Document:

<PAGE>

                           PURCHASE AND SALE AGREEMENT
                               (VERMONT ELECTRIC)

                                     between

                           CITIZENS UTILITIES COMPANY,

                          CAP ROCK ELECTRIC COOPERATIVE

                                       and

                           CAP ROCK ENERGY CORPORATION

                          Dated as of February 11, 2000

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                                            Page
<S>                                                                                                                         <C>
ARTICLE I  DEFINITIONS                                                                                                         1
        Section 1.1             Certain Defined Terms                                                                          1
        Section 1.2             Other Defined Terms                                                                            9

ARTICLE II PURCHASE AND SALE                                                                                                   9
        Section 2.1             Purchase and Sale of Assets                                                                    9
        Section 2.2             Assumed Liabilities                                                                            9
        Section 2.3             Retained Liabilities                                                                          11
        Section 2.4             Condition on Assignment or Assumption of Contracts and Rights                                 12

ARTICLE III PURCHASE PRICE                                                                                                    12
        Section 3.1             Purchase Price                                                                                12
        Section 3.2             Deposit                                                                                       13
        Section 3.3             Calculation of Purchase Price                                                                 13
        Section 3.4             Prorations and Adjustments as of the Closing Date                                             14

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER                                                                            15
        Section 4.1             Organization, Existence and Qualification                                                     15
        Section 4.2             Authority Relative to this Agreement and Binding Effect                                       15
        Section 4.3             Governmental Approvals                                                                        15
        Section 4.4             Availability of Funds                                                                         16
        Section 4.5             Filings                                                                                       16
        Section 4.6             Brokers                                                                                       16
        Section 4.7             Independent Investigation                                                                     16
        Section 4.8             Public Utility Holding Company Status; Regulation as a Public Utility                         16
        Section 4.9             Buyer's Financial Statements                                                                  17
        Section 4.10            Buyer's Insurance                                                                             17
<PAGE>

ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER                                                                            17
        Section 5.1             Organization, Existence and Qualification                                                     17
        Section 5.2             Authority Relative to this Agreement and Binding Effect                                       17
        Section 5.3             Governmental and Other Required Consents                                                      17
        Section 5.4             Public Utility Holding Company Status; Regulation as a Public
                                Utility                                                                                       18
        Section 5.5             Title to Assets; Liens                                                                        18
        Section 5.6             Financial Statements                                                                          18
        Section 5.7             Compliance with Legal Requirements; Governmental Permits                                      19
        Section 5.8             Legal Proceedings; Outstanding Orders                                                         19
        Section 5.9             Taxes                                                                                         20
        Section 5.10            Intellectual Property                                                                         20
        Section 5.11            Personal Property                                                                             20
        Section 5.12            Material Contracts; Existing Loan Documents                                                   20
        Section 5.13            Employee Benefit Matters                                                                      21
        Section 5.14            Environmental Matters                                                                         21
        Section 5.15            No Material Adverse Change                                                                    22
        Section 5.16            State and Federal Regulatory Matters                                                          22
        Section 5.17            Brokers                                                                                       23
        Section 5.18            Employee Relations                                                                            23
        Section 5.19            Insurance                                                                                     23
        Section 5.20            Accounts Receivable                                                                           23
        Section 5.21            Appropriate Knowledge Persons                                                                 24
        Section 5.22            Disclaimer                                                                                    24

ARTICLE VI COVENANTS                                                                                                          24
        Section 6.1             Covenants of Seller                                                                           24
        Section 6.2             Covenants of Buyer                                                                            27
        Section 6.3             Governmental Filings                                                                          28
        Section 6.4             Citizens Marks                                                                                28
        Section 6.5             Acknowledgment by Buyer                                                                       29
        Section 6.6             Transition Plan                                                                               29
        Section 6.7             Title Insurance                                                                               30
        Section 6.8             Sale of Generating Assets                                                                     30
        Section 6.9             Hydro-Quebec Step-up Indemnity Agreement                                                      31

ARTICLE VII CONDITIONS PRECEDENT                                                                                              31
        Section 7.1             Seller's Conditions Precedent to Closing                                                      31
        Section 7.2             Buyer's Conditions Precedent to Closing                                                       33

ARTICLE VIII CLOSING                                                                                                          34
        Section 8.1             Closing                                                                                       34

ARTICLE IX TERMINATION                                                                                                        35
        Section 9.1             Termination Rights                                                                            35
        Section 9.2             Limitation on Right to Terminate: Effect of Termination                                       36

ARTICLE X EMPLOYEE MATTERS                                                                                                    37
        Section 10.1            Employment of Transferred Employees                                                           37
        Section 10.2            Assumption of Collective Bargaining Agreement Obligations                                     38
<PAGE>

        Section 10.3            Cessation of Participation in Seller's Plans; Proration of Bonuses                            38
        Section 10.4            Similarity of Benefit Packages                                                                38
        Section 10.5            Defined Benefit Pension Plan                                                                  39
        Section 10.6            401(k) Plan                                                                                   39
        Section 10.7            Welfare Benefits                                                                              40
        Section 10.8            Flexible Spending Accounts                                                                    41
        Section 10.9            Employment Agreements                                                                         41
        Section 10.10           Vacation                                                                                      41
        Section 10.11           Severance                                                                                     41

ARTICLE XI TAX MATTERS                                                                                                        41
        Section 11.1            Purchase Price Allocation                                                                     41
        Section 11.2            Cooperation with Respect to Like-Kind Exchange                                                42
        Section 11.3            Transaction Taxes                                                                             42

ARTICLE XII ENVIRONMENTAL MATTERS                                                                                             43
        Section 12.1  Environmental Due Diligence                                                                             43

ARTICLE XIII INDEMNIFICATION
        Section 13.1            Indemnification by Seller                                                                     44
        Section 13.2            Indemnification by Buyer                                                                      45
        Section 13.3            Limitations on Liability                                                                      45
        Section 13.4            Claims Procedure                                                                              48
        Section 13.5            Exclusive Remedy                                                                              49
        Section 13.6            Indemnification for Negligence                                                                49
        Section 13.7            Waiver and Release                                                                            50

ARTICLE XIV GENERAL PROVISIONS                                                                                                50
        Section 14.1            Expenses                                                                                      50
        Section 14.2            Notices                                                                                       50
        Section 14.3            Assignment                                                                                    51
        Section 14.4            Successor Bound                                                                               52
        Section 14.5            Governing Law                                                                                 52
        Section 14.6            Dispute Resolution                                                                            52
        Section 14.7            Cooperation                                                                                   53
        Section 14.8            Construction of Agreement                                                                     53
        Section 14.9            Publicity                                                                                     54
        Section 14.10           Waiver                                                                                        54
        Section 14.11           Parties in Interest                                                                           54
        Section 14.12           Section and Paragraph Headings                                                                54
        Section 14.13           Amendment                                                                                     54
        Section 14.14           Entire Agreement                                                                              54
        Section 14.15           Counterparts                                                                                  54
        Section 14.16           Severability                                                                                  55
</TABLE>
<PAGE>

                   LIST OF EXHIBITS

Exhibit 7.1(g)     Form of Buyer's Opinion of Counsel
Exhibit 7.2(g)     Form of Seller's Opinion of Counsel
Exhibit 8.1(a)     Form of Bill of Sale

                   LIST OF SCHEDULES

Schedule 1.1(a)    Excluded Assets
Schedule 1.1(b)    Related Purchase Agreements
Schedule 2.2(b)    Certain Assumed Proceedings
Schedule 5.2       Seller's Authority
Schedule 5.3       Seller's Governmental and Other Required Consents
Schedule 5.5       Encumbrances; Owned Real Property
Schedule 5.6(a)    Financial Statements
Schedule 5.6(b)    Certain Liabilities
Schedule 5.7       Compliance with Legal Requirements; Governmental Permits
Schedule 5.8       Legal Proceedings; Outstanding Orders
Schedule 5.9       Taxes
Schedule 5.10      Intellectual Property
Schedule 5.11      Extraordinary Required Repairs
Schedule 5.12      Material Contracts
Schedule 5.13      Employee Matters
Schedule 5.14      Environmental Matters
Schedule 5.15      Material Adverse Changes
Schedule 5.16      State and Federal Regulatory Matters
Schedule 5.19      Seller's Insurance
Schedule 6.1       Conduct of Business
Schedule 6.2(c)    Citizens' Guarantees and Surety instruments
Schedule 10.1      Active Employees
Schedule 10.7      Retirees and "Grandfathered Employees"

<PAGE>

                           PURCHASE AND SALE AGREEMENT
                               (VERMONT ELECTRIC)

         This PURCHASE AND SALE AGREEMENT (this "Agreement") is made as of the 1
day of February, 2000, by and between CITIZENS UTILITIES COMPANY, a Delaware
corporation ("Seller"), and CAP ROCK ELECTRIC COOPERATIVE, a Texas corporation,
and CAP ROCK ENERGY CORPORATION, a Texas corporation ("Cap Rock Energy"). Cap
Rock Cooperative and Cap Rock Energy are sometimes referred to in this Agreement
individually as a "Buyer Entity" and collectively as the "Buyer". Capitalized
terms used herein shall have the meanings ascribed to them in Article I, unless
otherwise provided.

                                   WITNESSETH:

         WHEREAS, Seller owns all of the Assets; and

         WHEREAS, Buyer desires to purchase, and Seller desires to sell, the
Assets, subject in all respects to the provisions of this Agreement.

         NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

         Section 1.1 Certain Defined Terms. For purposes of this Agreement, the
following terms have the meanings specified or referred to in this Article I
(such definitions to be equally applicable to both the singular and plural forms
of the terms defined):

         "Affiliates " or "Affiliated Entities" - entities shall be deemed
"Affiliated as to each other to the extent (i) one of the entities directly or
indirectly controls the other, or the direct or indirect control of one of the
entities is exercised by the officers, directors, stockholders, or partners of
the other entity (whether or not such persons exercise such control in their
capacities as officers, directors, stockholders, or partners) or (ii) is deemed
to be an Affiliate under existing statutes or regulations of the SEC.

         "Assets" -- all of the assets, property and interests of every type and
description, real, personal or mixed, tangible and intangible, owned by Seller
and relating primarily to the Business, other than the Excluded Assets.

         "Assumed Environmental Liabilities" -- means any of the following:

<PAGE>

                  (a) All Environmental Liabilities of Seller relating to the
Business or the Assets and arising from or relating to the environmental matters
or incidents disclosed by Seller on Schedule 5.14 as of the date of execution of
this Agreement that remain outstanding as of the Closing Date, it being
understood by the parties that the unadjusted Purchase Price reflects Buyer's
estimate of any Losses that could arise after the Closing Date with respect to
such Environmental Liabilities;

                  (b) All Environmental Liabilities of Seller relating to the
Business or the Assets and arising from or relating to environmental matters or
incidents that are disclosed to Buyer by Seller after the date of execution of
this Agreement (including any additional disclosures appearing on - Schedule
5.14 as revised by Seller and delivered to Buyer prior to the Closing Date) but
prior to the Closing Date that remain outstanding as of the Closing Date,
PROVIDED that any Losses incurred by Buyer in connection with any such
Environmental Liability in any year in excess of $200,000 or in the aggregate
(when-combined with all other Losses incurred by Buyer in connection with its
performance or discharge of other Disclosed Pre-Closing Liabilities) in excess
of $2,000,000 shall be Retained Environmental Liabilities and Seller shall be
obligated to indemnify Buyer pursuant to Section 13.1 (but subject to the
applicable limitations on such obligations provided in Section 13.3(f)) for such
Losses incurred by Buyer in the amount of such excess; and

                  (c) Any other Environmental Liability relating to the
Business, the Assets, Buyer or any Affiliate, successor or assign of Buyer, to
the extent arising or relating to the period after the Closing, including with
respect to the removal of asbestos or asbestos-containing materials in
connection with any renovation or structural change to any Asset conducted after
Closing.

         "Business" - means collectively:

                  (a) the electricity, generation, transmission and distribution
business conducted by Seller within the State of Vermont through its Vermont
Electric division; and

                  (b) the provision of related services and products and the
engagement in related activities by Seller within the State of Vermont through
its Vermont Electric division.

                  "Capital Budget" - means the capital budget for the Business
approved by the Board of Directors of Seller for the year 2000.

                  "Claim Notice" - means a written notice of a claim given by a
party seeking indemnification pursuant to the terms of this Agreement that
specifies in reasonable detail the nature of the Losses and the estimated amount
of such Losses.

<PAGE>

         "Confidentiality Agreement" - means that certain confidentiality
agreement dated October 21, 1999, between Buyer and Seller.

         "Consent" -- any approval, consent, ratification, waiver, license,
permit, registration, certificate, exemption, legal statute, order,
determination or other authorization from any Person.

         "Contract" -- any agreement, contract, document, instrument,
obligation, promise or undertaking (whether written or oral) that is legally
binding, including Easements.

         "Disclosed Pre-Closing Liabilities" means any and all liabilities and
obligations relating to or arising from Seller's ownership of the Assets or
Seller's conduct or operation of the Business on or prior to the Closing Date
that were not disclosed in any Schedule to this Agreement as of the date of
execution of this Agreement (and with respect to which Seller had no Knowledge
as of the date of execution of this Agreement) and that are disclosed to Buyer
by Seller after the date of execution of this Agreement to the extent remaining
outstanding or undischarged as of the Closing Date, including the Environmental
Liabilities described in clause (b) of the definition of Assumed Environmental
Liabilities and the Proceedings described in Section 2.2(c), but expressly
excluding any such liabilities and obligations that are Retained Liabilities
pursuant to Section 2.3(a), (b), (c) or (d) or with respect to which the
Purchase Price is reduced (but only to the extent reduced).

         "Easements" - means all easements, rights of way, permits, licenses,
and other ways of necessity, whether or not of record.

         "Encumbrances" - any charge, adverse claim, lien, mortgage, pledge or
security interest.

         "Environmental Law"- any Order or Legal Requirement, and any judicial
and administrative interpretation there of and related policies, guidelines and
standards, relating to pollution or protection of the environment and natural
resources, including those relating to (a) emissions, discharges, Releases or
threatened Releases of Hazardous Material into the environment (including
ambient air, surface water, groundwater or land), and (b) the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Material, each as in effect as of the date of
determination.

         "Environmental Liability" -- means any liability, responsibility or
obligation arising out of or relating to:

                  (a) the presence of any Hazardous Material in the fixtures,
Structures, soils, groundwater, surface water or air on, under or about or
emanating from the assets and properties currently or formerly used, operated,
owned, leased, controlled,

<PAGE>

possessed, occupied or maintaIned by a Person, and any such Hazardous
Material emanating to adjoining or other properties;

                  (b) the use, generation, production, manufacture, treatment,
storage, disposal, Release, threatened Release, discharge, spillage, loss,
seepage or filtration of Hazardous Materials by a Person or its employees,
agents or contractors from, on, under or about the assets or properties
currently or formerly used, operated, owned, leased, controlled, possessed,
occupied or maintained by such Person or the presence therein or thereunder of
any underground or above-ground tanks for the storage of fuel oil, gasoline
and/or other petroleum products or by-products or other Hazardous Material;

                  (c) the violation or noncompliance or alleged violation or
noncompliance by a Person or its employees, agents or contractors of any
Environmental Law arising from or related to its or their conduct, actions or
operations or the former or current use, operation, ownership, lease,
possession, control, occupancy, maintenance or condition of any of such Person's
former or current assets or properties;

                  (d) the failure by a Person or its employees, agents, or
contractors to have obtained or maintained in effect any Consent required by any
Environmental Law as a result of its or their conduct, actions or operations or
the use, operation, ownership, lease, control, possession, occupancy,
maintenance or condition of such Person's assets or properties;

                  (e) any and all Proceedings arising out of any of the
above-described matters, including Proceedings by Governmental Bodies for
enforcement, cleanup, removal, treatment, response, remedial or other actions or
damages and Proceedings by any third Person seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief; and

                  (f) any and all remedial work and other corrective action
(including investigation or monitoring of sit; conditions, or any clean-up,
containment, restoration or removal) taken by, or the costs of which are imposed
upon, a Person arising from any of the above-described matters.

         "ERISA" - the Employee Retirement Income Security Act of 1974, as
amended, or any successor law, and regulations and rules issued pursuant to that
act or any successor law.

         "Excluded Assets" - means the following assets of Seller, each of which
shall be excluded from the Assets, and not acquired by the Buyer, at Closing:

                  (a) assets that Seller uses in both the Business and in
Seller's other gas, electric, communications or water businesses, and which are
described generally on Schedule 1.1(a), and Contracts regarding the procurement
of services or goods by

<PAGE>

Seller for use in such in other businesses;

                  (b) cash and cash equivalents in transit, in hand or in bank
accounts;

                  (c) except as otherwise set forth in Article X, assets
attributable to or related to an Employee Benefit Plan of Sell&;

                  (d) the stock record and minute books of Seller, duplicate
copies of all books and records transferred to Buyer, all records prepared in
connection with the sale of the Business (including bids received from third
parties and analysis relating to the Business);

                  (e) assets disposed of by Seller after the date of this
Agreement to the extent such dispositions are not prohibited by this Agreement;

                  (f) except to the extent set forth in Section 3.4, rights to
refunds of Taxes payable for periods prior to the Closing with respect to the
Business, assets, properties or operations of Seller or any member of any
affiliated group of which either of them is a member;

                  (g) accounts owing, by and among Seller and its Affiliates;

                  (h) all deferred tax assets or collectibles for periods prior
to the Closing;

                  (i) any insurance policy, bond, letter of credit or other
similar item, and any cash surrender value in regard thereto;

                  (j) the Citizens Marks; and

                  (k) the other assets listed on Schedule 1.1(a).

