Borrower hereby requests such counsel to deliver
                such opinion.

              
              

              (d) The
                Lender’s review of and satisfaction with the projections and pro-forma
                financial statements of Borrower.

              
              

              (e) The
                Lender’s satisfaction with the condition (financial and otherwise),
                operations, assets, nature of assets, liabilities and prospects of
                the
                Borrower.

              
              

              (f) The
                Lender has received satisfactory evidence of compliance with all
                applicable U.S. federal, state and local laws and regulations, including
                all applicable Environmental Laws and regulations and that all necessary
                regulatory approvals have been obtained, including but not limited
                to the
                Vermont Public Service Board.  Without limiting the foregoing,
                the Borrower shall have provided evidence, satisfactory to the lender,
                that the Regulators have approved the purchase by the Borrower of
                equity
                interest in Vermont Transco LLC as may be required by applicable
                law.

              
              

              (g) No
                litigation by any person or entity (private or governmental) shall
                be
                pending or threatened (i) with respect to the Transactions, the Agreement,
                or any other documentation executed in connection herewith or therewith
                or
                the transaction contemplated hereby or (ii) which in the Lender’s sole
                judgment, individually or in the aggregate, could have a Materially
                Adverse Effect on the business, property, assets, liabilities, condition
                (financial or otherwise), operations, results of operations or prospects
                of the Borrower after giving effect to the Transactions.

              
              

              (h) Since
                the date of the last financial statements for the Borrower delivered
                to
                the Lender prior to the date hereof, nothing shall have occurred
                which in
                the Lender’s sole judgment could, individual or in the aggregate, have a
                Material Adverse Effect on (i) the rights and remedies of the Lender
                under
                the definitive documentation for the Transaction, (ii) the ability
                of the
                Borrower to perform its respective obligations or (iii) the business,
                property, assets, liabilities, condition (financial or otherwise),
                operations, results of operations or prospects of the Borrower after
                giving effect to the Transactions.

              
              

              (i) The
                Lender shall have received such documents and certificates as the
                Lender
                or its counsel may reasonably request relating to the organization,
                existence and good standing of the Borrower, the Guarantors, the
                authorization of the Transactions and any other legal matters relating
                to
                the Borrower, this Agreement or the Transactions, all in form and
                substance satisfactory to the Lender and its counsel.

              
              

              (j) The
                Lender shall have received a certificate, dated the Effective Date
                and
                signed by the President, a Vice President or a Financial Officer
                of the
                Borrower, confirming compliance with the conditions set forth in
                paragraphs (a) through (i) of Section 4.02.

              
              

              (k) The
                Lender shall have received an executed subsidiary guaranty agreement
                from
                the Guarantor, in form and substance satisfactory to the Lender and
                its
                counsel.

              
              

              (l) The
                Lender shall have received all fees and other amounts due and payable
                on
                or prior to the Effective Date, including, to the extent invoiced,
                reimbursement or payment of all out-of-pocket expenses required to
                be
                reimbursed or paid by the Borrower hereunder.

              
              

              (m) With
                respect to the Revolving Credit Commitment, the Borrower shall have
                provided evidence that the Credit Agreement dated as of October 21,
                2005
                with JP Morgan Chase Bank, N.A., shall be terminated contemporaneously
                with the effectiveness of the Revolving Credit Commitment and amounts
                outstanding thereunder repaid (which may be repaid with Revolving
                Loans
                hereunder).

              
              

              The
                Lender shall notify the
                Borrower of the Effective Date, and such notice shall be conclusive
                and
                binding.  Notwithstanding the foregoing, the obligations of the
                Lender to make Term Loans hereunder shall not become effective unless
                each
                of the foregoing conditions is satisfied (or waived pursuant to Section
                8.02) at or prior to 1:00 p.m., New York City time, on December 28,
                2007
                (and, in the event such conditions are not so satisfied or waived,
                the
                Term Loan Commitment shall terminate at such
                time).  Notwithstanding the foregoing, the obligations of the
                Lender to make Revolving Loans and to issue Letters of Credit hereunder
                shall not become effective unless each of the foregoing conditions
                is
                satisfied (or waived pursuant to Section 8.02) at or prior to 1:00
                p.m.,
                New York City time, on December 31, 2007 (and, in the event such
                conditions are not so satisfied or waived, the Revolving Credit Commitment
                shall terminate at such time).

              
              

               

              SECTION
                4.02. Each
                Credit Event.  The
                obligation of the Lender to make a Loan on the occasion of any Borrowing,
                and to issue, amend, renew or extend any Letter of Credit, is subject
                to
                the satisfaction of the following conditions:

              
              

              (a) The
                representations and warranties of the Borrower set forth in this
                Agreement, shall be true and correct on and as of the date of such
                Borrowing or the date of issuance, amendment, renewal or extension
                of such
                Letter of Credit, as applicable.

              
              

              (b) At
                the time of and immediately after giving effect to such Borrowing
                or the
                issuance, amendment, renewal or extension of such Letter of Credit,
                as
                applicable, no Default shall have occurred and be continuing.

              
              

              (c) Borrower’s
                unsecured long term debt has a rating of “BBB”  or higher from
                S&P or “Baa3” or higher from Moody’s; provided, if the Borrower does not
                have
                such rating, there has been no change in the business, assets, operations,
                prospects or condition, financial or otherwise, the Borrower and
                its
                Regulated Subsidiaries, and, to the best of Borrower’s Knowledge, all of
                its other Subsidiaries taken as a whole, that individually, or in
                the
                aggregate, could not be expected to have a Material Adverse
                Effect.

              
              

              (d) Prior
                to the issuance, amendment, renewal or extension of any Letter of
                Credit,
                the Borrower shall have confirmed in writing to Lender that it has
                received all necessary regulatory approvals permitting Borrower to
                provide
                the cash collateral, as set forth in Section 2.04 (h).

              
              

              Each
                Borrowing and each issuance, amendment, renewal or extension of a
                Letter
                of Credit shall be deemed to constitute a representation and warranty
                by
                the Borrower on the date thereof as to the matters specified in paragraphs
                (a), (b) and (c) of this Section.

               

              ARTICLE
                V

              Affirmative
                Covenants

               

              
              

              Until
                the Commitments have
                expired or been terminated and the principal of and interest on each
                Loan
                and all fees payable hereunder shall have been paid in full and all
                Letters of Credit shall have expired or terminated and all LC
                Disbursements shall have been reimbursed, the Borrower covenants
                and
                agrees with the Lender that:

              
              

               

              SECTION
                5.01. Financial
                Statements; Ratings Change and Other
                Information.  The Borrower will furnish to the
                Lender:

              
              

              (a) within
                120 days after the end of each fiscal year of the
                Borrower:

              
              

              (i) its
                audited consolidated balance sheet and related statements of operations,
                stockholders’ equity and cash flows as of the end of and for such year,
                setting forth in each case in comparative form the figures for the
                previous fiscal year, all reported on by Deloitte & Touche, LLP or
                other independent public accountants of recognized national standing
                (without a “going concern” or like qualification or exception and without
                any qualification or exception as to the scope of such audit) to
                the
                effect that such consolidated financial statements present fairly
                in all
                material respects the financial condition and results of operations
                of the
                Borrower and its consolidated Subsidiaries on a consolidated basis
                in
                accordance with GAAP consistently applied; provided that the
                delivery within the time period specified above of the Borrower’s Annual
                Report on Form 10-K for such fiscal year prepared in accordance with
                the
                requirements therefor and filed with the Securities and Exchange
                Commission, shall be deemed to satisfy the requirements
                of  Section 5.01(a)(i);

              
              

              (ii) its
                unaudited balance sheet and related statements of operations, and
                stockholders’ equity as of the end of and for such year, setting forth in
                each case in comparative form the figures for the previous fiscal
                year,
                all certified by its Chief Financial Officer to the effect that such
                financial statements present fairly in all material respects the
                financial
                condition and results of operations of the Borrower on a standalone
                basis
                in accordance with GAAP consistently applied; and

              
              

              (iii) its
                unaudited consolidating statement as of end of and for such year
                as
                reported on Form U3/A–2 filed with the U.S. Securities and Exchange
                Commission, provided the Borrower is required to file such
                form;

              
              

              (b) within
                60 days after the end of each of the first three fiscal quarters of
                each fiscal year of the Borrower:

              
              

              
              

              (i) its
                consolidated balance sheet and related statements of operations,
                stockholders’ equity and cash flows as of the end of and for such fiscal
                quarter and the then elapsed portion of the fiscal year, setting
                forth in
                each case in comparative form the figures for the corresponding period
                or
                periods of (or, in the case of the balance sheet, as of the end of)
                the
                previous fiscal year, all certified by its Chief Finan­cial Officer as
                presenting fairly in all material respects the financial condition
                and
                results of operations of the Borrower and its consolidated Subsidiaries
                on
                a consolidated basis in accordance with GAAP consis­tently applied,
                subject to normal year-end audit adjustments and the absence of
                footnotes;  provided that delivery
                within the time period specified above of copies of the Borrower’s
                Quarterly Report on Form 10-Q prepared in compliance with the requirements
                therefor and filed with the Securities and Exchange Commission shall
                be
                deemed to satisfy the requirements of this Section 5.01(b)(i);
                and

              
              

              (ii) its
                unaudited balance sheet and related statements of operations and
                stockholders’ equity as of the end of and for such fiscal quarter and the
                then elapsed portion of the fiscal year, setting forth in each case
                in
                comparative form the figures for the corresponding period or periods
                of
                (or, in the case of the balance sheet, as of the end of) the previous
                fiscal year, all certified by its Chief Finan­cial Officer as
                presenting fairly in all material respects the financial condition
                and
                results of operations of the Borrower on a standalone basis in accordance
                with GAAP consis­tently applied, subject to normal year-end audit
                adjustments and the absence of footnotes.

              
              

              (c) concurrently
                with any delivery of financial statements under clause (a) or
                (b) above, a certificate of a Financial Officer of the Borrower
                (i) certifying as to whether a Default has occurred and, if a Default
                has occurred, specifying the details thereof and any action taken
                or
                proposed to be taken with respect thereto, (ii) setting forth
                reasonably detailed calculations demonstrating compliance with
                Sections 6.09 and 6.10 and (iii) stating whether any change in
                GAAP or in the application thereof has occurred since the date of
                the
                audited financial statements referred to in Section 3.04 and, if any
                such change has occurred, specifying the effect of such change on
                the
                financial statements accompanying such certificate unless otherwise
                disclosed in the Borrower’s Forms 10-K or 10-Q delivered under Section
                5.01(a) or (b);

              
              

              (d) promptly
                after the same become publicly available, copies of all periodic
                and other
                reports, proxy statements and other materials filed by the Borrower
                or any
                Subsidiary with the Securities and Exchange Commission, or any
                Govern­mental Authority succeeding to any or all of the functions of
                said Commission, or with any national securities exchange, or distributed
                by the Borrower to its share­holders generally, as the case may
                be;

              
              

              (e) promptly
                after Moody’s or S&P shall have announced a change in the rating
                established or deemed to have been established for the Index Debt
                (i)
                written notice of such rating change and (ii) if the Index Debt is
                rated
                less than BBB- (stable) by Standard & Poor or Baa3 (stable) by
                Moody’s, the notice shall be accompanied by a written statement of a
                Financial Officer or other executive officer of the Borrower whether
                or
                not there has been a change in the business, assets, operations,
                prospects
                or conditions, financial or otherwise, having a Material Adverse
                Effect on
                the Borrower and its Subsidiaries, taken as a whole; and

              
              

              (f) promptly
                following any request therefor, such other information regarding
                the
                operations, business affairs and financial condition of the Borrower
                or
                any Subsidi­ary, or compliance with the terms of this Agreement, as
                the Lender may reasonably request.

              
              

               

              SECTION
                5.02. Notices
                of Material Events.  The
                Borrower will furnish to the Lender prompt written notice of the
                following:

              
              

              (a) the
                occurrence of any Default;

              
              

              (b) the
                filing or commencement of any action, suit or proceeding by or before
                any
                arbitrator or Governmental Authority against or affecting the Borrower
                or
                any Affiliate thereof that, if adversely determined, could reasonably
                be
                expected to result in a Material Adverse Effect;

              
              

              (c) the
                occurrence of any ERISA Event that, alone or together with any other
                ERISA
                Events that have occurred, could reasonably be expected to result
                in
                liability of the Borrower and its Regulated Subsidiaries in an aggregate
                amount exceeding $500,000; and

              
              

              (d) any
                other development that results in, or could reasonably be expected
                to
                result in, a Material Adverse Effect.

              
              

              Each
                notice delivered under this Section shall be accompanied by a
                statement of a Financial Officer or other executive officer of the
                Borrower setting forth the details of the event or development requiring
                such notice and any action taken or proposed to be taken with respect
                thereto.

              
              

               

              SECTION
                5.03. Existence;
                Conduct of
                Business.  The Borrower will, and will cause each of its
                Regulated Subsidiaries to, do or cause to be done all things necessary
                to
                preserve, renew and keep in full force and effect its legal existence
                and
                the rights, licenses, permits, privileges and franchises material
                to the
                conduct of its business; provided
                that the foregoing shall not prohibit any merger, consolidation,
                liquidation or dissolution permitted under Section 6.03.

              
              

               

              SECTION
                5.04. Payment
                of Obligations.  The
                Borrower will, and will cause each of its
                Regulated  Subsidiaries to, pay its obliga­tions, including
                Tax liabilities, that, if not paid, could result in a Material Adverse
                Effect before the same shall become delinquent or in default, except
                where
                (a) the validity or amount thereof is being contested in good faith
                by
                appropri­ate proceedings, (b) the Borrower or such Subsidiary has set
                aside on its books adequate reserves with respect thereto as necessary
                in
                accordance with GAAP and (c) the failure to make payment pending
                such
                contest could not reasonably be expected to result in a Material
                Adverse
                Effect.

              
              

               

              SECTION
                5.05. Maintenance
                of Properties;
                Insurance.  The Borrower will, and will cause each of its
                Regulated Subsidiaries to, (a) keep and maintain all property
                material to the conduct of its business in good working order and
                condition, ordinary wear and tear excepted, and (b) maintain, with
                financially sound and reputable insurance companies, insurance in
                such
                amounts and against such risks as are customarily maintained by companies
                engaged in the same or similar businesses operating in the same or
                similar
                locations.

              
              

              SECTION
                5.06. Books
                and Records; Inspection
                Rights.  The Borrower will, and will cause each of its
                Regulated Subsidiaries to, keep proper books of record and account
                in
                which full, true and correct entries are made of all dealings and
                transactions in relation to its business and activities.  The
                Borrower will, and will cause each of its Regulated Subsidiaries
                to,
                permit any representatives designated by the Lender, upon reasonable
                prior
                notice, to visit and inspect its properties, to examine and make
                extracts
                from its books and records, and to discuss its affairs, finances
                and
                condition with its officers and independent accountants, all at such
                reasonable times and as often as reasonably requested.

              
              

               

              SECTION
                5.07. Compliance
                with Laws.  The
                Borrower will, and will cause each of its Regulated Subsidiaries
                to,
                comply with all laws, rules, regulations and orders of any Governmental
                Authority applicable to it or its property (including, without limitation,
                ERISA and the Public Utility Holding Company Act), except where the
                failure to do so, individually or in the aggregate, could not reasonably
                be expected to result in a Material Adverse Effect.

              
              

               

              SECTION
                5.08. Use
                of Proceeds and Letters of
                Credit.  The proceeds of the Revolving Loans will be used
                only for general corporate purposes of Borrower in the ordinary course
                of
                business.  The proceeds of the Term Loan will be used only for
                the purchase by the Borrower of equity interests in VT Transco
                LLC.  No part of the proceeds of any Loan will be used, whether
                directly or indirectly, for any purpose that entails a violation
                of any of
                the Regulations of the Board, including Regulations T, U and
                X.  Letters of Credit will be issued only to support general
                corporate purposes of Borrower in the ordinary course of
                business.

              
              

               

              SECTION
                5.09. Guaranty
                by Certain Regulated
                Subsidiaries.   If requested by the Lender, the
                Borrower will seek regulatory approval for its Regulated Subsidiaries,
                Custom Investment Corporation and Central Vermont Public Service
                Corporation – East Barnet Hydroelectric, Inc., to  be guarantors
                of the obligations of the Borrower to the Lender, pursuant to guaranty
                agreements substantially similar to the guaranty agreements executed
                by
                the Guarantors.

               

              ARTICLE
                VI

              Negative
                Covenants

               

              
              

              Until
                the Commitments have
                expired or terminated and the principal of and interest on each Loan
                and
                all fees payable hereunder have been paid in full and all Letters
                of
                Credit have expired or terminated and all LC Disbursements shall
                have been
                reimbursed, the Borrower covenants and agrees with the Lender
                that:

              
              

               

              SECTION
                6.01. Indebtedness.  The
                Borrower will
                not, and will not permit any Regulated Subsidiary to, create, incur,
                assume or permit to exist any Indebtedness, except:

              
              

              (a) Indebtedness
                created hereunder, including the Guaranty by the Guarantors;

              
              

              (b) Indebtedness
                existing on the date hereof and set forth in Schedule 6.01(b), and
                extensions, renewals and replacements of any such Indebtedness that
                do not
                increase the outstanding principal amount thereof;

              
              

              (c) Indebtedness
                of the Borrower to or from Guarantor, or to or from any Significant
                Subsidiary provided such Indebtedness to or from a non-Regulated
                Subsidiary does not exceed $17,500,000 plus twenty percent (20%)
                of
                Borrower’s cumulative net income since January, 2004 or an amount
                permitted by the Indenture, whichever is less;

              
              

              (d) Guarantees
                by the Borrower of Indebtedness of any Guarantor or any Regulated
                Subsidiary and by any Significant Subsidiary of Indebtedness of the
                Borrower or any other Regulated Subsidiary existing on the date hereof
                and
                set forth on Schedule 6.01(d), and extensions, renewals and replacements
                of any such Indebtedness that do not increase the outstanding principal
                amount thereof;

              
              

              (e) Indebtedness
                of the Borrower or any Subsidiary incurred to finance the acquisition,
                construction or improvement of any fixed or capital assets, including
                Capital Lease Obligations and any Indebtedness assumed in connection
                with
                the acquisition of any such assets or secured by a Lien on any such
                assets
                prior to the acquisition thereof, and extensions, renewals and
                replacements of any such Indebtedness; provided that (i) such Indebtedness
                is
                incurred prior to or within 90 days after such acquisition or the
                completion of such construction or improvement and (ii) such Indebtedness
                does not reduce the Borrower’s Bonding Capacity below the greater of
                $30,000,000, or the total aggregate amount of unsecured
                Indebtedness;

              
              

              (f) Indebtedness
                of Catamount Resources Corporation and its subsidiaries provided
                it is not
                guaranteed by the Borrower and/or any other Guarantor;

              
              

              (g) other
                unsecured Indebtedness in an aggregate principal amount not
                exceeding  the Borrower’s statutory short-term borrowing limit,
                if the Borrower carries an investment grade rating, and not exceeding
                $35,000,000 if the Borrower does not carry an investment grade rating;
                and

              
              

              (h) additional
                mortgage bonds issued under the Borrower’s Indenture, provided the bonding
                capacity under the Indenture does not go below the greater of $30,000,000
                million, or the total aggregate amount of unsecured
                Indebtedness.

