Document:

Exhibit (10) (i) (67)

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                         NEW YORK STATE ENERGY RESEARCH

                            AND DEVELOPMENT AUTHORITY

                                       AND

                    CENTRAL HUDSON GAS & ELECTRIC CORPORATION

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

                             PARTICIPATION AGREEMENT

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

                           Dated as of August 1, 1999

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                                  -relating to-

              $33,700,000 Pollution Control Refunding Revenue Bonds
              (Central Hudson Gas & Electric Corporation Projects)
                                  1999 Series B

              $41,150,000 Pollution Control Refunding Revenue Bonds
              (Central Hudson Gas & Electric Corporation Projects)
                                  1999 Series C

              $41,000,000 Pollution Control Refunding Revenue Bonds
              (Central Hudson Gas & Electric Corporation Projects)
                                  1999 Series D
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                                TABLE OF CONTENTS

                                    ARTICLE I

               DEFINITIONS; RULES OF CONSTRUCTION; EFFECTIVE DATE
                     AND DURATION OF PARTICIPATION AGREEMENT

SECTION 1.01.     Definitions; Rules of Construction...........................2
SECTION 1.02.     Effective Date of Participation Agreement; Duration of
                  Participation Agreement......................................3

                                   ARTICLE II

                                 REPRESENTATIONS

SECTION 2.01.     Representations and Warranties by the Authority..............4
SECTION 2.02.     Representations and Warranties by the Corporation............4

                                   ARTICLE III

                         THE PROJECT; ISSUANCE OF BONDS

SECTION 3.01.     The Project..................................................6
SECTION 3.02.     Sale of Bonds and Deposit of Proceeds; Liability Under
                  Bonds........................................................6
SECTION 3.03.     No Interest in Project Conferred.............................6
SECTION 3.04.     Operation, Maintenance and Repair............................6
SECTION 3.05.     Agreement not to Exercise Option to Convert to Fixed Rate
                  Absent Specified Rating......................................7
SECTION  3.06.    Securities Depository
SECTION 3.07.     Investments Under the Indenture..............................7

                                   ARTICLE IV

           CORPORATION NOTE AND PAYMENTS; CREDIT AND LIQUIDITY SUPPORT

SECTION 4.01.     Execution and Delivery of Corporation Note to Trustee........8
SECTION 4.02.     Redemption of Bonds..........................................8
SECTION 4.03.     Obligation for Payment Absolute; Deficiencies................8
SECTION 4.04.     Administration Fees; Expenses, Etc...........................9
SECTION 4.05.     Compensation of Fiduciaries, Remarketing Agents
                  and Indexing Agents..........................................9
SECTION 4.06.     Project Not Security for Bonds..............................10
SECTION 4.07.     Payment of Taxes and Assessments; No Liens or Charges.......10
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SECTION 4.08.     Indemnification of Authority, Fiduciaries, Remarketing
                  Agents, Auction Agent and Indexing Agents...................10
SECTION 4.09.     Corporation to Pay Attorneys' Fees and Disbursements........11
SECTION 4.10.     No Abatement of Administration Fees and Other Charges.......11
SECTION 4.11.     Payment to Tender Agent.....................................11
SECTION 4.12.     Support Facilities..........................................11

                                    ARTICLE V

                                SPECIAL COVENANTS

SECTION 5.01.     No Warranty as to Suitability of Project....................13
SECTION 5.02.     Authority's Rights to Inspect Project and Plans and
                  Specifications..............................................13
SECTION 5.03.     Corporation Consent to Amendment of Indenture...............13
SECTION 5.04.     Tax Covenant................................................13
SECTION 5.05.     Corporation Agrees to Perform Obligations Imposed by
                  Indenture...................................................13
SECTION 5.06.     Maintenance of Office or Agency of Corporation..............13
SECTION 5.07.     Further Assurances..........................................14
SECTION 5.08.     Payment of Taxes and Other Charges..........................14
SECTION 5.09.     Maintenance of Properties...................................14
SECTION 5.10.     Insurance...................................................14
SECTION 5.11.     Proper Books of Record and Account..........................14
SECTION 5.12.     Certificates as to Defaults.................................15
SECTION 5.13.     Corporation Not to Permit Hindrance or Delay of Payment
                  of Corporation Note.........................................15
SECTION 5.14.     Consolidation, Merger or Sale of Assets.....................15
SECTION 5.15.     Financial Statements of Corporation.........................16
SECTION 5.16.     Compliance with Laws........................................16

                                   ARTICLE VI

                        DEFAULTS BY CORPORATION; REMEDIES

SECTION 6.01.     Events of Default; Acceleration.............................17
SECTION 6.02.     Certain Events of Default; Authority or Trustee May Take
                  Certain Actions.............................................19
SECTION 6.03.     Judicial Proceedings by Trustee.............................19
<PAGE>

                                   ARTICLE VII

                                  MISCELLANEOUS

SECTION 7.01.     Disposition of Amounts After Payment of Bonds...............20
SECTION 7.02.     Notices.....................................................20
SECTION 7.03.     Successors and Assigns......................................20
SECTION 7.04.     References to the Liquidity Facility........................21
SECTION 7.05.     Amendment of Participation Agreement........................21
SECTION 7.06.     Assignment and Transfer.....................................21
SECTION 7.07.     Participation Agreement Supersedes Any Prior Agreements.....22
SECTION 7.08.     Counterparts................................................22
SECTION 7.09.     Severability................................................22
SECTION 7.10.     NEW YORK LAW TO GOVERN......................................22

EXHIBIT A: FORM OF PROMISSORY NOTE.  A-1
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         This PARTICIPATION AGREEMENT, dated as of August 1, 1999, between NEW
YORK STATE ENERGY RESEARCH AND DEVELOPMENT AUTHORITY, a body corporate and
politic, constituting a public benefit corporation, established and existing
under and by virtue of the laws of the State of New York (the "Authority"), and
CENTRAL HUDSON GAS & ELECTRIC CORPORATION, a corporation duly organized and
existing and qualified to do business as a public utility under the laws of the
State of New York (the "Corporation"),

                              W I T N E S S E T H :

         WHEREAS, pursuant to a special act of the Legislature of the State of
New York (Title 9 of Article 8 of the Public Authorities Law of New York, as
from time to time amended and supplemented, herein called the "Act"), the New
York State Energy Research and Development Authority (the "Authority") has been
established as a body corporate and politic, constituting a public benefit
corporation;

         WHEREAS, pursuant to the Act, the Authority is empowered to contract
with any power company to participate in the incorporation of features in power
plants and the construction of associated facilities to the extent required by
the public interest in development, health, recreation, safety, conservation of
natural resources, and aesthetics;

         WHEREAS, pursuant to the Act, the Authority is also empowered to extend
credit and make loans from bond proceeds to any person for the construction,
acquisition, and installation of, or for the reimbursement to any person for
costs in connection with, any special energy project, including, but not limited
to, any land, works, system, building or other improvement and all real and
personal properties of any nature or any interest in any of them which are
suitable for or related to the furnishing, generation, or production of energy;

         WHEREAS, the Authority is also authorized under the Act to borrow money
and issue its negotiable bonds and notes to provide sufficient moneys for
achieving its corporate purposes, including the refunding of outstanding
obligations of the Authority;

         WHEREAS, the Authority is also authorized under the Act to enter into
any contracts and to execute all instruments necessary or convenient for the
exercise of its corporate powers and the fulfillment of its corporate purposes;

         WHEREAS, the Corporation is a public utility corporation doing business
in the State of New York and operates power plants in the State of New York;

         WHEREAS, the Corporation has requested that the Authority issue bonds
for the purpose of refunding the Pollution Control Revenue Bonds (Central Hudson
Gas & Electric Corporation Projects), 1985 Series A, Pollution Control Revenue
Bonds (Central Hudson Gas & Electric Corporation Projects), 1985 Series B,
Pollution Control Refunding Revenue Bonds (Central Hudson Gas & Electric
Corporation Projects), 1987 Series A and Pollution Control Refunding

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Revenue Bonds (Central Hudson Gas & Electric Corporation Projects), 1987 Series
B (collectively, the "Prior Bonds"), of the Authority which were issued to
finance or refinance a portion of the cost of construction of certain pollution
control, sewage and solid waste disposal and other facilities at the Nine Mile
Point Nuclear Generating Station Unit No. 2 located in Scriba, Oswego County,
New York, and Roseton Electric Generating Plant and Danskammer Electric
Generating Plant, both located in the Town of Newburgh, Orange County, New York;

         WHEREAS, the Authority proposes to issue such bonds and make the
proceeds thereof available to the Corporation to refund the Prior Bonds;

         WHEREAS, simultaneously with the issuance and delivery of such bonds,
the Corporation will deliver a promissory note dated the date of issuance of
such bonds as evidence of its obligation to repay the advance of the proceeds of
the bonds; and

         WHEREAS, the Authority, pursuant to Resolution No. 943, adopted June
21, 1999, has determined to issue (i) $33,700,000 aggregate principal amount of
Pollution Control Refunding Revenue Bonds (Central Hudson Gas & Electric
Corporation Projects), 1999 Series B (the "1999 Series B Bonds"), (ii)
$41,150,000 aggregate principal amount of Pollution Control Refunding Revenue
Bonds (Central Hudson Gas & Electric Corporation Projects), 1999 Series C (the
"1999 Series C Bonds") and (iii) $41,000,000 aggregate principal amount of
Pollution Control Refunding Revenue Bonds (Central Hudson Gas & Electric
Corporation Projects), 1999 Series D (the "1999 Series D Bonds", and
collectively with the 1999 Series B Bonds and the 1999 Series C Bonds, the
"Bonds"), for the purpose of refunding the Prior Bonds, all such Bonds to be
issued under and secured by an Trust Indenture dated as of August 1, 1999,
between the Authority and United States Trust Company of New York, as Trustee
(the "Indenture");

         NOW, THEREFORE, for and in consideration of the premises and of the
mutual covenants and agreements hereinafter set forth, it is hereby agreed by
and between the parties as follows:

                                    ARTICLE I

               DEFINITIONS; RULES OF CONSTRUCTION; EFFECTIVE DATE
                     AND DURATION OF PARTICIPATION AGREEMENT

                  SECTION 1.01. DEFINITIONS; RULES OF CONSTRUCTION. Unless the
context otherwise indicates, terms defined in the Indenture are used herein as
so defined; and:

                  (a) Words importing the singular number shall include the
         plural number and vice versa;

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                  (b) All references herein to particular articles or sections
         are references to articles or sections of this Participation Agreement;

                  (c) The captions and headings herein are solely for
         convenience of reference and shall not constitute a part of this
         Participation Agreement nor shall they affect its meaning, construction
         or effect;

                  (d) The terms "hereby," "hereof," "hereto," "herein,"
         "hereunder" and any similar terms, as used in this Participation
         Agreement, refer to this Participation Agreement in its entirety and
         not to the particular article or section of this Participation
         Agreement in which they appear, and the term "hereafter" means after,
         and the term "heretofore" means before, the effective date of this
         Participation Agreement; and

                  (e) In the event that there is any conflict between the
         provisions of this Participation Agreement and those of the Indenture,
         the provisions of the Indenture shall govern the disposition of such
         conflict.