         "Existing Loan Documents " -- means all Contracts relating to the
indebtedness for money borrowed by Seller and used in connection with the
Business or the Assets as of the date hereof to which Seller is a party,
excluding line extension agreements or similar arrangements involving customer
advances for construction, it being understood and agreed that customer
advances, customer deposits and construction advances do not create indebtedness
for money borrowed.

         "Final Order" - an action by a Governmental Body as to which: (a) no
request for stay of the action is pending, no such stay is in effect and if any
time period is permitted by statute or regulation for filing any request for
such stay, such time period has passed; (b) no petition for rehearing,
reconsideration or application for review of the action is pending and the time
for filing any such petition or application has passed; (c) such

<PAGE>

Governmental Body does not have the action under reconsideration on its own
motion and the time in which such reconsideration is permitted has passed;
and (d) no appeal to 4 court, or a request for stay by a court of the
Governmental Body's action is pending or in effect and the deadline for
filing any such appeal or request has passed.

         "Future Regulatory Obligations" -- means all liabilities,
responsibilities and obligations relating to the Assets or the Business,
including capital expenditure obligations and liabilities of the types that
appear as "Accrued Liabilities" and "Non-Current Liabilities" on the Balance
Sheet, arising out of any Legal Requirement or other action of any state or
federal regulatory commission or local franchising authority, including with
respect to all Proceedings of any state regulatory commission relating to the
Assets or the Business commenced before or after the Closing Date, regardless of
whether the Legal Requirement or other action is or purports to be based on
conduct, actions, facts, circumstances or conditions arising, existing or
occurring at any time on or prior to the Closing Date, but other than
liabilities, responsibilities and obligations (i) relating to any Retained
Environmental Liability or (ii) arising out of Seller's violation of any Order
or Legal Requirement of such Governmental Body, as in effect and as reasonably
interpreted by common industry practice as of the date such violation occurred,
that is found by Final Order to have occurred prior to Closing and that is
reasonably likely to have a material adverse effect on the Business or the
Assets, taken as a whole.

         "GAAP" - generally accepted United States accounting principles,
applied on a consistent basis.

         "Generating Assets" -- all of Seller's generating facilities and dams
located in the State of Vermont, including the NeWport Generating Facility Units
1, 2, 3 and 11, the Troy Generating Facility, and the West Charleston Generating
Facility (collectively, the "Generating Facilities"), together with (a) the Real
Property associated with such Generating Facilities and dams, including the
buildings and other improvements located thereon and approximately 500 acres of
unimproved Real Property located around the Generating Facilities; (b) the
diesel generator sets of Seller located at the Newport Generating Facility Units
1, 2 and 3; (c) all other tangible personal property located on or relating to
the Generating Facilities; and (d) Easements and Consents (to the extent
transferrable) relating to such Generating Facilities.

         "Governmental Body" -- any of the following that possesses competent
jurisdiction:

                  (a) federal, state, county, local, municipal or other
governmental body;

                  (b) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department,

<PAGE>

official or entity and any court or other tribunal); or

                  (c) any governmental body entitled to exercise any
administrative, executive, judicial, legislative, police, regulatory or taxing
authority or power of any nature.

         "Hazardous Materials" -- any waste or other chemical, material or
substance that is listed, defined, designated, or classified as, or otherwise
determined to be, hazardous, radioactive, toxic, or a pollutant or a
contaminant, or words of similar import, under or pursuant to any Environmental
Law, including any admixture or solution thereof, and specifically including
oil, natural gas, petroleum and all derivatives thereof or synthetic substitutes
therefor, asbestos or asbestos containing materials, any flammable substances or
explosives, any radioactive materials, any toxic wastes of substances, urea
formaldehyde foam insulation, toluene or polychlorinated biphenyls.

         "HSR Act" -- the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, or any successor law, and regulations and rules issued by the U.S.
Department of Justice or the Federal Trade Commission pursuant to that act or
any successor law.

         "Hydro-Quebec Contracts" -- means (a) the Firm Power and Energy
Contract between Hydro-Quebec and Vermont Joint Owners, dated as of December 4,
1987, as amended (as amended, the "H-Q/VJO Contract"), and (b) the Hydro-Quebec
Participation Agreement among the electric utilities named therein, dated as of
April 1, 1988, as amended and restated pursuant to Amendment No. 5 to
Hydro-Quebec Participation Agreement made as of October 21, 1993 (as amended and
restated, the "H-Q Participation Agreement").

         "IRC' -- the Internal Revenue Code of 1986, as amended.

         "IRS" -- the Internal Revenue Service or any successor agency.

         "Knowledge" -- means, with respect to Seller, the actual knowledge of
Seller's Chief Financial Officer; President, Citizens Public Services; Vice
President of Arizona Energy Operations; and Vice President and General Manager,
Vermont Electric Division, or their respective successor.

         "Legal Requirement" -- any federal, state, county, local, municipal,
foreign, international, multinational, or other administrative Order,
constitution, law, ordinance, adopted code, principle of common law, regulation,
rule, directive, approval, notice, tariff, franchise agreement, statute or
treaty.

         "Losses" -- shall mean all claims, losses, liabilities, causes of
action, costs and expenses (including, without limitation, involving theories of
negligence or strict liability and including court costs and reasonable
attorneys' fees and

<PAGE>

disbursements in connection therewith).

         "Material Adverse Effect" -- an occurrence or condition that has a
material adverse effect on the operation, financial condition or results of
operations of the Business when combined with the businesses and assets being
acquired by Buyer or Affiliates of Buyer pursuant to the Related Purchase
Agreements, taken as a whole. For purposes of this Agreement, an occurrence or
condition shall not constitute a Material Adverse Effect (a) if it arises from
general business, economic or financial market conditions, from conditions
generally affecting the industries in which the Business competes, or from the
transactions contemplated by this Agreement, (b) if it is of the type normally
recoverable by the Business through rates, or (c) to the extent that the
Business may realize the benefit of insurance maintained by Seller or to the
extent that Seller or Buyer may receive or recover payments m respect of such
occurrence from any other source (whether in a lump sum or stream of payments).
In addition, for purposes of this Agreement any increase in Seller's pro-rata
obligations under the Hydro-Quebec Contracts, or any occurrence or condition
that could result in such an increase, shall not constitute a Material Adverse
Effect.

         "Material Contract" - a Contract relating primarily to the Business and
involving a total commitment by or to and party thereto of at least $100,000 on
an annual basis and which cannot be terminated by Seller with notice of ninety
(90) days or less without penalty to Seller.

         "Order" -- any award, decision, injunction,judgment, order, writ,
decree, ruling, subpoena, or verdict entered, issued, made, or rendered by any
court, administrative agency, other Governmental Body, or by any arbitrator,
each of which possesses competent jurisdiction.

         "Organizational Documents" -- the articles or certificate of
incorporation and the bylaws of a corporation or the comparable organizational
and governing documents of other Persons.

         "Permitted Encumbrances" - means any of the following:

                  (a) mechanics', carriers', workers' and other similar liens
arising in the ordinary course of business and which in the aggregate are not
substantial in amount and do not interfere with the present use of the Assets to
which they apply;

                  (b) liens for current Taxes and assessments not yet due and
payable;

                  (c) usual and customary nonmonetary real property
Encumbrances, covenants, imperfections in title, Easements, restrictions and
other title matters (whether or not the same are recorded) that do not and will
not materially interfere with the operation of that portion of the Business
currently conducted on

<PAGE>

such real property;

                  (d) Encumbrances securing the payment or performance of any of
the Assumed Liabilities;

                  (e) all applicable zoning ordinances and land use
restrictions;

                  (f) with respect to any Asset which consists of a leasehold or
other possessory interests in red property, all usual and customary nonmonetary
real property Encumbrances, covenants, imperfections in title, Easements,
restrictions and other title matters (whether or not the same are recorded) to
which the underlying fee estate in such real property is subject that do not
currently and will not interfere materially with the operation of that portion
of the Business currently conducted on such property; and

                  (g) any other Encumbrances, Contracts, obligations, defects or
irregularities of any kind whatsoever, affecting the Assets that, individually
or in the aggregate, do not have a Material Adverse Effect or that will be
terminated, released or waived on or before the Closing Date.

         "Person" -- any individual, corporation (including any nonprofit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization or Governmental Body.

         "Proceeding" -- any claim, action, arbitration, hearing, litigation or
suit commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.

         "PUHCA "-- the Public Utility Holding Company Act of 1935, as amended,
or any successor law, and regulations and rules issued by the SEC pursuant to
that act or any successor law.

         "Real Property" -- all real property owned, leased or under Contract by
Seller in the operation of the Business, together with all interests in red
property (including Easements) used or held for use by Seller in the operation
of the Business.

         "Related Documents" -- any Contract provided for in this Agreement to
be entered into by one or more of the parties hereto in connection with the
transactions contemplated by this Agreement.

         "Related Purchase Agreements" -- means those certain purchase
agreements between Seller and Buyer or Affiliates of Buyer described on Schedule
1.1(b).

<PAGE>

         "Release" -- any presence, emission, dispersal, disposal, spilling,
leaking, emitting, discharging, depositing, pumping, pouring, escaping,
leaching, dumping, releasing or migration into the indoor or outdoor environment
(including the abandonment or disposal of any barrels, containers or other
closed receptacles containing any Hazardous Materials), or in, into or from any
facility, including the movement of any Hazardous Materials through the air,
soil, surface water, groundwater or property.

         "Representative" -- with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.

         "Retained Environmental Liabilities" -- means all Environmental
Liabilities of Seller that are described in this Agreement as Retained
Environmental Liabilities or that are otherwise not being assumed by Buyer under
this Agreement as Assumed Environmental Liabilities.

         "SEC" -- The United States Securities and Exchange Commission or any
successor agency.

         "Tax" -- any tax (including any income tax, capital gains tax,
value-added tax, sales and use tax, franchise tax, payroll tax, withholding tax,
property tax or transfer tax), levy, assessment, tariff; duty (including any
customs duty), deficiency, franchise fee or payment, payroll tax, utility tax,
gross receipts tax or other fee or payment relating to the foregoing, and any
related charge or amount (including any fine, penalty, interest or addition to
tax), imposed, assessed or collected by or under the authority of any
Governmental Body or for which Seller has any liability as a transferee,
pursuant to Treasury Regulation Section 1.1502-6, or pursuant to any other Legal
Requirement.

         "Tax Return" -- any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to any Governmental
Body in connection with the determination, assessment, collection or payment of
and Tax, or in connection with the administration, implementation, or
enforcement of or compliance with any Legal Requirement relating to any Tax.

         "Threatened" -- a claim, dispute, or other matter will be deemed to
have been "Threatened" if any demand or statement has been made in writing or
orally or any notice has been given in writing or orally, and Seller has
Knowledge of the same.

         Section 1.2 Other Defined Terms. In addition to the terms defined in
Section 1.1, certain other terms are defined elsewhere in this Agreement as
indicated below and, whenever such terms are used in this Agreement, they shall
have their respective defined meanings.

<PAGE>

<TABLE>
<CAPTION>
Term                                            Sections
----                                            --------
<S>                                             <C>
Active Employees                                   10.1
Antitrust Authorities                               6.3
Assumed Liabilities                                 2.2
Balance Sheet                                       5.6(a)
Bill of Sale                                        8.1
Buyer Indemnitees                                  13.1
Buyer's Pension Plan                               10.5
Buyer Welfare Plans                                10.7(a)
CERCLA                                             5.14(e)
Citizens Marks                                      6.4
Closing                                             8.1
Closing Date                                        8.1
Deposit                                             3.2
Employee Plans                                     5.13
Environmental Data                                 12.1(c)
Estimated Purchase Price                            3.3(a)
Financial Statements                                5.6
Purchase Price                                      3.1
Retained Liabilities                                2.3
Seller Indemnitees                                 13.2
Seller's Pension Plan                              10.5
Seller's 401(k) Plan                               10.6
Seller Welfare Plan                                10.7
Transaction Taxes                                  11.3
Transferred Employee                               10.1
</TABLE>

                                   ARTICLE II
                                PURCHASE AND SALE

         Section 2.1 Purchase and Sale of Assets. Upon the terms and subject to
the conditions contained herein, at the Closing, Seller shall sell, transfer,
assign, convey and deliver to Buyer, and Buyer shall purchase and accept
delivery from Seller, all of the Assets.

         Section 2.2 Assumed Liabilities. In further consideration for the sale
of the Assets at the Closing, Buyer will assume and agree to pay, perform and
discharge when due, all liabilities and obligations, of every kind or nature,
arising out of or relating to:

                  (a) Buyer's ownership or use of the Assets and the conduct or
operation of the Business by Buyer, in each case after the Closing Date,
including all liabilities, responsibilities and obligations relating to or
arising from the following:

                           (i)    Transferred Employees (except to the extent
otherwise provided in Article X), including any termination of any Transferred
Employee for any reason (including constructive

<PAGE>

dismissal) and Buyer's hiring practices or decisions;

                           (ii)   Performance of the Contracts included among
the Assets (except that Buyer shall not assume any liabilities or obligations
for any breach or default by, or payment obligations of, Seller under any such
Contract occurring or arising or accruing on or prior to the Closing Date);

                           (iii)  Customer advances, customer deposits and
construction advances, unperformed service obligations, Easement relocation
obligations, and engineering and construction required to complete scheduled
construction, construction work in progress, and other capital expenditure
projects, in each case relating to the Business and outstanding on or arising
after the Closing Date;

                           (iv)   Future Regulatory Obligations;

                           (v)    Assumed Environmental Liabilities;

                           (vi)   One-half of the Transaction Taxes arising out
of the sale of the Assets to Buyer hereunder;

                           (vii)  Proceedings based on conduct, actions, facts,
circumstances or conditions arising or occurring after the Closing Date,
Proceedings in respect of Future Regulatory Obligations regardless of when
filed, and Proceedings arising from or related to any other Assumed Liability;
and

                           (viii) Items addressed in Section 3.1(d) to the
extent resulting in a decrease in the Purchase Price;

                  (b) the Proceedings described as Assumed Liabilities in
Schedule 2.2(b) and Proceedings affecting other Persons engaged in a business
similar to the Business such as generic or industry-wide Proceedings; and

                  (c) all Proceedings involving Seller, the Assets o? the
Business based on conduct, actions, facts, circumstances or conditions arising
or occurring on or before the Closing Date that are pending or threatened as of
the Closing Date and that are disclosed to Buyer by Seller after the date of
execution of this Agreement but prior to the Closing Date (except any such
Proceedings described as Retained Liabilities in Schedule 2.2(b) and any such
Proceedings relating to the Retained Liabilities described in Sections 2.3(a),
(b), (c), (d), and (f)), provided that any Losses incurred by Buyer in
connection with any such individual Proceeding in excess of $200,000 or in
connection with all such Proceedings in excess of $2,000,000 in the aggregate
(when combined with all other Losses incurred by Buyer in connection with its
performance or discharge of other Disclosed Pre-Closing Liabilities) shall be
Retained Liabilities and Seller shall be obligated to indemnify Buyer pursuant
to Section 13.1 (but subject to the applicable limitations on such obligations
provided in Section 13.3(D) for such Losses incurred by Buyer in

<PAGE>

the amount of such excess;

The liabilities, responsibilities and obligations to be assumed by Buyer
pursuant to this Section 2.2 are hereinafter collectively referred to as the
"Assumed Liabilities." Buyer hereby irrevocably and unconditionally waives and
releases Seller from all Assumed Liabilities and all liabilities or obligations
relating to the Business or the Assets to the extent arising from events or
occurrences after the Closing or to the extent otherwise relating to the period
after the Closing, including any liabilities created or which arise by statute
or common law, including CERCLA (it being understood that this shall not
constitute a waiver and release of any claims arising out of the contractual
relationships and indemnification arrangements between Buyer and Seller).
Notwithstanding anything in this Section 2.2 to the contrary, "Assumed
Liabilities" shall not include any liabilities, responsibilities or obligations
expressly stated to be Retained Liabilities pursuant to Section 2.3.

         Section 2.3 Retained Liabilities. Buyer shall not assume and at the
Closing Seller shall retain and pay, perform and discharge when due, all of the
liabilities and obligations relating to or arising from Seller's ownership of
the Assets and Seller's conduct or operation of the Business on and prior to the
Closing Date, except to the extent any such liability or obligation is included
among the Assumed Liabilities, including liabilities and obligations relating to
or arising from the following (collectively referred to herein as the "Retained
Liabilities"):

                  (a) all indebtedness for money borrowed by Seller (including
items due to Seller's Affiliates) other than payment obligations arising after
the Closing Date under any equipment lease listed in Part VII of Schedule 5.12
or under any line extension Contracts or similar construction arrangements, it
being understood and agreed that such leases, Contracts and similar arrangements
do not create indebtedness for money borrowed;

                  (b) Taxes of Seller or the Business with respect to ownership
or use of the Assets and Seller's conduct and operation of the Business on and
prior to the Closing Date;

                  (c) Excluded Assets;

                  (d) Non-Transferred Employees, the Seller's Employee Benefit
Plans and Employee Plans (except to the extent otherwise provided in Article X)
and any breach or default by, or payment obligations of; Seller with respect to
any Transferred Employee occurring or arising or accruing on or prior to the
Closing Date (except to the extent any such payment obligation becomes the
responsibility and obligation of Buyer in accordance with Article X);

                  (e) Proceedings involving Seller, the Assets or the
<PAGE>

Business based on conduct (including Seller's performance under any Contract
included among the Assets), action, facts, circumstances or conditions
arising or occurring on or before the Closing Date, including Proceedings
described as Retained Liabilities on Schedule 2.2(b) but expressly excluding
any such liabilities or obligations relating to any Proceeding described as
Assumed Liabilities on Schedule 2.2(b) and any Proceeding relating to (x)
Assumed Liabilities (subject to the proviso set forth in Section 2.2(c) with
respect to the Proceedings described in Section 2.2(c)), (y) Future
Regulatory Obligations and (z) Proceedings affecting other Persons engaged in
a business similar to the Business such as generic or industry-wide
Proceedings;

                  (f) Retained Environmental Liabilities; and

                  (g) One-half of the Transaction Taxes arising out of the sale
of the Assets, to Buyer hereunder.