              
              

               

              SECTION
                6.02. Liens.  The
                Borrower will not,
                and will not permit any Subsidiary to, create, incur, assume or permit
                to
                exist any Lien on any property or asset now owned or hereafter acquired
                by
                it, or assign or sell any income or revenues (including accounts
                receivable) or rights in respect of any thereof, except:

              
              

              (a) Permitted
                Encumbrances;

              
              

              (b) any
                Lien on any property or asset of the Borrower or any Subsidiary existing
                on the date hereof and set forth in Schedule 6.02; provided that (i) such Lien shall not
                apply
                to any other property or asset of the Borrower or any Subsidiary
                and (ii)
                such Lien shall secure only those obligations which it secures on
                the date
                hereof and extensions, renewals and replacements thereof that do
                not
                increase the outstanding principal amount thereof;

              
              

              (c) any
                Lien existing on any property or asset prior to the acquisition thereof
                by
                the Borrower or any Subsidiary or existing on any property or asset
                of any
                Person that becomes a  Subsidiary after the date hereof prior to
                the time such Person becomes a Subsidiary; provided that (i) such Lien is not
                created in contemplation of or in connection with such acquisi­tion or
                such Person becoming a Subsidiary, as the case may be, (ii) such Lien
                shall not apply to any other property or assets of the Borrower or
                any  Subsidiary and (iii) such Lien shall secure only those
                obligations which it secures on the date of such acquisition or the
                date
                such Person becomes a Subsidiary, as the case may be and extensions,
                renewals and replacements thereof that do not increase the outstanding
                principal amount thereof;

              
              

              (d) Liens
                on fixed or capital assets acquired, constructed or improved by the
                Borrower or any Subsidiary; provided
                that (i) such security interests secure Indebtedness permitted by
                clause (e) of Section 6.01, (ii) such security interests
                and the Indebtedness secured thereby are incurred prior to or within
                90 days after such acquisition or the completion of such construction
                or improvement, (iii) the Indebtedness secured thereby does not
                exceed 100% of the cost of acquiring, constructing or improving such
                fixed
                or capital assets and (iv) such security interests shall not apply to
                any other property or assets of the Borrower or any
                Subsidiary;

              
              

              (e) Liens
                on property or assets of the Borrower to secure Power Transactions
                in the
                ordinary course of business;

              
              

              (f) The
                Lien of the Indenture;

              
              

              (g) Pledge
                agreements identified on Schedule 6.08; and

              
              

              (h) Liens
                on property or assets of the Borrower under or pursuant to any Swap
                Agreement, provided the bonding capacity under the Indenture does
                not go
                below the greater of $30,000,000 or the aggregate amount of the unsecured
                Indebtedness.

              
              

               

              SECTION
                6.03. Fundamental
                Changes.

              
              

              (a) The
                Borrower will not, and will not permit any Regulated Subsidiary to,
                merge
                into or consolidate with any other Person, or permit any other Person
                to
                merge into or consolidate with it, or sell, transfer, lease or otherwise
                dispose of (in one transaction or in a series of transactions) all
                or any
                substantial part of its assets, or all or substantially all of the
                stock
                of any of its Regulated Subsidiaries (in each case, whether now owned
                or
                here­after acquired), or liquidate or dissolve, except that, if at the
                time thereof and immediately after giving effect thereto no Default
                shall
                have occurred and be continuing (i) any Subsidiary may merge into the
                Borrower in a transaction in which the Borrower is the surviving
                corporation, (ii) any Subsidiary may merge into any Subsidiary in a
                transaction in which the surviving entity is a Subsidiary, (iii)
                any
                Subsidiary may sell, transfer, lease or otherwise dispose of its
                assets in
                the ordinary course of business or to the Borrower or to another
                Subsidiary and (iv) any Subsidiary may liquidate or dissolve if the
                Borrower determines in good faith that such liquidation or dissolution
                is
                in the best interests of the Borrower and is not materially
                disadvantageous to the Lender; provided that any such merger involving
                a
                Person that is not a wholly owned Subsidiary immediately prior to
                such
                merger shall not be permitted unless also permitted by Section 6.04;
                and provided further, Eversant
                Corporation, Catamount Resources Corporation or Catamount Energy
                Corporation may sell any or all of their capital stock to an investor,
                if
                the Borrower determines in good faith that such is in the best interests
                of the Borrower and is not materially disadvantageous to the
                Lender.

              
              

              (b) The
                Borrower will not, and will not permit any of its Regulated Subsidiaries
                to, engage to any material extent in any business other than businesses
                of
                the type conducted by the Borrower and its Regulated Subsidiaries
                on the
                date of execution of this Agreement and businesses reasonably related
                thereto.

              
              

               

              SECTION
                6.04. Investments,
                Loans, Advances, Guarantees and
                Acquisitions.  The Borrower will not, and will not permit
                any of its Regulated Subsidiaries to, purchase, hold or acquire (including
                pursuant to any merger with any Person that was not a wholly owned
                Subsidiary prior to such merger) any capital stock, evidences of
                indebtedness or other securities (including any option, warrant or
                other
                right to acquire any of the foregoing) of, make or permit to exist
                any
                loans or advances to, Guarantee any obligations of, or make or permit
                to
                exist any investment or any other interest in, any other Person,
                or
                purchase or otherwise acquire (in one transaction or a series of
                transactions) any assets of any other Person constituting a business
                unit,
                except:

              
              

              (a) Permitted
                Investments;

              
              

              (b) investments
                by the Borrower existing on the date hereof in the capital stock
                of its
                Subsidiaries;

              
              

              (c) loans
                or advances made by the Borrower to the Guarantor and made by the
                Guarantor to the Borrower;

              
              

              (d) Guarantees
                constituting Indebtedness permitted by Section 6.01;

              
              

              (e) transactions
                by and among the Borrower and Significant Subsidiaries provided,
                however,
                that there is no Event of Default and investments, advances or loans
                to a
                non-Regulated Subsidiaries will not exceed $17,500,000 plus twenty
                percent
                (20%) of Borrower’s cumulative net income since January 1, 2004 or an
                amount permitted under the Indenture, whichever is less; and

              
              

              (f) investments
                in Vermont Transco LLC, provided, however, that the Borrower has
                provided
                Notice to the Lender of Borrower’s intent to make any such investment at
                least thirty (30) days prior to the anticipated investment
                date.

              
              

               

              SECTION
                6.05. Swap
                Agreements.  The Borrower
                will not, and will not permit any of its Regulated Subsidiaries to,
                enter
                into any Swap Agreement, except (a) Swap Agreements entered into
                to hedge
                or mitigate risks to which the Borrower or any Subsidiary has actual
                exposure (other than those in respect of Equity Interests of the
                Borrower
                or any of its Subsidiaries), (b) Swap Agreements entered into in
                the
                ordinary course of business, and (c) Swap Agreements entered into
                in order
                to effectively cap, collar or exchange interest rates (from fixed
                to
                floating rates, from one floating rate to another floating rate or
                otherwise) with respect to any interest-bearing liability or investment
                of
                the Borrower or any Subsidiary.

              
              

               

              SECTION
                6.06. Restricted
                Payments.  The
                Borrower will not, and will not permit any of its Regulated Subsidiaries
                to, declare or make, or agree to pay or make, directly or indirectly,
                any
                Restricted Payment, except (provided there is no Default by the Borrower
                or Guarantor) (a) the Borrower may declare and pay dividends ratably
                with
                respect to its Equity Interests, (b) the Borrower may make all mandatory
                sinking funds, (c) Subsidiaries may declare and pay dividends ratably
                with
                respect to their Equity Interests, and (d) the Borrower may make
                Restricted Payments pursuant to and in accordance with stock option
                plans
                or other benefit plans for management or employees of the Borrower
                and its
                Subsidiaries.

              
              

               

              SECTION
                6.07. Transactions
                with
                Affiliates.  The Borrower will not, and will not permit
                any of its Regulated Subsidiaries to, sell, lease or otherwise transfer
                any property or assets to, or purchase, lease or otherwise acquire
                any
                property or assets from, or otherwise engage in any other transactions
                with, any of its Affiliates, except (a) in the ordinary course of
                business
                at prices and on terms and conditions not less favorable to the Borrower
                or such Regulated Subsidiary than could be obtained on an arm’s-length
                basis from unrelated third parties, (b) transactions between or among
                the
                Borrower and its wholly-owned Regulated Subsidiaries not involving
                any
                other Affiliate and (c) any Restricted Payment permitted by Section
                6.06.

              
              

               

              SECTION
                6.08. Restrictive
                Agreements.  The
                Borrower will not, and will not permit any of its Regulated Subsidiaries
                to, directly or indirectly, enter into, incur or permit to exist
                any
                agreement or other arrangement that prohibits, restricts or imposes
                any
                condition upon (a) the ability of the Borrower or any Regulated Subsidiary
                to create, incur or permit to exist any Lien upon any of its property
                or
                assets, or (b) the ability of any Regulated Subsidiary to pay dividends
                or
                other distributions with respect to any shares of its capital stock
                or to
                make or repay loans or advances to the Borrower or any other Subsidiary
                or
                to Guarantee Indebtedness of the Borrower or any other Subsidiary;
provided that (i) the foregoing shall
                not
                apply to restrictions and conditions imposed by law or by this Agreement,
                (ii) the foregoing shall not apply to restrictions and conditions
                existing
                on the date hereof identified on Schedule 6.08 (but shall apply to
                any
                extension or renewal of, or any amendment or modification which materially
                expands the scope of, any such restriction or condition), (iii) the
                foregoing shall not apply to customary restrictions and conditions
                contained in agreements relating to the sale of a Subsidiary pending
                such
                sale, provided such restrictions and conditions apply only to the
                Subsidiary that is to be sold and such sale is permitted hereunder,
                (iv)
                clause (a) of the foregoing shall not apply to restrictions or conditions
                imposed by any agreement relating to secured Indebtedness permitted
                by
                this Agreement if such restrictions or conditions apply only to the
                property or assets securing such Indebtedness and (v) clause (a)
                of the
                foregoing shall not apply to customary provisions in leases and other
                contracts restricting the assignment thereof.

              
              

               

              SECTION
                6.09. Total
                Debt to Total Capitalization
                Ratio.  The Borrower, on a standalone basis, shall not
                permit its ratio of Total Debt to Total Capitalization to exceed
                .65 to
                1.00, at any time.

              
              

               

              SECTION
                6.10. Interest
                Coverage Ratio.  On and
                after January 1, 2008, the Borrower, on a standalone basis, shall
                not
                permit a ratio of the sum of Net Income plus Interest Expense and
                Income
                Tax Expense, to Interest Expense to be less than 1.75 to 1.00, in
                each
                case tested for the four fiscal quarters of the Borrower ended on
                or
                immediately prior to such date.

              
              

               

              ARTICLE
                VII

              Events
                of Default

               

              
              

              If
                any of the following events
                (“Events of Default”) shall
                occur:

              
              

              (a) the
                Borrower shall fail to pay any principal of any Loan or any reimbursement
                obligation in respect of any LC Disbursement when and as the same
                shall
                become due and payable, whether at the due date thereof or at a date
                fixed
                for prepay­ment thereof or otherwise;

              
              

              (b) the
                Borrower shall fail to pay any interest on any Loan or any fee or
                any
                other amount (other than an amount referred to in clause (a) of this
                Article) payable under this Agreement, when and as the same shall
                become
                due and payable, and such failure shall continue unremedied for a
                period
                of three Business Days;

              
              

              (c) any
                representation or warranty made or deemed made by or on behalf of
                the
                Borrower or any Subsidiary in or in connection with this Agreement
                or any
                amendment or modification hereof or waiver hereunder, or in any report,
                certificate, financial statement or other document furnished pursuant
                to
                or in connection with this Agreement or any amendment or modification
                hereof or waiver hereunder, shall prove to have been incorrect when
                made
                or deemed made;

              
              

              (d) the
                Borrower shall fail to observe or perform any covenant, condition
                or
                agreement contained in Section 5.02, 5.03 (with respect to the
                Borrower’s existence) or 5.08 or in Article VI;

              
              

              (e) the
                Borrower shall fail to observe or perform any covenant, condition
                or
                agree­ment contained in this Agreement (other than those specified in
                clause (a), (b) or (d) of this Article), and such failure shall continue
                unremedied for a period of 30 days after notice thereof from the
                Lender to the Borrower;

              
              

              (f) the
                Borrower or any Subsidiary shall fail to make any payment (whether of
                principal or interest and regardless of amount) in respect of any
                Material
                Indebtedness, when and as the same shall become due and
                payable;

              
              

              (g) any
                event or condition occurs that results in any Material Indebtedness
                becoming due prior to its scheduled maturity or that enables or permits
                (with or without the giving of notice, the lapse of time or both)
                the
                holder or holders of any Material Indebtedness or any trustee or
                agent on
                its or their behalf to cause any Material Indebtedness to become
                due, or
                to require the prepayment, repurchase, redemption or defeasance thereof,
                prior to its scheduled maturity; provided that this clause (g) shall
                not apply to secured Indebtedness that becomes due as a result of
                the
                voluntary sale or transfer of the property or assets securing such
                Indebtedness or the prepayment, repurchase, redemption or defeasance
                of a
                hedge agreement or Swap Agreement in the ordinary course of
                business;

              
              

              (h) an
                involuntary proceeding shall be commenced or an involuntary petition
                shall
                be filed seeking (i) liquidation, reorganization or other relief in
                respect of the Borrower or any Regulated Subsidiary or its debts,
                or of a
                substantial part of its assets, under any Federal, state or foreign
                bankruptcy, insolvency, receivership or similar law now or hereafter
                in
                effect or (ii) the appointment of a receiver, trustee, custodian,
                sequestrator, conservator or similar official for the Borrower or
                any
                Regulated Subsidiary or for a substantial part of its assets, and,
                in any
                such case, such proceeding or petition shall continue undismissed
                for
                60 days or an order or decree approving or ordering any of the
                foregoing shall be entered;

              
              

              (i) the
                Borrower or any Regulated Subsidiary shall (i) voluntarily commence
                any proceeding or file any petition seeking liquidation, reorganization
                or
                other relief under any Federal, state or foreign bankruptcy, insolvency,
                receivership or similar law now or hereafter in effect, (ii) consent
                to the institution of, or fail to contest in a timely and appropriate
                manner, any proceeding or petition described in clause (h) of this
                Article, (iii) apply for or consent to the appointment of a receiver,
                trustee, custodian, sequestrator, conservator or similar offi­cial for
                the Borrower or any Regulated Subsidiary or for a substan­tial part of
                its assets, (iv) file an answer admit­ting the material
                allegations of a petition filed against it in any such proceeding,
                (v) make a general assignment for the benefit of creditors or
                (vi) take any action for the purpose of effecting any of the
                fore­going;

              
              

              (j) the
                Borrower or any Regulated Subsidiary shall become unable or admit
                in
                writing its inability or fail generally to pay its debts as they
                become
                due;

              
              

              (k) one
                or more judgments for the payment of money in an aggregate amount
                in
                excess of $2,000,000 shall be rendered against the Borrower, any
                Regulated
                Subsidiary or any combination thereof and the same shall remain
                undischarged for a period of 30 consecutive days during which
                execution shall not be effectively stayed, or any action shall be
                legally
                taken by a judgment creditor to attach or levy upon any assets of
                the
                Borrower or any Regulated Subsidiary to enforce any such
                judgment;

              
              

              (l) An
                ERISA Event shall have occurred
                that, in the opinion of the Lender, when taken together with all
                other
                ERISA Events that have occurred, could reasonably be expected to
                result in
                a Material Adverse Effect; or

              
              

              (m) a
                Change in Control shall occur without the prior
                written consent
                of the Lender; or

              
              

              (n) any
                material default shall have occurred under the Indenture pursuant
                to which
                the trustee thereunder would have the right to accelerate the Material
                Indebtedness;

              
              

              then,
                and in every such event (other than an event with respect to the
                Borrower
                described in clause (h) or (i) of this Article), and at any time
                thereafter during the continuance of such event, the Lender may,
                by notice
                to the Borrower, take either or both of the following actions, at
                the same
                or different times:  (i) terminate the Commitments, and
                thereupon the Commitments shall terminate immediately, and
                (ii) declare the Loans then out­standing to be due and payable in
                whole (or in part, in which case any principal not so declared to
                be due
                and payable may thereafter be declared to be due and payable), and
                thereupon the principal of the Loans so declared to be due and payable,
                together with accrued interest thereon and all fees and other obligations
                of the Borrower accrued hereunder, shall become due and payable
                immediately, without presentment, demand, protest or other notice
                of any
                kind, all of which are hereby waived by the Borrower; and in case
                of any
                event with respect to the Borrower described in clause (h) or (i)
                of this
                Article, the Commitments shall automatically terminate and the principal
                of the Loans then outstanding, together with accrued interest thereon
                and
                all fees and other obligations of the Borrower accrued hereunder,
                shall
                automatically become due and payable, without present­ment, demand,
                protest or other notice of any kind, all of which are hereby waived
                by the
                Borrower.

               

              ARTICLE
                VIII

              Miscellaneous

               

              
              

              SECTION
                8.01. Notices.

              
              

              (a) Except
                in the case of notices and other communications expressly permitted
                to be
                given by telephone or telecopy (and subject to paragraph (b) below),
                all
                notices and other communications provided for herein shall be in
                writing
                and shall be delivered by hand, overnight courier service, or mailed
                by
                certified or registered mail or sent by telecopy, as follows:

              
              

              if
                to the Borrower: Central Vermont Public Service Corporation

              77
                Grove Street

              Rutland,
                Vermont  05701

              Attn:  Director
                of
                Treasury and Corporate Planning

              Fax:  (802)
                747-2129

              
              

              with
                a copy to: Central Vermont Public Service Corporation

              77
                Grove Street

              Rutland,
                Vermont  05701

              Attn:  Assistant
                General Counsel

              Fax:  (802)
                747-1913

              
              

              if
                to the Lender: KeyBank National Association

              149
                Bank Street

              Burlington,
                VT
                05401

              Attn:
                Tony Martin, Senior Vice
                President

              Fax:
                (802) 864-6908

              
              

              with
                a copy to: Burak Anderson & Melloni, PLC

              30
                Main Street, PO Box
                787

              Burlington,
                VT
                05401-0787

              Attn:  Thomas
                Melloni,
                Esq.

              Fax:  (802)
                862-8176

              
              

              (b) Notices
                and other communications to the Lender hereunder may be delivered
                or
                furnished by electronic communications pursuant to procedures approved
                by
                the Lender; provided that the foregoing shall not apply to notices
                pursuant to Article II unless otherwise agreed by the
                Lender.  The Lender or the Borrower may, in its discretion,
                agree to accept notices and other communications to it hereunder
                by
                electronic communications pursuant to procedures approved by it;
                provided
                that approval of such procedures may be limited to particular notices
                or
                communications.

              
              

              (c) Any
                party hereto may change its address, contact person(s) or telecopy
                number
                for notices and other communications hereunder by notice to the other
                parties hereto.  All notices and other communications given to
                any party hereto in accordance with the provisions of this Agreement
                shall
                be deemed to have been given on the date of receipt.