                  SECTION 1.02. EFFECTIVE DATE OF PARTICIPATION AGREEMENT;
DURATION OF PARTICIPATION AGREEMENT. This Participation Agreement shall become
effective upon its execution and delivery, and shall continue in full force and
effect until the principal of, and premium, if any, and interest on, the
Corporation Note and Bonds have been fully paid (or provision for their payment
has been made in accordance with the provisions of the Indenture) and all sums
to which the Authority or the Fiduciaries are entitled hereunder have been fully
paid.

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                                   ARTICLE II

                                 REPRESENTATIONS

                  SECTION 2.01. REPRESENTATIONS AND WARRANTIES BY THE AUTHORITY.
The Authority represents and warrants as follows:

                  (a) The Authority is a body corporate and politic,
         constituting a public benefit corporation, established and existing
         under the laws of the State of New York;

                  (b) The Authority has full power and authority to execute and
         deliver this Participation Agreement, the Indenture and the Tax
         Regulatory Agreement and to consummate the transactions contemplated
         hereby and thereby and to perform its obligations hereunder and
         thereunder;

                  (c) The Authority is not in default under any of the
         provisions of the laws of the State of New York which would affect its
         existence or its powers referred to in the preceding paragraph (b);

                  (d) The Authority has determined that its participation in the
         financing of the Project, as contemplated by this Participation
         Agreement, is in the public interest;

                  (e) The Authority has duly authorized the execution and
         delivery of this Participation Agreement, the Indenture and the Tax
         Regulatory Agreement and the execution and delivery of the other
         documents incidental to this transaction, and all necessary
         authorizations therefor or in connection with the performance by the
         Authority of its obligations hereunder or thereunder have been obtained
         and are in full force and effect; and

                  (f) The execution and delivery by the Authority of this
         Participation Agreement, the Indenture and the Tax Regulatory Agreement
         and the consummation of the transactions herein or therein contemplated
         will not violate any indenture, mortgage, loan agreement or other
         contract or instrument to which the Authority is a party or by which it
         is bound or, to the best of the Authority's knowledge, any judgment,
         decree, order, statute, rule or regulation applicable to the Authority.

                  SECTION 2.02. REPRESENTATIONS AND WARRANTIES BY THE
CORPORATION. The Corporation represents and warrants as follows:

                  (a) The Corporation is a corporation duly incorporated and in
         good standing under the laws of the State of New York, is duly
         qualified and authorized to engage in business as a public utility in
         the State of New York, has power to enter into, execute and deliver
         this Participation Agreement, the Tax Regulatory Agreement and the
         Corporation

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         Note by proper corporate action and has duly authorized the execution
         and delivery by it of this Participation Agreement, the Tax Regulatory
         Agreement and the Corporation Note;

                  (b) The execution and delivery by the Corporation of this
         Participation Agreement, the Tax Regulatory Agreement and the
         Corporation Note and the consummation of the transactions herein
         contemplated do not conflict with or constitute a breach of or a
         default under the Corporation's Certificate of Incorporation, By-Laws
         or any indenture, mortgage, loan agreement or other contract or
         instrument to which the Corporation is a party or by which it is bound
         or, to the best of the Corporation's knowledge, any judgment, decree,
         order, statute, rule or regulation applicable to the Corporation;

                  (c) This Participation Agreement, the Tax Regulatory Agreement
         and the Corporation Note constitute valid and legally binding
         obligations of the Corporation, enforceable against the Corporation in
         accordance with their respective terms, except as the right of
         indemnity hereunder may be limited by principles of public policy and
         except as enforcement may be limited by applicable bankruptcy,
         insolvency, moratorium, reorganization or other laws, judicial
         decisions or principles of equity relating to or affecting the
         enforcement of creditors' rights or contractual obligations generally
         (regardless of whether enforceability is considered in a proceeding in
         equity or at law);

                  (d) The issuance and delivery by the Corporation of the
         Corporation Note in the manner and for the purposes herein set forth
         have been duly authorized by the Public Service Commission of the State
         of New York;

                  (e) No additional authorizations for or approvals of the
         execution and delivery by the Corporation of this Participation
         Agreement, the Tax Regulatory Agreement and the Corporation Note need
         be obtained by the Corporation or if any such authorization or approval
         is necessary it has been obtained; and

                  (f) The representations of the Corporation set forth in the
         Tax Regulatory Agreement are hereby incorporated by reference as though
         fully set forth herein.

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                                   ARTICLE III

                         THE PROJECT; ISSUANCE OF BONDS

                  SECTION 3.01. THE PROJECT. The Corporation represents that the
Project is complete. The Project belongs to and is the property of the
Corporation. In order to effectuate the purposes of this Participation
Agreement, the Corporation will do or cause to be done all things requisite or
proper for the fulfillment of the obligations of the Corporation under this
Participation Agreement.

                  SECTION 3.02. SALE OF BONDS AND DEPOSIT OF PROCEEDS; LIABILITY
UNDER BONDS. (a) In order to refund the Prior Bonds, the Authority, as soon as
practicable after the execution of this Participation Agreement will issue, sell
and deliver the Bonds to the Underwriters thereof, all pursuant to and as
provided in the Bond Purchase Agreement for the Bonds among the Authority, the
Corporation and the Underwriters and will deposit the proceeds of such sale of
the Bonds with the Trustee in the Proceeds Fund.

                  (b) The Bonds shall not be general obligations of the
Authority, and shall not constitute an indebtedness of, or a charge against the
general credit of, the Authority or give rise to any pecuniary liability of the
Authority. The liability of the Authority under the Bonds shall be enforceable
only to the extent provided in the Indenture, and the Bonds shall be payable
solely from the Corporation Note Payments, any payments by the Corporation under
Section 4.11, funds paid under the Support Facilities and any other funds held
by the Trustee under the Indenture or the Tender Agent under the Bond Purchase
Trust Agreement and available for such payment. The Bonds shall not be a debt of
the State of New York, and the State of New York shall not be liable thereon.

                  SECTION 3.03. NO INTEREST IN PROJECT CONFERRED. Neither the
Authority nor the Trustee shall be entitled to any interest in the Project by
reason of the advance of Bond proceeds pursuant to this Participation Agreement.

                  SECTION 3.04. OPERATION, MAINTENANCE AND REPAIR. The Authority
and the Corporation recognize that the Project constitutes integrated portions
of the electric energy and production facilities of the Corporation and its
co-tenants and that it is not feasible to administer the Project separately from
such facilities. The Corporation shall operate the Project or cause the Project
to be operated (with such changes, improvements or additions as the Corporation
may deem desirable) as part of such facilities for the joint useful life of the
Project and such facilities, shall maintain and repair the Project or cause the
Project to be maintained and repaired in conformity with the Corporation's and
its co-tenants' normal maintenance and repair programs for such facilities and
shall proceed in good faith to maintain the availability of the Project for use
as an authorized project under the Act; but the Corporation and its co-tenants
shall have no obligation to operate, maintain or repair or cause to be operated,
maintained, or repaired, or proceed in good faith to maintain the availability
of the Project for use as an authorized project under the Act with

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respect to, any element or item of the Project the operation, maintenance, or
repair of which becomes uneconomic to the Corporation because of damage or
destruction or obsolescence (including physical, functional and economic
obsolescence), or change in government standards and regulations, or the
termination of the operation of the portion of such facilities to which the
element or item of the Project is an adjunct, or the sale, transfer or other
disposition by the Corporation of its interest in such facilities.

                  SECTION 3.05. AGREEMENT NOT TO EXERCISE OPTION TO CONVERT TO
FIXED RATE ABSENT SPECIFIED RATING. The Corporation agrees not to direct that a
Fixed Rate become effective pursuant to Section 4.02 of the Indenture unless the
Corporation shall have delivered to the Authority evidence satisfactory to the
Authority that upon conversion to a Fixed Rate the Bonds are expected to be
rated in at least the third highest rating category (without regard to
gradations therein) of Moody's or S&P, currently "A" in the case of Moody's and
"A" in the case of S&P.

                  SECTION 3.06. SECURITIES DEPOSITORY. The Corporation
acknowledges that the Authority and the Trustee, at the request of the
Corporation, have arranged for the initial deposit of the Bonds with The
Depository Trust Company ("DTC") which will act as Securities Depository in
order to effectuate a book-entry-only system and that this system may be
discontinued or, if discontinued, reinstituted (with DTC or another Securities
Depository) in accordance with the Indenture. The Corporation agrees to take all
actions necessary, and to refrain from taking actions contrary to the
effectuation of a book-entry-only system established pursuant to the Indenture
and any arrangements among the Authority, the Trustee and any Securities
Depository. The Authority shall not enter into any written agreements with a
Securities Depository without receipt and acceptance of such agreements by the
Corporation.