Seller hereby irrevocably and unconditionally waives and releases Buyer from all
Retained Liabilities including any liabilities created or which arise by statute
or common law, including CERCLA (it being understood that this shall not
constitute a waiver and release of any claims arising out of the contractual
relationships and indemnification arrangements between Buyer and Seller).

         Section 2.4 -- Condition on Assignment or Assumption of Contracts and
Rights. Anything in this Agreement to the contrary notwithstanding, this
Agreement shall not constitute an agreement to assign or assume any Contract or
any claim or right or any benefit arising thereunder or resulting therefrom if
an attempted assignment or assumption thereof, without the Consent of a third
party thereto, would constitute a breach thereof. Any transfer or assignment to
Buyer by Seller of any property or property rights or any Contract which
requires the Consent of any third party shall be made subject to such Consent
being obtained. If such Consent is not obtained, or if an attempted assignment
thereof would be ineffective or would affect the rights of Seller thereunder so
that Buyer would not in fact receive all such rights, Seller will, at its
expense, cooperate with Buyer in any arrangement reasonably designed to provide
for Buyer, at Buyer's cost, the benefits under any such Contract including,
without limitation, enforcement for the benefit of Buyer of any and all rights
of Seller against a third party thereto arising out of the breach o?
cancellation by such third party or otherwise to the extent that Buyer does
receive the benefits of any such Contract pursuant to the preceding sentence,
such Contract shall be a Contract deemed to have been assigned or transferred to
Buyer pursuant to Section 2.2(a)(ii).

                                   ARTICLE III
                                 PURCHASE PRICE

         Section 3.1       Purchase Price.

<PAGE>

         Subject to the terms and conditions of this Agreement, the aggregate
purchase price for the Assets (the "Purchase Price") shall be an amount equal to
$38,000,000 in cash, as adjusted in accordance with the following provisions and
with such adjustments determined pursuant to Section 3.3:

                  (a) Such amount will be increased by the aggregate amount of
all accounts receivable, earned but unbilled revenue, and materials and supplies
inventory of the Business, in each case outstanding as of the Closing Date and
other than any such items that are due from Seller's Affiliates.

                  (b) Such amount will be decreased by the aggregate amount of
all accounts payable, customer deposits and unexpended cash from customer
advances for construction, in each case to the extent relating to the Business
and outstanding as of the Closing Date and other than any such items that are
due to Seller's Affiliates.

                  (c) Such amount will be increased by the aggregate amount of
all (i) capital expenditures relating to the Business that are accrued by Seller
between the date of the Balance Sheet and the Closing Date (including
expenditures recorded in the Construction Work in Progress account of the
Business as of the Closing Date and relating to such period), (ii) without
duplication, expenditures to purchase materials, supplies and other capital
items that are dedicated to, but as of Closing have not been used in, the
construction or improvement of the property, plant or equipment relating to the
Business and (iii) without duplication, other expenditures recorded as an asset
of the Business as of the Closing Date and relating to such period to the extent
such expenditures are normally recoverable through rates, including expenditures
recorded in the Preliminary Survey and Investigation account of the Business, in
each case to the extent such expenditures are not prohibited by this Agreement.

                  (d) Such amount will be decreased or increased, as
appropriate, by an aggregate amount equal to the total amount payable to or by
Buyer pursuant to Section 3.4.

                  (e) Such amount will be decreased by $3,000,000 if Seller
sells the Generating Assets on or prior to the Closing Date.

         Section 3.2 Deposit. Concurrently with its execution of this Agreement,
Buyer has deposited with Seller $380,000 in cash. By 5:00 p.m. East Coast Time
on Wednesday, March 15, 2000, Buyer shall deliver to Seller an irrevocable
letter of credit from a reputable financial institution with an expiration date
of at least 21 months after the date of execution of this Agreement (the "Letter
of Credit"), as and for an earnest money deposit, in the amount of $1,900,000
(the "Deposit") and appropriately conditioned in accordance with the terms of
Section 9.2(c). If Seller receives the Letter of Credit by such deadline, then
Seller promptly shall

<PAGE>

refund to Buyer the $380,000 in cash previously provided by Buyer. If Buyer
shall fail to deliver the Letter of Credit by such deadline, then (i) Buyer
shall continue using its best efforts to arrange for the Letter of Credit to
be delivered to Seller and (ii) Seller may retain, as liquidated damages, the
$380,000 in cash previously delivered to Seller, free of any claims by Buyer
or any other Person with respect thereto. The parties hereby acknowledge that
the extent of damages to Seller occasioned by Buyer's failure to deliver the
Letter of Credit to Seller by March 15, 2000, would be impossible or
extremely difficult to ascertain and that $380,000 is a fair and reasonable
estimate of such damages under the circumstances.

         Section 3.3       Calculation of Purchase Price.

                  (a) Any of the items included in clauses (a) through (e) of
Section 3.1 that cannot be calculated in a timely fashion as of the Closing Date
shall be estimated by Seller in good faith based upon the account balance of
such item at the end of the month for which Seller's books are closed next
preceding the Closing Date, with such adjustments as may be appropriate to
reflect changes in such account balance occurring between such month-end and the
Closing Date. Any such estimated amounts shall be set forth in a certificate of
Seller delivered to Buyer at least five (5) business days prior to the Closing
Date, which certificate shall set forth an estimate of the Purchase Price (the
"Estimated Purchase Price"), including such estimated amounts and shall be
accompanied by reasonably detailed supporting documentation.

                  (b) Within one hundred twenty (120) days after the Closing
Date, Seller shall notify Buyer of the actual amount as recorded on Seller's
books and records for the Business of any items that were estimated in arriving
at the Estimated Purchase Price, as well as the prorations and adjustments
required to be made under Section 3.4 below. Buyer may dispute any amount so
determined by Seller, by written notice to Seller within fifteen (15) days after
receipt of Seller's notice. If Buyer does not so dispute any item, the party
owing the difference between the Estimated Purchase Price and the Purchase Price
shall pay such difference to the other party within ten (10) days after the
expiration of such fifteen (15) day period, plus interest at 8.25% per annum on
such amount from the Closing Date to (but not including) the date of payment If
Buyer disputes the actual amount of any item, the undisputed amount plus
interest at 8.25% per annum on such amount from the Closing Date to (but not
including) the date-of-payment shall be paid promptly by the owing party. If
such dispute cannot be resolved within sixty (60) days after the giving of
Buyer's notice that there exists a disputed amount, then an independent auditor
mutually agreeable to Buyer and Seller shall, upon written notice from either
Buyer or Seller, resolve such dispute within sixty (60) days after receipt of
such notice. The fees and expenses of such independent auditor shall be
allocated between Buyer and Seller so that Seller's share of such

<PAGE>

fees and expenses shall be in the same proportion that the aggregate amount
of such remaining disputed amounts so submitted by Buyer to such auditor that
is unsuccessfully disputed by Buyer (as finally determined by such auditor)
bears to the total amount of such remaining disputed amounts so submitted by
Buyer to such auditor. Any determination by such independent auditor shall be
binding and conclusive upon the parties without further appeal therefrom.
Within ten (10) days after the independent auditor shall have resolved such
dispute, the party owing the determined amount shall pay such determined
amount to the other parry, plus interest at 8.25% per annum on such
determined amount from the Closing Date to (but not including) the date of
payment.

         Section 3.4       Prorations and Adjustments as of the Closing Date.

                  (a) Buyer and Seller agree that the following items relating
to the Assets and the Business shall be adjusted and allocated as of the Closing
Date, with Seller to be responsible for and to receive the benefit of the same
for the period through and including the Closing Date and Buyer to be
responsible for and to receive the benefit of the same after the Closing Date;

                           (i)    real and personal property taxes, assessments
and annual registration fees;

                           (ii)   water, sewer and other similar types of taxes,
and installments on special benefit assessments and regulatory assessments;

                           (iii)  electric, gas, telephone and other utility
charges;

                           (iv)   payroll expenses, payroll taxes, reimbursable
employee business expenses and the financial cost of the accrued vacation time
of the Transferred Employees, in each case as recorded on Seller's books for the
Business as of the Closing Date;

                            (v) rents under leases transferred to or assumed
by Buyer;

                           (vi)   charges under maintenance, service and other
Contracts and fees under licenses transferred to or assumed by Buyer and not
included in the items described in Section 3. 1(a);

                           (vii)  deposits of Seller to the extent transferable
to Buyer;

                           (viii) prepaid and accrued expenses;

                           (ix)   sales, franchise, gross receipts and other
similar Taxes based upon revenues; and

                           (x)    petty cash.
<PAGE>

                  (b) The items listed in Section 3.4(a) above shall be
estimated item by item by Seller and reflected on the certificate and supporting
documentation to be delivered to Buyer pursuant to Section 3.3(a) and finally
determined in accordance with Section 3.3(b).

                                   ARTICLE IV
                     REPRESENTATIONS AND WARRANTIES OF BUYER

         Section 4.1 Organization, Existence and Qualification. Each Buyer
Entity is a corporation duly incorporated, validly existing, and in good
standing under the laws of the State of Texas, with full corporate power and
authority to conduct its business as it is now being conducted, to own or use
the properties and assets that it purports to own or use, to perform its
obligations under all Contracts to which it is a party, and to execute and
deliver this Agreement and the Related Documents to which it is a party. Buyer
Entity is duly qualified to do business as a foreign corporation and is in good
standing under the laws of each state in which the failure to be so qualified or
in good standing would materially adversely affect the business or properties of
Buyer. By Closing, Cap Rock Energy will be, duly qualified and in good standing
as a foreign corporation licensed to do business in the State of Vermont.

         Section 4.2 Authority Relative to this Agreement and Binding Effect.
The execution, delivery and performance of this Agreement and the Related
Documents by Buyer have been duly authorized by Buyer's Board of Directors,
which constitutes all necessary corporate action required on the part of Buyer
for such authorizations. The execution, delivery and performance of this
Agreement and the Related Documents by Buyer will not result in (a) any conflict
with or breach or violation of or default under the Organizational Documents of
Buyer, or (b) a violation or breach of any term or provision of, or constitute a
default or accelerate the performance required under, any indenture, mortgage,
deed of trust, security agreement, loan agreement, or Contract to which Buyer is
a party or by which its assets are bound, or (c) a violation of any Order of any
Governmental Body. This Agreement constitutes, and the Related Documents to be
executed by Buyer when executed and delivered will constitute, valid and binding
obligations of Buyer, enforceable against Buyer in accordance with their
respective terms, except as such enforceability may be limited by (i) bankruptcy
or similar laws from time to time in effect affecting the enforcement of
creditors' rights generally or (ii) the availability of equitable remedies
generally.

         Section 4.3 Governmental Approvals. Except for those Consents described
in Schedule 5.3 to the extent applicable to Buyer, no Consent of any
Governmental Body is required to be obtained by Buyer in connection with the
execution and delivery by Buyer of this Agreement or the Related Documents or
the

<PAGE>

consummation of the transactions contemplated by this Agreement or the
Related Documents. Buyer has no knowledge of any facts or circumstances
relating to Buyer or its Affiliates that reasonably would be likely to
preclude or prolong the receipt of such required Consents.

         Section 4.4 Availability of Funds. Buyer will have available on the
Closing Date sufficient funds to enable it to consummate the transactions
contemplated by this Agreement, and Buyer or the Affiliates of Buyer that are
buyers of the assets and businesses being acquired pursuant to the Related
Purchase Agreements will have available at the Closing Date sufficient funds to
enable them to consummate the transactions contemplated by the Related Purchase
Agreements. Buyer understands and agrees that its failure to arrange for such
funding by May 15, 2000 (which date shall be extended by Seller for up to three
consecutive thirty-day periods if Buyer can reasonably demonstrate to Seller at
the end of such period that Buyer is making reasonable progress towards
arranging such funding), or to have such funds available by the Closing, will
permit Seller in either case to terminate this Agreement under Section 9.1 and
to exercise its rights under Section 9.2(c).

         Section 4.5 Filings. No statement furnished by Buyer for inclusion in
any filing with any Governmental Body in connection with obtaining such
Governmental Body's Consent for the consummation of the transactions
contemplated by this Agreement will contain, as of the date such information is
so provided, any untrue statement of a material fact or will omit to state, as
of the date such information is so provided, any material fact which is
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.

         Section 4.6 Brokers. No broker or finder has acted for or on behalf of
Buyer or any Affiliate of Buyer in connection with this Agreement or the
transactions contemplated by this Agreement. No broker or finder is entitled to
any brokerage or finder's fee, or to any commission, based in any way on
agreements, arrangements or understandings made by or on behalf of Buyer or any
Affiliate of Buyer for which Seller or any Affiliate of Seller has or will have
any liability or obligations (contingent or otherwise).

         Section 4.7 Independent Investigation. Buyer is knowledgeable about the
businesses engaged in by Seller through its Vermont Electric division and of the
usual and customary practices of companies engaged in businesses similar to such
businesses and has had access to the Assets, the officers and employees of
Seller, and the books, records and files of Seller relating to the Business and
the Assets. In making the decision to enter into this Agreement and to
consummate the transactions contemplated hereby, Buyer has relied solely on the
basis of its own independent due diligence investigation of the Business and
upon the representations and warranties made in this Agreement and in any other
document or instrument delivered by Seller pursuant

<PAGE>

hereto. Accordingly, Buyer acknowledges that Seller has not made, and Seller
is expressly disclaiming and negating any representation or warranty (other
than those express representations and warranties made in Article V),
express, implied, at common law, by statute or otherwise, relating to the
Business.

         Section 4.8 Public Utility Holding Company Status; Regulation as a
Public Utility. Buyer is a "public utility company" (as such term is defined in
PUHCA). Neither Buyer nor any of its Affiliates is a "holding company", a
"subsidiary" of a "public utility company," or an "affiliate" of a "public
utility company" or of a "holding company," within the meaning of such terms in
PUHCA.
         Section 4.9 Buyer's Financial Statements. The consolidated financial
statements of Buyer for its most recently ended fiscal year heretofore delivered
to Seller were prepared in accordance with GAAP applied on a consistent basis,
except for changes concurred in by Buyer's accountants and disclosed in said
financial statements, throughout the periods specified, and present fairly in
all material respects the financial condition and results of operations of the
businesses of Buyer as of the dates thereof and for the periods then ended
(subject, in the case of unaudited financial statements, to normal year-end
adjustments).

         Section 4.10 Buyer's Insurance. Within five (5) business days after the
date of execution of this Agreement, Buyer will deliver to Seller a schedule
that lists the Buyer's policies and contracts in effect as of the date hereof
for casualty and property insurance covering its assets and properties and the
operation of its business, together with the risks insured against, coverage
limits and deductible amounts.

                                    ARTICLE V
                    REPRESENTATIONS AND WARRANTIES OF SELLER

         Section 5.1 Organization, Existence and Qualification. Seller is a
corporation duly incorporated, validly existing, and in good standing under the
laws of the State of Delaware, with full corporate power and authority to
conduct the Business as it is now being conducted, to own or use the Assets, to
perform its obligations under all Contracts to which it is a party, and to
execute and deliver this Agreement and the Related Documents to which Seller is
a party. Seller is duly qualified to do business as a foreign corporation and is
in good standing under the laws 'of the State of Vermont and each other state in
which the failure to be so qualified or in good standing would have a Material
Adverse Effect.

         Section 5.2 Authority Relative to this Agreement and Binding Effect the
execution, delivery and performance of this Agreement and the Related Documents
by Seller have been duly

<PAGE>

authorized by all requisite corporate action. Except as set forth in Schedule
5.2, the execution, delivery and performance of this Agreement and the
Related Documents by Seller will not result in (a) any conflict with or
breach or violation of or default under the Organizational Documents of
Seller, (b) to Seller's Knowledge, a violation or breach of any term or
provision of, or constitute a default or accelerate the performance required
under, any indenture, mortgage, deed of trust, security agreement, loan
agreement, or Material Contract to which Seller is a party or by which any of
the Assets are bound, or (c) a violation of any Order of any Governmental
Body, except for such exceptions to the foregoing clauses (b) and (c) that,
will be cured, waived or otherwise remedied on or prior to the Closing Date.
This Agreement constitutes and the Related Documents to be executed by Seller
when executed and delivered will constitute valid and binding obligations of
Seller, enforceable against Seller in accordance with their terms, except as
enforceability may be limited by (i) bankruptcy or similar laws from time to
time in effect affecting the enforcement of creditors' rights generally or
(ii) the availability of equitable remedies generally. No Person has any
agreement, option, warrant, subscription, understanding, or commitment, or
any right or privilege capable of becoming an agreement, option or commitment
for the purchase of the Assets of any other interest in the Business.