              
              

               

              SECTION
                8.02. Waivers;
                Amendments.

              
              

              (a) No
                failure or delay by the Lender in exercising any right or power hereunder
                shall operate as a waiver thereof, nor shall any single or partial
                exercise of any such right or power, or any abandonment or discontinuance
                of steps to enforce such a right or power, preclude any other or
                further
                exercise thereof or the exercise of any other right or
                power.  The rights and remedies of the Lender hereunder are
                cumulative and are not exclusive of any rights or remedies that it
                would
                otherwise have.  No waiver of any provision of this
                Agree­ment or consent to any departure by the Borrower therefrom shall
                in any event be effective unless the same shall be permitted by
                paragraph (b) of this Section, and then such waiver or consent shall
                be effec­tive only in the specific instance and for the purpose for
                which given.  Without limiting the generality of the foregoing,
                the making of a Loan or issuance of a Letter of Credit shall not
                be
                construed as a waiver of any Default, regardless of whether the Lender
                may
                have had notice or knowledge of such Default at the time.

              
              

              (b) Neither
                this Agreement nor any provision hereof may be waived, amended or
                modified
                except pursuant to an agreement or agreements in writing entered
                into by
                the Borrower and the Lender.

              
              

               

              SECTION
                8.03. Expenses;
                Indemnity; Damage
                Waiver.

              
              

              (a) The
                Borrower shall pay (i) all reasonable out-of-pocket expenses incurred
                by
                the Lender, including the reasonable fees, charges and disbursements
                of
                counsel for the Lender, in connection with the credit facilities
                provided
                for herein, the preparation and administration of this Agreement
                or any
                amendments, modifications or waivers of the provi­sions hereof
                (whether or not the transactions contemplated hereby or thereby shall
                be
                consummated), (ii) all reasonable out-of-pocket expenses incurred
                by the
                Lender in connection with the issuance, amendment, renewal or extension
                of
                any Letter of Credit or any demand for payment thereunder and (iii)
                all
                reasonable out-of-pocket expenses incurred by the Lender, including
                the
                fees, charges and disbursements of any counsel for the Lender in
                connection with the enforcement or protection of its rights in connection
                with this Agreement, including its rights under this Section, or
                in
                connection with the Loans made or Letters of Credit issued hereunder,
                including all such out-of-pocket expenses incurred during any workout,
                restructuring or negotiations in respect of such Loans or Letters
                of
                Credit.

              
              

              (b) The
                Borrower shall indemnify the Lender, and each Related Party of the
                Lender
                (each such Person being called an “Indemnitee”) against, and hold each
                Indemnitee harmless from, any and all losses, claims, damages, liabilities
                and related expenses, including the reasonable fees, charges and
                disbursements of any counsel for any Indemnitee, incurred by or asserted
                against any Indemnitee arising out of, in connection with, or as
                a result
                of (i) the execution or delivery of this Agreement or any agreement
                or instrument contemplated hereby, the performance by the parties
                hereto
                of their respective obligations hereunder or the consummation of
                the
                Transactions or any other transactions contemplated hereby, (ii) any
                Loan or Letter of Credit or the use of the proceeds therefrom (including
                any refusal by the Lender to honor a demand for payment under a Letter
                of
                Credit if the documents presented in connection with such demand
                do not
                strictly comply with the terms of such Letter of Credit), (iii) any
                actual or alleged presence or release of Hazardous Materials on or
                from
                any property owned or operated by the Borrower or any of its Subsidiaries,
                or any Environmental Liability related in any way to the Borrower
                or any
                of its Subsidiaries, or (iv) any actual or prospective claim, litigation,
                investigation or proceeding relating to any of the foregoing, whether
                based on contract, tort or any other theory and regardless of whether
                any
                Indemnitee is a party thereto; provided that such indemnity shall
                not, as
                to any Indemnitee, be available to the extent that such losses, claims,
                damages, liabilities or related expenses are deter­mined by a court of
                competent jurisdiction by final and nonappealable judgment to have
                resulted from the gross negligence or willful misconduct of such
                Indemnitee.

              
              

              (c) To
                the extent permitted by applicable law, the Borrower shall not assert,
                and
                hereby waives, any claim against any Indemnitee, on any theory of
                liability, for special, indirect, consequential or punitive damages
                (as
                opposed to direct or actual damages) arising out of, in connection
                with,
                or as a result of, this Agreement or any agreement or instrument
                contemplated hereby, the Transactions, any Loan or Letter of Credit
                or the
                use of the proceeds thereof.

              
              

              (d) All
                amounts due under this Section shall be payable promptly after written
                demand therefor.

              
              

               

              SECTION
                8.04. Successors
                and Assigns.

              
              

              (a) The
                provisions of this Agreement shall be binding upon and inure to the
                benefit of the parties hereto and their respective successors and
                assigns
                permitted hereby (including any Affiliate of the Lender that issues
                any
                Letter of Credit), except that (i) the Borrower may not assign or
                otherwise transfer any of its rights or obligations hereunder without
                the
                prior written consent of the Lender (and any attempted assignment
                or
                transfer by the Borrower without such consent shall be null and void)
                and
                (ii) the Lender may assign or otherwise transfer its rights or obligations
                hereunder except in accordance with this Section.  Nothing in
                this Agreement, expressed or implied, shall be construed to confer
                upon
                any Person (other than the parties hereto, their respective successors
                and
                assigns permitted hereby (including any Affiliate of the Lender that
                issues any Letter of Credit), Participants (to the extent provided
                in
                paragraph (c) of this Section ) and, to the extent expressly
                contemplated hereby, the Related Parties of the Lender) any legal
                or
                equitable right, remedy or claim under or by reason of this
                Agreement.

              
              

              (b) (i)  Subject
                to the conditions set forth in paragraph (b)(ii) below, the Lender
                may
                assign to one or more assignees all or a portion of its rights and
                obligations under this Agreement (including all or a portion of its
                Commitment and the Loans at the time owing to it) with the prior
                written
                consent (such consent not to be unreasonably withheld) of the Borrower,
                provided that no consent of the
                Borrower shall be required for an assignment to the Lender, an Affiliate
                of the Lender, an Approved Fund or, if an Event of Default has occurred
                and is continuing, any other assignee;

              
              

              (ii)  Assignments
                shall be subject to the following additional conditions:

              
              

              (A)  except
                in the
                case of an assignment to the Lender or an Affiliate of the Lender
                or an
                assignment of the entire remaining amount of the assigning Lender’s
                Commitment or Loans of any Class, the amount of the Commitment or
                Loans of
                the Lender subject to each such assignment shall not be less than
                $5,000,000 unless each of the Borrower and the Lender otherwise consent,
                provided that no such consent of the
                Borrower shall be required if an Event of Default has occurred and
                is
                continuing; and

              
              

              (B)  each
                partial
                assignment shall be made as an assignment of a proportionate part
                of all
                the assigning Lender’s rights and obligations under this Agreement, provided that this clause shall not
be
                construed to prohibit the
                assignment of a proportionate part of all the assigning Lender’s rights
                and obligations in respect of one Class of Commitments or
                Loans;

              
              

              For
                the purposes of this Section
                8.04(b), the term “Approved Fund” has
                the following meaning:

              
              

              “Approved
                Fund” means any Person (other than
                a natural person) that is engaged in making, purchasing, holding
                or
                investing in bank loans and similar extensions of credit in the ordinary
                course of its business and that is administered or managed by (a)
                the
                Lender, (b) an Affiliate of the Lender or (c) an entity or an Affiliate
                of
                an entity that administers or manages the Lender.

              
              

              (iii)  From
                and after
                the effective date specified in each Assignment and Assumption the
                assignee thereunder shall be a party hereto and, to the extent of
                the
                interest assigned by such Assignment and Assumption, have the rights
                and
                obligations of the Lender under this Agreement, and the assigning
                Lender
                thereunder shall, to the extent of the interest assigned by such
                Assignment and Assumption, be released from its obliga­tions under
                this Agreement (and, in the case of an Assignment and Assumption
                covering
                all of the assigning Lender’s rights and obligations under this Agreement,
                the Lender shall cease to be a party hereto but shall continue to
                be
                entitled to the benefits of Sections 2.12, 2.13, 2.14 and
                8.03).  Any assignment or transfer by the Lender of rights or
                obligations under this Agreement that does not comply with this Section
                8.04 shall be treated for purposes of this Agreement as a sale by
                the
                Lender of a participation in such rights and obligations in accordance
                with paragraph (c) of this Section.

              
              

              (c) (i)  The
                Lender may, without the consent of the Borrower, sell participations
                to
                one or more banks or other entities (a “Participant”) in all or a portion of the
                Lender’s rights and obligations under this Agreement (including all or a
                portion of its Commitment and the Loans owing to it); provided that (A) the Lender’s
                obligations under this Agreement shall remain unchanged, (B) the
                Lender shall remain solely responsible to the Borrower for the performance
                of such obligations and (C) the Borrower shall continue to deal
                solely and directly with the Lender in connection with the Lender’s rights
                and obligations under this Agreement.  Any agreement or
                instrument pursuant to which a Lender sells such a participation
                shall
                provide that the Lender shall retain the sole right to enforce this
                Agreement and to approve any amendment, modification or waiver of
                any
                provision of this Agreement; provided
                that such agreement or instrument may provide that the Lender will
                not,
                without the consent of the Participant, agree to any amendment,
                modification or waiver described in the first proviso to Section
                8.02(b)
                that affects such Participant.  Subject to paragraph (c)(ii) of
                this Section, the Borrower agrees that each Participant shall be
                entitled
                to the benefits of Sections 2.12, 2.13 and 2.14 to the same extent
                as if
                it were a Lender and had acquired its interest by assignment pursuant
                to
                paragraph (b) of this Section.  To the extent permitted by law,
                each Participant also shall be entitled to the benefits of
                Section 8.08 as though it were a Lender.

              
              

              (ii)  A
                Participant
                shall not be entitled to receive any greater payment under Section
                2.12 or
                2.14 than the applicable Lender would have been entitled to receive
                with
                respect to the participation sold to such Participant, unless the
                sale of
                the participation to such Participant is made with the Borrower’s prior
                written consent.  A Participant that would be a Foreign Lender
                if it were a Lender shall not be entitled to the benefits of
                Section 2.14 unless the Borrower is notified of the participation
                sold to such Participant.

              
              

              (d) The
                Lender may at any time pledge or assign a security interest in all
                or any
                portion of its rights under this Agreement to secure obligations
                of the
                Lender, including without limitation any pledge or assignment to
                secure
                obligations to a Federal Reserve Bank, and this Section shall not
                apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment
                of a security interest shall release the Lender from any of its
                obligations hereunder or substitute any such pledgee or assignee
                for the
                Lender as a party hereto.

              
              

               

              SECTION
                8.05. Survival.  All
                covenants,
                agreements, representations and warranties made by the Borrower herein
                and
                in the certificates or other instru­ments delivered in connection with
                or pursuant to this Agreement shall be considered to have been relied
                upon
                by the Lender and shall survive the execution and delivery of this
                Agreement and the making of any Loans and issuance of any Letters
                of
                Credit, regardless of any investigation made by any such other party
                or on
                its behalf and notwithstanding that the Lender may have had notice
                or
                knowledge of any Default or incorrect representation or warranty
                at the
                time any credit is extended hereunder (except to the extent provided
                pursuant to Sections 5.01 and 5.02 hereof or such notice was provided
                in
                writing to the Lender and, if applicable, clearly states that it
                is a
                notice of Default), and shall continue in full force and effect as
                long as
                the principal of or any accrued interest on any Loan or any fee or
                any
                other amount payable under this Agreement is outstand­ing and unpaid
                or any Letter of Credit is outstanding and so long as the Commitments
                have
                not expired or terminated.  The provisions of Sections 2.12,
                2.13, 2.14 and 8.03 shall survive and remain in full force and effect
                regardless of the consummation of the transactions contemplated hereby,
                the repayment of the Loans, the expiration or termination of the
                Letters
                of Credit and the Commitments or the termination of this Agreement
                or any
                provision hereof.

              
              

               

              SECTION
                8.06. Counterparts;
                Integration;
                Effectiveness.  This Agreement may be executed in
                counterparts, each of which shall constitute an original, but all
                of which
                when taken together shall constitute a single contract.  This
                Agreement and any separate letter agreements with respect to fees
                payable
                to the Lender constitute the entire contract among the parties relating
                to
                the subject matter hereof and supersede any and all previous agreements
                and understandings, oral or written, relating to the subject matter
                hereof.  Except as provided in Section 4.01, this Agreement
                shall become effective when it shall have been executed by the Lender
                and
                when the Lender shall have received counterparts hereof which, when
                taken
                together, bear the signature of the Borrower and thereafter shall
                be
                binding upon and inure to the benefit of the parties hereto and their
                respective successors and assigns.  Delivery of an executed
                counterpart of a signature page of this Agreement by telecopy shall
                be
                effective as delivery of a manually executed counterpart of this
                Agreement.

              
              

               

              SECTION
                8.07. Severability.  Any
                provision of
                this Agreement held to be invalid, illegal or unenforceable in any
                jurisdiction shall, as to such jurisdiction, be ineffective to the
                extent
                of such invalidity, illegality or unenforceability without affecting
                the
                validity, legality and enforceability of the remaining provisions
                hereof;
                and the invalidity of a particular provision in a particular jurisdiction
                shall not invalidate such provision in any other
                jurisdiction.

              
              

               

              SECTION
                8.08. Right
                of Setoff.  If an Event of
                Default shall have occurred and be continuing, the Lender and each
                of its
                Affiliates is hereby authorized at any time and from time to time,
                to the
                fullest extent permitted by law, to set off (a “Right of Setoff”) and
                apply any and all deposits (general or special, time or demand,
                provisional or final) at any time held and other obligations at any
                time
                owing by the Lender or Affiliate to or for the credit or the account
                of
                the Borrower against any of and all the obligations of the Borrower
                now or
                hereafter existing under this Agreement held by the Lender, irrespective
                of whether or not the Lender shall have made any demand under this
                Agreement and although such obligations may be unmatured; provided,
                however, that the Right of Setoff contained herein shall not apply
                to any
                deposits, collateral, or other amounts at any time held by, and other
                obligations at any time owing by the Borrower to or for the credit
                or the
                account of, the Lender or any of its Affiliates relating to any Power
                Transaction by, between or through the Borrower and the Lender and
                any of
                its Affiliates.  The rights of the Lender under this
                Section are in addition to other rights and remedies (including other
                rights of setoff) which the Lender may have.

              
              

               

              SECTION
                8.09. Governing
                Law; Jurisdiction; Consent to Service of
                Process.

              
              

              (a) This
                Agreement shall be construed in accordance with and governed by the
                law of
                the State of Vermont.

              
              

              (b) The
                Borrower hereby irrevocably and unconditionally submits, for itself
                and
                its property, to the nonexclusive jurisdiction of the courts of the
                State
                of Vermont sitting in Chittenden County and of the United States
                District
                Court  sitting in the State of Vermont, and any appellate court
                from any thereof, in any action or proceeding arising out of or relating
                to this Agreement, or for recognition or enforcement of any judgment,
                and
                each of the parties hereto hereby irrevocably and unconditionally
                agrees
                that all claims in respect of any such action or proceeding may be
                heard
                and determined in such Vermont state court or, to the extent permitted
                by
                law, in such Federal court.  Each of the parties hereto agrees
                that a final judgment in any such action or proceeding shall be conclusive
                and may be enforced in other jurisdictions by suit on the judgment
                or in
                any other manner provided by law.  Nothing in this Agreement
                shall affect any right that the Lender may otherwise have to bring
                any
                action or proceeding relating to this Agreement against the Borrower
                or
                its proper­ties in the courts of any jurisdiction.

              
              

              (c) The
                Borrower hereby irrevocably and unconditionally waives, to the fullest
                extent it may legally and effectively do so, any objection which
                it may
                now or here­after have to the laying of venue of any suit, action or
                proceeding arising out of or relating to this Agreement in any court
                referred to in paragraph (b) of this Section.  Each of the
                parties hereto hereby irrevocably waives, to the fullest extent permitted
                by law, the defense of an inconvenient forum to the maintenance of
                such
                action or proceeding in any such court.

              
              

              (d) Each
                party to this Agreement irrevocably consents to service of process
                in the
                manner provided for notices in Section 8.01.  Nothing in
                this Agreement will affect the right of any party to this Agreement
                to
                serve process in any other manner permitted by law.

              
              

               

              SECTION
                8.10. WAIVER
                OF JURY TRIAL.  EACH PARTY
                HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
                LAW,
                ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
                DIRECTLY
                OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
                TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT
                OR ANY
                OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO
                REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
                EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT
                OF
                LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
                THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO
                THIS
                AGREE­MENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
                CERTIFICATIONS IN THIS SECTION.

              
              

               

              SECTION
                8.11. Headings.  Article
                and
                Section headings and the Table of Contents used herein are for
                convenience of reference only, are not part of this Agreement and
                shall
                not affect the construction of, or be taken into consideration in
                interpreting, this Agreement.

              
              

               

              SECTION
                8.12. Confidentiality.  The
                Lender
                agrees to maintain the confidentiality of the Information (as defined
                below), except that Information may be disclosed (a) to its and its
                Affiliates’ directors, officers, employees and agents, including
                accountants, legal counsel and other advisors (it being understood
                that
                the Persons to whom such disclosure is made will be informed of the
                confidential nature of such Information and instructed to keep such
                Information confidential), (b) to the extent requested by any
                regulatory authority, (c) to the extent required by applicable laws
                or regulations or by any subpoena or similar legal process, (d) to
                any
                other party to this Agreement, (e) in connection with the exercise
                of any
                remedies hereunder or any suit, action or proceeding relating to
                this
                Agreement or the enforcement of rights hereunder, (f) subject to
                an
                agreement containing provisions substantially the same as those of
                this
                Section, to (i) any assignee of or Participant in, or any prospective
                assignee of or Participant in, any of its rights or obligations under
                this
                Agreement or (ii) any actual or prospective counterparty (or its
                advisors)
                to any swap or derivative transaction relating to the Borrower and
                its
                obligations, (g) with the consent of the Borrower or (h) to the
                extent such Information (i) becomes publicly available other than as
                a result of a breach of this Section or (ii) becomes available
                to the Lender on a nonconfidential basis from a source other than
                the
                Borrower.  For the purposes of this Section, “Information” means all information received
                from the Borrower relating to the Borrower or its business, other
                than any
                such information that is available to the Lender on a nonconfidential
                basis prior to disclosure by the Borrower; provided that, in the case of information
                received from the Borrower after the date hereof, such information
                is
                clearly identified at the time of delivery as confidential.  Any
                Person required to maintain the confidentiality of Information as
                provided
                in this Section shall be considered to have complied with its
                obligation to do so if such Person has exercised the same degree
                of care
                to maintain the confidentiality of such Information as such Person
                would
                accord to its own confidential information.