                  SECTION 3.07. INVESTMENTS UNDER THE INDENTURE. Any money held
in any fund under the Indenture shall be invested and reinvested as provided in
the Tax Regulatory Agreement and Article IX of the Indenture.

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                                   ARTICLE IV

           CORPORATION NOTE AND PAYMENTS; CREDIT AND LIQUIDITY SUPPORT

                  SECTION 4.01. EXECUTION AND DELIVERY OF CORPORATION NOTE TO
TRUSTEE. (a) Concurrently with the authentication by the Trustee and delivery by
the Authority of the Bonds and in order to evidence the obligation of the
Corporation to the Authority to repay the advance of the proceeds of the Bonds,
the Authority hereby directs the Corporation, and the Corporation hereby agrees,
to execute and deliver to the Trustee its Corporation Note and to duly and
punctually pay the principal of, premium, if any, and interest on, the
Corporation Note at the place, the times and in the manner provided therein. The
Corporation Note shall be substantially in the form attached hereto as
Exhibit A.

                  (b) The obligation of the Corporation to make any payment of
principal of, and premium, if any, and interest on, the Corporation Note shall
be deemed satisfied and discharged by and to the extent of a corresponding
payment made by a Liquidity Provider (other than as Purchase Price), but not by
any payment under the Policy.

                  SECTION 4.02. REDEMPTION OF BONDS. Whenever Bonds are
redeemable in whole or in part, the Authority will redeem the same at the
written direction of an Authorized Corporation Representative given in
accordance with Section 5.01 of the Indenture. Expenses in connection with the
redemption of Bonds shall be paid by the Corporation.

                  SECTION 4.03. OBLIGATION FOR PAYMENT ABSOLUTE; DEFICIENCIES.
The Corporation agrees that its obligation to make the Corporation Note Payments
and payments under Section 4.11 at the times and in the amounts provided in the
Corporation Note and this Participation Agreement shall be absolute, irrevocable
and unconditional and shall not be subject to any defense (other than payment)
or any right of set-off, counterclaim or recoupment for any reason, including,
without limitation, the unenforceability (because of judicial decision or
otherwise) or the impossibility of performance of the Corporation Note
obligations, or any breach by the Authority of any obligation to the
Corporation, whether under this Participation Agreement or otherwise, or
inaccuracy of any representation by the Authority to the Corporation under this
Participation Agreement or in any other instrument, or any indebtedness or
liability at any time owing to the Corporation by the Authority, or the
destruction by fire or other casualty of the Project or any portion thereof, or
the taking of title thereto or the use thereof by the exercise of the power of
eminent domain. If for any reason Corporation Note Payments, together with other
money held by the Trustee and then available for such purpose (including money
paid by a Liquidity Provider other than as Purchase Price), would not be
sufficient to make the corresponding payments of principal of, and premium, if
any, and interest on, the Bonds when such payments are due, the Corporation will
pay the amounts required from time to time to make up any such deficiency. If
for any reason payments under Section 4.11, together with other money held by
the Trustee and the Tender Agent and then available for such purpose (including
money paid by the Liquidity Provider), would not be sufficient to make the
corresponding payments of the Purchase Price of the Bonds when such

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payments are due, the Corporation will pay the amounts required from time to
time to make up any such deficiency.

                  SECTION 4.04. ADMINISTRATION FEES; EXPENSES, ETC. In order to
defray a portion of the expenses incurred by the Authority in conducting and
administering its programs for the acquisition and construction of facilities
for the furnishing of electricity, special energy projects and the development
of advanced technologies, the Corporation shall pay to the Authority an initial
Administration Fee in the amount of $289,625 on the date of the authentication
and delivery of the Bonds and an annual fee equal to $130 per million dollar
principal amount of the Bonds on August 1 of each year commencing August 1,
2000, based upon the amount of Bonds Outstanding as of such August 1 and for
purposes of the calculation of such fee, rounding up to the nearest whole
million dollars, and all reasonable expenses, disbursements, advances, taxes,
assessments or impositions, not otherwise paid under this Participation
Agreement or the Indenture, incurred by or imposed upon the Authority in
connection with its administration and enforcement of, and compliance with, this
Participation Agreement, the Auction Agency Agreement, the Bond Purchase Trust
Agreement, the Remarketing Agreement and the Indenture, which amounts the
Company is obligated to pay, including, but not limited to, reasonable
attorneys' fees. In addition, the Corporation shall pay to the State of New York
with respect to the Bonds a bond issuance charge in the amount of $405,475 on
the date of authentication and delivery of the Bonds.

                  SECTION 4.05. COMPENSATION OF FIDUCIARIES, REMARKETING AGENTS
AND INDEXING AGENTS. The Corporation agrees:

                  (1) to pay to the Trustee from time to time upon its request
         reasonable compensation for all services rendered by it in any capacity
         under the Indenture (which compensation shall not be limited by any
         provision of law in regard to the compensation of a trustee of an
         express trust);

                  (2) except as so otherwise expressly provided herein, to
         reimburse the Trustee upon its request for all reasonable expenses,
         disbursements and advances incurred by it in any capacity under the
         Indenture (including the reasonable compensation and the expenses and
         disbursements of its agents and counsel), except any such expense,
         disbursement or advance as may be attributable to its negligence, bad
         faith or willful misconduct;

                  (3) to pay to the Fiduciaries, other than the Trustee, from
         time to time upon their request, reasonable compensation for all
         services rendered by them under the Indenture and reimburse them for
         their reasonable expenses incurred under the Indenture (including
         reasonable compensation and expenses and disbursements of their agents
         and counsel), except any such expense as may be attributable to their
         negligence, bad faith or willful misconduct; and

                  (4) to pay to the Remarketing Agents and the Indexing Agents
         (and in the case of Auction Rate Bonds during an Auction Rate Period,
         the Auction Agent under the

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         Auction Agency Agreement, and any Broker-Dealers under the respective
         Broker-Dealer Agreements) their reasonable fees and expenses as and
         when the same become due, except any such expense as may be
         attributable to such person's negligence, bad faith or willful
         misconduct.

                  SECTION 4.06. PROJECT NOT SECURITY FOR BONDS. It is expressly
recognized by the parties hereto that neither the Project nor any other property
of the Corporation will constitute any part of the security for the Bonds.

                  SECTION 4.07. PAYMENT OF TAXES AND ASSESSMENTS; NO LIENS OR
CHARGES. The Corporation will (a) pay, when the same shall become due, all taxes
and assessments, including income, profits, property or excise taxes, if any, or
other municipal or governmental charges, imposed, levied or assessed by the
Federal, state or any municipal government upon the Authority or any Fiduciary
in respect of any payments (other than payments made pursuant to Sections 4.04
and 4.05) made or to be made pursuant to this Participation Agreement or the
Corporation Note and (b) pay or cause to be discharged, within 60 days after the
same shall accrue, any lien or charge upon any such payment made or to be made
under this Participation Agreement, provided that the Corporation shall not be
required to pay any such tax or assessment so long as (i) the Corporation at its
expense contests, by appropriate legal proceedings conducted in good faith and
with due diligence, the amount, validity or application of any such tax,
assessment or charge, (ii) such proceedings shall have the effect of suspending
the collection thereof from the Authority or such Fiduciary, and (iii) the
Corporation shall indemnify and hold the Authority and each Fiduciary harmless
from any losses, costs, charges, expenses (including reasonable attorneys' fees
and disbursements), judgments and liabilities arising in respect of such tax,
assessment or charge and the nonpayment thereof.

                  SECTION 4.08. INDEMNIFICATION OF AUTHORITY, FIDUCIARIES,
REMARKETING AGENTS, AUCTION AGENT AND INDEXING AGENTS. Any obligation of the
Authority created by or arising out of this Participation Agreement shall be a
limited obligation of the Authority, payable solely from the Corporation Note
Payments, any payments by the Corporation under Section 4.11, funds paid under
the Support Facilities and any other funds held by the Trustee under the
Indenture and available for such payment, and shall not constitute an
indebtedness of or a charge against the general credit of the Authority and
shall not constitute or give rise to any pecuniary liability of the Authority;
nevertheless, if the Authority shall incur any such pecuniary liability, then in
such event the Corporation shall indemnify and hold the Authority harmless by
reason thereof. The Corporation releases the Authority, the Fiduciaries, the
Remarketing Agents, the Auction Agent and the Indexing Agents from, agrees that
the Authority, the Fiduciaries, the Remarketing Agents, the Auction Agent and
the Indexing Agents shall not be liable for, and agrees to indemnify and hold
the Authority, the Fiduciaries, the Remarketing Agents, the Auction Agent and
the Indexing Agents harmless from, any liability for any loss or damage to
property or any injury to or death of any person that may be occasioned by any
cause whatsoever arising out of the construction or operation of the Project.
The Corporation agrees to indemnify and hold the Authority, its members,
officers and employees, the Fiduciaries, the Remarketing Agents, the Auction
Agent

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<PAGE>

and the Indexing Agents harmless from any losses, costs, charges, expenses
(including reasonable attorneys' fees and disbursements), judgments and
liabilities incurred by it or them, as the case may be, in connection with any
claims made, or any action, suit or proceeding instituted or threatened, in
connection with the transactions contemplated by this Participation Agreement,
the Bond Purchase Trust Agreement, any Remarketing Agreement, the Auction Agency
Agreement or the Indenture (i) so long as, in the case of the Authority, its
members, officers and employees, it or they, as the case may be, have acted in
good faith to carry out the transactions contemplated by this Participation
Agreement, the Remarketing Agreement, the Auction Agency Agreement , the Bond
Purchase Trust Agreement and the Indenture and (ii) so long as, in the case of
the Fiduciaries, the Indexing Agents, the Auction Agent and the Remarketing
Agents, it or they shall not have acted negligently, in bad faith or with
willful misconduct in carrying out the transactions contemplated by this
Participation Agreement, the Remarketing Agreement, the Auction Agency
Agreement, the Bond Purchase Trust Agreement and the Indenture.