         Section 5.3 Governmental and Other Required Consents. Except as set
forth in Schedule 5.3, no Consent of any Governmental Body or third Person is
required to be obtained by Seller in connection with the execution and delivery
by Seller of this Agreement or the Related Documents or the consummation by
Seller of the transactions contemplated by this Agreement or the Related
Documents, other than (i) any Consent the failure of which to obtain would not
be material to the operation or conduct of the Business after Closing and (ii)
any Consent that is obtained or made on or prior to the Closing Date. Seller has
no Knowledge of any facts or circumstances relating to Seller or its Affiliates,
other than those relating to the auction process in which Buyer was selected,
and other bidders were not selected, to acquire the Business or relating to the
matters disclosed in any Schedule referred to in this Agreement, that would be
reasonably likely to preclude or prolong the receipt of such required Consents.

         Section 5.4 Public Utility Holding Company Status; Regulation as a
Public Utility. Seller is a "public utility company" (as such term is defined in
PUHCA). Seller is not a "holding company, a "subsidiary" of a "public utility
company, or an "affiliate" of a "public utility company or of a "holding
company," within the meaning of such terms in PUHCA.

         Section 5.5       Title to Assets; Liens.

         Seller has good and indefeasible title to the Assets, including the
Assets reflected in the Financial Statements, except those disposed of since the
date of the Financial Statements in

<PAGE>

the ordinary course of business or otherwise disposed of in accordance with
this Agreement. None of the Assets are subject to any Encumbrance except (i)
Encumbrances described in Schedule 5.5 and (ii) Permitted Encumbrances.
Schedule 5.5 lists each parcel of Real Property owned in fee simple that is a
part of the Assets. To Seller's Knowledge, except as set forth in Schedule
5.5, Seller owns or possesses all Easements necessary to conduct the Business
as now being conducted without any known conflict with the rights of others.
Except as set forth in Schedule 5.5, (a) Seller enjoys peaceful and
undisturbed possession under all real property leases included in the Assets,
and to the Knowledge of Seller, all such leases are valid and In full force
and effect; (b) all rents due to date from Seller on each such lease have
been paid; (c) Seller has not received notice that it is in default under any
such lease; and (d) to the Knowledge of Seller, there exists no event,
occurrence, condition or act (including the consummation of the transactions
contemplated by this Agreement) which, with the giving of notice, the lapse
of time or the happening of any further event or condition, would become a
default by Seller under such lease. Except as set forth in Schedule 5.5, all
buildings, structures and equipment that are a part of the Assets lie wholly
within the boundaries of the Real Property and do not encroach upon the
property of, or otherwise conflict with the property rights of, any other
Person. Seller has adequate rights of ingress and egress for operation of the
Business in the ordinary course consistent with past practices. None of the
buildings, structures or equipment that are a part of the Assets, nor the
operation and maintenance thereof, violates any restrictive covenant.

         Section 5.6       Financial Statements.

                  (a) Schedule 5.6(a) sets forth the unaudited balance sheet for
the Business as at September 30, 1999 (the "Balance Sheet") and unaudited
statement of income of the Business for the nine-month period ended September
30, 1999 (collectively, the "Financial Statements"). Except as set forth in
Schedule 5.6(a), the Financial Statements have been prepared on a pre-tax basis
in accordance, in all material respects, with GAAP applied on a basis consistent
with prior periods. Except as set forth in Schedule 5.6(a), the Balance Sheet
presents fairly in all material respects the financial condition of the Business
as of its date and the income statement included in the Financial Statements
presents fairly in all material respects the results of operations of the
Business for the periods covered thereby. The books and records of Seller from
which the Financial Statements were prepared were complete and accurate in all
material respects at the time of such preparation.

                  (b) Except as disclosed in Schedule 5.6(b), Seller has no
liabilities with respect to the Business or the Assets which would constitute
Assumed Liabilities, either direct or indirect, matured or unmatured or
absolute, contingent or otherwise, except:

                           (1) those liabilities set forth in the Financial
<PAGE>

Statements or referred to in the notes to the Financial Statements and not
heretofore paid or discharged;

                           (2) those liabilities relating to or arising from
matters disclosed in any other Schedule hereto;

                           (3) liabilities arising in the ordinary course of
business consistent with past practices under any Contract or Legal
Requirements;

                           (4) those liabilities incurred, consistent with past
practices, in or as a result of the ordinary course of business since the
Balance Sheet Date which do not and could not be reasonably expected to, in the
aggregate, result in a Material Adverse Effect;

                           (5) those liabilities and obligations that are the
subject of Article X; and

                           (6) those liabilities, which, if outstanding as of
the Closing Date, would result in a decrease to the Purchase Price in accordance
with Section 3.1(b) or (d).

         Section 5.7 Compliance with Legal Requirements; Governmental Permits.
Except as set forth in Schedule 5.7: (a) Seller is in substantial compliance
with each Legal Requirement or Order that is applicable to it, to the conduct or
operation of the Business, or to the ownership or use of any of the Assets; (b)
Seller possesses all Consents from Governmental Bodies required by any
applicable Legal Requirement or Order necessary to permit the operation of the
Business in the manner in which it is currently being conducted by Seller; (c)
all such Consents are in full force and effect; and (d) Seller has not received
notice from any Governmental Body of its intent to revoke or terminate of such
Consent.

         Section 5.8 Legal Proceedings; Outstanding Orders. Except as set forth
in Schedule 5.8, there is no pending or threatened Proceeding (a) that has been
commenced against Seller or the Business other than Proceedings affecting other
Persons engaged in a business similar to the Business such as generic or
industry-wide Proceedings, or (b) as of the date of this Agreement, that
challenges, or that may have the effect of preventing, delaying, making illegal,
restricting or otherwise interfering with, the transactions contemplated hereby.
Schedule 5.8 lists each outstanding Order against Seller which relates to or
arises out of the conduct of the Business or the ownership, condition or
operation of the Business or the Assets which would be considered material to a
reasonably prudent purchaser of the Business in its reasonable business
judgment, other than any Orders relating to rates, tariffs and similar matters
arising in the ordinary course of business and other than any Order applicable
to other Persons engaged in a business similar to the Business such as generic
or industry-wide Orders.

<PAGE>

         Section 5.9 Taxes. All Tax Returns required to be filed by or on behalf
of Seller or requests for extensions to file such Tax Returns have been timely
filed, and Seller has paid and discharged or made adequate provision for all
Taxes that are required to be paid or remitted by or on behalf of Seller. There
are no pending audits or other examinations relating to any Tax matters relating
to the Business or the Assets except as set forth in Schedule 5.9. There are no
Tax Encumbrances on the Assets, except for liens for Taxes not yet due and
payable or for Taxes that Seller is contesting in good faith through appropriate
proceedings. As of the date of this Agreement, Seller has not grunted any waiver
of any statute of limitations with respect to, or any extension of a period for
the assessment of, any Tax relating to the Business or the Assets except as set
forth in Schedule 5.9. Except as set forth in Schedule 5.9, none of the Assets
include stock of a corporation or interests in a partnership or limited
liability company. Seller is not a party to any safe harbor lease within the
meaning of IRC Section 168(f)(8), as in effect prior to amendment by the Tax
Equity and Fiscal Responsibility Act of 1982. Seller is not a "foreign person"
as defined in IRC Section 1445(f)(3) and Buyer is not required to withhold tax
on the purchase of the Assets of Seller by reason of IRC Section 1445. Seller
has not entered into any agreement with respect to the performance of services
that would require a payment, and Seller is not requiring Buyer pursuant to this
Agreement to make any payment (including but not limited to the payments
described in Section 10.11 of this Agreement), that would result in a
nondeductible expense pursuant to IRC Section 280G or an excise tax to the
recipient of such payment pursuant to IRC Section 4999.

         Section 5.10 Intellectual Property. Schedule 5.10 lists all patents,
trademarks, service marks and copyrights used or held for use by Seller
primarily in the operation of the Business. Seller has no Knowledge of(i) any
infringement or claimed infringement by Seller of any patent, trademark, service
mark or copyright of others or (ii) any infringement of any patent, trademark,
service mark or copyright owned by or under license to Seller.

         Section 5.11 Personal Property. Except for normal wear and tear, the
tangible Assets, taken as a whole, are in good operating condition and in a
state of reasonable maintenance and-repair. The buildings, structures and
equipment that are a part of the Assets are structurally sound, are in good
operating condition and repair and are adequate for the uses to which they are
being put, and none of such buildings, structures or equipment is in need of
maintenance or repairs, except in each case, for the Assets described in
Schedule 5.11 and for Assets in need of ordinary and routine maintenance and
repairs that will not, individually or in the aggregate, have a Material Adverse
Effect.

         Section 5.12 Material Contracts; Existing Loan Documents.

<PAGE>

Schedule 5.12 contains, to Seller's Knowledge, a complete and correct list as
of the date hereof of all Material Contracts (other than line extension
Contracts and similar construction arrangements), including all Existing Loan
Documents. To Seller's Knowledge, (i) each Material Contact is in kill force
and effect and enforceable against the parties thereto, (ii) there are no
defaults and Seller has not rescinded nor given notice of a default or
claimed default under any such Material Contract, and (iii) no event has
occurred which with notice or lapse of time, or both, would constitute a
default thereunder. Except as set forth in Schedule 5.12, Seller is not
obligated under any Contract relating to the Business or the Assets with
respect to industrial development bonds or other obligations with respect to
which the interest thereon is excluded from gross income of the holder for
federal or state income tax purposes.

         Section 5.15      Employee Benefit Matters.

                  (a) Schedule 5.13 lists (i) each "Employee Benefit Plan," as
such term is defined in Section 3(3) of ERISA, which is covered by any provision
of ERISA and which is maintained,or contributed to by Seller or its Affiliates
for the-benefit of the Active Employees; (ii) each other material fringe benefit
plan, policy or arrangement currently maintained or contributed to by Seller or
its Affiliates for the benefit of Active Employees which provides for pension,
retirement, deferred compensation, bonuses, incentive compensation, profit
sharing, stock options, severance, employee insurance coverage or similar
employee benefits (collectively, "Employee Plans"; and (iii) each collective
bargaining, union or other employee association agreement, employment,
managerial, advisory, and consulting agreement, change-in-control agreement,
employee confidentiality agreement, and all other material agreements, policies,
or arrangements maintained or contributed to by Seller or its Affiliates for the
Active Employees or by which Seller is bound with respect to the Business.
Seller has made available to Buyer accurate and complete copies of all such
documents and (if applicable) summary plan descriptions with respect to such
plans, agreements and arrangements, or summary description(s) of any such plans,
agreements or arrangements not otherwise in writing.

                  (b) Seller's Pension Plan and Seller's 401(k) Plan are the
only Employee Benefit Plans which are intended to be qualified under Section
401(a) of the IRC.

                  (c) Each Employee Benefit Plan has been established and
administered in all material respects in accordance with its terms, ERISA and
the applicable provisions of the IRC.

         Section 5.14      Environmental Matters.

                  (a) Except as listed in Schedule 5.14, since December 31,
1996, Seller has not received a written notice from a Governmental Body that
Seller is in violation of any Environmental

<PAGE>

Law arising out of Seller's ownership, use or operation of the Assets or the
operation of the Business.

                  (b) Except as listed in Schedule 5.14, there are no
Proceedings pending or threatened with respect to Seller's compliance with
Environmental Laws and relating to the Business or the Assets. To Seller's
Knowledge, there is no reasonable basis for any such Proceeding that would
impose any liability or obligation that would have or would reasonably be
expected to have a Material Adverse Effect.

                  (c) Except as listed in Schedule 5.14, Seller possesses all
certificates, permits and authorizations required by any Environmental Law for
Seller's ownership, use or operation of the Assets or the operation of the
Business.

                  (d) Except as set forth in Schedule 5.14, no environmental
remediation of any Release is occurring on any Real Property included in the
Assets nor has Seller issued a request for proposal or otherwise asked an
environmental remediation contractor to begin plans for any such environmental
remediation. Except as set forth in Schedule 5.14, to Seller's Knowledge, during
or prior to the period of Seller's ownership or operation of the Business there
were no Releases or threatened Releases which would reasonably be expected to
have a Material Adverse Effect.

                  (e) Except as set forth in Schedule 5.14, none of the Real
Property is (i) situated in a federal "Superfund" site or, to Seller's
Knowledge, in any federal "Superfund" study area designated under the federal
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA",
or (ii) to Seller's Knowledge, situated in any site or study area designated
under any state statute comparable to CERCLA.

         Section 5.15      No Material Adverse Change. Except as set forth in
Schedule 5. 15, between the date of the Balance Sheet and the date of execution
of this Agreement:

                  (a) no Material Adverse Effect has occurred;

                  (b) except for actions taken in connection with the
contemplated sale of the Business and this Agreement and except for conversion
to the SAP financial reporting system, between the date of the Balance Sheet and
the date of execution of this Agreement, the Business has been conducted in the
ordinary course, consistent with past practices;

                  (c) There has not been any increase in the salary, wage,
bonus, grants, awards, benefits or other compensation payable or that could
become payable by Seller to its officers, directors and employees with respect
to the Business or any amendment of any of the Employee Plans, Seller's Pension
Plan and Seller's 401(k) Plan other than increases or amendments in the

<PAGE>

ordinary course of the Business, consistent with past practices (which may
include normal periodic performance reviews and related compensation and
benefit increases and the provision of new individual compensation and
benefits for promoted or newly hired officers and employees on terms
consistent with past practice), nor has Seller granted any severance or
termination pay, entered into any contract to make or grant any severance or
termination pay, or paid any bonus, in each case to any such officer,
director, or employee, other than pursuant to preexisting agreements,
arrangements or bonus plans, or taken any action that would result in the
payment of any amounts, or the accelerated vesting of any rights or benefits,
under any Employee Plan, Seller's Pension Plan or Seller's 401(k) Plan;

                  (d) There has been no change in any method of accounting or
accounting practice of the Business;

                  (e) Seller has not sold, mortgaged, pledged or encumbered the
Business or the Assets, other than sales of Assets in the ordinary course of
business; and

                  (f) no agreement or commitment to do any of the actions
contemplated by clauses (c), (d) or (e) above has been entered into.

         Section 5.16      State and Federal Regulatory Matters.

                  (a) Schedule 5.16 reflects all of the currently pending
filings relating to the Business heretofore made by Seller before state or
federal regulatory commissions and each other currently pending Proceeding of
such state or federal regulatory commission which would be considered material
to a reasonably prudent purchaser of the Business in its reasonable business
judgment, other than any currently pending Proceeding that also is applicable to
other Persons engaged in a business similar to the Business such as generic or
industry-wide Proceedings.

                  (b) All currently effective material filings relating to the
Business heretofore made by Seller with state or federal regulatory commissions
were made in compliance with Legal Requirements then applicable thereto and the
information contained therein was true and correct in all material respects as
of the respective dates of such filings.

         Section 5.17 Brokers. Except for Morgan Stanley & Co. Incorporated, no
broker or finder has acted for or on behalf of Seller or any Affiliate of Seller
in connection with this Agreement or the transactions contemplated by this
Agreement. No broker or finder is entitled to any brokerage or finder's fee, or
to any commission, based in any way on agreements, arrangements or
understandings made by or on behalf of Seller or any Affiliate of Seller for
which Buyer has or will have any liabilities or obligations (contingent or
otherwise).

<PAGE>

         Section 5.18 Employee Relations. Except as disclosed in Schedule 5.18,
as of the execution of this Agreement (i) there is no strike, slowdown, picket,
work stoppage or other labor dispute or disturbance on the part of the employees
of Seller with respect to the Business pending or threatened, and Seller has not
experienced any such strike, slowdown, picket, work stoppage or other labor
dispute or disturbance with respect to the Business within the past two years,
(ii) no grievance, unfair labor practice charge or any arbitration Proceeding
arising out of or under any collective bargaining agreement relating to the
Business exists or is pending on the date hereof, (iii) Seller is not the
subject of a Proceeding asserting that it has committed an unfair labor practice
(within the meaning of the National Labor Relations Act) or seeking to compel it
to bargain with any labor organization as to wages or conditions of employment
with respect to the Business, (iv) Seller is not aware of any activity involving
Seller's employees seeking to certify a collective bargaining unit or engaging
in other organizational activity with respect to the Business, (v) Sealer is
currently in compliance in all material respects with respect to the Business
with all applicable Legal Requirements relating to the employment of labor,
including those related to wages, hours and collective bargaining, and is not
liable for any arrearages of wages, penalties or other sums for failure to
comply with any of the foregoing and (A) there is no claim with respect to
payment of wages, salary or overtime pay that has been asserted or is now
pending or threatened before any Governmental Body regarding any person or
entity currently or formerly employed by Seller with respect to the Business.

         Section 5.19 Insurance. Schedule 5.19 lists the Seller's property and
casualty insurance policies and contracts in effect as of the date hereof in
connection with the Business. Except as disclosed in Schedule 5.19, (i) each
material insurance policy thereof is in full force and effect, (ii) Seller is
not in default with respect to its obligations under any such policy and (iii)
Seller has not received any notice of cancellation or termination with respect
to any material insurance policy thereof.