              
              

               

              SECTION
                8.13. Interest
                Rate
                Limitation.  Notwithstanding anything herein to the
                contrary, if at any time the interest rate applicable to any Loan,
                together with all fees, charges and other amounts which are treated
                as
                interest on such Loan under appli­cable law (collectively the “Charges”), shall exceed the maximum
                lawful
                rate (the “Maximum Rate”) which may
                be contracted for, charged, taken, received or reserved by the Lender
                in
                accordance with applicable law, the rate of interest payable in respect
                of
                such Loan hereunder, together with all Charges payable in respect
                thereof,
                shall be limited to the Maximum Rate and, to the extent lawful, the
                interest and Charges that would have been payable in respect of such
                Loan
                but were not payable as a result of the operation of this
                Section shall be cumulated and the interest and Charges payable to
                the Lender in respect of other Loans or periods shall be increased
                (but
                not above the Maximum Rate therefor) until such cumulated amount,
                together
                with interest thereon at the Federal Funds Effective Rate to the
                date of
                repayment, shall have been received by the Lender.

              
              

               

              SECTION
                8.14. USA
                Patriot Act.  The Lender
                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 the
                Lender to identify the Borrower in accordance with the Act.

               

              
              

              [Signature
                Page Follows]

            


    

    


    
      	
              IN
                WITNESS WHEREOF, the parties
                hereto have caused this Agreement to be duly executed by their respective
                authorized officers as of the day and year first above
                written.

              
              

              Central
                Vermont Public Service Corporation

              
              

              
              

              By:    /s/
                Pamela J.
                Keefe                                                     

              Name:  Pamela
                J.
                Keefe

              Title:    Vice
                President, Chief Financial Officer and

                           Treasurer

              
              

              
              

              keybank
                national association

              
              

              
              

              By:    /s/
                Tony
                Martin                                                            

              Name:  Tony
                Martin

              Title:    Senior
                Vice President

            


    

    


    
      	
              SCHEDULE
                3.04(d)

              
              

              Guaranteed
                Indebtedness

               

              
              

              
              

              
              

              Indebtedness
                Guaranteed by the
                Borrower:

               

              
              

              1. Guaranty
                dated March 1, 2002 between CV &
                Citizens Bank of Massachusetts

              CV
                guarantees all of East Barnet's obligations due under the Letter
                of Credit
                and Reimbursement Agreement also dated March 1, 2002.  CVPS
                issued First Mortgage Bonds ("Pledge Bonds") as further security
                for these
                same obligations due (see Pledge and Security Agreement dated March
                1,
                2002 between East Barnet and Citizens Bank of Massachusetts).

               

              
              

              2. Loan
                Agreement dated December 1, 1983 among VIDA,
                East Barnet & CV

              CV
                guarantees all of East Barnet's obligations due under this Loan Agreement,
                primarily payment of interest & principal on the East Barnet Revenue
                Bonds, as well as remarketing, Trustee, paying agent, indexing agent
                and
                registrar fees.

              
              

              
              

              
              

               

              Indebtedness
                Guaranteed by C.V. Realty,
                Inc.:

               

              
              

              1. Credit
                Agreement dated 10-21-05 between CVPS and
                JPMorgan Chase Bank, N.A.

              C.V.
                Realty guarantees all of CV’s obligations under this $25 million credit
                facility.  Credit facility will terminate effective December 31,
                2007.

              
              

               

              Indebtedness
                Guaranteed by Catamount Resources
                Corporation:

              
              

              None,
                directly.  A wholly owned subsidiary of Catamount Resources has
                guaranteed:

               

              
              

              1.  Master
                Lease Agreement between SmartEnergy Water
                Heating Services and BankNorth Leasing Corp (formerly People’s Heritage
                Leasing Corp) Eversant guarantees all SEWH’s obligations under any
                leases outstanding under the master lease.

               

              
              

              
              

              
              

              SCHEDULE
                3.06

              
              

              Disclosed
                Matters

               

              
              

              
              

              Other
                than those matters disclosed in:

               

              
              

              The
                Borrower’s Form 10-K for the year ended December 31, 2006;

               

              
              

              The
                Borrower’s Form 10-Q for the period ended September 30, 2007;
                and

               

              
              

              The
                Borrower’s Form 8-K’s dated November 2, 2007, November 29, 2007 and
                December 19, 2007.

               

              
              

              None.

               

              
              

              
              

              
              

              SCHEDULE
                6.01(b)

              
              

              Existing
                Indebtedness

               

              
              

              
              

              Borrower,
                as of December 28,
                2007:

              First
                Mortgage Bonds, Series
                JJ                                                                                                           
                $15,000,000

              First
                Mortgage Bonds, Series
                NN                                                                                                             
                3,000,000

              First
                Mortgage Bonds, Series
                OO                                                                                                            17,500,000

              First
                Mortgage Bonds, Series PP (1)                                                                                                           5,133,562

              First
                Mortgage Bonds, Series QQ (1)                                                                                                          5,788,750

              First
                Mortgage Bonds, Series RR (1)                                                                                                           6,015,275

              First
                Mortgage Bonds, Series
                SS                                                                                                              20,000,000

              First
                Mortgage Bonds, Series
                TT                                                                                                              55,000,000

                                               
                  $127,437,587

              
              

               

              New
                Hampshire Industrial Development Authority (NHIDA) Revenue

              Bonds                      
                                                                                                                                      
                  5,450,000

               

              Connecticut
                Development Authority (CDA) Revenue
                Bonds                                                                5,000,000

                                                     
                $10,450,000

              
              

               

              Capital
                lease
                Obligations                                                                                                                         
                    $6,837,000

              
              

               

              Letter
                of Credit in support of NHIDA Revenue Bonds
                (2)                                                                       
                $5,736,125

              Letter
                of Credit in support of CDA Revenue Bonds
                (2)                                                                            $5,133,562

              
              

              
              

               

              (1)
                Issued as security for Letters of Credit, which support revenue
                bonds.  As such, not reflected as debt on Borrower's financial
                statements, in accordance with GAAP.

              (2)
                Issued as security for revenue bonds.  As such, not reflected as
                debt on Borrower's financial statements, in accordance with
                GAAP.

              
              

              
              

              
              

              Regulated
                Subsidiaries, as of December 28,
                2007:

              
              

              Vermont
                Industrial Development Authority (VIDA) Revenue
                Bonds                                                   $
                5,800,000

              
              

               

              Letter
                of Credit in support of VIDA Revenue Bonds
                (2)                                                                           
                $ 6,015,275

               

              
              

              
              

              (2)
                Issued as security for revenue bonds, and guaranteed by
                CVPS.  As such, not reflected as debt on Borrower's financial
                statements, in accordance with GAAP.

               

              
              

              
              

              
              

              
              

              SCHEDULE
                6.02

              
              

              Existing
                Liens

               

              1. Pledge
                Agreement between VIDA & East
                Barnet - provides for the pledge of East Barnet's rights to rental
                and
                other payment, under the Lease Agreement, to VIDA

               

              2. Pledge
                and Security Agreement securing
                payment of obligations due under the LOC and Reimbursement Agreements
                with
                Citizens Bank of Massachusetts, and assigns to Citizens Bank rights
                to
                receive tendered bonds:

               

              (a)
                between East Barnet &
                Citizens Bank for VIDA Bonds;

              (b)
                between CVPS & Citizens
                Bank for NHIDA Bonds; and

              (c)
                between CVPS & Citizens
                Bank for CDA Bonds.

               

              3.
                Liens on property or assets of the Borrower to secure Power Transactions
                in the ordinary course of business.

              
              

               

              4.
                Capital Leases as defined in “Liens”:

               

                 Support
                Agreements for Phase I/II Hydro-Quebec transmission interconnection
                facilities: relates to CVPS participation in the facilities; CVPS
                is
                obligated to pay its 5.132 percent share of Phase II Hydro-Quebec
                capital
                costs over a 25-year recovery period ending in 2015.  These
                agreements meet the capital lease accounting requirements under SFAS
                No.
                13, Accounting for
                Leases.

              
              

               

                
Capital
                Lease for
                mainframe computer under master lease between CV and ComSource dated
                5-14-99.  Only one lease schedule dated 12-8-05 is currently
                active.  This master lease 

                  meets
                the capital lease accounting requirements under SFAS No. 13, Accounting for
                Leases.

               

              
              

              Capital
                Leases for certain
                copiers.  Five individual financing leases are currently
                active.  These leases meet the capital lease accounting
                requirements under SFAS No. 13, Accounting for
                Leases.

               

              
              

              5.  Attachments:

               

              
              

              Summary
                of Rutland City, Vermont, Land Records Lien Search for Borrower and
                Guarantors (4 pages)

               

              
              

              First
                Mortgage Indenture as recorded in Rutland City, Vermont, Land Records
                (3
                pages)

               

              
              

              Summary
                of Vermont Secretary of State UCC Search for Borrower and Guarantors
                (4
                pages)

               

              
              

              First
                Mortgage Indenture Schedule of Towns in which Indenture is recorded
                (3
                pages)

              
              

            
	
              CENTRAL
                VERMONT PUBLIC SERVICE CORPORATION

              SUMMARY
                OF RUTLAND CITY LAND RECORDS

              as
                of December 26, 2007

            


    

    


    
      	
              Book/Page

            	
              GRANTOR

            	
              GRANTEE

            	
              DOCUMENT

            	
              DOR1

            	
              DATED

            	
              DATE
                OF RECORD

            	
              COMMENTS

            
	
              291/154

            	
              F.W.
                Webb Company

            	
              CVPS

            	
              Notice
                of Material Men’s Lien.
                2

            	
              No

            	
              5/11/90

            	
              5/15/90

            	
              Not
                perfected.

            
	
              295/553

            	
              FEDCO
                Tank & Equipment vs.

            	
              CVPS

            	
              Order
                for Approval of Attachment.2

            	
              No

            	
              7/10/90

            	
              7/13/90

            	 
	
              295/552

            	
              FEDCO
                Tank & Equipment vs.

            	
              CVPS

            	
              Writ
                of Attachment

            	
              No

            	
              7/12/90

            	
              7/13/90

            	 
	
              293/278

            	
              FEDCO
                Tank & Equipment

            	
              CVPS

            	
              Notice
                of Contractor’s Lien $7,759.87

            	
              No

            	
              4/13/90

            	
              4/16/90

            	 
	
              291/266

            	
              North
                Country Mech. Insulators, Inc.

            	
              CVPS

            	
              Notice
                of Mechanic’s Lien $734.00.
                2

            	
              No

            	
              1/16/90

            	
              1/18/90

            	
              Not
                perfected

            
	
              297/427

            	
              Sheet
                Metal Specialists

            	
              CVPS

            	
              Order
                of Dismissal

            	 	
              9/11/90

            	
              9/17/90

            	 
	
              293/35

            	
              Sheet
                Metal Specialists

            	
              CVPS

            	
              Writ
                of Attachment

            	
              YES

            	
              3/28/90

            	
              3/28/90

            	 
	
              292/587

            	
              Sheet
                Metal Specialists

            	
              CVPS

            	
              Notice
                of Lien

            	
              YES

            	
              1/17/90

            	
              1/18/90

            	 
	
              299/254

            	
              Control
                Technologies, Inc.

            	
              CVPS

            	
              Discharge
                of Attachment

            	 	
              11/21/90

            	
              11/28/90

            	 
	
              294/58

            	
              Control
                Technologies

            	
              CVPS

            	
              Order

            	
              YES

            	
              5/4/90

            	
              5/10/90

            	 
	
              291/777

            	
              Control
                Technologies

            	
              CVPS

            	
              Notice
                of Mechanic’s Lien

            	
              Yes

            	
              2/12/90

            	
              2/13/90

            	 
	
              379/418

            	
              CVPS

            	
              Toronto
                Dominion

            	
              Mortgage

            	
              Yes

            	
              10/5/98

            	
              10/9/98

            	 
	
              370/597

            	
              Toronto
                Dominion

            	
              CVPS

            	
              Discharge
                of Mortgage

            	 	
              7/23/99

            	
              7/30/99

            	 
	 	 	 	 	 	 	 	 
	
              357/331

            	
              City
                of Rutland vs.

            	
              CVPS

            	
              Judgment
                Order

            	 	
              8/22/96

            	
              9/11/96

            	
              Voluntary
                Condemnation

            
	
              390/598

            	
              CVPS

            	
              Bank
                of NY

            	
              2nd
                Mtg.

            	
              YES

            	
              7/15/99

            	
              7/30/99

            	 
	
              390/599

            	
              CVPS

            	
              Bank
                of NY

            	
              1st
                Supp to 2nd
                Mtg.

            	
              YES

            	
              7/15/99

            	
              7/30/99

            	 
	
              395/373

            	
              CVPS

            	
              Bank
                of NY

            	
              2nd
                Supp to 2nd
                Mtg.

            	
              Yes

            	
              12/1/99

            	
              12/14/99

            	 
	
              395/511

            	
              CVPS

            	
              Bank
                of NY

            	
              Duplicate
                recording of 2nd
                Supp to 2nd
                Mtg.

            	 	
              12/1/99

            	
              12/20/99

            	 
	
              492/008

            	
              Bank
                of NY

            	
              CVPS

            	
              Discharge
                of Mortgages

            	 	
              9/16/04

            	
              9/27/04

            	 
	
              Various

            	
              CVPS

            	 	
              Supplemental
                Indentures3

            	 	 	 	 


    

    


    
      	
              1
                Discharged of Record

              2
                A
                review of CVPS’ records showed no outstanding monies owed to F.W. Webb,
                Inc., FEDCO Tank & Equipment, Inc. or North County Mech. Insulators,
                Inc.  These liens were associated with a project under the
                management of a general contractor, and it is believed that it was
                the
                general contractor, and not CVPS, that failed to pay
                subcontractors.  We believe that all issues have since been
                resolved.  In fact, F. W. Webb and FEDCO are current suppliers
                of CVPS, and invoices to CVPS do not show any overdue
                balances.

              3
                See attached printout of the indenture recordings filed in the Rutland
                City Land Records.

            


    

    


    
      	
              487682A

               

              
              

              
              

              
                [CONFORMED
                  COPY]

                 

              

              
              

              
              

              CENTRAL
                VERMONT PUBLIC SERVICE CORPORATION

               

              
              

              
              

              FORTY-FOURTH
                SUPPLEMENTAL INDENTURE

               

              
              

              
              

              Dated
                as of June 15, 2004

               

              
              

              
              

              Amending
                and Restating the

              Central
                Vermont Public Service Corporation Indenture of Mortgage

               

              Dated
                as of October 1, 1929

               

              
              

              
                
                

              

              
              

              
              

              RECORDING
                INFORMATION

              
              

                  Rutland
                City      Town Clerk's Office - Received
                this Supplemental Indenture for record on the    19    day
                of    July   ,
                2004, at    3:00   
                o'clock,   P  .M., and filed the
                bound copy as Book    487    in
                accordance with T 24 V.S.A., Section 1155, and cross-indexed in the
                Land
                Records in Book    487    at
                Page    682A   .

               

              
              

              
              

              Attest:
                  /s/ Susan A.
                Clark                    

            


    

    


    
      	
              488329A

               

              
              

              
              

              
                [CONFORMED
                  COPY]

                 

              

              
              

              
              

              CENTRAL
                VERMONT PUBLIC SERVICE CORPORATION

               

              
              

              
              

              FORTY-FIFTH
                SUPPLEMENTAL INDENTURE

               

              
              

              
              

              Dated
                as of July 15, 2004

               

              
              

              
              

              Amending
                and Supplementing the

              Central
                Vermont Public Service Corporation Indenture of Mortgage

               

              
              

              Dated
                as of October 1, 1929

               

              
              

              
                
                

              

              
              

              
              

              
              

              CITY
                OF RUTLAND, RECEIVED FOR RECORD

              Date
                7/28/04   TIME 3:00

              BOOK
                488   PAGE 329A

              /s/
                Susan A. Clark Asst. Clerk

              Pd
                CVPS

            


    

    


     

    
      	
              
              

              Rutland City

            	 	
              
              

              The
                Original Mortgage has also
                been recorded as provided in Section 3951 of the General Laws of
                Vermont
                as amended by Laws of Vermont (1929) No. 52 by filing copies thereof
                with
                the Clerk's Office on October 28, 1929.

            
	
              
              

              TOWN

            	
              
              

              COUNTY

            	
              
              

              STATE

            	
              
              

              DATE

            	
              
              

              YEAR
                RECORDED

            	
              
              

              BOOK

            	
              
              

              PAGE

            	
              
              

              INDENTURE
                #

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              8/29

            	
              
              

              1929

            	
              
              

              51A

            	 	
              
              

              0

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              8/27

            	
              
              

              1936

            	
              
              

              61

            	
              
              

              41

            	
              
              

              1

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              12/13

            	
              
              

              1943

            	
              
              

              72

            	
              
              

              315

            	
              
              

              2

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              1/8

            	
              
              

              1944

            	
              
              

              72

            	
              
              

              316

            	
              
              

              3

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              5/24

            	
              
              

              1944

            	
              
              

              72

            	
              
              

              380

            	
              
              

              4

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              4/24

            	
              
              

              1945

            	
              
              

              73A

            	
              
              

              211

            	
              
              

              5

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              9/29

            	
              
              

              1947

            	
              
              

              84

            	
              
              

              7

            	
              
              

              6

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              8/9

            	
              
              

              1948

            	
              
              

              84

            	
              
              

              319-328

            	
              
              

              7

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              5/8

            	
              
              

              1950

            	
              
              

              87

            	
              
              

              231

            	
              
              

              8

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              8/2

            	
              
              

              1951

            	
              
              

              92

            	
              
              

              133

            	
              
              

              9

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              5/22

            	
              
              

              1952

            	
              
              

              92

            	
              
              

              345

            	
              
              

              10

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              7/24

            	
              
              

              1953

            	
              
              

              95

            	
              
              

              193

            	
              
              

              11

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              9/23

            	
              
              

              1953

            	
              
              

              95

            	
              
              

              226

            	
              
              

              12

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              6/24

            	
              
              

              1954

            	
              
              

              95

            	
              
              

              404

            	
              
              

              13

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              4/9

            	
              
              

              1957

            	
              
              

              103

            	
              
              

              356

            	
              
              

              15

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              3/18

            	
              
              

              1960

            	
              
              

              112

            	
              
              

              259

            	
              
              

              16

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              3/5

            	
              
              

              1962

            	
              
              

              119

            	
              
              

              231

            	
              
              

              17

            
	
              
              

              Wednesday,
                December 26,
                2007

            	
              
              

              Page
                1 of
                3

            
	
              
              

              TOWN

            	
              
              

              COUNTY

            	
              
              

              STATE

            	
              
              

              DATE

            	
              
              

              YEAR
                RECORDED

            	
              
              

              BOOK

            	
              
              

              PAGE

            	
              
              

              INDENTURE
                #

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              3/6

            	
              
              

              1964

            	
              
              

              113

            	
              
              

              491

            	
              
              

              18

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              3/1

            	
              
              

              1965

            	
              
              

              127

            	
              
              

              202

            	
              
              

              19

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              12/27

            	
              
              

              1966

            	
              
              

              136

            	
              
              

              78

            	
              
              

              20

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              12/22

            	
              
              

              1967

            	
              
              

              140

            	
              
              

              256A

            	
              
              

              22

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              7/1

            	
              
              