                  SECTION 4.09. CORPORATION TO PAY ATTORNEYS' FEES AND
DISBURSEMENTS. If the Corporation shall default under any of the provisions of
this Participation Agreement and the Authority or the Trustee or both of them
shall employ attorneys or incur other expenses for the collection of payments
due under this Participation Agreement or for the enforcement of performance or
observance of any obligation or agreement on the part of the Corporation
contained in this Participation Agreement, the Corporation will on demand
therefor reimburse the reasonable fees of such attorneys and such other
reasonable disbursements so incurred.

                  SECTION 4.10. NO ABATEMENT OF ADMINISTRATION FEES AND OTHER
CHARGES. It is understood and agreed that, so long as any Bonds are outstanding
under the Indenture, Administration Fees and other charges payable to the
Authority pursuant to this Participation Agreement shall continue to be payable
at the times and in the amounts herein specified, whether or not the Project, or
any portion thereof, shall have been destroyed by fire or other casualty, or
title thereto or the use thereof shall have been taken by the exercise of the
power of eminent domain, and that there shall be no abatement of any such
Administration Fees and other charges by reason thereof.

                  SECTION 4.11. PAYMENT TO TENDER AGENT. The Corporation shall
timely pay, or cause to be paid, to the Tender Agent amounts equal to the
amounts to be paid pursuant to Article V of the Indenture in respect of Bonds
duly tendered or deemed tendered for purchase; but the obligation of the
Corporation to make any such payment shall be deemed satisfied to the extent of
any money available pursuant to a Liquidity Facility or from the proceeds of
remarketing.

                  SECTION 4.12. SUPPORT FACILITIES. In order to secure the
payment of interest on the Bonds, the Corporation has obtained the Policy. At
all times on or prior to the Fixed Rate Conversion Date, except during any
Auction Rate Period during which the Bonds bear interest at an Auction Rate or
when all the Bonds then outstanding are held by or for the account of the
Corporation, a Liquidity Facility meeting the requirements of this Section 4.12
shall be in effect and, in the event that an Alternate Liquidity Facility is to
replace a Liquidity Facility, the

                                       11
<PAGE>

requirements of Section 6.02 of the Indenture with regard to such Liquidity
Facility will be fulfilled. A Liquidity Facility shall expire no earlier than
the earliest of (1) its stated expiration date, which shall be not less than six
months from its effective date and shall be no earlier than the second Business
Day after the next succeeding date when Bonds are subject to optional or
mandatory tender for purchase, (2) when all available amounts have been drawn,
(3) the second business day following a Change in the Interest Rate Mode to an
Auction Rate, (4) the second business day following the Fixed Rate Conversion
Date, (5) on the effective date of any Alternate Liquidity Facility that
replaces the then effective Liquidity Facility, (6) the earliest date on which
no Bonds are outstanding and (7) twelve days after the Trustee receives notice
from the Liquidity Provider that it is terminating the Liquidity Facility and
directing the Trustee to cause a mandatory tender and purchase of the Bonds.

                                       12
<PAGE>

                                    ARTICLE V

                                SPECIAL COVENANTS

                  SECTION 5.01. NO WARRANTY AS TO SUITABILITY OF PROJECT. The
Authority makes no warranty, either express or implied, with respect to actual
or designed capacity of the Project, as to the suitability of the Project for
the purposes specified in this Participation Agreement, as to the condition of
the Project, or as to the suitability of the Project for the Corporation's
purposes or needs.

                  SECTION 5.02. AUTHORITY'S RIGHTS TO INSPECT PROJECT AND PLANS
AND SPECIFICATIONS. The Authority shall have the right at all reasonable times
to examine and inspect the Project and, to the extent reasonably available, the
plans and specifications therefor and such other information and records
relating to the Project as may be reasonably necessary to establish the
qualification of the Project for financing under the Act and compliance with
this Participation Agreement.

                  SECTION 5.03. CORPORATION CONSENT TO AMENDMENT OF INDENTURE.
The Authority shall not enter into any indenture supplemental to or amendatory
of the Indenture without the prior consent of the Corporation as evidenced by a
certificate in writing signed by an Authorized Corporation Representative.

                  SECTION 5.04. TAX COVENANT. Notwithstanding any other
provision hereof, the Corporation covenants and agrees that it will not take or
authorize or permit any action to be taken with respect to the Project, or the
proceeds of Bonds, including any amounts treated as proceeds of the Bonds for
any purpose of Section 103 of the Code, which will result in the loss of the
exclusion of interest on the Bonds from gross income for Federal income tax
purposes under Section 103 of the Code (except for any Bond during any period
while any such Bond is held by a person referred to in Section 147(a) of the
Code). This provision shall control in case of conflict or ambiguity with any
other provision of this Participation Agreement. In furtherance of such covenant
and agreement, the Authority and the Corporation have entered into the Tax
Regulatory Agreement and the Corporation hereby agrees to comply with the
provisions thereof insofar as the Tax Regulatory Agreement relates to the Bonds.

                  SECTION 5.05. CORPORATION AGREES TO PERFORM OBLIGATIONS
IMPOSED BY INDENTURE. The Corporation agrees to perform such obligations as may
be required of it by the provisions of the Indenture.

                  SECTION 5.06. MAINTENANCE OF OFFICE OR AGENCY OF CORPORATION.
The Corporation will at all times keep in Poughkeepsie, New York, or another
location in the State of New York, an office or agency where notices and demands
to or upon the Corporation with respect to the Corporation Note and this
Participation Agreement may be served, and will, from time to time, give written
notice to the Trustee and the Authority of the location of such office or

                                       13
<PAGE>

agency; and, in case the Corporation shall fail so to do, notices may be served
and demands may be made at the principal office of the Trustee.

                  SECTION 5.07. FURTHER ASSURANCES. Upon request of the Trustee
in writing, the Corporation will make, execute, acknowledge and deliver, or
cause to be made, executed, acknowledged and delivered, to the Trustee any and
all such further acts, instruments or assurances as may be reasonably required
for effectuating the intention of this Participation Agreement and the
Corporation Note.

                  SECTION 5.08. PAYMENT OF TAXES AND OTHER CHARGES. The
Corporation will promptly pay and discharge, or cause to be paid and discharged,
as the same become due and payable, any and all taxes, rates, levies,
assessments, and governmental liens, claims and other charges at any time
lawfully imposed or accruing upon or against the Corporation or upon or against
its properties or any part thereof, or upon the income derived therefrom or from
the operations of the Corporation, provided that the Corporation shall not be
required to pay or discharge, or cause to be paid or discharged, any such
obligation, tax, rate, levy, assessment, lien, claim or other charge so long as
in good faith and by appropriate legal proceedings the validity thereof shall be
contested.

                  SECTION 5.09. MAINTENANCE OF PROPERTIES. The Corporation will
at all times make or cause to be made such expenditures for repairs, maintenance
and renewals, or otherwise, as shall be necessary to maintain its properties in
good repair, working order and condition as an operating system or systems to
the extent necessary to meet the Corporation's obligations under the Public
Service Law of the State of New York and this Participation Agreement; provided,
however, that nothing herein contained shall be construed to prevent the
Corporation from ceasing to own or operate any of its plants or any other
property, if, in the judgment of the Corporation, it is advisable not to own or
operate the same and the ownership or operation thereof shall not be essential
to the maintenance and continued operation of the rest of the operating system
or systems, and the security under the Indenture afforded by the Corporation
Note will not be substantially impaired by the termination of such operation.

                  SECTION 5.10. INSURANCE. The Corporation will keep or cause to
be kept such parts of its properties as, in the opinion of an Authorized
Corporation Representative (who shall for this purpose be a professional
experienced in corporate risk management or a licensed professional engineer),
are of an insurable nature, insured against loss or damage by fire or other
casualties, the risk of which is customarily insured against by companies
similarly situated and operating like properties, to the extent that property of
similar character is customarily insured against by such companies, either (a)
by reputable insurers or (b) in whole or in part in the form of reserves or of
one or more insurance funds created by the Corporation, whether alone or with
other corporations.

                  SECTION 5.11. PROPER BOOKS OF RECORD AND ACCOUNT. The
Corporation will at all times keep or cause to be kept proper books of record
and account, in which full, true and

                                       14
<PAGE>

correct entry will be made of all dealings, business and affairs of the
Corporation, including proper and complete entries to capital or property
accounts covering property worn out, obsolete, abandoned or sold, all in
accordance with the requirements of any system of accounting or keeping accounts
or the rules, regulations or orders prescribed by a regulatory commission with
jurisdiction over the rates of the Corporation giving rise to more than 50% of
the Corporation's gross revenues, or if there are no such requirements or rules,
regulations or orders, then in compliance with generally accepted accounting
principles.

                  SECTION 5.12. CERTIFICATES AS TO DEFAULTS. The Corporation
shall file with the Trustee, on or before November 1 of each year, a certificate
signed by an Authorized Corporation Representative stating that, to the best of
his knowledge, information and belief, the Corporation has kept, observed,
performed and fulfilled or caused to be kept, observed, performed and fulfilled
each and every one of its covenants and obligations contained in this
Participation Agreement and in the Corporation Note and, to the best of his
knowledge, information and belief, there does not exist at the date of such
certificate any default by the Corporation under this Participation Agreement or
any event of default hereunder or other event which, with notice or the lapse of
time specified in Section 6.01, or both, would become an event of default or, if
any such default or event of default or other event shall so exist, specifying
the same and the nature and status thereof.

                  SECTION 5.13. CORPORATION NOT TO PERMIT HINDRANCE OR DELAY OF
PAYMENT OF CORPORATION NOTE. The Corporation will not voluntarily do, suffer or
permit any act or thing intended to hinder or delay the payment of the
indebtedness evidenced by the Corporation Note.