         Section 5.20 Accounts Receivable. All accounts receivable and earned
but unbilled revenue reflected in the Financial Statements represent actual
indebtedness to Seller incurred by the applicable account debtors in the
ordinary course of business consistent with past practices. To Seller's
Knowledge, all accounts receivable and earned but unbilled revenue reflected in
the Financial Statements are good and collectible at the aggregate recorded
amounts thereof, net of any reserve for doubtfUl accounts reflected therein.

         Section 5.21 Appropriate Knowledge Persons. The individuals identified
in the definition of "Knowledge" are agents, employees or officers of Seller and
certain of such individuals have primary decision making responsibility for the
day-to-day operations, management, maintenance and repair of the Assets and the
Business, and they have served in such capacities for more than twelve (12)

<PAGE>

months.

         Section 5.22 Disclaimer. Except as otherwise expressly set forth in
this Agreement or in any other document or instrument delivered by Seller
pursuant hereto, Seller expressly disclaims any representations or warranties of
any kind or nature, express or implied, as to the condition, value or quality of
the assets or properties currently or formerly used, operated, owned, leased,
controlled, possessed, occupied or maintained by Seller, and Seller SPECIFICALLY
DISCLAIMS ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE, SUITABILITY
OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO SUCH ASSETS OR PROPERTIES,
OR ANY PART THEREOF, OR AS TO THE WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY
DEFECTS THEREIN, WHETHER LATENT OR PATENT, IT BEING UNDERSTOOD THAT SUCH ASSETS
AND PROPERTIES ARE BEING ACQUIRED, "AS IS, WHERE IS" ON THE CLOSING DATE, AND IN
THEIR PRESENT CONDITION, WITH ALL FAULTS AND THAT BUYER SHALL RELY ON ITS OWN
EXAMINATION AND INVESTIGATION THEREOF.

                                   ARTICLE VI
                                    COVENANTS

         Section 6.1       Covenants of Seller. Seller agrees to observe and
perform the following covenants and agreements:

                  (a) CONDUCT OF THE BUSINESS PRIOR TO THE CLOSING DATE. With
respect to the Business, except (i) as contemplated in this Agreement or in
Schedule 6.1, (ii) as required by any Legal Requirement or Order or (iii) as
otherwise expressly consented to in writing by Buyer which consent will not be
unreasonably withheld or delayed, prior to the Closing, Seller will, with
respect to the Business.

                           (1)  Not make or permit any material change in the
general nature of the Business;

                           (2)  Maintain and conduct the Business in the
ordinary course of business in accordance with prudent business judgment and
consistent with past practice and policy, and maintain the Assets in their
present condition, reasonable wear and tear excepted, subject to retirements in
the ordinary course of business, use all reasonable efforts to preserve intact
the present business organization and the relationship with customers, suppliers
and others having business dealings with the Business;

                           (3)  Not enter into any material transaction or
Material Contract other than in the ordinary course of business in accordance
with prudent business judgment and consistent with past practice and policy;

                           (4)  Not purchase, sell, lease, dispose of or
otherwise transfer or make any Contract for the purchase, sale, lease,
disposition or transfer of, or subject to Encumbrance, any material Assets other
than in the ordinary course of business in

<PAGE>

accordance with prudent business judgment and consistent with past practice
and policy;

                           (5)  Not hire any new employee unless such employee
is a BONA FIDE replacement for either a presently-filled position or a vacancy
in an authorized position with the Business;

                           (6)  Not make any capital expenditure or capital
expenditure commitment in excess of $200,000 in the aggregate that is not
included in the Capital Budget except in the event of service interruption,
emergency or casualty loss, and use commercially reasonable efforts to make
capital expenditures in accordance with the Capital Budget;

                           (7)  Comply in all material respects with all
applicable Legal Requirements and Orders, including without limitation those
relating to the filing of reports, the timely filing of Tax Returns and the
payment of Taxes due to be paid prior to the Closing, other than those Taxes
contested in good faith;

                           (8)  Except in the ordinary course of business
consistent with past practices or in accordance with the terms of any existing
Contract, Employee Plan or collective bargaining agreement, not grant any
material increase or change in total compensation or benefits (taken as a whole)
to any of the Transferred Employees or, except as permitted by Section 10.2,
enter into any employment, severance or similar Contract with any Person or
amend any such existing Contracts to increase any amounts payable thereunder or
benefits provided thereunder;

                           (9)  Not terminate any Material Contract;

                           (10) Not create, incur, assume, guarantee or
otherwise become liable with respect to any indebtedness for money borrowed
other than in the ordinary course of business (it being understood and agreed
that customer advances, customer deposits and construction advances do not
create indebtedness for money borrowed), except in connection with additional
borrowings under the Existing Loan Documents and any renewal, extension,
rearrangement or refunding of any indebtedness created under or evidenced by the
Existing Loan Documents, and except pursuant to advances made by Seller to the
Business; or

                           (11) Not make any material filings with any
Governmental Body prior to consulting with Buyer except for filings made in the
ordinary course of business consistent with past practices.

                  (b)      Access to the Business. Assets and Records:
Updating Information.

                           (1)  From and after the date hereof and until the
<PAGE>

Closing Date, Seller shall permit Buyer and its Representatives to have, on
reasonable notice and at reasonable times, reasonable access to the Business,
the Assets and all books, papers and records to the extent that they reasonably
relate to the ownership, operation, obligations and liabilities of the Business
and the Assets; provided, however, that such access shall not unreasonably
interfere with the operation of the Business; and provided, further, that Buyer
hereby agrees to defend, indemnify and hold harmless Seller from and against all
Losses arising out of or relating to the negligence or willful misconduct of
Buyer or its Representatives in connection with Buyer's access provided pursuant
to this Section 6.1(b)(1). Without limiting the application of the
Confidentiality Agreement, all documents or information furnished by Seller
hereunder shall be subject to the Confidentiality Agreement.

                           (2)  Seller will notify Buyer as promptly as
practicable of any significant change in the ordinary course of business for the
Business and of any material Proceedings (threatened or pending) involving or
affecting the Business or the transactions contemplated by this Agreement, and
shall use reasonable efforts to keep Buyer fully informed of such events.

                  (c) CONSENTS. Seller will use its commercially reasonable
efforts to obtain all necessary Consents from any Person required to consummate
the transactions contemplated hereby, including the Consent of any Person
required under any Legal Requirement or Contract applicable to the Business and
all Consents listed in Schedule 5.3.

                  (d) EXCLUSIVITY. Until consummation of the transactions
contemplated hereby or termination of this Agreement pursuant to Section 9.1,
neither Seller nor its Affiliates, representatives, officers, directors,
employees or agent will, directly or indirectly, (1) submit, solicit, initiate,
encourage or discuss any proposal or offer from any Person (other than Buyer or
its Affiliates) or enter into any agreement or accept any offer relating to any
(i) reorganization, liquidation or dissolution of the Business; (ii) merger or
consolidation involving the Business; (iii) purchase or sale of substantially
all of the Assets; or (iv) similar transaction or business combination involving
the Business or the Assets, or (2) furnish any information with respect to,
assist or participate in or facilitate in any other manner any effort or attempt
by any Person or do or seek to do any of the foregoing. Seller shall notify
Buyer promptly if any Person makes any proposal, offer, inquiry or contact with
respect to an action described in clauses (i) through (iv) above.

                  (e)      NONCOMPETITION.

                           (i)    From the Closing Date through the third (3rd)
anniversary thereof, Seller agrees that neither it nor any of its Affiliates
will (i) directly, or indirectly through one or more entities, own, manage,
operate, control, be employed by or

<PAGE>

participate in the ownership, management, operation or control, or have a
financial interest in, any Person which is engaged in the Business within the
State of Vermont, provided, however, that the foregoing shall not prevent the
purchase or ownership of shares which constitute less than five percent (5%)
of the outstanding equity securities of a publicly-held company; or (ii)
divert or direct any Person who is, at that time, a customer or supplier of
the Business away from the Business.

                           (ii)   Seller acknowledges that it has carefully read
all the terms of this Section 6.1(e), and agrees that (A) the same are necessary
for the reasonable and proper protection of the value of the Business, (B) each
and every covenant is reasonable with respect to such matter, length of time and
the geographical area described, and (C) that irrespective of all other
conditions, the covenants and restrictions in clause (i) above shall be
operative daring the full period and throughout the geographical area described.
In the event any court finds any such restraint or limitation to be
unreasonable, then it is the intent of the parties that such court should
determine the maximum restraint or limitation which is reasonable and
enforcement will be of that restraint or limitation.

                           (iii)  Because of the immediate and irreparable
damage that would be caused to Buyer as a result of the breach of the covenants
of Seller contained in this Section 6.1(e), for which Buyer would not have other
adequate remedy, Seller agrees that, in the event of any such breach, Buyer
shall be entitled to seek, from any court of competent jurisdiction, an
injunction against any further breach by Seller. In addition, Buyer shall be
entitled to pursue any other remedies available under applicable laws or
equitable principles. Each party waives any requirements for security of the
posting of any bond or other surety in connection with any temporary or
permanent award or injunctive, mandatory or other equitable relief.

         Section 6.2       Covenants of Buyer.  Buyer agrees to observe and
perform the following covenants and agreements:

                  (a) CONSENTS. Buyer will use its commercially reasonable
efforts to assist Seller in obtaining all necessary Consents from any Person
required to consummate the transactions contemplated hereby, including the
Consent of any Person required under any Legal Requirement or Contract
applicable to the Business, and will use its commercially reasonable efforts to
obtain all Consents listed in Schedule 4.2 and Schedule 4.3.

                  (b) ACCESS TO INFORMATION. After Closing, Buyer will, and will
cause its Representatives to, afford to Seller, including its Representatives,
at Seller's expense, reasonable access to all books, records, files and
documents related to the Business to the extent necessary to permit Seller to
prepare and file its tax returns and to prepare for and participate in any
investigation with respect thereto, to prepare for and participate in any other

<PAGE>

investigation and defend any Proceedings relating to or involving Seller or the
Business for which Seller may be responsible, to discharge its obligations under
this Agreement and the other Related Documents to which its is a party and for
other reasonable purposes and will afford Seller reasonable assistance in
connection therewith. Buyer will cause such records to be maintained for not
less than seven years from the Closing Date and will not dispose of such records
without first offering in writing to deliver them to Seller; provided, however,
that in the event that Buyer transfers all or a portion of the Business to any
third party during such period, Buyer may transfer to such third party all or a
portion of the books, records, files and documents related thereof, provided
such third party transferee expressly assumes in writing the obligations of
Buyer under this Section 6.2(b). In addition, after the Closing Date, at
Seller's request, Buyer shall make available to Seller and its Affiliates,
employees, representatives and agents, those employees of Buyer requested by
Seller in connection with any Proceeding, including to provide testimony, to be
deposed, to act as witnesses and to assist counsel; provided, however, that (x)
such access to such employees shall not unreasonably interfere with the normal
conduct of the operations of Buyer and (y) Seller shall reimburse Buyer for the
allocated time charges of such employees and the out-of-pocket costs reasonably
incurred by Buyer in making such employees available to Seller.

                  (c) CITIZENS GUARANTEES AND SURETY INSTRUMENTS. Buyer shall
use its commercially reasonable efforts to assist Seller in obtaining full and
complete releases on the guarantees, letters of credit, bonds and other surety
instruments listed in Schedule 6.2(c). For purposes of this Section 6.2(c),
reasonable efforts shall include: (i) Buyer's assumption of the Contracts on the
terms set forth in this Agreement; and (ii) an obligation on the part of Buyer
to provide a guaranty, letter of credit, bond or other surety instrument at
Closing to the extent required by any Contract assumed by Buyer at Closing and,
in general, an equivalent surety instrument to be substituted for any surety
instrument provided by Citizens to any beneficiary in connection with the
Business.

                  (d) OTHER COVENANTS OF BUYER. Buyer agrees to submit to
regulation by the appropriate state regulatory commission to the same extent as
such state regulatory commission currently regulates Seller in connection with
the Business. Buyer also agrees to make no filings with such state regulatory
commission or take any other action in connection with any Proceeding or Legal
Requirement relating to any other businesses conducted by Seller that also are
subject to regulation by such state regulatory commission.

         Section 63        Governmental Filings.

                  (a) HSR ACT FILING. Buyer and Seller shall comply promptly
with the notice and reporting requirements of the HSR Act

<PAGE>

Buyer and Seller shall comply substantially with any additional requests for
information, including requests for production of documents and production of
witnesses for interviews or depositions, made by the Antitrust Division of
the United States Department of Justice, the United States Federal Trade
Commission or the antitrust or competition law authorities of any other
jurisdiction (the "Antitrust Authorities"). Buyer shall exercise its
commercially reasonable efforts, and Seller shall cooperate fully with Buyer,
to prevent the entry in any Proceeding brought by an Antitrust Authority or
any Governmental Body which would prohibit, make unlawful or delay the
consummation of the transactions contemplated by this Agreement. Seller shall
not oppose any efforts of Buyer, including Buyer's proffer of consent to any
Order, to complete lawfully the transactions contemplated by this Agreement,
and shall cooperate in good faith with Buyer and the Antitrust Authorities to
the same effect.

                  (b) OTHER REGULATORY FILINGS. Buyer and Seller will, as soon
as reasonably practicable following the execution of this Agreement, prepare and
file with each Governmental Body, including the appropriate state regulatory
commission, requests for such Consents as may be necessary for the transfer of
the Assets in accordance with the terms of this Agreement. Buyer and Seller will
diligently pursue such Consents and will cooperate with each other in seekIng
such Consents. To this end, the parties agree to make available the personnel
and other resources of their respective organizations in order to accomplish
actions reasonably required by them to obtain all such Consents.

                  (c) ACTIONS NOT REQUIRED. Notwithstanding anything to the
contrary contained in this Agreement, in connection with or as a condition to
receiving any Consent, neither Seller nor Buyer shall be required (A) to divest,
abandon, license or take similar action with respect to any assets (tangible or
intangible) of it or any of its respective Affiliates, or (B) to expend material
sums of money or grant any material financial or other accommodations (other
than as contemplated hereby).

         Section 6.4 Citizens Marks. Buyer acknowledges and agrees with Seller
that Seller has the absolute and exclusive proprietary right to all names,
marks, trade names, trademarks and corporate symbols and logos incorporating
"Citizens" and "CZN" (collectively and together with all other names, marks,
trade names, trademarks and corporate symbols and logos owned by Seller or any
of its Affiliates, the "Citizens Marks"), all rights to which and the goodwill
represented thereby and pertaining thereto are being retained by Seller. Within
ninety (90) days after the Closing Date, Buyer shall cease using any Citizens
Mark and shall remove from the Assets any and all Citizens Marks. Thereafter,
Buyer shall not use any Citizens Mark in connection with the sale of any
products or services or otherwise in the conduct of its businesses. In the event
that Buyer breaches this Section 6.4, Seller shall be entitled to specific
performance of this Section 6.4 and to injunctive relief against further
violations, as well

<PAGE>

as any other remedies at law or in equity available to Seller.

         Section 6.5 Acknowledgment by Buyer. In order to induce Seller to enter
into and perform this Agreement and the Related Documents, Buyer acknowledges
and agrees with Seller as follows:

                  (a) To the extent any representation or warranty of Seller
made herein is, to the knowledge of Buyer acquired prior to the date of
execution of this Agreement, untrue or incorrect, (i) Buyer shall have no rights
under this Agreement or any Related Documents by reason of such untruth or
inaccuracy, and (ii) any such representation or warranty by Seller shall be
deemed to be amended to the extent necessary to render it consistent with such
knowledge of Buyer. As used in this Agreement, the "knowledge of Buyer" means
the actual knowledge of John D. Parker, Buyer's Chief Financial Officer.

                  (b) EXCEPT AS SET FORTH IN THIS AGREEMENT AND ANY OTHER
DOCUMENT OR INSTRUMENT DELIVERED BY SELLER PURSUANT HERETO, NONE OF SELLER OR
ANY OF ITS AFFILIATES OR REPRESENTATIVES MAKES ANY REPRESENTATION OR WARRANTY AS
TO THE ACCURACY OR COMPLETENESS OF ANY INFORMATION, WRITTEN OR ORAL, FURNISHED
TO OR PREPARED AT THE REQUEST OF BUYER OR ANY OF ITS AFFILIATES OR
REPRESENTATIVES WITH RESPECT TO THE BUSINESS OR THE ASSETS.

                  (c) THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS
AGREEMENT AND IN ANY OTHER DOCUMENT OR INSTRUMENT DELIVERED BY SELLER PURSUANT
HERETO CONSTITUTE THE SOLE AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES OF
SELLER TO BUYER IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY AND BY
THE RELATED DOCUMENTS THERE ARE NO REPRESENTATIONS, WARRANTIES, COVENANTS,
UNDERSTANDINGS OR AGREEMENTS, ORAL OR WRITTEN, IN RELATION THERETO BETWEEN THE
PARTIES OTHER THAN THOSE INCORPORATED HEREIN AND THEREIN. EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT AND IN ANY
OTHER DOCUMENT OR INSTRUMENT DELIVERED BY SELLER PURSUANT HERETO, BUYER
DISCLAIMS RELIANCE ON ANY REPRESENTATIONS OR WARRANTIES, EITHER EXPRESS OR
IMPLIED, BY OR ON BEHALF OF SELLER OR ITS AFFILIATES OR REPRESENTATIVES. WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, BUYER ACKNOWLEDGES AND AGREES THAT,
EXCEPT AS PROVIDED IN SECTIONS 5.7, 5.11 AND 5.14, THERE ARE NO REPRESENTATIONS
OR WARRANTIES OF SELLER WITH RESPECT TO THE CONDITION OF THE ASSETS, COMPLIANCE
WITh ENVIRONMENTAL LAWS AND ENVIRONMENTAL PERMITS OR THE PRESENCE OR RELEASES OF
HAZARDOUS MATERIAL IN THE FIXTURES, SOILS, GROUNDWATER, SURFACE WATER OR AIR ON,
UNDER OR ABOUT OR EMANATING FROM ANY OF THE PROPERTIES OR ASSETS OF SELLER.