              1969

            	
              
              

              148

            	
              
              

              96A

            	
              
              

              23

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              12/15

            	
              
              

              1969

            	
              
              

              150

            	
              
              

              170A

            	
              
              

              24

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              5/28

            	
              
              

              1971

            	
              
              

              156

            	
              
              

              660

            	
              
              

              25

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              4/26

            	
              
              

              1973

            	
              
              

              167

            	
              
              

              416

            	
              
              

              26

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              4/30

            	
              
              

              1975

            	
              
              

              178

            	
              
              

              285

            	
              
              

              27

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              8/5

            	
              
              

              1977

            	
              
              

              194

            	
              
              

              138

            	
              
              

              29

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              10/12

            	
              
              

              1978

            	
              
              

              203

            	
              
              

              42

            	
              
              

              30

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              9/27

            	
              
              

              1979

            	
              
              

              209

            	
              
              

              8

            	
              
              

              31

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              6/11

            	
              
              

              1981

            	
              
              

              220-W

            	
              
              

              1-35

            	
              
              

              32

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              8/31

            	
              
              

              1983

            	
              
              

              232

            	
              
              

              131

            	
              
              

              33

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              1/31

            	
              
              

              1985

            	
              
              

              242

            	
              
              

              633

            	
              
              

              34

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              12/15

            	
              
              

              1989

            	
              
              

              290

            	
              
              

              569

            	
              
              

              35

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              12/13

            	
              
              

              1990

            	
              
              

              299

            	
              
              

              473

            	
              
              

              36

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              12/12

            	
              
              

              1991

            	
              
              

              308

            	
              
              

              307

            	
              
              

              37

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              12/14

            	
              
              

              1993

            	
              
              

              331

            	
              
              

              732

            	
              
              

              38

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              2/24

            	
              
              

              1998

            	
              
              

              371

            	
              
              

              193

            	
              
              

              39

            
	
              
              

              Wednesday,
                December 26,
                2007

            	
              
              

              Page
                2 of
                3

            
	
              
              

              TOWN

            	
              
              

              COUNTY

            	
              
              

              STATE

            	
              
              

              DATE

            	
              
              

              YEAR
                RECORDED

            	
              
              

              BOOK

            	
              
              

              PAGE

            	
              
              

              INDENTURE
                #

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              6/12

            	
              
              

              1998

            	
              
              

              374

            	
              
              

              758

            	
              
              

              40

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              7/30

            	
              
              

              1999

            	
              
              

              390

            	
              
              

              596

            	
              
              

              41

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              8/2

            	
              
              

              2001

            	
              
              

              417

            	
              
              

              465A

            	
              
              

              42

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              8/5

            	
              
              

              2003

            	
              
              

              464

            	
              
              

              A

            	
              
              

              43

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              7/28

            	
              
              

              2004

            	
              
              

              488

            	
              
              

              329A

            	
              
              

              45

            
	
              
              

              Rutland City

            	
              
              

              RUTLAND

            	
              
              

              Vermont

            	
              
              

              7/19

            	
              
              

              2004

            	
              
              

              487

            	
              
              

              682A

            	
              
              

              44

            
	
              
              

              Wednesday,
                December 26,
                2007

            	
              
              

              Page
                3 of
                3

            


    

    


    
      	
              Central
                Vermont Public Service Corporation

              UCC
                Search Results as of December 26, 2007

              
              

            
	
              UCC
                #

            	
              Date

            	
              Secured
                Party

            	
              Collateral/Comments

            
	
              07-211835

            	
              8/29/07

            	
              Citizens
                Bank

            	
              Letters
                of Credit d. 3/1/02

            
	
              07-211826

            	
              8/29/07

            	
              Citizens
                Bank

            	
              Letters
                of Credit d. 3/1/02

            
	
              07-211825

            	
              8/29/07

            	
              Citizens
                Bank

            	
              Letters
                of Credit d. 8/1/02

            
	
              07-205051

            	
              1/4/07

            	
              US
                Bancorp

            	
              Equip.
                Lease

            
	
              06-203585

            	
              11/1/06

            	
              US
                Bancorp

            	
              Equip.
                Lease

            
	
              06-198819

            	
              5/19/06

            	
              1st
                Bank of Highland Park

            	
              Equip.
                Lease

            
	
              06-197095

            	
              3/30/06

            	
              US
                Bancorp

            	
              Equip.
                Lease

            
	
              05-185428

            	
              2/11/05

            	
              Bankers
                Leasing Corp.

            	
              Vehicle/Equip.
                Lease

            
	
              04-179622

            	
              7/27/04

            	
              US
                National Bank

            	
              45th
                Supp. Indenture

            
	
              04-179407

            	
              7/20/04

            	
              US
                National Bank

            	
              44th
                Supp. Indenture

            
	
              04-172838

            	
              1/6/04

            	
              IBM
                Credit

            	
              Equip.
                Lease

            
	
              03-169714

            	
              9/25/03

            	
              State
                St./US Bank

            	
              43rd
                Supp. Indenture

            
	
              02-155211

            	
              8/1/02

            	
              Citizens
                Bank

            	
              Letters
                of Credit d. 8/1/02

            
	
              02-151296

            	
              9/15/03

            	
              CA
                Financial Services

            	
              TERMINATED

            
	
              02-150067

            	
              3/28/02

            	
              Citizens
                Bank

            	
              Letters
                of Credit d. 3/1/02

            
	
              01-141899

            	
              8/9/01

            	
              State
                St. Bank

            	
              42nd
                Supp. Indenture

            
	
              00-132590

            	
              12/01/00

            	
              IBM
                Credit

            	
              Equip.
                Lease

            
	
              99-118948

            	
              12/15/99

            	
              Bank
                of NY

            	
              TERMINATED

            
	
              99-113326

            	
              9/28/04

            	
              Bank
                of NY

            	
              TERMINATED

            
	
              98-99232

            	
              8/28/98

            	
              State
                St. Bank

            	
              40th
                Supp. Indenture

            
	
              98-99231

            	
              8/28/98

            	
              State
                St. Bank

            	
              39th
                Supp. Indenture

            
	
              95-59219

            	
              10/30/95

            	
              AR
                Sandri

            	
              Fuel
                Equip.

            
	
              95-54836

            	
              6/30/95

            	
              IBM
                Credit

            	
              Equip.
                Lease

            
	
              94-16256

            	
              1/14/94

            	
              IBM
                Credit

            	
              Equip.
                Lease

            
	
              93-37473

            	
              12/14/93

            	
              1st
                National Bank of Boston

            	
              38th
                Supp. Indenture

            
	
              93-31103

            	
              5/17/93

            	
              Toronto
                Dominion Bank

            	
              Collateral
                Oversize File

            
	
              93-27730

            	
              1/14/93

            	
              IBM
                Credit

            	
              Equip.
                Lease

            
	
              92-24646

            	
              9/25/92

            	
              Toronto
                Dominion Bank

            	
              Collateral
                Oversize File

            
	
              91-16873

            	
              12/11/91

            	
              1st
                National Bank of Boston

            	
              37th
                Supp. Indenture

            
	
              91-16256

            	
              11/14/91

            	
              IBM
                Credit

            	
              Equip.
                Lease

            
	
              90-07191

            	
              12/13/90

            	
              1st
                National Bank of Boston

            	
              36thSupp.
                Indenture

            
	
              89-96277

            	
              12/15/89

            	
              1st
                National Bank of Boston

            	
              35th
                Supp. Indenture

            
	
              89-94272

            	
              10/11/89

            	
              Capital
                Associates Inter.

            	
              Equip.
                Lease

            
	
              89-92710

            	
              8/25/89

            	
              Capital
                Associates Inter

            	
              Equip.
                Lease

            
	
              89-91759

            	
              7/31/89

            	
              Bankers
                Leasing Corp.

            	
              Vehicle/Equip.
                Lease

            
	
              89-91233

            	
              7/14/89

            	
              IBM
                Credit

            	
              Equip.
                Lease

            
	
              88-83105

            	
              11/30/88

            	
              1st
                National Bank of Boston

            	
              Accts
                Receivable

            
	
              88-83104

            	
              11/30/88

            	
              Bank
                Boston

            	
              Accts.
                Receivable

            
	
              85-31262

            	
              1/31/85

            	
              1st
                National Bank of Boston

            	
              Supp.
                Indenture

            
	
              84-24522

            	
              6/26/84

            	
              Pacific
                First Federal Savings

            	
              IBM
                Equipment

            
	
              83-18609

            	
              12/22/83

            	
              JPMorgan
                Chase

            	
              N/A
                – CVPS E. Barnet Hydro

            
	
              83-18574

            	
              12/21/83

            	
              Citi
                Bank

            	
              N/A
                – CVPS E. Barnet Hydro

            
	
              83-18572

            	
              12/21/83

            	
              Chemical
                Bank Corp.

            	
              N/A
                – CVPS E. Barnet Hydro

            
	
              83-15487

            	
              8/31/83

            	
              1st
                National Bank of Boston

            	
              Supp.
                Indenture

            
	
              81-30039

            	
              11/02/81

            	
              Chittenden
                Bank

            	
              N/A
                – CVPS E. Barnet Hydro

            
	
              81-26753

            	
              6/11/81

            	
              1st
                National Bank of Boston

            	
              Supp.
                Indenture

            
	
              79-14770

            	
              11/16/79

            	
              IBM
                Corp.

            	
              Equip.
                Lease

            
	
              79-13670

            	
              9/27/79

            	
              1st
                National Bank of Boston

            	
              Supp.
                Indenture

            
	
              79-12285

            	
              7/25/79

            	
              Irving
                Lease Corp.

            	
              Lease
                Equipment

            
	
              71-28603

            	
              10/29/71

            	
              Old
                Colony Trust

            	
              Supp.
                Indenture

            
	
              71-25594

            	
              5/27/71

            	
              1st
                National Bank of Boston

            	
              Supp.
                Indenture

            
	
              69-16486

            	
              12/15/69

            	
              Old
                Colony Trust

            	
              Supp.
                Indenture

            
	
              68-09922

            	
              10/14/68

            	
              Old
                Colony Trust

            	
              Supp.
                Indenture

            
	
              67-67675

            	
              1/17/67

            	
              Old
                Colony Trust

            	
              Supp.
                Indenture

            


    

    


    
      	
              Catamount
                Resources Corporation

              UCC
                Search Results as of December 26, 2007

              
              

              None.

               

              
              

              In
                New London County, State of Connecticut:

              Waterford

               

              In
                Hartford County, State of Connecticut:

              Berlin

               

              In
                Cumberland County, State of Maine:

              Yarmouth

            


    

     

    In
      Sullivan County, State of New Hampshire:

    
      	
              Charlestown

            	
              Cornish

            	
              Plainfield

            
	
              Claremont

            	
              Newport

            	
              Unity

            


    

     

    In
      Cheshire County, State of New Hampshire:

    
      	
              Chesterfield

            	
              Hinsdale

            


    

     

    In
      Grafton County, State of New Hampshire:

    
      	
              Bath

            	
              Lyman

            	
              Orford

            
	
              Haverhill

            	
              Lyme

            	
              Piermont

            


    

     

    In
      Washington County, State of New York:

    
      	
              Granville

            	
              Hampton

            


    

     

    In
      Rensselaer County, State of New York:

    Hoosick

     

    In
      Addison County, State of Vermont:

    
      	
              Addison

            	
              Leicester

            	
              Ripton

            
	
              Bridport

            	
              Lincoln

            	
              Salisbury

            
	
              Bristol

            	
              Middlebury

            	
              Shoreham

            
	
              Cornwall

            	
              Monkton

            	
              Starksboro

            
	
              Ferrisburg

            	
              New
                Haven

            	
              Vergennes

            
	
              Goshen

            	
              Orwell

            	
              Weybridge

            
	
              Granville

            	
              Panton

            	
              Whiting

            
	
              Hancock

            	 	 


    

     

    In
      Bennington County, State of Vermont:

    
      	
              Arlington

            	
              Manchester

            	
              Searsburg

            
	
              Bennington

            	
              Peru

            	
              Shaftsbury

            
	
              Dorset

            	
              Pownal

            	
              Sunderland

            
	
              Glastenbury

            	
              Rupert

            	
              Winhall

            
	
              Landgrove

            	
              Sandgate

            	
              Woodford

            


    

     

    In
      Caledonia County, State of Vermont:

    
      	
              Barnet

            	
              Lyndon

            	
              Walden

            
	
              Danville

            	
              Ryegate

            	
              Waterford

            
	
              Kirby

            	
              St.
                Johnsbury

            	
              Wheelock

            


    

     

    In
      Chittenden County, State of Vermont:

    
      	
              Buels
                Gore

            	
              Essex

            	
              Milton

            
	
              Burlington

            	
              Huntington

            	
              Underhill

            
	
              Colchester

            	
              Jericho

            	
              Westford

            


    

     

    In
      Essex
      County, State of Vermont:

    
      	
              Concord

            	
              Guildhall

            	
              Victory

            
	
              Granby

            	
              Lunenburg

            	 


    

     

    In
      Franklin County, State of Vermont:

    
      	
              Bakersfield

            	
              Fletcher

            	
              Richford

            
	
              Berkshire

            	
              Franklin

            	
              Sheldon

            
	
              Enosburg

            	
              Georgia

            	
              St.
                Albans City

            
	
              Fairfax

            	
              Highgate

            	
              St.
                Albans Town

            
	
              Fairfield

            	
              Montgomery

            	
              Swanton

            


    

     

    In
      Lamoille County, State of Vermont:

    
      	
              Belvidere

            	
              Eden

            	
              Johnson

            
	
              Cambridge

            	
              Hyde
                Park

            	 


    

     

    In
      Orange
      County, State of Vermont:

    
      	
              Bradford

            	
              Fairlee

            	
              Thetford

            
	
              Braintree

            	
              Newbury

            	
              Tunbridge

            
	
              Brookfield

            	
              Randolph

            	
              Vershire

            
	
              Chelsea

            	
              Strafford

            	
              West
                Fairlee

            


    

     

    In
      Orleans County, State of Vermont:

    
      	
              Lowell

            	
              Irasburg

            	 


    

     

    In
      Rutland County, State of Vermont:

    
      	
              Benson

            	
              Middletown
                Springs

            	
              Sherburne

            
	
              Brandon

            	
              Mt.
                Holly

            	
              Shrewsbury

            
	
              Castleton

            	
              Mt.
                Tabor

            	
              Sudbury

            
	
              Chittenden

            	
              Pawlet

            	
              Tinmouth

            
	
              Clarendon

            	
              Pittsfield

            	
              Wallingford

            
	
              Danby

            	
              Pittsford

            	
              Wells

            
	
              Fair
                Haven

            	
              Poultney

            	
              West
                Haven

            
	
              Hubbardton

            	
              Proctor

            	
              West
                Rutland

            
	
              Ira

            	
              Rutland
                City

            	 
	
              Mendon

            	
              Rutland
                Town

            	 


    

     

    In
      Washington County, State of Vermont:

    
      	
              Northfield

            	
              Roxbury

            	 


    

     

    In
      Windham County, State of Vermont:

    
      	
              Athens

            	
              Guilford

            	
              Stratton

            
	
              Brattleboro

            	
              Jamaica

            	
              Townshend

            
	
              Brookline

            	
              Londonderry

            	
              Vernon

            
	
              Dover

            	
              Marlboro

            	
              Wardsboro

            
	
              Dummerston

            	
              Newfane

            	
              Westminster

            
	
              Grafton

            	
              Rockingham

            	
              Windham

            


    

     

    In
      Windsor County, State of Vermont:

    
      	
              Andover

            	
              Hartland

            	
              Sharon

            
	
              Baltimore

            	
              Ludlow

            	
              Springfield

            
	
              Barnard

            	
              Norwich

            	
              Stockbridge

            
	
              Bethel

            	
              Plymouth

            	
              Weathersfield

            
	
              Bridgewater

            	
              Pomfret

            	
              Weston

            
	
              Cavendish

            	
              Reading

            	
              West
                Windsor

            
	
              Chester

            	
              Rochester

            	
              Windsor

            
	
              Hartford

            	
              Royalton

            	
              Woodstock

            


    

    


    
      	
              SCHEDULE
                6.08

               

              
              

              Existing
                Restrictions

               

              
              

              
              

              Vermont
                Statutes - 30 V.S.A.
                Section 108 (restricts short-term financing, long-term financing
                and any security interest absent regulatory approval)

               

              
              

              Connecticut
                Statutes – C.G.S. §
                16-43 (restricts short-term financing, long-term financing and
                any
                security interest absent regulatory approval; currently not applicable
                to
                CVPS under existing Conn. law)

               

              
              

              Central
                Vermont Public Service
                Corporation First Mortgage Indenture dated October 1, 1929, amended
                and restated June 15, 2004 in 44th
                Supplemental Indenture - see Section 5.10 and 5.11 attached as Exhibit
                1

               

              
              

              CVPSC
                - East Barnet Hydroelectric, Inc. VIDA Revenue Bonds

              Loan
                Agreement between VIDA, East Barnet
                & CV - see Section 5.08 attached as Exhibit 2

              Lease
                Agreement between CV & East
                Barnet - see Section 6.4 attached as Exhibit 3

              Pledge
                Agreement between VIDA & East
                Barnet - provides for the pledge of East Barnet's rights to rental
                and
                other payment, under the Lease Agreement, to VIDA

              LOC
                and Reimbursement Agreement between
                East Barnet & Citizens Bank of Massachusetts - see Section 6(d)
                attached as Exhibit 4

              Pledge
                and Security Agreement between East
                Barnet & Citizens Bank of Massachusetts - East Barnet pledges and
                assigns to Citizens Bank its rights to receive tendered
                bonds.  Secures payment of obligations due under the LOC and
                Reimbursement Agreement.

              Guarantee
                between CV & Citizens Bank of
                Massachusetts - CV guarantees all of East Barnet's obligations under
                the
                LOC and Reimbursement Agreement

               

              
              

              Central
                Vermont Public Service Corporation CDA Revenue Bonds

              Indenture
                of Trust between Connecticut
                Development Authority ("CDA") & Trustee - see Section 7.8 attached as
                Exhibit 5

              Loan
                Agreement between CDA & CV - see
                Section 4.9 attached as Exhibit 6

              LOC
                and Reimbursement Agreement between CV
                & Citizens Bank of Massachusetts - see Section 6(d) attached as
                Exhibit 7

              Pledge
                and Security Agreement between CV
                & Citizens Bank of Massachusetts - CV pledges and assigns to Citizens
                Bank its rights to receive tendered bonds.  Secures payment of
                obligations due under the Reimbursement Agreement.

               

              
              

              Central
                Vermont Public Service Corporation NHIDA Revenue Bonds

              LOC
                and Reimbursement Agreement between CV
                & Citizens Bank of Massachusetts - see Section 6(d) attached as
                Exhibit 8

              Pledge
                and Security Agreement between CV
                & Citizens Bank of Massachusetts - CV pledges and assigns to Citizens
                Bank its rights to receive tendered bonds.  Secures payment of
                obligations due under the Reimbursement Agreement.