                  SECTION 5.14. CONSOLIDATION, MERGER OR SALE OF ASSETS. (a) The
Corporation will not consolidate with or permit itself to be merged into any
individual, corporation, partnership, joint venture, trust, limited liability
Corporation or corporation, unincorporated organization or government or any
political subdivision thereof, or any department, agency authority or other
instrumentality of any government or political subdivision thereof (each, a
"Person") or Persons or convey, transfer, lease or otherwise dispose of all or
substantially all of its properties and assets (any such conveyance, transfer,
lease or other disposition, a "Transfer"), except in the manner and upon the
terms and conditions set forth in this Section 5.14.

                  (b) Nothing contained in this Participation Agreement shall
prevent (and this Participation Agreement shall be construed as permitting and
authorizing) any lawful consolidation or merger of the Corporation with or into
any other Person lawfully authorized to acquire and operate the properties of
the Corporation, or a series of consolidations or mergers, or successive
consolidations or mergers, in which the Corporation or its successor or
successors shall be a party, or any Transfer to a Person lawfully authorized to
acquire and operate the same; provided that upon any consolidation, merger or
Transfer, the Person formed by such consolidation, or into which such merger may
be made if other than the Corporation, or the Person that is a transferee in a
Transfer shall execute and deliver to the Trustee an instrument, in form
satisfactory to the Trustee, whereby such Person shall effectually assume the
due and punctual payment of the principal of, and premium, if any, and interest
on, the Corporation Note according to its tenor and

                                       15
<PAGE>

the due and punctual performance and observance of all covenants and agreements
to be performed by the Corporation pursuant to this Participation Agreement, the
Tax Regulatory Agreement and the Corporation Note; and, thereupon, the
Corporation shall be released from its obligations under this Participation
Agreement and under the Tax Regulatory Agreement and the Corporation Note.

                  (c) Every such successor Person (or transferee Person under
Section 7.06) shall possess, and may exercise, from time to time, each and every
right and power of the Corporation hereunder and under the Note, in its name or
otherwise; and any act, proceeding, resolution or certificate by any of the
terms of this Participation Agreement, the Tax Regulatory Agreement and the
Corporation Note required or provided to be done, taken and performed or made,
executed or verified by any board or officer of the Corporation shall and may be
done, taken and performed or made, executed or verified with like force and
effect by the corresponding board or officer of any such successor Person.

                  (d) If consolidation, merger or sale or other Transfer is made
as permitted by this Section, the provisions of this Section shall continue in
full force and effect and no further consolidation, merger or Transfer shall be
made except in compliance with the provisions of this Section.

                  SECTION 5.15. FINANCIAL STATEMENTS OF CORPORATION. So long as
the Corporation is a publicly-owned corporation, it shall (a) furnish the
Trustee and the Bond Insurer with a copy of its annual report to shareholders
for each year, beginning with the year 1999, on or before March 31 of the
subsequent year or as soon thereafter as it is reasonably available, and (b)
furnish to the Trustee, to the Bond Insurer, and to any owner of the Bonds if
requested in writing by such owner, all financial statements which it sends to
its shareholders generally. While the Policy is in effect, the Corporation shall
furnish to the Bond Insurer such additional information it may reasonably
request. To the extent that the Corporation has entered into a continuing
disclosure undertaking pursuant to Rule 15c2-12 under the Securities Exchange
Act as in effect on the date of this Participation Agreement or any successor
thereto (the "Rule") with respect to the Bonds, the Bond Insurer shall be
included as party to receive notices of all material events (as described in
paragraph (b)(5)(i)(C) of the Rule).

                  SECTION 5.16. COMPLIANCE WITH LAWS. The Corporation agrees to
use its best efforts to comply in all material respects with all applicable
laws, rules and regulations and orders of any governmental authority,
non-compliance with which would materially adversely affect the Corporation's
ability to perform its obligations hereunder or under the Tax Regulatory
Agreement or the Corporation Note, except laws, rules, regulations or orders
being contested in good faith or laws, rules, regulations or orders for which
the Corporation has applied for variances from or exceptions to.

                                       16
<PAGE>

                                   ARTICLE VI

                        DEFAULTS BY CORPORATION; REMEDIES

                  SECTION 6.01. EVENTS OF DEFAULT; ACCELERATION. In case one or
more of the following events of default (each, an "event of default") shall have
occurred and be continuing:

                  (a) failure by the Corporation to pay when due any amount
         required to be paid under this Participation Agreement or the
         Corporation Note, which failure causes a default in the payment when
         due of the interest on any of the Bonds and continuance of such default
         for five Business Days;

                  (b) failure by the Corporation to pay when due any amount
         required to be paid under this Participation Agreement or the
         Corporation Note, which failure causes a default in the payment when
         due of the principal of, or premium, if any, on any of the Bonds;
         provided that, with respect to any payment of principal of, or premium,
         if any, payable on Bonds called for redemption, such failure by the
         Corporation shall continue for five Business Days; or

                  (c) failure by the Corporation to pay when due any amount
         required to be paid under Section 4.11, which failure causes a default
         in the payment when due of any amount payable pursuant to Article V of
         the Indenture;

                  (d) failure on the part of the Corporation duly to observe or
         perform any other of the covenants or agreements on the part of the
         Corporation contained in this Participation Agreement (other than
         failure to pay amounts required to be paid under Sections 4.04, 4.05,
         4.07, 4.08, 4.09 or 4.10) or in the Corporation Note for a period of 90
         days after the date on which written notice of such failure, requiring
         the Corporation to remedy the same, shall have been given to the
         Corporation by the Authority or the Trustee, provided, however, that,
         if such failure is such that it cannot be corrected within such 90-day
         period, it shall not constitute an event of default if corrective
         action is instituted by the Corporation within such 90-day period and
         diligently pursued until such failure is corrected; or

                  (e) an Act of Bankruptcy relating to the Corporation;

then, and in any such event, the Trustee with the consent of the Bond Insurer,
may, and upon the written request of the Bond Insurer or the owners of at least
25% in aggregate principal amount of the Bonds then outstanding with the consent
of the Bond Insurer shall, by notice in writing to the Corporation and the Bond
Insurer and provided that the default has not theretofore been cured, declare
the Corporation Note to be due and payable immediately, and upon any such
declaration the same shall become and shall be immediately due and payable,
anything contained in this Participation Agreement or in the Corporation Note to
the contrary notwithstanding. Any amounts

                                       17
<PAGE>

collected by the Trustee pursuant to action taken under this Section 6.01 shall
be applied in accordance with the Indenture. In addition, if at any time the
principal of the Bonds shall have been declared to be due and payable by
acceleration pursuant to the terms of the Indenture, the Corporation Note shall
thereupon become and be immediately due and payable, subject to such declaration
with respect to the Bonds being rescinded or annulled pursuant to the Indenture.

                  The right or obligation of the Trustee to make any such
declaration as aforesaid, however, is subject to the condition that if, at any
time after declaration, but before all the Bonds shall have matured by their
terms, the principal of, premium, if any, and interest on, the Corporation Note
which shall have become due and payable otherwise than by such declaration, and
all other sums payable hereunder, except the principal of, and interest on, the
Corporation Note which shall have become due and payable by such declaration,
shall have been paid or provision satisfactory to the Trustee shall have been
made for such payment, and the reasonable expenses of the Trustee and of the
owners of the Bonds incurred pursuant to the Indenture shall have been paid,
including reasonable attorneys' fees paid or incurred, and all defaults
hereunder and under the Bonds or under the Indenture, except as to the payment
of principal and interest due and payable solely by reason of such declaration,
shall be made good or be secured to the satisfaction of the Trustee or provision
deemed by the Trustee to be adequate shall be made therefor, then and in every
such case the owners of a majority in aggregate principal amount of the Bonds
then outstanding, by written notice to the Authority and to the Trustee, may
rescind such declaration and annul such default in its entirety, or, if the
Trustee shall have acted in the absence of a written request of the owners of at
least 25% in aggregate principal amount of the outstanding Bonds, and if there
shall not have been theretofore delivered to the Trustee written direction to
the contrary by the owners of at least 25% in aggregate principal amount of the
outstanding Bonds, then any such declaration shall ipso facto be deemed to be
rescinded and any such default and its consequences shall ipso facto be deemed
to be annulled, but no such rescission and annulment shall extend to or affect
any subsequent default or impair or exhaust any right or power consequent
thereon.

                  Anything in this Participation Agreement to the contrary
notwithstanding, upon the occurrence and continuance of an event of default as
defined herein, the Bond Insurer (if not in default) shall be entitled to
control and direct the enforcement of all rights and remedies granted to the
Bondholders or the Trustee for the benefit of the Bondholders under this
Participation Agreement, including, without limitation: (i) the right to
accelerate the principal of the Corporation Note as described in this
Participation Agreement, and (ii) the right to rescind any declaration of
acceleration, and the Bond Insurer shall also be entitled to approve all waivers
of events of default.

                  In case the Trustee shall have proceeded to enforce any right
under this Participation Agreement or the Corporation Note and such proceedings
shall have been discontinued or abandoned for any reason or shall have been
determined adversely to the Trustee, then and in every such case the
Corporation, the Authority and the Trustee shall be restored respectively to
their former positions and rights hereunder, and all rights, remedies and powers

                                       18
<PAGE>

of the Corporation, the Authority and the Trustee shall continue as though no
such proceedings had been taken.

                  In the event of any Act of Bankruptcy, reorganization or
liquidation, the Bond Insurer shall have the right to vote on behalf of all
Bondholders absent a default by the Bond Insurer under the Policy.