         Section 6.6 Transition Plan. Within 30 days after the execution date of
this Agreement, Buyer shall deliver to Seller a list of its proposed
representatives to a joint transition team, which shall include expertise from
various functional specialties associated or involved in providing billing,
payroll and other support services provided to the Business by any automated or

<PAGE>

manual process using facilities or employees that are not included among the
Assets or Transferred Employees. Seller will add its representatives to such
team within 15 days after receipt of Buyer's list Such team will be responsible
for preparing as soon as reasonably practicable after the execution date of this
Agreement and at least 60 days prior to the Closing Date, and timely
implementing, a transition plan which will identify and describe substantially
all of the various transition activities that the parties will cause to occur
before and after the Closing and any other transfer of control matters that any
party reasonably believes should be addressed in such transition plan, including
(i) the payment, collection, remittance and/or other appropriate arrangements
with respect to the items addressed in Sections 3.1(a), 3.1(b) and 3.4; and (ii)
identification, selection and hiring by Buyer on or after the Closing Date of
employees of Seller who provide support services to the Business but who are not
included among the Active Employees. If requested by either party, the terms and
conditions governIng such transition activities will be more fully set forth in
a Transition Agreement reasonably satisfactory to the parties. Buyer and Seller
shall use their commercially reasonable efforts to cause their Representatives
on such transition team to cooperate in good faith and take all reasonable steps
necessary to develop a mutually acceptable transition plan by no later than 120
days after the date of this Agreement.

         Section 6.7 Title Insurance. Prior to Closing, Seller shall cooperate
with Buyer and use commercially reasonable efforts to assist Buyer if Buyer
desires to obtain ALTA title insurance commitments (collectively, the "Title
Commitments," and each a "Title Commitment"), in final form, from one or more
title insurance companies (collectively, the "Title Company"), committing the
Title Company (subject only to the satisfaction of any industry standard
requirements contained in the Title Commitment) to issuing ALTA (or its local
equivalent) form of title insurance policies insuring good, valid, indefeasible
fee simple title to the owned Real Estate in Buyer, in all cases, at Buyer's
sole expense and in the respective amounts that Buyer requests prior to Closing,
subject to no Encumbrances or other exceptions to title other than Permitted
Encumbrances (collectively the "Title Policies"). On or prior to the Closing
Date, Seller shall execute and deliver, or cause to be executed and delivered,
to the Title Company, at no cost to Seller, any customary affidavits, standard
gap indemnities and similar documents reasonably requested by the Title Company
in connection with the issuance of the Title Commitments or the Title Policies;
provided that such efforts and Buyers' request for Title Policies or Title
Commitments shall, in no event, result in any delay in the consummation of the
transactions contemplated by this Agreement.

         Section 6.8 Sale of Generating Assets. Seller shall use its
commercially reasonable efforts, prior to Closing, to negotiate, to enter into
and to consummate, prior to Closing, a definitive purchase and sale agreement,
containing terms and conditions

<PAGE>

reasonably acceptable to Seller and for an adjusted purchase price of at
least $3,000,000, with a third Person regarding the sale to and purchase by
such third Person of the Generating Assets and the assumption by such third
Person of related obligations and liabilities of Seller. Upon the full
execution of such an agreement, the Generating Assets shall automatically be
deemed to be Excluded Assets for all purposes of this Agreement and Seller
shall deliver to Buyer revised Schedules reflecting changes that result as a
consequence of the Generating Assets becoming Excluded Assets. Buyer shall
cooperate fully with Seller, and shall not oppose Seller's efforts to sell
the Generating Assets separately from the other Assets. Seller also may enter
into, and Buyer agrees to assume at Closing or separately to enter into at
Closing, any power purchase agreement that Seller and the buyer of the
Generating Assets may agree to enter into as part of such purchase and sale
transaction, provided such power purchase agreement is approved by the
Vermont Public Services Board.

         Section 6.9 Hydro-Quebec Step-up Indemnity Agreement. Within 30 days
after the execution date of this Agreement, the parties jointly shall establish
a working group of appropriate subject matter experts who shall be instructed to
prepare, within 120 days after the date of execution of this Agreement, a
comprehensive agreement (the "Hydro-Quebec Step-Up Indemnity Agreement, for
execution by the parties at Closing, setting forth the following terms and
procedures together with any other appropriate arrangements that either party
believes should be included in such agreement:

                  (a) It is the intention of the parties that Seller's
obligations under the Hydro Quebec Contracts shall not be increased or enlarged
as a result of the sale of the Assets hereunder or by any act or omission of
Buyer, but shall remain to the same extent and in the same amount as if such
sale of the Assets did not occur. Accordingly, Seller shall agree to indemnify
and hold harmless Buyer from and against any and all Losses arising out of or
resulting from Section 17.3 of H-7Q/VJO Contract or Sections 6.1, 6.2, 6.3 or
6.4 of the H-Q Participation Agreement to the same extent (but only to such
extent) that Seller would have incurred such Losses had Seller continued to own
the Assets as of the time the event giving rise to such Losses occurred.

                  (b) Without the prior written consent of Seller (which may be
withheld in Seller's sole discretion), Buyer shall not amend, modify, waive or
agree to the waiver of any provision of the Hydro-Quebec Contracts if such
action could adversely affect the rights or obligations of Seller.

                  (c) Buyer shall notify Seller as promptly as practicable of
any significant change or development with respect to the Hydro-Quebec Contracts
or the parties thereto.

                  (d) Buyer shall take all commercially reasonable steps
<PAGE>

to mitigate such Losses, including exercising all rights available to it
under the Hydro-Quebec Contracts to resell the additional power it purchases
thereunder and enforcing its rights against the other purchasing parties to
the Hydro-Quebec Contracts. Such rights shall be exercised by Buyer in good
faith and in a manner consistent with its business practices involving claims
for which no third party contractual indemnification is available.

                  (e) To the fullest extent permitted, Seller shall be
subrogated to any rights or claims that Buyer may have against any of the other
power purchasing parties under the Hydro-Quebec Contacts in connection with the
event giving rise to such Losses.

                                   ARTICLE VII
                              CONDITIONS PRECEDENT

         Section 7.1       Seller's Conditions Precedent to Closing.  the
obligation of Seller to consummate the transactions contemplated by this
Agreement shall be subject to fulfillment at or prior to the Closing of the
following conditions:

                  (a) REPRESENTATIONS AND WARRANTIES TRUE AS OF THE CLOSING
DATE. Buyer's representations and warranties in this Agreement shall have been
true and correct in all material respects (except for representations and
warranties that contain a qualification as to materiality, which shall have been
true and correct in all respects) as of the date of this Agreement and shall be
true and correct in all material respects (except for representations and
warranties that contain a qualification as to materiality, which shall be true
and correct in all respects) as of the Closing Date as if made on the Closing
Date, subject to changes expressly contemplated and permitted by this Agreement,
except that representations and warranties made as of, or in respect of; only a
specified date or period shall be true and correct in all material respects as
of; or in respect of; such date or period.

                  (b) COMPLIANCE WITH AGREEMENTS. The covenants, agreements and
conditions required by this Agreement to be performed and complied with by Buyer
shall have been performed and complied with in all material respects prior to or
at the Closing Date.

                  (c) CERTIFICATE. Buyer shall execute and deliver to Seller a
certificate of an authorized officer of Buyer, dated the Closing Date, stating
that the conditions specified in Sections 7.1(a) and 7.1(b) of this Agreement
have been satisfied.

                  (d) GOVERNMENTAL APPROVALS AND OTHER CONSENTS. The Vermont
Public Services Board shall have issued an Order approving the transactions
contemplated hereby, the terms and conditions of such Order shall be acceptable
in all material respects to Seller in its reasonable discretion and shall have
no significant adverse

<PAGE>

effect on Seller's acquisition and divestiture activities in the State of
Vermont (including the divestiture of the Assets), and such Order shall have
become a Final Order. Seller also shall have obtained all other Consents of
Governmental Bodies and other Persons which are required in order to
consummate the transactions contemplated hereby and to transfer the Assets to
Buyer without incurring material liability under any Legal Requirement, Order
or Contract, including all Consents required by the Hydro-Quebec Contracts to
assign such Contracts to Buyer.

                  (e) HSR ACT. The applicable waiting period under the HSR Act
with respect to the transactions contemplated hereby shall have expired or have
been terminated without there being in effect a Legal Requirement enjoining or
restraining consummation of such transaction.

                  (f) INJUNCTIONS. On the Closing Date, there shall be no
Proceedings pending which seek, and no Orders which operate, to restrain, enjoin
or otherwise prevent the consummation of the transactions contemplated by this
Agreement.

                  (g) OPINION OF COUNSEL.  On the Closing Date, Seller shall
have received from counsel to Buyer an opinion in the form of Exhibit 7.1(g).

                  (h) DOCUMENTS. Buyer shall have delivered all the
certificates, instruments, contracts and other documents specified to be
delivered by it hereunder on or before the Closing Date, including pursuant to
Section 8.1, and shall have taken such actions as Seller may have requested
pursuant to Section 11.2 hereof.

                  (i) SALE OF GENERATING ASSETS. Any agreement entered into by
Seller in accordance with Section 6.8 shall have been consummated prior to the
Closing Date or Seller shall be satisfied that such transaction will be
consummated concurrently with the Closing.

         Section 7.2 Buyer's Conditions Precedent to Closing. The obligation of
buyer to consummate transactions contemplated by this Agreement shall be subject
to fulfillment at or prior -to the Closing of the following conditions:

                  (a) REPRESENTATIONS AND WARRANTIES TRUE AS OF THE CLOSING
DATE. Seller's representations and warranties in this Agreement shall have been
true and correct in all material respects (except for representations and
warranties that contain a qualification as to materiality, which shall have been
true and correct in all respects) as of the date of this Agreement and shall be
true and correct in all material respects (except for representations and
warranties that contain a qualification as to materiality, which shall be true
and correct in all respects) as of the Closing Date as if made on the Closing
Date,

<PAGE>

subject to changes expressly contemplated and permitted by this Agreement;
except (i) that representations and warranties made as of; or in respect of;
only a specified date or period shall be true and correct in all material
respects as of; or in respect of, such date or period, and (ii) to the extent
that any failure of such representations and warranties to be true and
correct as aforesaid when taken in the aggregate would not have a Material
Adverse Effect.

                  (b) COMPLIANCE WITH AGREEMENTS. The covenants, agreements and
conditions required by this Agreement to be performed and complied with by
Seller shall have been performed and complied with in all material respects
prior to or at the Closing Date, except where the failure to so perform or
comply when taken in the aggregate would not have a Material Adverse Effect.

                  (c) CERTIFICATE. Seller shall execute and deliver to Buyer a
certificate of an authorized officer of Seller, dated the Closing Date, stating
that the conditions specified in Sections 7.2(a) and 7.2(b) of this Agreement
have been satisfied.

                  (d) GOVERNMENTAL APPROVALS. The Vermont Public Services Board
shall have issued an Order approving the transactions contemplated hereby, such
Order shall not contain any restrictions or conditions (other than those in
effect on the date of this Agreement or requiring that the regulatory treatment
with respect to the Business in existence as of the date of this Agreement
applicable to Seller be continued following the Closing) which would have a
material adverse effect on the operation, financial condition or results of
operations of the Business, and such Order shall have become a Final Order. In
addition, Seller shall have obtained all other Consents of Governmental Bodies
and other Persons which are required in order to consummate the transactions
contemplated hereby other than those the failure of which to obtain would not
have a material adverse effect on the operation, financial condition or results
of operations of the Business.

                  (e) HSR ACT. The applicable waiting period under the HSR Act
with respect to the transactions contemplated hereby shall have expired or have
been terminated.

                  (f) INJUNCTIONS. On the Closing Date, there shall be no
Proceedings pending which seek, and no Orders which operate, to restrain, enjoin
or otherwise prevent the consummation of the transactions contemplated by this
Agreement.

                  (g) OPINION OF COUNSEL. On the Closing Date, Buyer shall have
received from L. Russell Mitten II, Vice President and General Counsel of
Seller, an opinion in the form of Exhibit 7.2(g) hereto.

<PAGE>

                  (h) DOCUMENTS. Seller shall have delivered all of the
certificates, instruments, contracts and other documents specified to be
delivered by it hereunder, including pursuant to Section 8.1, and shall have
made arrangements reasonably satisfactory to Buyer to deliver to Buyer as
promptly as practicable after the Closing such records (including customer and
employee records) necessary to own and operate the Business.

                  (i) NO MATERIAL ADVERSE CHANGE.  Since the date of execution
of this Agreement, no Material Adverse Effect shall have occurred that has
continuing effect as of the Closing Date.

                  (j) HYDRO-QUEBEC STEP-UP INDEMNITY AGREEMENT. Seller shall
have executed and delivered to Buyer the Hydro-Quebec Step-Up Indemnity
Agreement contemplated by Section 6.9 and such agreement shall be reasonably
satisfactory to Buyer.

                                   ARTICLE VII
                                     CLOSING

         Section 8.1 Closing. The closing of the purchase and sale of the Assets
(the "Closing") will take place at the offices of Fleischman and Walsh, L.L.P.,
1400 Sixteenth Street, N.W., Suite 600, Washington, D.C. 20036, on the last
calendar day of the month in which the conditions specified in Sections 7.1(d)
and 7.2(d) have been satisfied, unless another time, date and place is agreed to
in writing by the parties. The date of the Closing is referred to in this
Agreement as the "Closing Date." the transactions to be consummated on the
Closing Date shall be deemed to have been consummated as of 11:59 p.m. on the
Closing Date. At the Closing the following events shall occur, each event being
deemed to have occurred simultaneously with the other events.

                  (a) BILL OF SALE. Seller and Buyer shall execute and deliver
the Bill of Sale and Assignment and Assumption Agreement in the form of Exhibit
8.1(a) hereto (the "Bill of Sale").

                  (b) PAYMENT OF PURCHASE PRICE. As provided below, Buyer will
pay to Seller an amount equal to the Estimated Purchase Price by wire
transferring such amount, in lawful money of the United States of America in
immediately available funds, to such account as Seller shall have designed by
notice to Buyer. If the Closing Date is not a business day on which financial
institutions are open and operating, then on or before the last business day on
which financial institutions are open and operating before the Closing Date,
Buyer shall deliver the Estimated Purchase Price to Buyer's lead bank (the
"Escrow Agent") in immediately available funds in U.S. dollars. Upon receipt,
the Escrow Agent shall invest the Estimated Purchase Price in an
interest-bearing account mutually agreed upon by Seller and Buyer. At Closing,
Buyer shall sign and deliver to Seller a statement which confirms that the
Closing has occurred and which instructs the Escrow Agent to transfer to Seller
the funds representing the Estimated Purchase Price, plus an amount representing
the interest earned after the

<PAGE>

Closing Date until the date the funds are transferred, to an account that
Seller shall designate at least two (2) business days prior to the date the
funds are required to be transferred hereunder. The Escrow Agent shall refund
the balance to Buyer. The fees and expenses of Escrow Agent shall be paid
one-half by Seller and one-half by Buyer.

                  (c) OTHER RELATED DOCUMENTS. To the extent consistent with the
other provisions of this Agreement, Seller (or the appropriate Affiliate of
Seller) and Buyer shall execute and deliver such other Related Documents
(including special warranty deeds, conveyances, certificates of title, bills of
sale, assignment and assumption instruments and FIRPTA affidavits) requested by
a party that are necessary in order to satisfy any applicable Legal Requirements
relating to the transfer of the Assets to Buyer or the assumption of the Assumed
Liabilities by Buyer or which are customarily given in the State of Vermont to
accomplish transfers of assets of the type involved; provided, however, that
nothing in this clause (c) shall obligate Seller or any Affiliate of Seller to
execute or deliver any document that effects, in a manner adverse to Seller and
in manner not required by the terms of this Agreement, Seller's liability to
Buyer as expressed herein and in the Bill of Sale.

                  (d) FIRPTA CERTIFICATE.  Seller shall execute and deliver to
Buyer a certification of nonforeign status within the meaning of Treasury
Regulations Section 1.1445-2.