               

              
              

              Vermont
                Public Service Board
                Rate Order in Docket No. 6460 (requires sharing of any profit above
                book value if CVPS sells some or all of its assets or merges with
                another
                company, up to a maximum sharing of $16 million)

               

              
              

              Vermont
                Electric Power Company
                ("VELCO") Stock Ownership Agreements - restricts lien on or
                transfer of CV's stock in VELCO

               

              
              

              Vermont
                Transco LLC (“Transco”)
                Operating Agreement– restricts lien on or transfer of CV’s equity
                Units in Transco

               

              
              

              Vermont
                Yankee Nuclear Power
                Corporation ("VYNPC") Stock Ownership Agreements - restricts lien
                on or transfer of CV's stock in VYNPC

              
              

              Credit
                Agreement dated 10-21-05 between CVPS and JPMorgan Chase Bank N.A.
                –  Sections 6.09, 6.10, 6.01 and 6.06 contain restrictions that
                will terminate effective 12-31-07.

            


    

    


    


    
      	
              EXHIBIT
                A

               

              
              

              PROMISSORY
                NOTE

               

              (Term
                Loans)

            


    

    


    
      	
              FOR
                VALUE RECEIVED,
                CENTRAL VERMONT
                PUBLIC
                SERVICE CORPORATION, a Vermont corporation, with its principal
                place of business in Rutland, Vermont (the “Borrower”), promises to pay to
                the order of KEYBANK
                NATIONAL ASSOCIATION (together with any successors or assigns, the
                “Bank”) at the office of the Bank, 149 Bank Street, P.O. Box 949,
                Burlington, Vermont 05402-0949, the principal amount of FIFTY-THREE
                MILLION DOLLARS ($53,000,000) or such amount thereof as may have
                been
                advanced to the Borrower as Term Loans under the Credit Agreement
                (defined
                below), together with interest on the unpaid balance and all other
                charges, as provided below.  This Note evidences Term Loans made
                under and pursuant to the Credit Agreement, dated as of December
                28, 2007,
                by and between the Borrower and the Bank (as the same may from time
                to
                time be amended, modified or restated, the “Credit
                Agreement”).  Capitalized terms used herein and not otherwise
                defined shall have the respective meanings given in the Credit
                Agreement.

               

              
              

               Commencing
                on the date
                hereof, interest shall accrue on the outstanding principal balance
                of this
                Note at the rate and in the manner forth in the Credit
                Agreement.  Accrued interest shall be due and payable on each
                Interest Payment Date and on the date the entire amount of this Note
                becomes due and payable in full (whether by acceleration or
                otherwise).

               

              
              

              If
                not sooner paid, the principal
                balance hereof, plus accrued interest and all other charges, shall
                be due
                and payable on the Maturity Date, or at any other time that the entire
                amount of this Note becomes due and payable in full (whether by
                acceleration or otherwise).

              
              

               

              Section
1.                      
                Payment
                Terms.

              
              

              1.1           
                Payments; Prepayments.  All
                payments hereunder shall be made by the Borrower to the Bank in United
                States cur­rency at the Bank’s address specified above (or at such
                other ad­dress as the Bank may specify), in immediately available
                funds, on or before 2:00 p.m. (New York City time) on the due date
                thereof.  Payments received by the Bank prior to the occurrence
                of an Event of Default (as defined in Section 2.1 below) will be
                applied
                first to fees, expenses and other
                amounts due hereunder (excluding principal and interest); second, to accrued interest; and
third
                to outstanding principal; after the
                occurrence of an Event of Default payments will be applied to the
                amounts
                outstanding under this Note as the Bank determines in its sole
                discretion.

               

              
              

              1.2           
                Prepayment. The Borrower may
                make prepayments of principal at any time without premium or penalty,
                subject however, to any requirements or provisions of any agreement,
                if
                any, for a derivative or interest rate swap, now or hereafter executed
                by
                and between Borrower and the Bank, with respect to this Note and
                subject
                to Section 2.13 of the Credit Agreement.

               

              
              

              1.3           
                Default Rate.  Principal
                and interest that is not paid when due shall bear interest at the
                rate set
                forth in Section 2.10(c) of the Credit Agreement.

               

              
              

              1.4           
                Late Payment Charge.  If a
                payment of principal or interest hereunder is not made within ten
                (10)
                days of its due date, the undersigned will pay on demand a late payment
                charge equal to 5% of the amount of such payment or $50.00, whichever
                is
                greater.  Nothing in the preceding sentence shall affect the
                Bank’s right to accelerate the maturity of this Note in the event of any
                default in the payment of this Note.

               

              
              

              1.5           
                Deposit Account.  The
                Borrower shall maintain with the Bank a commercial demand deposit
                account
                and maintain sufficient collected balances in the account to pay
                any
                amounts as they become due.

              
              

               

              Section
                2.                      
                Defaults and Remedies.

              
              

              2.1           
                Default.  The occurrence of
                any Event of Default under and as defined in the Credit Agreement
                shall
                constitute an “Event of Default” hereunder.

               

              
              

              2.2           
                Remedies.  Upon an Event of
                Default, or at any time thereafter, at the option of the Bank, all
                amounts
                outstanding hereunder shall become immediately due and payable without
                notice or demand.  All rights and remedies of the Bank are
                cumulative and are not exclusive of any rights or remedies provided
                by
                laws or any other agreement, and may be exercised separately or
                concurrently.

              
              

               

              Section
                3.                      
                Miscellaneous.

              
              

              3.1           
                Waiver; Amendment.  No
                delay or omission on the part of the Bank in exercising any right
                hereunder shall operate as a waiver of such right or of any other
                right
                under this Note.  No waiver of any right or amendment to this
                Note shall be effective unless in writing and signed by the Bank
                nor shall
                a waiver on one occasion be construed as a bar to a waiver of any
                such
                right on any future occasion.  Without limiting the generality
                of the foregoing, the acceptance by the Bank of any late payment
                shall not
                be deemed to be a waiver of the Event of Default aris­ing as a
                consequence thereof.  The Borrower waives presentment, demand,
                notice, protest and all other demands and notices in connection with
                the
                delivery, acceptance, performance, default or enforcement of this
                Note,
                and assents to any extensions or postponements of the time of payment
                or
                any and all other indulgences under this Note, or to any and all
                substitutions, exchanges or releases of any collateral securing this
                Note,
                or to any and all additions or releases of any other parties or persons
                primarily or secondarily liable under this Note, which from time
                to time
                be granted by the Bank in connection herewith regardless of the number
                or
                period of any extensions.

               

              
              

              3.2           
                Bank Records.  The entries
                on the records of the Bank (including any appearing on this Note)
                shall be
                prima facie evidence of the aggregate principal amount outstanding
                under
                this Note and interest accrued thereon.

               

              
              

              3.3           
                Governing Law; Consent to
                Jurisdiction.  This Note shall be governed by, and
                construed in accordance with, the laws of the State of
                Vermont.  The Borrower agrees that any suit for the enforcement
                of this Note may be brought in the courts of the State of Vermont
                or any
                federal court sitting in such state and consents to the non-exclusive
                jurisdiction of each such court and to service of process in any
                such suit
                being made upon the Borrower by mail at the address specified
                below.  The Borrower hereby waives any objection that it may now
                or hereafter have to the venue of any such suit or any such court
                or that
                such suit was brought in an inconvenient court.

               

              
              

              3.4           
                WAIVER OF JURY TRIAL.  THE
                BORROWER AND THE BANK, BY ITS ACCEPTANCE OF THIS NOTE, HEREBY WAIVE
                TRIAL
                BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION
                WITH, OR ARISING OUT OF: (A) THIS NOTE, CREDIT AGREEMENT OR ANY OTHER
                INSTRUMENT OR DOCUMENT DELIVERED IN CONNECTION HEREWITH OR THEREWITH;
                (B) THE VALIDITY, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF;
                OR (C) ANY OTHER CLAIM OR DISPUTE HOWEVER ARISING BETWEEN THE BORROWER
                AND
                THE BANK.

               

              
              

              3.5           
                Severability; Authorization to Complete;
                Paragraph Headings. If any provision of this Note shall be invalid,
                illegal or unenforceable, such provision shall be severable from
                the
                remainder of this Note and the validity, legality and enforceability
                of
                the remaining provisions shall not in any way be affected or impaired
                thereby.  The Bank is hereby authorized, without further notice,
                to fill in any blank spaces on this Note, and to date this Note as
                of the
                date funds are first advanced hereunder.  Paragraph headings are
                for the convenience of reference only and are not a part of this
                Note and
                shall not af­fect its interpretation.

               

              
              

              3.6           
                Certain References. All pronouns and
                any variations thereof shall be deemed to refer to the masculine,
                feminine, neuter, singular or plural, as the identity of the person,
                persons, entity or entities may require.  The terms “herein”,
                “hereof” or “hereunder” or similar terms used in this Note refer to this
                entire Note and not only to the particular provision in which the
                term is
                used.

            


    

    


    
      	 	
              BORROWER:

              
              

              
              

            
	 	
              Central
                Vermont Public Service Corporation

            
	 	 
	 	 
	
              ___________________________________

              Witness

            	
              By:_____________________________________

              Name:  Pamela
                J. Keefe

              Title:    Vice
                President, Chief Financial Officer and
                Treasurer

            


    

    


    
      	
              EXHIBIT
                A

               

              
              

              PROMISSORY
                NOTE

               

              (Revolving
                Loans)

            


    

    


    
      	
              FOR
                VALUE RECEIVED,
                CENTRAL VERMONT
                PUBLIC
                SERVICE CORPORATION, a Vermont corporation, with its principal
                place of business in Rutland, Vermont (the “Borrower”), promises to pay to
                the order of KEYBANK
                NATIONAL ASSOCIATION (together with any successors or assigns, the
                “Bank”) at the office of the Bank, 149 Bank Street, P.O. Box 949,
                Burlington, Vermont 05402-0949, the principal amount of TWENTY-FIVE
                MILLION DOLLARS ($25,000,000) or such amount thereof as may have
                been
                advanced to the Borrower as Revolving Loans under the Credit Agreement
                (defined below), together with interest on the unpaid balance and
                all
                other charges, as provided below.  This Note evidences the
                Revolving Loans made under and pursuant to the Credit Agreement,
                dated as
                of December 28, 2007, by and between the Borrower and the Bank (as
                the
                same may from time to time be amended, modified or restated, the
“Credit
                Agreement”).  Capitalized terms used herein and not otherwise
                defined shall have the respective meanings given in the Credit
                Agreement.

               

              
              

               Commencing
                on the date
                hereof, interest shall accrue on the outstanding principal balance
                of this
                Note at the rate and in the manner forth in the Credit
                Agreement.  Accrued interest shall be due and payable on each
                Interest Payment Date and on the date the entire amount of this Note
                becomes due and payable in full (whether by acceleration or
                otherwise).

               

              
              

              If
                not sooner paid, the principal
                balance hereof, plus accrued interest and all other charges, shall
                be due
                and payable on the Maturity Date, or at any other time that the entire
                amount of this Note becomes due and payable in full (whether by
                acceleration or otherwise).

               

              
              

              Section
1.                      
                Payment
                Terms.

              
              

              1.1           
                Payments; Prepayments.  All
                payments hereunder shall be made by the Borrower to the Bank in United
                States currency at the Bank’s address specified above (or at such other
                address as the Bank may specify), in immediately available funds,
                on or
                before 2:00 p.m. (New York City time) on the due date
                thereof.  Payments received by the Bank prior to the occurrence
                of an Event of Default (as defined in Section 2.1 below) will be
                applied
                first to fees, expenses and other
                amounts due hereunder (excluding principal and interest); second, to accrued interest; and
third
                to outstanding principal; after the
                occurrence of an Event of Default payments will be applied to the
                amounts
                outstanding under this Note as the Bank determines in its sole
                discretion.

               

              
              

              1.2           
                Prepayment.  The Borrower
                may make prepayments of principal at any time without premium or
                penalty,
                subject however, to any requirements or provisions of any agreement,
                if
                any, for a derivative or interest rate swap, now or hereafter executed
                by
                and between Borrower and the Bank, with respect to this Note and
                subject
                to Section 2.13 of the Credit Agreement.

               

              
              

              1.3           
                Default Rate.  Principal
                and interest that is not paid when due shall bear interest at the
                rate set
                forth in Section 2.10(c) of the Credit Agreement.

               

              
              

              1.4           
                Late Payment Charge.  If a
                payment of principal or interest hereunder is not made within ten
                (10)
                days of its due date, the undersigned will pay on demand a late payment
                charge equal to 5% of the amount of such payment or $50.00, whichever
                is
                greater.  Nothing in the preceding sentence shall affect the
                Bank’s right to accelerate the maturity of this Note in the event of any
                default in the payment of this Note.

               

              
              

              1.5           
                Deposit Account.  The
                Borrower shall maintain with the Bank a commercial demand deposit
                account
                and maintain sufficient collected balances in the account to pay
                any
                amounts as they become due.

               

              
              

              Section
                2.                      
                Defaults and Remedies.

              
              

              2.1           
                Default.  The occurrence of
                any Event of Default under and as defined in the Credit Agreement
                shall
                constitute an “Event of Default” hereunder.

               

              
              

              2.2           
                Remedies.  Upon an Event of
                Default, or at any time thereafter, at the option of the Bank, all
                amounts
                outstanding hereunder shall become immediately due and payable without
                notice or demand.  All rights and remedies of the Bank are
                cumulative and are not exclusive of any rights or remedies provided
                by
                laws or any other agreement, and may be exercised separately or
                concurrently.

               

              
              

              Section
                3.                      
                Miscellaneous.

              
              

              3.1           
                Waiver; Amendment.  No
                delay or omission on the part of the Bank in exercising any right
                hereunder shall operate as a waiver of such right or of any other
                right
                under this Note.  No waiver of any right or amendment to this
                Note shall be effective unless in writing and signed by the Bank
                nor shall
                a waiver on one occasion be construed as a bar to a waiver of any
                such
                right on any future occasion.  Without limiting the generality
                of the foregoing, the acceptance by the Bank of any late payment
                shall not
                be deemed to be a waiver of the Event of Default arising as a consequence
                thereof.  The Borrower waives presentment, demand, notice,
                protest and all other demands and notices in connection with the
                delivery,
                acceptance, performance, default or enforcement of this Note, and
                assents
                to any extensions or postponements of the time of payment or any
                and all
                other indulgences under this Note, or to any and all substitutions,
                exchanges or releases of any collateral securing this Note, or to
                any and
                all additions or releases of any other parties or persons primarily
                or
                secondarily liable under this Note, which from time to time be granted
                by
                the Bank in connection herewith regardless of the number or period
                of any
                extensions.

               

              
              

              3.2           
                Bank Records.  The entries
                on the records of the Bank (including any appearing on this Note)
                shall be
                prima facie evidence of the aggregate principal amount outstanding
                under
                this Note and interest accrued thereon.

               

              
              

              3.3           
                Governing Law; Consent to
                Jurisdiction.  This Note shall be governed by, and
                construed in accordance with, the laws of the State of
                Vermont.  The Borrower agrees that any suit for the enforcement
                of this Note may be brought in the courts of the State of Vermont
                or any
                federal court sitting in such state and consents to the non-exclusive
                jurisdiction of each such court and to service of process in any
                such suit
                being made upon the Borrower by mail at the address specified
                below.  The Borrower hereby waives any objection that it may now
                or hereafter have to the venue of any such suit or any such court
                or that
                such suit was brought in an inconvenient court.

               

              
              

              3.4           
                WAIVER OF JURY TRIAL.  THE
                BORROWER AND THE BANK, BY ITS ACCEPTANCE OF THIS NOTE, HEREBY WAIVE
                TRIAL
                BY JURY IN ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION
                WITH, OR ARISING OUT OF: (A) THIS NOTE, CREDIT AGREEMENT OR ANY OTHER
                INSTRUMENT OR DOCUMENT DELIVERED IN CONNECTION HEREWITH OR THEREWITH;
                (B) THE VALIDITY, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF;
                OR (C) ANY OTHER CLAIM OR DISPUTE HOWEVER ARISING BETWEEN THE BORROWER
                AND
                THE BANK.

               

              
              

              3.5           
                Severability; Authorization to Complete;
                Paragraph Headings. If any provision of this Note shall be invalid,
                illegal or unenforceable, such provision shall be severable from
                the
                remainder of this Note and the validity, legality and enfor­ceability
                of the remaining provisions shall not in any way be affected or impaired
                thereby.  The Bank is hereby authorized, without further notice,
                to fill in any blank spaces on this Note, and to date this Note as
                of the
                date funds are first advanced hereunder.  Paragraph headings are
                for the convenience of reference only and are not a part of this
                Note and
                shall not affect its interpretation.

               

              
              

              3.6           
                Certain References. All pronouns and
                any variations thereof shall be deemed to refer to the masculine,
                feminine, neuter, singular or plural, as the identity of the person,
                persons, entity or entities may require.  The terms “herein”,
                “hereof” or “hereunder” or similar terms used in this Note refer to this
                entire Note and not only to the particular provision in which the
                term is
                used.

            


    

    


    
      	 	
              BORROWER:

              
              

              
              

            
	 	
              Central
                Vermont Public Service Corporation

            
	 	 
	 	 
	
              ___________________________________

              Witness

            	
              By:_____________________________________

              Name:  Pamela
                J. Keefe

              Title:    Vice
                President, Chief Financial Officer and
                Treasurer

            


    

    


    
      	
              EXHIBIT
                B

               

              
              

              Form
                of Opinion of Borrower's Counsel

              
              

            
	
              Central
                Vermont Public Service Corporation

              Legal
                Department

              77
                Grove Street

              Rutland,
                Vermont  05701

               

              
              

              
              

              Kenneth
                C. Picton,
                Esq.                                                                                                                                          
                Phone: (802) 747-5372

              Assistant
                General Counsel Fax:  (802) 747-2189

               kpicton@cvps.com

              
              

              
              

               

              December
                28, 2007

              
              

               

              KeyBank
                National Association

              149
                Bank Street

              PO
                Box 949

              Burlington,
                VT 05402-0949

              
              

               

              Re:           
                Credit Agreement dated as of December 28, 2007 by and between Central
                VermontPublic Service Corporation and KeyBank National
                Association

              
              

               

              Ladies
                and Gentlemen:

               

              
              

              I
                am Assistant General Counsel to
                Central Vermont Public Service Corporation, a corporation organized
                and
                existing under the laws of the State of Vermont (the “Company” or the
                “Borrower”).  For all purposes relating to the transactions
                discussed herein, I am also Assistant General Counsel to C.V. Realty,
                Inc.
                (“CVR”), and Catamount Resources Corporation (“CRC”), each a corporation
                organized and existing under the laws of the State of Vermont, and
                each a
                wholly-owned subsidiary of the Company (CVR and CRC, each a “Guarantor”
                and, collectively, the “Guarantors”).