                  SECTION 6.02. CERTAIN EVENTS OF DEFAULT; AUTHORITY OR TRUSTEE
MAY TAKE CERTAIN ACTIONS. In case the Corporation shall have failed to comply
with its obligations under Article III or under Sections 4.04, 4.08, 4.09, 4. 10
or 5.16, which event shall have continued for a period of 90 days after the date
on which written notice of such failure, requiring the Corporation to remedy the
same, shall have been given to the Corporation by the Authority or the Trustee,
the Authority or the Trustee may take whatever action at law or in equity as may
appear necessary or desirable to enforce performance or observance of any
obligations or agreements of the Corporation under said Article or Sections. In
case the Corporation shall have failed to comply with its obligations under
Section 4.05, which event shall have continued for a period of 90 days after the
date on which written notice of such failure, requiring the Corporation to
remedy the same, shall have been given to the Corporation by the Trustee, the
Trustee may take whatever action at law or in equity as may appear necessary or
desirable to the Trustee to enforce performance or observance of any obligations
or agreements of the Corporation under said Section.

                  SECTION 6.03. JUDICIAL PROCEEDINGS BY TRUSTEE. Upon the
occurrence and continuance of an event of default (as defined in Section 6.01)
the Trustee may, and upon the written request of the owners of at least 25 % in
aggregate principal amount of the Bonds then outstanding and receipt by the
Trustee of indemnity satisfactory to it shall, institute any actions or
proceedings at law or in equity for the collection of any amounts then due and
unpaid on the Corporation Note, and may prosecute any such action or proceeding
to judgment or final decree, and may collect in the manner provided by law the
money adjudged or decreed to be payable.

                                       19
<PAGE>

                                   ARTICLE VII

                                  MISCELLANEOUS

                  SECTION 7.01. DISPOSITION OF AMOUNTS AFTER PAYMENT OF BONDS.
Any amounts determined by the Trustee to be remaining in the funds created under
the Indenture after payment in full, or provision for payment in full, of
principal of, and premium, if any, and interest on, all of the Bonds, in
accordance with the provisions of the Indenture, and payment of all the fees,
charges and expenses of the Authority, the Fiduciaries, the Remarketing Agents,
the Auction Agent and the Indexing Agents in accordance with the Indenture and
this Participation Agreement and any amounts required to be paid to the United
States of America pursuant to the Tax Regulatory Agreement, shall belong to and
be paid to the Corporation.

                  SECTION 7.02. NOTICES. All notices, certificates, requests or
other communications between the Authority, the Corporation and the Trustee
required or permitted to be given under this Participation Agreement or under
the Indenture (except as otherwise provided therein) shall be sufficiently given
and shall be deemed given when delivered or mailed by first class mail, postage
prepaid, addressed as follows: if to the Authority, at Corporate Plaza West, 286
Washington Avenue Extension, Albany, New York 12203, Attention: President; if to
the Corporation, at 284 South Avenue, Poughkeepsie, New York 12601-4879,
Attention: Treasurer; if to the Trustee, at 114 West 47th Street, New York, N.Y.
10036-1552, Attention: Corporate Trust and Agency Division; if to the
Remarketing Agent, at the address set forth in the Remarketing Agreement; and if
to the Tender Agent or the Bond Insurer to the addresses set forth for such
persons in Section 17.09 of the Indenture. A duplicate copy of each notice,
certificate, request or other communication given hereunder to the Authority,
the Bond Insurer, the Corporation or the Trustee shall also be given to the
others. The Corporation, the Bond Insurer, the Authority and the Trustee may, by
notice given hereunder, designate any further or different addresses to which
subsequent notices, certificates, requests or other communications shall be
sent.

                  SECTION 7.03. SUCCESSORS AND ASSIGNS. This Participation
Agreement shall inure to the benefit of and shall be binding upon the Authority,
the Corporation, the Fiduciaries, all providers of Support Facilities, the
Remarketing Agents, the Indexing Agents and their respective successors and
assigns. To the extent that this Participation Agreement confers upon or gives
or grants to the Bond Insurer any right, remedy or claim under or by reason of
this Participation Agreement, the Bond Insurer (if not in default under the
Policy) is hereby explicitly recognized as being a third-party beneficiary
hereunder and may enforce any such right remedy or claim conferred, given or
granted hereunder. Nothing in this Participation Agreement expressed or implied
is intended or shall be construed to confer upon, or to give or grant to, any
Person, other than the Authority, the Fiduciaries, the providers of Support
Facilities, the Remarketing Agents, the Indexing Agents, the Corporation and the
Bondholders, any right, remedy or claim under or by reason of this Participation
Agreement or any covenant, condition or stipulation hereof, and all covenants,
stipulations, promises and agreements in this Participation Agreement contained
by

                                       20
<PAGE>

and on behalf of the Corporation shall be for the sole and exclusive benefit of
the Authority, the Fiduciaries, all providers of Support Facilities, the
Remarketing Agents, the Indexing Agents, and the Bondholders.

                  SECTION 7.04. REFERENCES TO THE LIQUIDITY FACILITY. After
establishment of a Fixed Rate for the Bonds and upon receipt by the Trustee of
notice from the Liquidity Provider that all amounts payable to the Liquidity
Provider with respect to the Liquidity Facility have been received, all
references in this Participation Agreement to the Liquidity Facility or the
Liquidity Provider shall be ineffective.

                  SECTION 7.05. AMENDMENT OF PARTICIPATION AGREEMENT. This
Participation Agreement may not be amended except by an instrument in writing
signed by the parties hereto and upon compliance with the applicable provisions
of Sections 14.06, 14.07 and 14.08 of the Indenture. Subject to the provisions
of Section 14.06 of the Indenture, any provision of this Participation Agreement
expressly recognizing or granting rights in or to the Bond Insurer may not be
amended in any manner which affects the rights of the Bond Insurer hereunder
without the prior written consent of the Bond Insurer.

                  SECTION 7.06. ASSIGNMENT AND TRANSFER. The Authority shall
assign its rights under and interest in this Participation Agreement (except the
rights and interest of the Authority under Article III and Sections 4.04, 4.08,
4.09, 4.10 and 5.16, clause (a) of this Section 7.06, and insofar as the
obligations of the Corporation under Section 4.07 relate to taxes and
assessments imposed upon the Authority and not the Fiduciaries, Section 4.07
thereof), subject to the provisions of this Participation Agreement relating to
the amendment thereof, to the Trustee pursuant to the Indenture, as security for
payment of the principal of, and premium, if any, and interest on, the Bonds. In
addition, the Trustee shall have the same power as the Authority to enforce from
time to time the rights of the Authority set forth in Article III and Section
5.16, subject to the provisions of this Participation Agreement relating to the
amendment hereof. Except as provided in this Section 7.06, the Authority will
not sell, assign, transfer, convey or otherwise dispose of its interest in this
Participation Agreement during the term of this Participation Agreement.

                  The Corporation may convey, transfer, lease or otherwise
dispose of the Project provided that such conveyance, transfer, lease or other
disposition will not release the Corporation from its obligations under this
Participation Agreement except in accordance with the next paragraph.

                  The Corporation may convey, transfer, lease or otherwise
dispose of the Project and be released from its obligations under this
Participation Agreement, the Tax Regulatory Agreement and the Corporation Note,
in a transaction not constituting a Transfer as defined in Section 5.14(a),
subject to the following:

                                       21

<PAGE>

                  (a) The Authority shall have consented to the conveyance,
         transfer, lease or other disposition upon receipt of (i) Opinion of
         Bond Counsel to the effect that the conveyance, transfer, lease or
         other disposition will not have an adverse effect on the exclusion of
         interest on such Bonds from gross income for federal income tax
         purposes and (ii) other legal opinions and documents satisfactory to it
         under the circumstances.

                  (b) The Person that is a transferee of the Project shall
         execute and deliver to the Trustee an instrument, in form satisfactory
         to the Authority and the Trustee, whereby such Person shall effectually
         assume the due and punctual payment of the principal of, and premium,
         if any, and interest on, the Corporation Note according to its tenor
         and the due and punctual performance and observance of all covenants
         and agreements to be performed by the Corporation pursuant to this
         Participation Agreement, the Tax Regulatory Agreement and the
         Corporation Note.

                  (c) If a disposition is made as permitted by this Section, the
         provisions of this Section and Section 5.14 shall continue in full
         force and effect and no further disposition shall be made except in
         compliance with the provisions of this Section or Section 5.14.

                  SECTION 7.07. PARTICIPATION AGREEMENT SUPERSEDES ANY PRIOR
AGREEMENTS. This Participation Agreement and the related documents identified
herein supersede any other prior agreements or understandings, written or oral,
between the parties with respect to the transactions contemplated hereby.

                  SECTION 7.08. COUNTERPARTS. This Participation Agreement may
be executed in any number of counterparts, each of which when so executed and
delivered shall be an original, but such counterparts shall together constitute
but one and the same Participation Agreement.

                  SECTION 7.09. SEVERABILITY. If any clause, provision or
section of this Participation Agreement is held illegal, invalid or
unenforceable by any court or administrative body, such Participation Agreement
shall be construed and enforced as if such illegal or invalid or unenforceable
clause, provision or section had not been contained in this Participation
Agreement. In case any agreement or obligation contained in this Participation
Agreement shall be held to be in violation of law, then such agreement or
obligation shall be deemed to be the agreement or obligation of the Authority or
the Corporation, as the case may be, to the full extent permitted by law.

                  SECTION 7.10. NEW YORK LAW TO GOVERN. THE DOMESTIC LAW OF THE
STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION OF THIS PARTICIPATION AGREEMENT.