                                   ARTICLE IX
                                   TERMINATION

         Section 9.1       Termination Rights. This Agreement may be terminated
in its entirety at any time prior to the Closing:

                  (a) By the mutual written agreement of Seller and Buyer;

                  (b) By Buyer, on the one hand, or Seller, on the other hand,
in writing if there shall be in effect a nonappealable Order prohibiting
,enjoining or restricting the transactions contemplated by this Agreement;

                  (c) By Buyer, upon the breach in any material respect of any
of the representations and warranties of Seller contained herein or in the
failure by Seller to perform and comply in any material respect with any of the
agreements and obligations required by this Agreement to be performed or
complied with by Seller, provided that such breach or failure is reasonably
likely to result in a Material Adverse Effect and is not cured or otherwise
addressed by Seller in a manner reasonably acceptable to Buyer within 30 days of
Seller's receipt of a written notice from Buyer that such a breach or failure
has occurred (or significant efforts have not been commenced to cure such
misrepresentation or breach if it is susceptible to cure but not capable of
being cured

<PAGE>

within such 30 days);

                  (d) By Seller, upon the breach in any material respect of any
of the representations and warranties of Buyer contained herein or the failure
by Buyer to perform and comply in any material respect with any of the
agreements and obligations required by this Agreement to be performed or
complied with by Buyer, provided that such breach or failure is not cured or
otherwise addressed by Buyer in a manner reasonably acceptable to Seller within
30 days of Buyer's receipt of a written notice from Seller that such a breach or
failure has occurred (or significant efforts have not been commenced to cure
such misrepresentation or breach if it is susceptible to cure but not capable of
being cured within such 30 days);

                  (e) By either party in writing if the Closing has not occurred
within fifteen (15) months after the execution date of this Agreement; provided,
however, that the right to terminate this Agreement under this Section 9.1(e)
will not be available to any party that is in material breach of its
representations, warranties, covenants or agreements contained herein; and
provided, further, that if Closing has not occurred within such period of time
because the conditions precedent to Closing set forth in Sections 7. 1(d) and
7.2(d) have not been fulfilled, then such period of time shall be automatically
extended by an additional six (6) months;

                  (f) By Seller or Buyer, as appropriate, if any Governmental
Body whose Consent is required to fulfill a condition precedent to Closing set
forth in Section 7.1(d) (with respect to Seller) or in Section 7.2(d) (with
respect to Buyer) has affirmatively indicated that such Consent will not be
given or will contain terms or conditions (or, if such Consent has been
obtained, contains terms or conditions) that, in the reasonable business
judgment of Seller or Buyer, as appropriate, will result in a condition
precedent to Closing set forth in Section 7.1(d) (with respect to Seller) or in
Section 7.2(d) (with respect to Buyer) not being satisfied;

                  (g) By Seller if by the deadline set forth in Section 4.4 (as
such deadline may have been extended by Seller), Buyer fails to obtain from a
reputable financial institution a binding commitment letter, in form and
substance reasonably satisfactory to Seller, obligating such financier to
provide the necessary funds to Buyer at Closing to enable Buyer to consummate
the transactions contemplated by this Agreement; or

                  (h) By Seller if both (i) Buyer's financier fails to advance
loan proceeds to Buyer with which to fund the payments required to be made by
Buyer at Closing or such financier affirmatively indicates, for no reason or for
any reason other than the proper termination of this Agreement pursuant to any
other provision of this Section 9.1, that such funding will not be provided to
Buyer by such financier and (ii) Buyer is unable to

<PAGE>

arrange, to Seller's reasonable satisfaction, replacement funding from any
other source within forty-five (45) days after the occurrence of the event
described in the preceding clause (i).

         Section 9.2       Limitation on Right to Terminate: Effect of
Termination.

                  (a) A party shall not be allowed to exercise any right of
termination pursuant to Section 9.1 if the event giving rise to the termination
right shall be due to the willful failure of such parry seeking to terminate
this Agreement to perform or observe in any material respect any of the
covenants or agreements hereof to be performed or observed by such party.

                  (b) If this Agreement is terminated as permitted under Section
9.1, such termination shall be without liability of or to any party to this
Agreement, or any shareholder or Representative of such party; provided,
however, that if such termination shall result from the willful failure of any
party to fulfill a condition to the performance of any other party or to perform
a covenant of this Agreement or from a material and willful breach by any party
to this Agreement (it being understood that the failure to cure a breach shall
not, by itself, be a willful breach of this Agreement), then such party shall
(subject to the limitation set forth in the last sentence of this Section
9.2(b)) be fully liable for any and all damages sustained or incurred by the
other parry. If prior to Closing either party to this Agreement resorts to legal
proceedings to enforce this Agreement, the prevailing party in such proceedings
shall be entitled to recover all costs incurred by such party including
reasonable attorney's fees, in addition to any other relief to which such party
may be entitled; provided, however, and notwithstanding anything to the contrary
in this Agreement, in no event shall either party be entitled to receive any
punitive, indirect or consequential damages.

                  (c) If (i) Seller terminates this Agreement pursuant to
Section 9.1(d), Section 9.1(g) or Section 9.1(h) or (ii) this Agreement is
terminated by either party pursuant to Section 9.1(e) or 9.1(f) because the
requisite Consent from the applicable state regulatory commission has not been
obtained, or because such Governmental Body has affirmatively indicated that its
Consent will not be given, due in whole or in part to concerns about Buyer's
qualifications or capabilities, unless such Governmental Body also has
affirmatively indicated that its Consent is being withheld due in part to
concerns. about Seller's operation of the Business or ownership of the Assets,
then Seller may present a sight draft under the Letter of Credit, and thereby
retain either all of the Deposit (if clause (i) is applicable) or $380,000 (if
clause (ii) is applicable), (or, if there is no Letter of Credit or if the
Letter of Credit does not permit Seller to present a sight draft in such
circumstances, then Buyer shall pay to Seller in cash an amount equal to the
Deposit or $380,000, as the case may be, within five (5) business days after the
effective date of

<PAGE>

termination of this Agreement), in either case, as liquidated damages free of
any claims by Buyer or any other Person with respect thereto (the parties
hereby acknowledging that the extent of damages to Seller occasioned by such
breach or default or failure by Buyer would be impossible or extremely
difficult to ascertain and that the amount to be paid to Seller is a fair and
reasonable estimate of such damages under the circumstances). If this
Agreement is terminated for any reason other than as set forth in the
preceding sentence, then Seller shall promptly deliver the Letter of Credit
to Buyer, free of any claims by Seller or any other Person with respect
thereto.

                                    ARTICLE X
                                EMPLOYEE MATTERS

         Section 10.1 Employment of Transferred Employees.

                  (a) Schedule 10.1 lists each division, and the total number of
salaried and hourly, nonunion and union, employees actively employed as of the
date of this Agreement in each division by Seller or its Affiliates whose
primary duties relate to the Business ("Active Employees"). As of the Closing
Date, Buyer shall employ all Active Employees of Seller employed in the Business
being acquired ("Transferred Employees") in the same comparable positions, and
at the same compensation level (including wages, salary and bonuses) as were in
effect with Seller immediately prior to the Closing Date. Buyer reserves the
right to restructure positions and functions as it deems appropriate so long as
reassignment does not result in materially diminished responsibilities or a
reduction in compensation. For purposes of the preceding sentence, "Active
Employees" shall include all full-time and part-time employees, employees on
military leave, maternity leave, leave under the Family and Medical Leave Act of
1993, on short-term disability, on layoff with recall rights, and employees on
other leaves of absences where there is a legal or contractual right to
reinstatement. Notwithstanding the foregoing, nothing in this Agreement shall
operate to prevent or prohibit Buyer from making changes in compensation of
Transferred Employees based on demotions arising for cause.

                  (b) Prior to the execution date of this Agreement, Seller has
delivered to Buyer a list of the persons who would have been Transferred
Employees had the Closing Date occurred on December 31, 1999, showing the
following information for each such person: (i) the name of each such person;
(ii) the name of his or her current employer; (iii) his or her current base pay,
1998 bonus that was paid in 1999 and the projected 1999 bonus that will be paid
in 2000; (iv) his or her hire date, any rehire date (if available) and years of
service; (v) his or her then-current position and job title; (vi) whether such
employee is subject to a collective bargaining agreement or represented by a
labor organization.and, if so, the name of the union and local, (vii) whether
such employee is on military leave, maternity leave, leave

<PAGE>

under the Family and Medical Leave Act of 1993, short-term disability, on
layoff with recall rights, or on other leave of absence with a legal or
contractual right to reinstatement. Seller shall update such list as of the
end of each calendar quarter occurring between the execution date hereof and
the Closing Date, in each case assuming the Closing Date had occurred on such
date, and shall deliver such updated lists to Buyer within ten (10) days
after the end of each such calendar quarter.

         Section 10.2. Assumption of Collective Bargaining Agreement
Obligations. On and after the Closing Date, Buyer, shall assume all of the
Seller's obligations under, and be bound by the provisions of; each collective
bargaining agreement to the extent of provisions covering Transferred Employees.
Each collective bargaining agreement shall be identified on a Schedule 10.2 to
be prepared by Seller and submitted to Buyer on or before the Closing Date.
Seller shall cooperate with Buyer in Buyer's efforts to contact the unions
representing Transferred Employees. Seller may extend, renew or enter into a new
Contract to replace any collective bargaining agreement that will expire prior
to December 31, 2000, provided that Seller shall consult with Buyer regarding
the terms and conditions of any such extension, renewal or replacement of any
such collective bargaining agreement. Notwithstanding the foregoing provisions
of this Section 10.2, Buyer shall not be obligated to assume any new collective
bargaining agreement that contains terms and conditions that, when taken as a
whole, are materially more onerous on the employer than the terms and
conditions, taken as a whole, of the collective bargaining agreement that was
replaced by such new collective bargaining agreement.

         Section 10.3 Cessation of Participation in Seller's Plans; Proration of
Bonuses. From and after the Closing Date, Transferred Employees shall accrue no
additional benefits under any Employee Benefit Plan, or Employee Plan of Seller
or its Affiliates. Seller and Buyer shall pro-rate the.obligation to pay any
bonuses declared by Seller after the Closing Date that would have been payable
to the Transferred Employees had the Transferred Employees remained employed by
Seller or its Affiliates throughout the calendar year in which the Closing Date
occurs, in accordance with the provisions of any Employee Benefit Plan or
Employee Plan of Seller under which such bonus would have been paid. For
Transferred Employees entitled to such bonus, Buyer shall be obligated to pay
that portion of each such bonus determined by multiplying the amount of such
bonus by a fraction, the numerator of which is the number of days from and after
the Closing Date through the end of the calendar year in which the Closing Date
occurs, and the denominator of which is 365. Seller shall be obligated to pay
the balance of any such bonuses.

         Section 10.4 Similarity of Benefit Packages. As of the Closing Date,
and except as otherwise expressly provided in this Article X, Buyer shall
include each Transferred Employee in a benefit package providing benefits that
are in the aggregate

<PAGE>

substantially similar to those provided by Seller to such Transferred
Employees immediately prior to the Closing Date. Notwithstanding the
foregoing, to the extent that one or more collective bargaining agreements
being assumed by Buyer contains provisions pertaining to employee benefits,
Buyer shall provide the Transferred Employees covered by such agreements with
benefits that are identical to those required to be provided under the terms
of such agreements. Except as otherwise expressly provided in this Article X,
Buyer shall treat all service and compensation credited to each such
Transferred Employee as if such service and compensation had been rendered
to, and paid by, Buyer for all purposes under Buyer's benefit plans,
arrangements, and policies.

         Section 10.5  Defined Benefit Pension Plan.

                  (a) At least fifteen days prior to the Closing Date, Seller
shall take any and all actions necessary to cease benefit accruals and fully
vest all Transferred Employees in their accrued benefits under the Citizens
Pension Plan ("Seller's Pension Plan"). Seller shall retain all liabilities and
assets for pension benefits accrued through the Closing Date by Transferred
Employees and retirees of the Business under Seller's Pension Plan.

                  (b) As of the Closing Date, Buyer shall cause all union
Transferred Employees to be included in a qualified defined benefit pension plan
providing benefits identical to the benefits provided under the Seller's Pension
Plan ("Buyer's Pension Plan"). Buyer shall take all actions necessary to cause
Buyer's Pension Plan to recognize the service that all union Transferred
Employees had under Seller's Pension Plan for purposes of such Employees'
eligibility to participate, vesting, attainment of retirement dates, subsidized
benefits, and entitlement to optional forms of payment.

         Section 10.6      401(k) Plan.

                  (a) Buyer shall take all action necessary to ensure that, as
of the Closing Date, it includes Transferred Employees in a qualified 401(k)
plan providing for matching contributions at least equivalent to that provided
to the Transferred Employee under Citizens 401(k) Savings Plan ("Seller's 401(k)
Plan") immediately prior to the Closing Date. Buyer shall take all actions
necessary to cause Buyer's 401 (k) Plan to recognize the service that the
Transferred Employees had in Seller's 401(k) Plan for purposes of determining
such Employees' eligibility to participate, vesting, attainment of retirement
dates, contribution levels and, if applicable, eligibility for optional forms of
benefit payments. Buyer shall cause the trustee of Buyer's 401(k) Plan to accept
transfers and direct rollovers from Seller's 401(k) Plan of the vested account
balances of Transferred Employees, including transfers of outstanding loan
balances and related promissory notes, subject to compliance with applicable
law.

                  (b) Seller shall vest Transferred Employees in their

<PAGE>

account balances under Seller's 401(k) Plan as of the Closing Date. Seller
shall direct the trustee of Seller's 401(k) Plan to transfer to the trustee
of Buyer's 401(k) Plan an amount of cash equal to the value of the account
balances of the Transferred Employees under Seller's 401(k) Plan; except that
to the extent that the account balances consist of outstanding loans, Seller
shall direct the trustee of Seller's 401(k) Plan to transfer to the trustee
of Buyer's 401(k) Plan the promissory notes and related documents evidencing
such loans.

                  (c) Alter the transfer of assets and liabilities pursuant to
this Section, Buyer shall assume all liabilities for the benefits payable with
respect to Transferred Employees under Seller's 401(k) Plan, and Seller and
Seller's 401(k) Plan shall have no liability for such benefits.

                  (d) In connection with the transfer of assets and liabilities
under this Section, Seller and Buyer shall cooperate in making all appropriate
filings, and providing all applicable notices, required by the IRC or ERISA.
Buyer shall deliver to Seller a copy of Buyer's 401(k) Plan, and a copy of the
most recent determination letter from the IRS with respect to such Plan,
together with a certification to the effect that no events have occurred since
the date of the determination letter that would adversely affect the Plan's
qualified status.

         Section 10.7 Welfare Benefits.

                  (a) Buyer shall take all action necessary and appropriate to
ensure that, as of the Closing Date, Buyer maintains employee welfare benefit
plans (including retiree medical benefits) for the benefit of Transferred
Employees that, in the case of nonunion Transferred Employees are, in the
aggregate, comparable to those benefits provided by Seller under its
corresponding welfare benefit plans (the "Buyer's Nonunion Welfare Plans"), and
in the case of union Transferred Employees are identical to those benefits
provided to union Transferred Employees under Seller's corresponding welfare
benefit plans (the "Buyer's Bargained Welfare Plans"), as in effect immediately
prior to the Closing Date. the Buyer's Nonunion Welfare Plans and the Buyer's
Bargained Welfare Plans are hereinafter referred to collectively as the "Buyer
Welfare Plans." For purposes of determining eligibility to participate, and
entitlement to benefits, in each Buyer Welfare Plan, each Transferred Employee
shall be credited with service, determined under the terms of the corresponding
welfare plans maintained by Seller on the Closing Date (hereinafter referred to
collectively as the "Seller Welfare Plans"). Any restrictions on coverage for
pre-existing conditions, actively at work requirements, waiting periods, and
requirements for evidence of insurability under the Buyer Welfare Plans shall be
waived in the Buyer Welfare Plans for Transferred Employees, and Transferred
Employees shall receive credit under the Buyer Welfare Plans for co-payments,
payments under a deductible limit made by them, and for out-of-pocket maximums

<PAGE>

applicable to them during the plan year of the Seller Welfare Plan in which the
Closing Date occurs. As soon as practicable after the Closing Date, Seller shall
deliver to Buyer a list of the Transferred Employees who had credited service
under a Seller Welfare Plan, together with each such Transferred Employee's
service, co-payment, deductible and out-of-pocket payment amounts under such
plan.

                  (b) Buyer shall provide or cause to be provided retiree
medical, dental, and life benefits to each retiree of the Business identified in
Schedule 10.7 as updated as of the Closing Date (the "Retirees"), to each
Transferred Employee who is considered to be a "grandfathered employee" (as
hereinafter defined), and to each union Transferred Employee who otherwise is
eligible for such retiree benefits, under the same terms and conditions as
applied to such Retiree or Transferred Employee immediately prior to' the
Closing Date, and Seller shall have no obligation or liability, contingent or
otherwise, to provide retiree medical, dental or life benefits to any such
Retiree or Transferred Employee on or after the Closing Date. For purposes of
this Section 10.7, a "grandfathered employee" is a union or nonunion Transferred
Employee, who was at least age 55 with at least 10 years of service as defined
in the Seller's Pension Plan by December 31, 1997, and who retires after
December 31, 1997. Schedule 10.7 identifies each Active Employee who is a
"grandfathered employee" and each union Active Employee who otherwise is
eligible for such retiree benefits. Buyer agrees not to terminate or materially
modify those post-retirement benefit provisions covering "grandfathered"
Transferred Employees, eligible union Transferred Employees, Retirees, their
spouses and dependents that are in effect immediately prior to the Closing Date.