               

              
              

              In
                those capacities I am familiar
                with the matters relating to the preparation, execution and delivery
                of:
                (a) a Credit Agreement dated as of December 28, 2007 (as such Agreement
                may be supplemented or amended, the “Credit Agreement”), by and between
                the Borrower and KeyBank National Association (the “Lender”); (b) the
                $53,000,000 Promissory Note (Term Loans), dated December 28, 2007,
                executed by the Borrower in favor of the Lender (the “Term Note”); (c) the
                $25,000,000 Promissory Note (Revolving Loans), dated December 28,
                2007,
                executed by the Borrower in favor of the lender (the “Revolving Note”)(the
                Term Note and Revolving Note, collectively, the “Notes”);
                (d)  the Subsidiary Guaranty, dated December 28, 2007 by and
                between CVR and the Lender; (e) the Subsidiary Guaranty, dated December
                28, 2007, by and between CRC and the Lender (the documents described
                in
                (a) through (e) above, collectively, the “Loan Documents”).

               

              
              

              I
                have examined copies of the
                following instruments and documents: (i) the Articles of Association
                and
                By-laws of the Company and the Guarantors, respectively; (ii) the
                Loan
                Documents; (iii) the Resolutions, dated December 20-21, 2007, of
                the
                Company's Board of Directors and the Unanimous Consents, each dated
                December 27, 2007, of each of the Guarantor’s Board of Directors; (iv) the
                October 30, 2007, Order of the Vermont Public Service Board (“VPSB”) in
                Docket No. 7310; (v) the November 20, 2007, Order of the VPSB in
                Docket
                No. 7342; and (vi) the October 24, 2007 Blanket Authorization Letter
                Order
                of the Federal Energy Regulatory Commission.  I have also
                reviewed, and to the extent I have deemed appropriate relied upon,
                certificates of officers of the Company and the Guarantors or of
                government officials as to certain factual matters.  In
                addition, I have reviewed such other instruments and documents as
                I have
                deemed necessary or appropriate as the basis for the opinions hereinafter
                expressed, and I have conducted such other investigations of fact
                and law
                as I have considered appropriate.

               

              
              

              I
                am providing this opinion
                pursuant to and in accordance with Section 4.01(c) of the Credit
                Agreement.

               

              
              

              Based
                upon the foregoing I am of
                the opinion that:

               

              
              

              A.
                Each Borrower and Guarantor is a duly organized corporation, validly
                existing and in good standing under the laws of the State of Vermont
                and
                in each jurisdiction in which the conduct of its business requires
                registration.

               

              
              

              B.
                The execution, delivery and performance of the Credit Agreement and
                each
                of the Notes have been duly authorized by all necessary corporate
                action
                on the part of the Borrower.

               

              
              

              C.
                The execution, delivery and performance of the Credit Agreement,
                Term
                Note, Revolving Note is within the Borrower’s powers and does not
                contravene or constitute a breach or default of (i) any provision
                of the
                Borrower’s Articles of Incorporation or Bylaws, or (ii) any contract,
                indenture, instrument or document to which the Borrower is a party
                or to
                which it or any of its properties, both personal and real, are bound,
                or
                (iii) any law, rule, regulation, court order or order of any governmental
                agency.  The execution, delivery and performance of the
                Subsidiary Guaranty by each of the  Guarantors  is
                within each Guarantor’s powers and does not contravene or constitute a
                breach or default of (i) any provision of such  Guarantor’s
                Articles of Incorporation, or Bylaws, , or (ii) any contract, indenture,
                instrument or document to which the Guarantor is a party or to which
                it or
                any of its properties, both personal and real, are bound, or (iii)
                any
                law, rule, regulation, court order or order of any governmental
                agency.

               

              
              

              D.
                No consent, approval, authorization or order of, or filing, registration
                or qualification with, any governmental or regulatory authority,
                which has
                not been obtained, taken or made is required under any applicable
                law or
                under any judgment, order or decree of any court, arbitrator or
                governmental or regulatory authority for the execution and delivery
                of the
                Loan Documents or the performance of the Borrower's or the Guarantors’
                obligations thereunder.

               

              
              

              E.
                The Borrower has made all necessary filings, and received all necessary
                approvals, to collect the rates it charges under the tariffs currently
                in
                effect and to be in effect during the term of the Credit Agreement,
                and to
                make all payments under the Loan Documents with revenues collected
                pursuant to such filed rate tariffs.

               

              
              

              F.
                Each of the Credit Agreement, Term Note, Revolving Note has been
                duly
                authorized, executed and delivered by the Borrower, and constitutes
                the
                legal, valid and binding obligations of the Borrower, enforceable
                in
                accordance with their respective terms, except as enforceability
                may be
                limited by any applicable bankruptcy, insolvency, reorganization,
                moratorium or similar law affecting creditors' rights generally,
                or
                general principles of equity. Each Subsidiary Guaranty has been duly
                authorized, executed and delivered by the respective Guarantor, and
                constitutes the legal, valid and binding obligations of such Guarantor,
                enforceable in accordance with its respective terms, except as
                enforceability may be limited by any applicable bankruptcy, insolvency,
                reorganization, moratorium or similar law affecting creditors' rights
                generally, or general principles of equity.

               

              
              

              G.
                There is no pending or, to the best of my knowledge, threatened action
                or
                proceeding before any court, governmental agency or arbitrator against
                or
                affecting a Borrower or Guarantor which, if determined adversely
                to such
                Borrower or Guarantor, would materially and adversely affect its
                financial
                condition or its ability to perform its covenants and agreements
                under the
                Loan Documents.

               

              
              

              I
                express no opinion as to any
                question of law other than the law of the State of Vermont and the
                law of
                the United States of America.

               

              
              

              Sincerely,

               

              
              

              /s/
                Kenneth C. Picton

               

              
              

              Kenneth
                C. Picton

              KCP/k

            


    

    


    
      	
              EXHIBIT
                C

               

              
              

              Borrower's
                Investment Policy

            


    

    


    
      	
              CENTRAL
                VERMONT PUBLIC SERVICE CORPORATION

              AND
                SUBSIDIARIES

              
              

              
              

              
              

              
              

              
              

              INVESTMENT
                POLICY

              GUIDELINES

              
              

              
              

              Revised
                February, 2004

            


    

    


    
      	
              TABLE
                OF CONTENTS

              
              

              PAGE

              
              

              Goal                                                                3

              
              

              General
                Investment Guidelines                                                 
                3

              
              

              In-House
                Investment Guidelines                                               4
                - 5

              
              

              Professional
                Investment Management
                Guidelines                                                                                                        
                6

              
              

              Detail
                Sections:

              I. 
                Approved Short-Term Investment
                Options                                                       
                7

              II. Issuer
                Criteria                                      8

              III. 
                Investment Dealer
                Criteria                                                                                   9
                - 10

              IV. 
                Money Market Fund
                Criteria                                                                             11

              
              

              Appendix:

              A. 
                Market Background &
                Definitions                                                                    12
                - 13

              B. Security
                Descriptions                              14
                - 30

              U.S.
                Gov't and Gov't-backed Agency Securities

              U.S.
                Gov't and Agency Repurchase Agreements

              Agency/Gov't
                Securities (not backed by the U.S. Gov't)

              Bankers
                Acceptances

              Taxable
                Commercial Paper

              Tax-Exempt
                Commercial Paper

              Domestic
                Certificates of Deposit

              Tax-Exempt
                Floating Rate Notes & Bonds

              Municipal
                Bonds

              Auction
                Rate Securities

              Remarketed
                Preferred Stock

              Money
                Market Funds

              Corporate
                Bonds

              Mortgage-Backed
                Securities

              Collateralized
                Mortgage Obligations

              Asset-Backed
                Securities

              C. 
                Government & Agency Securities
                Guarantees                                                     31

              
              

              GOAL

              
              

              The
                goal of the Central Vermont Public Service Corporation ("Company",
                "CVPS")
                and Subsidiaries Investment Policy is to guide the investment of
                temporary
                excess funds which the Company and its subsidiaries may have from
                time to
                time in a way that will permit the Company and its subsidiaries to
                earn
                the maximum return on these funds consistent with the primary objectives
                of preservation of and liquidity of invested funds.

               

              
              

              GENERAL
                INVESTMENT GUIDELINES

              
              

              Funds
                required for short-term,
                working capital needs of CVPS and its subsidiaries will remain at
                CVPS and
                its subsidiaries and be invested in-house by CVPS personnel in accordance
                with In-House Investment Guidelines on pages 4 - 5.

               

              
              

              CVPS
                funds in excess of those
                needed for short-term, working capital needs will be sent to Custom
                Investment Corporation ("Custom") and invested by a professional
                investment manager in accordance with Professional Investment Management
                Guidelines on page 6.  (NOTE: Custom may, at any time, have
                minimal excess cash awaiting transfer to the professional investment
                manager.  This cash at Custom will also be invested in-house by
                CVPS personnel)

              
              

              IN-HOUSE
                INVESTMENT GUIDELINES

              
              

              1. CVPS
                short-term, working capital needs currently consist of the
                following:

              · $10
                million intra-month working capital swing (most typically $6 to $7
                million)

              · $5
                million potential ISO financial assurance needs

              · $5
                million to allow for forecast variability

              CVPS
                short-term, working capital needs will be updated annually to assure
                appropriate levels are maintained.

              
              

              Subsidiary
                working capital is that excess cash which has not been returned to
                the
                parent as a dividend or return of capital, or placed under professional
                management.

              
              

              2. Diversify
                maturities within a maximum maturity of three months, for those securities
                with specific maturity dates.

              
              

              3. Invest
                in individual securities as identified in Section I - Approved Short-Term
                Investment Options.

              
              

              4. Diversify
                issuers within approved investment criteria as identified in Section
                II -
                Issuer Criteria.

              
              

              5. Investments
                must be placed with approved investment dealers or banks meeting
                the
                criteria in Section III - Investment Dealer Criteria.

              
              

              6. Maximum
                investment of $2 million in any one security and/or issuer with the
                exception

              of
                direct investments in Government and Government-backed Agency securities
                and investments in money market funds as outlined in #7
                below.  If the Company's total excess cash, including
                investments under professional management, exceeds $25 million, then
                the
                maximum investment limit in any one security and/or issuer is raised
                to $5
                million.

              
              

              7. Maintain
                a liquid money market fund, with or without collateral backing, to
                allow
                for day-to-day liquidity. This fund must meet the criteria in Section
                IV -
                Money Market Fund Criteria and be placed with an approved dealer
                or bank
                meeting the criteria in Section III - Investment Dealer
                Criteria.  This account will generally not exceed $5 million,
                with the option to go to $10 million if there is a need for additional
                liquidity (i.e. reaching ISO Financial Assurance limits).

              
              

              8. All
                investments will be in taxable securities, except for the CVPS money
                market fund which may be invested in tax exempt securities.

              
              

              [Investing
                in tax-exempt
                funds while debt is outstanding could cause disallowance of interest
                expense deduction under Section 265(2) of the Internal Revenue
                Code.

              
              

              IRS
                deductions for interest expense in full is only allowed when the
                Company’s
                temporary cash investments in tax exempt funds do not exceed an amount
                needed to meet the business needs of the Company (working capital
                needs
                for CV is approximately $4 - $10 million per month.).

              
              

              Investment
                in tax-exempt obligations shall be presumed insubstantial only where
                during a taxable year the average amount of tax-exempt obligations
                (valued
                at their adjusted  basis) does not exceed 2% of the average
                adjusted tax basis of the portfolio investments and any assets held
                in the
                active conduct of trade or business. (2% of CV’s total adjusted assets at
                the end of September, 2003: $160 million = $3.2 million)]

               

              
              

              PROFESSIONAL
                INVESTMENT MANAGEMENT
                GUIDELINES

              
              

              
              

              1. Professional
                investment management must be placed with a firm meeting the criteria
                in
                Section III - Investment Dealer Criteria and with an investment philosophy
                consistent with the goal of this investment policy.

              
              

              2. Duration
                of the portfolio and maturities of the individual securities will
                be up to
                the discretion of the professional manager as long as the portfolio
                meets
                the liquidity needs of Custom.  CVPS will provide, at least
                quarterly and more often if necessary, a forecast of liquidity needs
                for
                use by the professional manager.

              
              

              3. Invest
                in individual securities as identified in Section I - Approved Short-Term
                Investment Options, or money market funds meeting the criteria in
                Section
                IV - Money Market Fund Criteria.  In no event are equity or
                derivative investments allowed.

              
              

              4. Employ
                diversification strategies in accordance with reasonable investment
                practices for size of portfolio.

              
              

              5. Individual
                securities must carry a bond or comparable credit rating of A or
                better.

              
              

              6. Overall
                portfolio must carry a weighted
                average bond or comparable credit rating of AA or
                better.

              
              

              7. All
                investments will be in taxable securities.

               

              
              

              Section
                I.  APPROVED SHORT-TERM
                INVESTMENT OPTIONS

              
              

              U.S.
                Government and Government-backed Agency Securities

              U.S.
                Government and Agency Repurchase Agreements

              Agency/Government
                Securities – not backed by the U.S. Government

              Bankers
                Acceptances

              Commercial
                Paper, Taxable or Tax-Exempt

              Domestic
                Certificates of Deposit

              Tax-Exempt
                Floating Rate Notes & Bonds

              Municipal
                Bonds, Taxable or Tax-Exempt

              Auction
                Rate Securities

              Remarketed
                Preferred Stock

              Money
                Market Funds

              Additional
                Investments Allowable for Funds under
                Professional Management:

              Corporate
                Bonds

              Mortgage-Backed
                Securities

              Collateralized
                Mortgage Obligations

              Asset-Backed
                Securities

               

              
              

              Section
                II.  ISSUER
                CRITERIA

              
              

              · U.S.
                Government or Federal Agency with full Government backing.

              
              

              · Other
                Federal Agencies with a rating of AA or AAA.

              
              

              · U.S.
                banks or U.S. banks that are subsidiaries of a foreign bank provided
                the
                bank is incorporated under U.S. law, registered with the SEC, and
                subject
                to all U.S. banking rules and regulations and is, thereby, protected
                against problems of the parent company/country.

              
              

              · Corporation
                carrying Aa or Aaa long-term debt rating and/or P-1 commercial paper
                rating from Moody’s or equivalent, or carries a letter of credit from a
                bank meeting same criteria.

              
              

              · Municipal
                or tax-exempt institution carrying Aa or Aaa long-term debt rating
                and/or
                P-1 commercial  paper rating and/or MIG-1 rating from Moody’s or
                equivalent, or carries a letter of credit from a bank meeting same
                criteria.

              
              

              · No
                known, anticipated or potential problems.

               

              
              

              Section
                III.  INVESTMENT DEALER
                CRITERIA

              
              

              Must
                be a primary or reporting dealer, investment/portfolio/money manager
                or
                advisor, broker-dealer or bank.

              
              

              Primary
                or reporting dealers, investment/portfolio/money managers or advisors,
                broker-dealers, and banks must all be registered with the Securities
                and
                Exchange Commission.  In addition, primary or reporting dealers
                must hold the designation given by the Federal Reserve Bank of New
                York
                (FRBNY) on behalf of the Federal Reserve Bank.  Any bank must be
                regulated by federal and state banking authorities.

              
              

              See
                lists of Approved Primary Dealers and Approved Investment Banks
                below.

               

              
              

              APPROVED
                PRIMARY DEALERS

              
              

              · ABN
                AMBRO Bank, N.V., New York Branch

              · BNP
                Paribas Securities Corp

              · Banc
                of America Securities LLC

              · Banc
                One Capital Markets, Inc.

              · Barclays
                Capital Inc

              · Bear,
                Stearns & Co., Inc.

              · CIBC
                World Markets, Inc.

              · Citigroup
                Global Markets, Inc.

              · Credit
                Suisse First Boston LLC

              · Daiwa
                Securities America Inc.

              · Deutsche
                Bank Securities Inc.

              · Dresdner
                Kleinwort Wasserstein Securities LLC.

              · Goldman,
                Sachs & Co.

              · Greenwich
                Capital Markets, Inc.

              · HSBC
                Securities (USA) Inc.

              · J.P.
                Morgan Securities, Inc.

              · Lehman
                Brothers Inc.

              · Merrill
                Lynch Government Securities Inc.

              · Mizuho
                Securities USA Inc.

              · Morgan
                Stanley & Co. Incorporated

              · Nomura
                Securities International, inc.

              · UBS
                Securities LLC.

               

              
              

              APPROVED
                INVESTMENT BANKS

              (not
                a complete list)

              
              

              · Alex
                Brown

              · Bankers
                Trust

              · Bank
                of Montreal

              · Brown,
                Brothers Harriman & C.

              · Burgan
                Bank (Kuwait)

              · BZW
                Investment Management Hong Kong Limited

              · CCF
                ( France)

              · CIBC
                Woody Gubdy

              · CS
                First Boston

              · First
                Chicago Capital Markets

              · Goldman
                Sachs

              · Gruntal
                & Co.

              · Hambrecht
                & Quist

              · IBP
                ( Sweden)

              · ING
                International

              · JP
                Morgan

              · Merrill
                Lynch

              · Montgomery
                Securities

              · Morgan
                Stanley

              · Nesbitt
                Burns ( Canada)

              · Nikko
                Securities

              · NRI
                ( Indonesia)

              · OCBC
                ( Thailand )

              · Paine
                Webber

              · Pipper
                Jaffray

              · Robertson
                Stephens

              · Royal
                Bank of Canada

              · Salomon
                Brothers

              · Scotia
                Mcleod ( Canada )

              · Toronto
                Dominion

              · Wertheim
                Schroder

              
              

               

              Section
                IV.  MONEY MARKET FUND
                CRITERIA

              
              

              1. Filed
                with Securities and Exchange Commission.

              
              

              2. Meet
                this Company’s goal of liquidity and preservation of
                principal.

              
              

              3. Daily
                liquidity unit value must always be at $1.00.

              
              

              4. Portfolio
                must have high quality instruments with a weighted average rating
                of AA
                equivalent or better.

               

              
              

              Appendix
                A

              MARKET
                BACKGROUND &
                DEFINITIONS

            


    

     

    
      	
              FEDERAL
                RESERVE SYSTEM

              
              

            
	
              12
                Federal Reserve Banks Conduct

              Monetary
                Operations through

              
              

            
	
              FEDERAL
                RESERVE BANK OF NEW YORK

              Serves
                as Agent for Federal Open Market Committee

              
              

            
	
              FEDERAL
                OPEN MARKET COMMITTEE

              7
                Federal Reserve Governors

              President
                of FEDERAL BANK OF NEW YORK

              4
                Rotating President from 11 Federal Reserve Banks

              
              

            


    

    


    
      	
              The
                Federal Reserve banks conduct domestic and foreign monetary operations
                through the Federal Reserve Bank of New York as agent for the Federal
                Open
                Market Committee.

              
              

              Defined
                Terms:

               

              Dealer
–
An
                institution
                that owns and offers securities.

               

              
              

              Broker
–
Does
                not own
                securities but simply acts to bring buyer and seller together on
                behalf of
                investment dealers for the payment of commission.

               

              
              

              Broker-Dealer
–
Any
                person or institution, other than a bank, engaged in business of
                buying or
                selling securities on it own behalf or for others.

               

              Investment
                Manager -
                Individual who manages a portfolio investment.

               

              
              

              Money
                Market Fund - an
                open-ended Mutual Fund that invests in short-term securities such
                as
                commercial paper, bankers acceptances, repurchase agreements, government
                securities, certificates of deposit, and other highly liquid and
                safe
                securities that pay money market rates of interest.  The fund's
                net asset value stays constant at $1.00 per share, only the interest
                changes.