                                       22
<PAGE>

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

                                         NEW YORK STATE ENERGY RESEARCH
                                         AND DEVELOPMENT AUTHORITY

                                         By:   /s/ F. WILLIAM VALENTINO, JR.
                                            -----------------------------------
                                                         President

(SEAL)

ATTEST:

/s/ WILLIAM M. FLYNN
------------------------------
Secretary to the Board and
  Vice President for
    Governmental Relations

                                         CENTRAL HUDSON GAS & ELECTRIC
                                         CORPORATION

                                         By:       /s/ STEVEN V. LANT
                                            ------------------------------------
                                                  Chief Financial Officer,
                                                  Treasurer and Secretary

(SEAL)

ATTEST:

/s/ WILLIAM P. REILLY
----------------------------
Assistant Secretary

                                       23
<PAGE>

                                    EXHIBIT A

                     (To Participation Agreement dated as of
                        August 1, 1999, between New York
                      State Energy Research and Development
            Authority and Central Hudson Gas & Electric Corporation)

                    CENTRAL HUDSON GAS & ELECTRIC CORPORATION

                                  $115,850,000
                                 PROMISSORY NOTE
                                       FOR

                    POLLUTION CONTROL REFUNDING REVENUE BONDS
              (CENTRAL HUDSON GAS & ELECTRIC CORPORATION PROJECTS),
                                  1999 SERIES B

                    POLLUTION CONTROL REFUNDING REVENUE BONDS
              (CENTRAL HUDSON GAS & ELECTRIC CORPORATION PROJECTS),
                                  1999 SERIES C

                    POLLUTION CONTROL REFUNDING REVENUE BONDS
              (CENTRAL HUDSON GAS & ELECTRIC CORPORATION PROJECTS),
                                  1999 SERIES D

                  Central Hudson Gas & Electric Corporation (the "Corporation"),
a New York corporation, for value received, hereby promises to pay, on or before
the dates set forth below, the amounts set forth below, to United States Trust
Corporation of New York, New York, New York, as trustee or its successor or
successors as trustee (the "Trustee") under the Trust Indenture dated as of
August 1, 1999, between the New York State Energy Research and Development
Authority (the "Authority"), a body corporate and politic, constituting a public
benefit corporation, established and existing under and by virtue of the laws of
the State of New York, and the Trustee. Such Trust Indenture, as it may be
amended or supplemented from time to time, is herein called the "Indenture."
Unless otherwise defined herein, the terms used in this promissory note (the
"Corporation Note") which are defined in Section 1.01 of the Indenture shall
have the meanings, respectively, herein which such terms are given in said
Section 1.01 of the Indenture.

                  This Corporation Note is issued pursuant to the Participation
Agreement in order to evidence the obligation of the Corporation to the
Authority to repay the advance of the proceeds of the Bonds. In accordance with
the Participation Agreement, the Authority has authorized and

                                       A-1
<PAGE>

directed the Corporation to issue this Corporation Note payable to the order of
the Trustee as security for the payment of principal of, premium, if any, and
interest on, the Bonds. The rights and interest of the Authority under the
Participation Agreement (except the rights and interest of the Authority under
Article III and Sections 4.04, 4.08, 4.09, 4.10 and 5.16 thereof, clause (a) of
Section 7.06, and insofar as the obligations of the Corporation under Section
4.07 relate to taxes and assessments imposed upon the Authority and not the
Fiduciaries, Section 4.07 thereof), subject to the provisions of the
Participation Agreement relating to the amendment thereof, have been assigned to
the Trustee pursuant to the Indenture. In addition, the Authority has granted
the Trustee the same power as the Authority to enforce from time to time the
rights of the Authority set forth in said Article III and Section 5.16, subject
to the provisions of the Participation Agreement relating to the amendment
thereof. All of the terms, conditions and provisions of the Participation
Agreement are, by this reference thereto, incorporated herein as part of this
Corporation Note.

                  This Corporation Note shall be payable as to principal,
premium, if any, and interest as follows:

                  (a) On or before each Interest Payment Date, a sum which
         together with other money then available for such purpose in the Bond
         Fund will enable the Trustee to pay the interest on the Bonds coming
         due on such date;

                  (b) On or before any redemption date for the Bonds (other than
         a redemption date pursuant to Section 5.07 of the Indenture), a sum
         which together with other money then available for such purpose in the
         Bond Fund will enable the Trustee to pay the principal of, premium, if
         any, and interest on the Bonds which are to be redeemed on such date;
         and

                  (c) On or before the Stated Maturity Date of each series of
         the Bonds (July 1, 2034, in the case of the 1999 Series B Bonds and
         August 1, 2028, in the case of the 1999 Series C Bonds and 1999 Series
         D Bonds), a sum which together with other money then available for such
         purpose in the Bond Fund will enable the Trustee to pay the outstanding
         principal amount of such series of Bonds;

provided that, if the Bonds are redeemed pursuant to Section 5.07 of the
Indenture, the amounts that would otherwise have been payable on this
Corporation Note if not for such redemption, shall continue to be payable at the
times and in the amounts set forth above as if such redemption had not occurred;
and provided further that if the Bonds are redeemed pursuant to Section 5.07 of
the Indenture the Corporation shall have the right at any time thereafter to
prepay this Corporation Note by paying the amount due on this Corporation Note
at the time of such prepayment together with unpaid interest accrued thereon to
the date of such prepayment.

                  The obligation of the Corporation to make any payment of
principal of, and premium, if any, and interest on, this Corporation Note shall
be deemed satisfied and discharged

                                       A-2
<PAGE>

to the extent of the corresponding payment made by a Liquidity Provider (other
than as Purchase Price).

                  All payments of principal of, and premium, if any, and
interest on, this Corporation Note shall be made by wire transfer in immediately
available funds to the Trustee at its corporate trust office, 114 West 47th
Street, New York, New York 10036-1552, ABA Routing Number: Chase NYC 021000021,
for further credit to the account of US Trust Account No. 920- 1-073195; Attn.:
NYSERDA/Central Hudson 1999 Series B, 1999 Series C and 1999 Series D, Account
No. 04265600 (in the case of payments of interest) or Account No. 04265700 (in
the case of payments of principal), or to such different address or account as
the Trustee may from time to time designate, on or before each date on which
such principal, premium, if any, or interest is due in such coin or currency of
the United States of America as at the time of payment shall be legal tender for
the payment of public and private debts.

                  The Corporation has agreed in the Participation Agreement that
if for any reason Corporation Note Payments, together with other moneys held by
the Trustee and then available for such purpose (including money paid by a
Liquidity Provider (other than as Purchase Price)), would not be sufficient to
make the corresponding payments of principal of, and premium, if any, and
interest on, the Bonds when such payments are due, the Corporation will pay the
amounts required from time to time to make up any such deficiency.

                  In the event that payment has been made in respect of the
principal of and premium, if any, and interest on, all of the Bonds, or
provision therefor has been made in accordance with the Indenture, then this
Corporation Note shall be deemed paid in full and shall be cancelled and
returned to the Corporation; provided that this Corporation Note shall not be
deemed paid in full if the Bonds are redeemed pursuant to Section 5.07 of the
Indenture.

                  No reference herein to the Participation Agreement shall
impair the obligation of the Corporation to pay the principal of and premium, if
any, and interest on this Corporation Note at the time and place and in the
amounts herein prescribed, which obligation is absolute, irrevocable and
unconditional and is not subject to any defense (other than payment) or any
right of set-off, counterclaim or recoupment for any reason, including, without
limitation, any breach by the Authority of any obligation to the Corporation,
whether under the Participation Agreement or otherwise, or inaccuracy of any
representation by the Authority to the Corporation under the Participation
Agreement, or any indebtedness or liability at any time owing to the Corporation
by the Authority or any failure to complete the Project or the destruction by
fire or other casualty of the Project or any portion thereof, or the taking of
title thereto or the use thereof by the exercise of the power of eminent domain.

                  In case of an event of default (as defined in Section 6.01 of
the Participation Agreement), the principal of and interest to the date of
payment of this Corporation Note may be declared immediately due and payable as
provided in the Participation Agreement. In addition, if at any time the
principal of the Bonds shall have been declared to be due and payable by

                                       A-3
<PAGE>

acceleration pursuant to the terms of the Indenture, this Corporation Note shall
thereupon become and be immediately due and payable, subject to such declaration
with respect to the Bonds being annulled pursuant to the Indenture.

                  This Corporation Note may not be amended except by an
instrument in writing signed by the Corporation, by the Authority and by the
Trustee, on behalf of the owners of the Bonds, in the manner and subject to the
conditions provided in the Indenture.

                  This Corporation Note may not be transferred by the Trustee
except to effect an assignment to a successor Trustee under the Indenture or
pursuant to Section 5.07 of the Indenture.

                  THIS CORPORATION NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE DOMESTIC LAW OF THE STATE OF NEW YORK.

                  Presentment, demand, protest and notice of dishonor are hereby
expressly waived.

                                       A-4
<PAGE>

                  IN WITNESS WHEREOF, the Corporation has caused this
Corporation Note to be duly executed and delivered as of August 3, 1999.

                                          CENTRAL HUDSON GAS & ELECTRIC
                                          CORPORATION

                                          By:
                                             ----------------------------------
(SEAL)                                             Chief Financial Officer,
                                                   Treasurer and Secretary

ATTEST:

---------------------------
Assistant Secretary

                                       A-5Exhibit (10) (i) 74

                INSTRUMENT OF APPOINTMENT AND ACCEPTANCE OF AGENT

                                       AND

                      AMENDED AND RESTATED CREDIT AGREEMENT

      Instrument of Appointment and Acceptance of Agent and Amended and Restated
Credit Agreement ("Amendment") dated as of January 3, 2001, among CENTRAL HUDSON
GAS & ELECTRIC CORPORATION, a New York corporation (the "Borrower"), the banks
party hereto, MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as resigning Agent (the
"Resigning Agent") for the Banks (as defined in the Credit Agreement referred to
below), and THE CHASE MANHATTAN BANK, as successor Agent (the "Successor Agent")
for the Banks.