               

              
              

              Mutual
                Fund - a type of
                regulated investment company that raises money from shareholders
                and
                invests in a diversified portfolio such as stocks, bonds, options,
                futures, currencies, or money market securities. Mutual funds raise
                money
                by selling shares of the fund.  The price of a share will
                fluctuate daily depending on the performance of the securities held
                by the
                fund.

               

              
              

              Portfolio
                Manager -
                Person responsible for the investment of a mutual fund's assets,
                implementing its investment strategy, and managing the day-to-day
                portfolio trading.

               

              
              

              Primary
                or Reporting Dealer –
                Banks and securities brokerages that trade in U.S. Government
                Securities with the Federal Reserve System or report to the Securities
                and
                Exchange Commission.

               

              
              

              Appendix
                B

               

              
              

              U.S.
                GOVERNMENT AND GOVERNMENT-BACKED AGENCY
                SECURITIES

              
              

              1. Treasury
                bills (T-bills) are issued in book-form by the Federal Government
                for a
                price less that their par (face) value, and when they mature are
                paid at
                their par values.  Treasury notes and bonds are government
                securities that pay a fixed interest rate every six months until
                the
                securities mature, which is when you will be paid their par
                value.  T-bills, notes and bonds may be purchased directly from
                the US Government, a Federal Reserve Bank, a financial institution,
                or a
                government securities broker or dealer.

              
              

              2. T-bills,
                notes and bonds are securities guaranteed directly by the US Government.
                The only government backed agency issuing securities is the Government
                National Mortgage Association (GNMA).

              
              

              3. Generally,
                trade in multiples of $5,000, although multiples of $1,000 is
                possible.

              
              

              4. T-bills
                are issued with a maturity of one year or less.  Notes are
                issued for up to 10 years and bonds are generally issued with maturities
                of over 10 years.  Agency security maturities also range from
                short-term to long-term.

              
              

              5. T-bills
                are issued at a discount, and interest is paid at
                maturity.  Notes, bonds and agency securities are issued in
                interest bearing form.  Interest on notes, bonds and agency
                securities is generally paid semi-annually.

              
              

              6. A
                very active secondary market exists for sales prior to
                maturity.

              
              

              7. Exempt
                from state and local income taxes.

              
              

              8. Safest
                investments available in the short-term market due to government
                backing.

              
              

              See
                Appendix C:   Government & Agency Securities
                Guarantees

              
              

               

              Appendix
                B

               

              
              

              U.S.
                GOVERNMENT AND AGENCY REPURCHASE AGREEMENTS
                (REPOS)

              
              

              1. The
                purchase of U.S. Treasury and Federal Agency securities from a bank’s or
                dealer’s portfolio with the agreement by the bank or dealer to repurchase
                the same securities at the same price, plus a stipulated rate of
                interest,
                on a specific future date.

              
              

              2. Backed
                by the credit-worthiness of the issuing bank or dealer and, ultimately,
                the guarantee of the U.S. Government and/or issuing agency.

              
              

              3.
                Minimum denomination varies.

              
              

              4. Issued
                for both short-term (including overnight) and long-term maturities,
                and
                interest is paid at maturity.  Open repos are available whereby
                the bank or dealer has the right of collateral substitution and the
                maturity date is at the discretion of the investor.

              
              

              5. Generally
                issued in interest-bearing form.

              
              

              6. Generally
                cannot be redeemed prior to maturity.

              
              

               

              Appendix
                B

               

              
              

              AGENCY/GOVERNMENT
                SECURITIES

              (not
                government backed)

              
              

              Agency
                securities are issued by U.S. Government-Sponsored Entities (GSEs)
                and
                federally related institutions. GSEs currently issuing securities
                comprise
                of privately owned, publicly chartered entities created to reduce
                borrowing costs for certain sectors of the economy, such as farmers,
                homeowners, and students.

              
              

              1. These
                instruments are available from 5 to 360 days.

              
              

              2. Available
                as new issues and in the secondary market through securities dealers
                and
                banks.

              
              

              3. Can
                be purchased in quantities of $25,000, at original issue and in additional
                increments of $5,000 thereafter.

              
              

              4. High
                credit quality.

              
              

              
              

              See
                Appendix C:    Government & Agency Securities
                Guarantees

              
              

               

              Appendix
                B

               

              
              

              BANKERS’
ACCEPTANCE
                ("BA")

              
              

              1. A
                time draft used in both domestic and international trade issued at
                a
                specified rate for a defined period of time.  Usually results
                from a short-term contractual obligation of a business to pay for
                merchandise received on a specific date.

              
              

              2. Backed
                by credit worthiness of “accepting” bank, and further secured by
                collateral of goods shipped.  In the event of default by the
                drawer or endorser, the bank would honor the BA at its
                maturity.

              
              

              3.
                Minimum denomination varies with bank.

              
              

              4.
                Generally issued for 270 days or less.

              
              

              5.
                Generally issued at a discount. Interest paid at maturity.

              
              

              6.
                Limited secondary market exists for sales prior to maturity.

              
              

               

              Appendix
                B

               

              
              

              TAXABLE
                COMMERCIAL PAPER

              
              

              1. Unsecured
                short-term promissory notes of major corporations issued at a specified
                rate for a defined period of time.

              
              

              2.
                Backed only by credit worthiness of issuer.

              
              

              3.
                Minimum denomination varies.

              
              

              4.
                Generally issued for 1 to 270 days.

              
              

              5.
                Generally issued at a discount. Interest paid at maturity.

              
              

              6.
                Cannot be redeemed prior to maturity.

              
              

               

              Appendix
                B

               

              
              

              TAX-EXEMPT
                COMMERCIAL PAPER

              
              

              1. Promissory
                notes issued by states, cities, towns, counties or other political
                or
                organizational sub-division having a tax-exempt status.  They
                are issued at a specified rate for a defined period of time.

              
              

              2.
                Backed by the credit worthiness of issuer, although this paper often
                carries a letter of credit.

              
              

              3.
                Generally trades in multiples of $50,000.

              
              

              4.
                Generally issued for 1 to 120 days, with a maximum maturity of 365
                days.

              
              

              5.
                Generally issued in interest bearing form. Interest is paid at
                maturity.

              
              

              6.
                Cannot be sold prior to maturity.

              
              

               

              Appendix
                B

               

              
              

              DOMESTIC
                CERTIFICATES OF DEPOSIT
                ("CD")

              
              

              1. Certificates
                issued by banks against funds deposited earning a specified rate
                of
                interest for a defined period of time.

              
              

              2.
                Backed by the credit worthiness of the issuing bank.

              
              

              3.
                Generally requires minimum denominations of $100,000.

              
              

              4.
                Generally issued for 14 days to several years.

              
              

              5.
                Issued in interest-bearing form. Interest paid at maturity.

              
              

              6.
                Limited secondary market exists for sales prior to maturity.

              
              

               

              Appendix
                B

               

              
              

              TAX-EXEMPT,
                FLOATING RATE NOTES & PUT
                BONDS

              
              

              1. Securities
                issued by states, cities, towns, counties or other political or
                organizational subdivision having a tax-exempt status.  They are
                issued at specified rates of interest, sometimes subject to change
                on a
                periodic basis to reflect current market conditions.  Theyalso
                have specified maturity dates, although some can be redeemed on demand
                of
                the investor or at periodic intervals with prior notice (usually
                7 days to
                one month).

              
              

              2. Backed
                by the credit worthiness of the obligor organization, although these
                securities often carry irrevocable letters of credit.

              
              

              3. Issued
                in interest bearing form.  Interest may be paid at maturity or
                on a periodic basis.

              
              

              4. Existence
                of letters of credit or floating rate characteristic limits risk
                of loss
                of principal.

              
              

               

              Appendix
                B

               

              
              

              MUNICIPAL
                BONDS

              
              

              1. Securities
                issued by state or local governments as Private Purpose Bonds used
                for
                such projects as sports, trade, and convention facilities and large
                issue
                (over $1 million) Industrial Development Bonds.

              
              

              2. Backed
                by credit worthiness of obligator organization, often are insured
                by AMBAC
                Financial or other insurance companies whose primary business is issuing
                Municipal Bonds.

              
              

              3. Issued
                in interest bearing form. Interest may be paid at maturity or on
                a
                periodic basis.

              
              

              
              

               

              Appendix
                B

               

              
              

              AUCTION
                RATE SECURITIES

              
              

              Securities
                issued by corporations through a Dutch Auction*.  Following are
                three types of auction-rate securities:

               

              
              

              TAX
                FREE PREFERRED STOCK

              
              

              1. Tax
                free preferred stock, issued at par.

              
              

              2. Alternative
                to short-term municipal securities

              
              

              3. Tax
                free due to the funds' underlying municipal investments

              
              

              4. Market
                sets the dividend rate which resets every 7 or 28 days through a
                Dutch
                Auction and is paid at end of each holding period.

              
              

              5. To
                maintain AAA rating, the fund must have asset coverage of at least
                200% as
                of the last business day of each month.  These guidelines are
                established by Moody's and Standard & Poor's.

              
              

              6. Issued
                in minimum denominations of $50,000, $100,000 or $500,000.

               

              
              

              SELECT
                AUCTION VARIABLE RATE SECURITIES
                ("SAVRS")

              
              

              1. Tax
                exempt variable rate municipal notes and bonds

              
              

              2. Market
                sets the dividend rate which resets every 35 days through a Dutch
                Auction
                and is paid at end of each holding period.

              
              

              3. SAVRS
                issuers normally obtain credit enhancement in the form of a Surety
                Bond
                provided by one of the primary municipal credit insurance providers
                (AMBAC, CGIC, FGIC, FSA, MBIA). As a result, the insurance provider
                is
                able to transfer its AAA/Aaa credit rating to the insured
                issue.

              
              

              4. Issued
                in denominations of $100,000 per bond.

               

              
              

              MONEY
                MARKET NOTES ("MMNs")

              
              

              1. Taxable
                debt securities with a variable interest rate.

              
              

              2. Reset
                typically every 35 days through the Dutch Auction process.  If
                all the outstanding MMNs are subject to Hold Orders, the interest
                rate for
                the next period will be 100% of the applicable Composite Commercial
                Paper
                Rate.  If insufficient bids are received at Auction, the rate
                will be set at the Maximum Rate which varies between 110% and 200%
                of one
                month LIBOR, depending on the credit rating of the issuer on the
                day
                before each Auction.

              
              

              3. Compares
                well with commercial paper in terms of safety and liquidity while
                offering
                investors the additional benefit of a yield premium over commercial
                paper.

              
              

              4. Issued
                in minimum denominations of $100,000 or $500,000 per bond.

               

              
              

              
              

              *Dutch
                Auction - Potential buyers submit bids specifying the number of shares
                desired and the yield the investor is willing to accept.  A
                buyer will not receive shares at a lower yield than the submitted
                bid, but
                may receive a higher yield than the bid, since the entire issue is
                reset
                at the same rate in the auction process.  Current holders of
                stock have the following alternatives in a re-auction:

               

              
              

              Alternative                      
                Result

              Hold                      
                Hold regardless of new rate

              Bid                                
                Hold if rate is at least equal to a specified rate

              Sell                                
                Sell regardless of new rate.

               

              
              

              The
                lowest bid level submitted by existing and potential investors which
                satisfies the number of shares available becomes the rate for the
                next
                period for all investors.  In the event of an incomplete auction
                (more sellers than buyers) the rate is automatically set at the issue’s
                maximum applicable rate, a designated percentage of either the “AA”
                Composite Commercial Paper Rate or the 30 day London Interbank Offering
                Rate (LIBOR).

              
              

               

              Appendix
                B

               

              REMARKETED
                PREFERRED (“RP”)
                STOCK

              
              

              
              

              1. Preferred
                stock issued with a floating dividend rate.

              
              

              2. Depending
                on the type, the credit ratings can be based on the following issuer’s
                credit worthiness and reflect the issuers:

              
              

              Stand
                Alone RP has credit ratings which are
                based on the issuer’s credit worthiness and reflect the issuer’s
                outstanding preferred stock ratings.

              
              

              Credit
                Supported RP offers additional
                support of a letter of credit from a highly rated major financial
                institution which investors can look to in the event the issuer is
                unable
                to fund dividend or redemption payments on the shares.  Ratings
                on Credit Supported RP reflect the
                stronger ability of the supporting financial institution to meet
                all
                payments.

              
              

              Structured
                RP is issued by a special
                purpose subsidiary created solely to hold and manage the collateral,
                or
                income producing assets, that enable payment of dividends and the
                redemption value of the preferred.  The RP issuer is capitalized
                with high quality assets including cash, U.S. government and agency
                securities.  Since the assets will typically have a market value
                equal to nearly 150% of the aggregate liquidation preference of the
                issue,
                and the issuer is effectively insulated from any adverse developments
                to
                its parent company, Structured RP
                normally receives an AAA rating.

              
              

              3. Can
                be tax-exempt, taxable or qualify for the dividends-received deduction
                (70%) if held for a minimum of 46 days initially.

              
              

              4. Offered
                in shares or minimum denominations of $100,000.

              
              

              5. Dividend
                rates determined through a remarketing process*.  Dividends are
                paid at the end of each holding period.

               

              
              

              *The
                remarketing process differs from a Dutch Auction in several
                ways.  The remarketing agent, typically the lead manager,
                notifies current holders on the tender date, (i.e. the business day
                prior
                to the trade date) of the estimated range of yields for the next
                7- and
                28-day holding periods.  Investors have the option to bid, hold,
                or sell, as they do in Dutch Auctions.  Existing holders must
                indicate if they will be sellers on the tender date.  The
                remarketing agent will then solicit prospective purchases for indications
                of the lowest yield required to distribute the shares at
                par.  The remarketing agent must set the new dividend rate by
                4:00 p.m. on trade date for both the 7- and 28-day holding
                periods.

              
              

               

              Appendix
                B

               

              
              

              MONEY
                MARKET FUNDS

              
              

              Money
                Market Fund is an open-ended Mutual Fund that invests in short-term
                securities such as commercial paper, bankers acceptances, repurchase
                agreements, government securities, certificates of deposit, and other
                highly liquid and safe securities that pay money market rates of
                interest.
                The money market operates through dealers, money center banks, and
                the
                Open Market Trading desk at the New York Federal Reserve Bank of
                New
                York.

              
              

              1. The
                fund’s net asset value stays constant at $1.00 per share - only the
                interest goes up and down (i.e. no risk of loss of
                principal).

              
              

              2. Interest
                is paid monthly.

              
              

              3. Most
                funds are not federally insured.

              
              

              4. Funds
                provide daily liquidity.

              
              

               

              Appendix
                B

               

              
              

              CORPORATE
                BONDS

              
              

              Generally
                these bonds pay higher rates than government or municipal bonds since
                the
                risk is higher. Corporate bonds have a wide range of ratings and
                yields
                because the financial health of the issuers can vary widely. Corporate
                Bonds typically have the following distinctive features.

              
              

              1. A
                debt instrument issued by a private corporation.

              
              

              2. They
                are taxable.

              
              

              3. They
                usually have a par value of $1,000.

              4. They
                have term maturity – which means they come due all at once- and may be
                paid out of sinking funds accumulated for that purpose.

              
              

              5. They
                are traded on major exchanges, with prices published in the
                newspaper.  Price of bonds fluctuate with changes in interest
                rates unless held to maturity.

              
              

              6. Backed
                only by credit worthiness of issuer.

              
              

               

              Appendix
                B

               

              
              

              MORTGAGE-BACKED
                SECURITIES
                ("MBS")

              
              

              1. A
                debt security that is backed by a pool of underlying mortgages, usually
                guaranteed by a government agency for payment of principal and a
                guarantee
                of timely payment.

              
              

              2. Usually
                carry a pass-through feature -- investors have an undivided interest
                in
                the pool.  Investors
                receive payments out of the interest and principal on the underlying
                mortgages.

              
              

              3. Traded
                in a secondary market.

              4. Essentially
                no credit risk.

              
              

              5. Prepayment
                risk is inherent with "prepayable" or "open" MBS.  Prepayment is
                passed through to the investor and forces the investor to find other
                uses
                for the prepaid investment.

              
              

              6. Ginnie
                Mae's (guaranteed by the U.S. gov't) are the most popular type of
                this
                security and comprised of VA guaranteed loans or FHA insured
                mortgages.

              
              

              7. Freddie
                Mac's & Fannie Mae's are other types of pass through
                MBS.  These are both "Participation Certificates" or "PC's" and
                not guaranteed by the U.S. gov't.

              a. Freddie
                Mac's are comprised of FHOMC conventional mortgages on single family
                homes

              b. Fannie
                Mae's are comprised of conventional mortgages and FHA insured
                mortgages.

              
              

              8. Very
                liquid secondary market for MBS's.

              
              

               

              Appendix
                B

               

              
              

              COLLATERALIZED
                MORTGAGE OBLIGATIONS
                ("CMO")

              
              

              1. Bonds
                that are collateralized by mortgages or mortgage-backed
                securities.

              
              

              2. CMO's
                have stated maturities (vs. pass through features).  Principal
                and interest payments are separated into different payment streams
                to
                create bonds that repay capital over differing periods of
                time.

              
              

              3. There
                are short-term, intermediate-term and long-term CMO's

              4. Most
                of the mortgages are traditional mortgages (vs. VA or FHA
                mortgages).

              
              

              5. Not
                a liquid secondary market for CMO's.

              
              

               

              Appendix
                B

               

              
              

              ASSET-BACKED
                SECURITIES
                ("ABS")

              
              

              1. Bonds
                that are collateralized by pools of loans of similar types, duration
                and
                interest rates.

              
              

              2. May
                be insured by bond insurers.

              
              

              3. May
                be backed by such assets as mortgages, agency securities, consumer
                loans,
                student loans, business loans, or trade receivables.

              
              

              4. Generally,
                the term "asset-backed security" is used to refer to all asset-backed
                securities except mortgage-backed securities (see description on
                page 28)
                or collateralized mortgage obligations (see description on page
                29).

              
              

               

              Appendix
                C

               

              
              

              GOVERNMENT
&
AGENCY
                SECURITIES
                GUARANTEES

               

              
              

              INSTRUMENT                                
                GUARANTEE

              
              

              U.S.
                Treasury
                Bills                                                             U.S.
                Government

              
              

              U.S.
                Treasury
                Notes                                                          U.
                S. Government

              
              

              U.
                S. Treasury
                Bonds                                                        U.
                S. Government

              
              

              Federal
                Home Loan
                Bank                                                  Issuing
                Agency

                 Discount
                Notes

              
              

              Federal
                National
                Mortgage                                              Issuing
                Agency

                Association
                Discount Notes

              
              

              Federal
                Home Loan
                Mortgage                                         Issuing
                Agency

                 Corporation
                Discount Notes

              
              

              Farm
                Credit
                Bank                                                                Issuing
                Agency

                 Discount
                Notes

              
              

              Student
                Loan
                Marketing                                                   Issuing
                Agency

                 Association
                Discount Notes

              
              

              Government
                National
                Mortgage                                      U.S.
                Government

                 Association

              
              

              Municipal
                Bonds                                                                Varies
                by Issue

              
              

              Municipal
                Notes                                                                 Varies
                by Issue