                                R E C I T A L S:

      WHEREAS, the Borrower is a party to a Credit Agreement dated as of October
23, 1996 (the "Credit Agreement") with the banks party thereto and the Resigning
Agent; and

      WHEREAS, the Resigning Agent has delivered written notice of its
resignation as Agent under the Credit Agreement to the Banks and the Borrower,
effective as of the Amendment Effective Date (as defined below), and the Banks,
with the Borrower's approval, desire to appoint the Successor Agent as successor
Agent; and

      WHEREAS, the parties desire to amend and restate the Credit Agreement
concomitantly with the resignation of the Resigning Agent and the appointment of
the Successor Agent, on the terms and conditions hereinafter set forth; and
<PAGE>

      WHEREAS, the Morgan Guaranty Trust Company of New York (the "Assignor")
agrees to assign and sell all of its rights under the Credit Agreement to The
Chase Manhattan Bank (the "Assignee"), and the Assignee agrees to accept such
assignment and assume all of the obligations of the Assignor under the Credit
Agreement on the terms and conditions of the Assignment and Assumption Agreement
set forth in Exhibit "A".

      NOW, THEREFORE, the parties hereto agree as follows:

                                    ARTICLE 1
                                CAPITALIZED TERMS

      SECTION 1.1. Unless otherwise indicated, all capitalized terms used
herein, but not defined herein shall have the meanings ascribed to them in the
Credit Agreement.

      SECTION 1.2. The following terms, as used herein, have the following
meanings:

            "Contemplated Transactions" means any of the sale of the Borrower's
interest in (i) its fossil fueled generating plants pursuant to the Amended and
Restated Settlement Agreement, dated January 2, 1998, by and among the Borrower,
the Public Service Commission of the State of New York ("PSC"), and certain
other parties thereto as subsequently modified and revised pursuant to an Order
of the PSC dated February 19, 1998, an Agreement dated February 26, 1998 and an
Order of the PSC dated June 30, 1998, copies of which are annexed hereto as
Exhibit "B", including a sale, if elected, to a corporate affiliate for tax
considerations; and (ii) the Nine Mile Point No. 2 nuclear plant if such sale is
approved by the PSC, provided, however, that

                                       2
<PAGE>

in the event that the Borrower's senior credit rating is below "A-", the
Borrower shall not distribute the proceeds of such sale without the prior
written consent of the Required Banks.

            "Fee Letter" means the letter agreement between the Borrower and the
Successor Agent dated November 9, 2000.

            "Successor Agent" means The Chase Manhattan Bank in its capacity as
agent for the Banks under the Credit Agreement, as amended, and its successors
in such capacity.

                                    ARTICLE 2
                       APPOINTMENT AND ACCEPTANCE OF AGENT

      SECTION 2.1. The Resigning Agent confirms that, pursuant to written notice
dated January 3, 2001, it has notified the Banks and the Borrower that it
resigns as Agent pursuant to Section 7.08 of the Credit Agreement, effective on
the Amendment Effective Date.

      SECTION 2.2. The Banks, with the Borrower's approval, hereby appoint the
Successor Agent as the successor Agent pursuant to Section 7.08 of the Credit
Agreement.

      SECTION 2.3. The Successor Agent hereby accepts the appointment as the
successor Agent under the Credit Agreement, as amended herein, such acceptance
to be effective on the Amendment Effective Date. Upon the effectiveness of this
Amendment, the Successor Agent shall automatically and without any further
action be vested with all the rights, powers, discretion, privileges and duties
of the Resigning Agent, and the Resigning Agent shall automatically and without
any further action be

                                       3
<PAGE>

discharged from its duties and obligations under the Credit Agreement. All
references hereafter in this Amendment to the Agent shall, unless otherwise
expressly provided herein, be deemed a reference to the Successor Agent.

                                    ARTICLE 3
                         AMENDMENTS TO CREDIT AGREEMENT

      SECTION 3.1. The Credit Agreement is hereby amended as follows:

            a.    All references to Morgan Guaranty Trust Company of New York
                  shall be deemed to be references to The Chase Manhattan Bank.

            b.    The first sentence of Section 5.10 is amended to read as
                  follows:

                        "The Borrower will not (a) consolidate with or merge
                        into any other Person or (b) sell, lease or otherwise
                        transfer all or any substantial part of its assets
                        (other than receivables) to any other Person, except the
                        sale of assets under any of the Contemplated
                        Transactions."

                                    ARTICLE 4
                  CONDITIONS OF EFFECTIVENESS OF THIS AMENDMENT

      This Amendment shall become effective on and as of the date (the
"Amendment Effective Date") when and only if the following conditions have been
satisfied, as determined by the Successor Agent:

      SECTION 4.1. The Successor Agent shall have received from each party
hereto a counterpart of this Amendment duly executed by such party.

                                       4
<PAGE>

      SECTION 4.2. The Fee Letter shall have been executed by the Borrower and
delivered to the Successor Agent.

      SECTION 4.3. The Assignee shall have received from the Assignor an
executed Assignment and Assumption Agreement dated as of the Amendment Effective
Date in the form of Exhibit "A" annexed hereto.

      SECTION 4.4. The Resigning Agent shall have delivered to the Successor
Agent (i) any register or similar documentation which evidences that full status
of any Loans; (ii) any funds held by the Resigning Agent pursuant to the Credit
Agreement and the Notes thereunder, and (iii) such other and further assurances
as the Successor Agent shall have reasonably requested.

      SECTION 4.5. The Successor Agent shall have received from the Borrower a
certificate of a duly authorized officer of the Borrower stating that, as of the
Amendment Effective Date, (i) all representations and warranties set forth in
the Credit Agreement are correct and complete as if made on and as of the
Amendment Effective Date and (ii) no event shall have occurred and be
continuing, or shall occur as a result of the occurrence of the Amendment
Effective Date, that constitutes a Default or Event of Default under the Credit
Agreement.

      SECTION 4.6. The Successor Agent shall have received the following
documentation:

            a.    An opinion of Gould & Wilkie, LLP, counsel for the Borrower,
                  substantially in the form of Exhibit "C" hereto and covering
                  such additional matters relating to the transactions
                  contemplated hereby

                                       5
<PAGE>

                  and under the Credit Agreement as the Required Banks may
                  reasonably request;

            b.    Evidence reasonably satisfactory to the Successor Agent that
                  the approval of the New York State Public Service Commission
                  with respect to the execution, delivery and performance by the
                  Borrower of the Amendment has been obtained and is in full
                  force and effect or that such approval is not necessary, which
                  evidence may be in the opinion in the form of Exhibit "C"; and

            c.    All documents the Successor Agent may reasonably request
                  relating to any other matters relevant hereto, all in form and
                  substance satisfactory to the Successor Agent.

                                    ARTICLE 5
                  BORROWER'S REPRESENTATIONS AND WARRANTIES

      The Borrower hereby represents and warrants:

      SECTION 5.1. The Borrower has the requisite corporate power and authority
to enter into, perform and deliver this Amendment, and this Amendment has been
duly authorized, executed and delivered.

      SECTION 5.2. This Amendment constitutes the valid and legally binding
obligation of the Borrower and is enforceable against the Borrower in accordance
with its terms, except to the extent that such enforcement may be limited by
applicable bankruptcy, insolvency or other similar laws effecting creditors'
rights generally or by the effect of general principles of equity which may
limit the enforceability of equitable remedies (whether in a proceeding at law
or in equity).

                                       6
<PAGE>

                                    ARTICLE 6
                                  MISCELLANEOUS

      SECTION 6.1. This Amendment may be executed in any number of counterparts,
all of which taken together shall constitute one and the same instrument, and
any party hereto may execute this Amendment by signing such counterpart.

      SECTION 6.2. This Amendment shall be governed by, and interpreted and
construed in accordance with, the laws of the State of New York.

      SECTION 6.3. Any notice or other communication provided for herein with
respect to the Successor Agent shall be writing and shall be delivered by hand
or overnight courier service, mailed by certified or registered mail or sent by
telecopy, to The Chase Manhattan Bank, 12 Corporate Woods Boulevard, 4th Floor,
Albany, New York 12211, Attention: David C. Horan, Jr., (telecopy number
518-436-9811); with a copy to DeGraff, Foy, Holt-Harris & Kunz, LLP, 90 State
Street, Albany, New York 12207, Attention: Terence J. Devine, Esq. (telecopy
number 518-436-0210).

      SECTION 6.4. Except as specifically amended hereby, the Credit Agreement
and the Note are restated and if set forth at length herein and shall remain in
full force and effect in accordance with their respective terms.

      SECTION 6.5. All references to the Credit Agreement in the Credit
Agreement or any of the instruments, agreements or other documents or papers
executed or delivered in connection therewith shall be deemed to refer to the
Credit Agreement as amended by this Amendment.

                                       7
<PAGE>

      IN WITNESS WHEREOF, the parties have caused this Instrument of Appointment
and Acceptance of Agent and Amendment to Credit Agreement to be duly executed as
of the day and year first above written.

                              CENTRAL HUDSON GAS & ELECTRIC CORPORATION

                        BY:          /s/ STEVEN V. LANT
                              ------------------------------------------------
                              Name:  Steven V. Lant
                              Title: Chief Financial Officer and Treasurer

                              MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
                              Individually and as Resigning Agent

                        BY:          /s/ ROBERT BOTTAMEDI
                              ------------------------------------------------
                              Name:  Robert Bottamedi
                              Title: Vice President

                              THE CHASE MANHATTAN BANK, Individually and as
                                 Successor Agent

                        BY:          /s/ DAVID C. HORAN, JR.
                              ------------------------------------------------
                              Name:  David C. Horan, Jr.
                              Title: Vice President

                              THE BANK OF NEW YORK

                        BY:          /s/ JOHN W. HALL
                              ------------------------------------------------
                              Name:  John W. Hall
                              Title: Vice President

                                       8
<PAGE>

                              HSBC BANK U.S.A., f/k/a MARINE MIDLAND
                              BANK, N.A.

                        BY:         /s/ PATRICK DOULIN
                              ------------------------------------------------
                              Name: Patrick Doulin
                              Title:   Senior Vice President

                                       9

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