                  (c) Within sixty (60) days after the Closing, Seller agrees to
transfer to an exempt trust established by Buyer under Section 501 (c)(9) of the
IRC ("Buyer's VEBA") the amount held under any trust established by Seller under
Section 501 (c)(9) of the IRC ("Seller's VEBA") to fund post-retirement health
care and life insurance benefits for the Business. Such amount shall be
determined based upon Seller's internal recordkeeping. Buyer agrees that Buyer's
VEBA will apply an amount at least equal to the sum of the assets transferred
from Seller's VEBA (and earnings thereon calculated at the rate of return
generated by Buyer's VEBA) to provide post-retirement health care and life
insurance benefits after the Closing Date to the Retirees and, as applicable,
the Transferred Employees who become eligible for such benefits after Closing.
Upon Closing, Buyer shall be responsible for all obligations of Seller to
provide post-retirement health care and life insurance benefits to such
Transferred Employees and Retirees, and Seller and Seller's VEBA shall cease to
have any liability, contingent or otherwise, for such benefits.

         Section 10.8 Flexible Spending Accounts. Seller shall transfer to
Buyer's flexible benefits plan any balances standing

<PAGE>

to the credit of Transferred Employees under Seller's flexible benefits plan
as of the Closing Date. Seller shall provide to Buyer prior to the Closing
Date a list of those Transferred Employees that have participated in the
health or dependent care reimbursement accounts of Seller, together with
their elections made prior to the Closing Date with respect to such account,
and balances standing to their credit as of the Closing Date.

         Section 10.9 Employment Agreements. Buyer shall assume all obligations
of each employment agreement to which Seller or its Affiliates is a party and
which covers any Transferred Employee immediately prior to the Closing Date.

         Section 10.10 Vacation. Seller shall pay to Transferred Employees any
"banked" vacation credited to them on or prior to the Closing Date. On or after
the Closing Date, Buyer shall provide to each Transferred Employee vacation in
an amount equal to the Transferred Employee's vacation entitlement for the year
of the Closing reduced by the number of vacation days that such Transferred
Employee has taken on or before the Closing.

         Section 10.11 Severance. In the event that Buyer terminates the
services of any Transferred Employee within twelve (12) months following the
Closing Date without cause, Buyer shall provide to any such Transferred Employee
severance or separation pay benefits that are at least equal to the benefits
that would have been paid by Seller had Seller continued to employ such
Transferred Employee through such twelve month period ending on the employee's
date of termination from Buyer; provided, however, that if a collective
bargaining agreement that is applicable to a union Transferred Employee would
provide for a greater benefit to be paid by Buyer, the terms and conditions of
such agreement shall instead be applicable. "Cause" for termination shall
consist oft (a) any act of dishonesty or fraud; (b) an employee's conviction of
a crime involving fraud, embezzlement or any other act of moral turpitude; (c)
an employee's gross negligence or willful misconduct in the performance of his
duties; (d) an employee's engagement in acts seriously detrimental to the
Business or reputation of Buyer; (e) an employee's failure to abide by lawful
policies of Buyer; and (f) the employee's failure to abide by the directives of
the employee's superior.

                                   ARTICLE XI
                                   TAX MATTERS

         Section 11.1 Purchase Price Allocation. Buyer and Seller shall use
their good faith efforts to agree upon the allocation (the "Allocation") of the
Purchase Price, the Assumed Liabilities and other relevant items (including, for
example, adjustments to the Purchase Price) to the individual assets or classes
of assets as required by Section 1060 of the IRC and the Treasury Regulations
promulgated thereunder. If Buyer and Seller agree to such Allocation, Buyer and
Seller covenant and agree that, except to the extent that the IRS or other
Governmental Body successfully

<PAGE>

challenges such Allocation, (i) the values assigned to the assets by the
parties' mutual agreement shall be conclusive and final for all purposes,
(ii) Buyer and Seller shall file all federal T&x Returns, including IRS Form
8594, in accordance with such Allocation, and (iii) neither Buyer nor Seller
will take any position before any Governmental Body or in any Proceeding that
is in any way inconsistent with such Allocation. Notwithstanding the
foregoing, if Buyer and Seller cannot agree to an Allocation, Buyer and
Seller covenant and agree to file, and to cause their respective Affiliates
to file, all Tax Returns and schedules thereto (including, for example,
amended returns, claims for refund, and those returns and forms required
under Section 1060 of the IRC and any Treasury regulations promulgated
thereunder) consistent with each of such party's good faith Allocations,
unless otherwise required because of a change in any Legal Requirement.

         Section 11.2 Cooperation with Respect to Like-Kind Exchange. Buyer
agrees that Seller may, at Seller's election prior to the Closing Date, direct
Buyer to acquire any portion of the Assets by delivering all or a portion of the
Purchase Price to a "qualified intermediary" (as defined in Treasury Regulations
ss. 1.1031 (k) - (1)(g)(4)) as to assist Seller in structuring the
relinquishment of the Assets to qualify as part of a like-kind exchange of
property covered by Section 1031 of the IRC. If Seller so elects, Buyer shall
cooperate with Seller (but without being required to incur any out-of-pocket
costs in the course thereof) in connection with Seller's efforts to effect such
like-kind exchange, which cooperation shall include, without limitation, taking
such actions as Seller reasonably requests in order to enable Seller to qualify
such transfer as part of a like-kind exchange of property covered by Section
1031 of the IRC (including any actions required to facilitate the use of a
"qualified intermediary"), and Buyer agrees that Seller may assign all or part
of its rights and delegate all or part of its obligations under this Agreement
to a person or entity acting as a qualified intermediary to the extent necessary
to qualify the transfer of the Assets as part of a like-kind exchange of
property covered by Section 1031 of the IRC, provided, however, lat no such
assignment shall relieve Seller of any of its obligations under this Agreement.
Buyer and Seller agree in good faith to use reasonable efforts to coordinate the
transactions contemplated by this Agreement with any other transactions engaged
in by either Buyer or Seller; provided lat such efforts are not required to
include an unreasonable delay in the consummation of the transactions
contemplated by this Agreement. Seller agrees to pay any additional Transaction
Taxes that may be imposed as a result of any like-kind exchange contemplated by
this Section 11.2 and to reimburse Buyer for any additional out-of-pocket legal
fees and expenses incurred by Buyer in connection with any such exchange.

         Section 11.3 Transaction Taxes. Buyer and Seller shall each bear and be
responsible for paying one-half of any sales, use, transfer, documentary,
registration (other than any annual

<PAGE>

registration fees), business and occupation and other similar Taxes
(including related penalties (civil or criminal), additions to tax and
interest) imposed by any Governmental Body with respect to the transfer of
Assets (including the Real Property) to Buyer ("Transaction Taxes"),
regardless of whether the tax authority seeks to collect such Taxes from
Seller or Buyer. Seller shall prepare all tax filings related to any
Transaction Taxes (other than with respect to Real Property and motor vehicle
title transfer and registration, which shall be prepared by Buyer). Fifteen
(IS) days prior to making such filings, the filing party shall provide to the
nonfiling party the filing party's workpapers for the nonfiling party's
review and approval. the nonfiling party shall provide to the filing party
approval or disapproval of such workpapers within ten (10) days of delivery
by the filing party. the filing party shall be responsible for (i)
administering the payment of such Transaction Taxes, (ii) defending or
pursuing any Proceedings related thereto, and (iii) paying any expenses
related thereto, in each case subject to reimbursement by the nonfiling party
for one-half of such payments and expenses. Each party shall give prompt
written notice to the other of any proposed adjustment or assessment of any
Transaction Taxes with respect to the transaction, or of any examination of
said transaction in a sales, use, transfer or similar tax audit. In any
Proceedings, whether formal or informal, the filing party shall control the
defense of such Proceedings, but shall permit the nonfiling party to
participate in the defense of such proceeding and shall take all actions and
execute all documents required to allow such participation. Neither party
shall negotiate a settlement or compromise of any Transaction Taxes without
the prior written consent of the other, which consent shall not be
unreasonably withheld.

                                   ARTICLE XII
                              ENVIRONMENTAL MATTERS

         Section 12.1      Environmental Due Diligence.

                  (a) RIGHT TO CONDUCT ENVIRONMENTAL DUE DILIGENCE. Regarding
environmental matters, Buyer has completed its initial environmental due
diligence prior to execution of this Agreement, including a review of the
Environmental Data. Buyer also has required Seller to make the representations
concerning environmental matters set forth in Section 5.14, upon which Buyer is
relying. In light of these actions, Buyer agrees not to conduct additional
environmental due diligence (including employee interviews and sampling of any
media or wastewater) except in accordance with this Section 12.1. All activities
of Buyer regarding environmental due diligence shall be conducted to minimize
any inconvenience or interruption of the normal use and enjoyment of the
Business and the Assets.

                  (b) DELIVERY OF ENVIRONMENTAL REPORTS. Seller has made
available to Buyer before the date of execution of this Agreement

<PAGE>

copies of all written environmental audits, reports or studies in Seller's
possession of which Seller has Knowledge and which were prepared after
December 31, 1996, concerning the existence or possible existence of
Hazardous Materials on, or under or adjacent to any of the Real Property or
relating to potential Environmental Liability of Seller in connection with
the Business or the Assets. Buyer shall provide to Seller copies of all
reports, assessments and other information composed or compiled by Buyer or
Buyer's environmental consultant(s) promptly following Buyer's receipt
thereof. Buyer shall treat all such information delivered to, or composed or
compiled by, Buyer or Buyer's environmental consultant(s) as Environmental
Data in accordance with the procedures of Section 12.1(c).

                  (c) CONFIDENTIALITY OF ENVIRONMENTAL DATA. All audits, reports
and studies delivered to or prepared by Buyer and all other information
collected and generated as a result of Buyer's environmental due diligence
("Environmental Data") will be subject to the terms and conditions of the
Confidentiality Agreement, except as otherwise expressly provided in this
Section 12.1. Neither Buyer nor its environmental consultant(s) shall disclose
or release any Environmental Data without the prior written consent of Seller
and all such information shall be kept strictly confidential. The Environmental
Data shall be prepared at the request of counsel to Buyer and, to the fullest
extent permitted by law, shall be the work product of such counsel and
constitute confidential attorney/client communications. The Environmental Data
shall be transferred among Buyer and its consultant(s) in a manner that will
preserve, to the greatest extent possible, such privileges. Buyer expressly
agrees that until the Closing, it will not distribute the Environmental Data to
any third party without Seller's prior written consent. After the Closing, each
Party agrees that it will not distribute the Environmental Data to any third
party without the other's prior written consent, except as required by law or by
express provisions of its corporate compliance program if the other Party is
provided written notice at least ten (10) days prior to such distribution,
provided, however, that for a period of two (2) years after the Closing Date,
Buyer may distribute the Environmental Data to any potential purchaser of the
Assets only after first notifying the Seller.

                  (d) ENVIRONMENTAL CONSULTANTS Buyer may retain one or more
outside environmental consultants to assist in its environmental due diligence
concerning the Assets and shall notify Seller of the environmental consultant or
consultants Buyer intends to retain. Thereafter, Seller shall have five (5) days
after receipt of such notification to notify Buyer in writing of Seller's
objection (which must be for good cause) and substantiate the basis for that
objection. If Seller does not object for good cause and substantiate that
objection within said five (5) day period, Seller shall be deemed to have
consented to Buyer's selection.

<PAGE>

                  (e) PHASE I REVIEWS. Buyer has conducted various environmental
assessment activities with respect to the Assets, including reviewing existing
environmental reports, correspondence, permits and related materials regarding
the Assets, but excluding inspecting individual sites. Buyer may not conduct any
further Phase I environmental assessment activities with respect to the Assets
without the prior written consent of Seller, which consent may be withheld,
conditioned or delayed by Seller in its sole discretion. Any permitted Phase I
environmental assessment activities shall not include any sampling or intrusive
testing.

                  (f) PHASE II REVIEWS. Buyer may not conduct any Phase II
environmental assessment activities with respect to the Assets (including, but
not limited to, the taking and analysis of soil, surface water and groundwater
samples, testing of buildings, drilling wells, taking soil borings and
excavating) without the prior written consent of Seller, which consent may be
withheld, conditioned or delayed by Seller in its sole discretion.

                  (g) ADDITIONAL DUE DILIGENCE. Notwithstanding the foregoing,
if prior to Closing Seller receives notice of any Proceeding or threatened
Proceeding arising under Environmental Laws or if Seller otherwise acquires
Knowledge that is reasonably likely to require a change to Schedule 5.14, Seller
promptly shall notify Buyer of the same and Buyer may request that Seller
authorize Buyer to conduct specific additional environmental due diligence
measures if and to the extent that such measures are required Co determine the
extent of any potential Environmental Liability relating thereto. Such
authorization shall not be unreasonably withheld, conditioned or delayed by
Seller. Any such additional environmental due diligence shall be conducted at
Buyer's sole expense.

                  (h) INDEMNITY FOR DUE DILIGENCE ACTIVITIES. Buyer hereby
agrees to indemnify and hold harmless Seller, Seller's Affiliates and their
respective officers, directors, employees, agents, successors and assigns from
and against any and all Losses with respect to persons or property arising out
of or resulting from any site visit by Buyer or its environmental consultant(s)
and resulting from an act or omission of Buyer or its environmental
consultant(s), provided, however, that such indemnity shall not extend to Losses
resulting from the discovery of pre-existing damage or other pre-existing
conditions of the Assets.

                                  ARTICLE XIII
                                 INDEMNIFICATION

         Section 13.1 Indemnification by Seller. From and after Closing and
subject to the other provisions of this Article XIII, Seller shall indemnify and
hold harmless Buyer, its Representatives, Affiliates, successors and permitted
assigns

<PAGE>

(collectively, the "Buyer Indemnitees") from and against any and all Losses
arising out of or resulting from:

                  (a) any representations and warranties made by Seller in this
Agreement not being true and correct when made or when required by this
Agreement to be true and correct, or any breach or default by Seller in the
performance of its covenants, agreements, or obligations under this Agreement
required to be performed prior to Closing;

                  (b) any breach or default by Seller in the performance of its
covenants, agreements, or obligations under this Agreement required to be
performed after Closing; and

                  (c) the Retained Liabilities, including the Retained
Environmental Liabilities.

         Section 13.2 Indemnification by Buyer. From and after Closing and
subject to the other provisions of this Article XIII, Buyer shall indemnify and
hold harmless Seller, its Representatives, Affiliates, successors and permitted
assigns (collectively, the "Seller Indemnitees") from and against any and all
Losses arising out of or resulting from:

                  (a) any representations and warranties made by Buyer in this
Agreement not being true and correct when made or when required by this
Agreement to be true and correct, or any breach or default by Buyer in the
performance of its covenants, agreements, or obligations under this Agreement
required to be performed prior to Closing;

                  (b) any breach or default by Buyer in the performance of its
covenants, agreements, or obligations under this Agreement required to be
performed after Closing; and

                  (c) Assumed Liabilities, including the Assumed Environmental
Liabilities.

         Section 133 Limitations on Liability. Notwithstanding anything to the
contrary m this Agreement, the liability of Seller and Buyer under this
Agreement and any documents delivered in connection herewith or contemplated
hereby shall be limited as follows:

                  (a) IN NO EVENT SHALL SELLER BE LIABLE TO THE BUYER
INDEMNITIES, OR SHALL BUYER BE LIABLE TO THE SELLER INDEMNITIES, FOR ANY
EXEMPLARY, PUNITIVE, SPECIAL, INDIRECT, CONSEQUENTIAL, REMOTE OR SPECULATIVE
DAMAGES; provided, however, That if Buyer or Seller is held liable to a third
party for any of such damages and Seller or Buyer, respectively is obligated to
indemnify the other for the matter that gave rise to such damages, then Seller
or Buyer, as appropriate, shall be liable for, and obligated to reimburse the
other for, such damages.

<PAGE>

                  (b) Except as provided below, the representations, warranties,
covenants and agreements of Seller and Buyer set forth in this Agreement shall
survive the Closing for the applicable period of time set forth below in this
Section 13.3(b), and all representations, warranties, covenants and agreements
of Seller and Buyer under this Agreement and the indemnities granted by Seller
and Buyer in Section 13.1 or Section 13.2, respectively, shall terminate at 5:00
p.m., local time in Stamford, Connecticut, on the appropriate anniversary of the
Closing Date or on the expiration of the applicable statute of limitations (or
extensions or waivers thereof), as the case may be, as set forth below in this
Section 13.3(b); provided, however, that such indemnities shall survive with
respect only to the specific matters that is the subject of a proper Claim
Notice delivered in good faith in compliance with the requirements of this
Section 13.3 until the earlier to occur of (A) the date on which a final
nonappealable resolution of the matter described in such Claim Notice has been
reached or (B) the date on which the matter described in such Claim Notice has
otherwise reached final resolution.

                           (1)  The representations and warranties of Seller
contained in Section 5.9 (Taxes), the covenants and agreements of Seller
relating to Taxes, and the related indemnity obligations of Seller contained in
Section 13.1 shall terminate on, and no action or claim with respect thereto may
be brought following, the expiration of the applicable statute of limitations
(or extensions or waivers thereof).

                           (2)  The representations and warranties of Seller
contained in Section 5.5 (Title to Assets; Liens) and the related indemnity
obligations of Seller contained in Section 13.1 shall terminate on, and no
action or claim with respect thereto may be brought after, the third anniversary
of the Closing Date.

                           (3)  The representations and warranties of Sellers
contained in Section 5.14 (Environmental Matters) and the related indemnity
obligations of Sellers contained in Section 13.1 shall terminate on, and no
action or claim with respect thereto may be brought after, the fourth
anniversary of the Closing Date.

                           (4)  All other representations and warranties of
Seller and Buyer contained in this Agreement and the related indemnity
obligations of Buyer and Seller contained in this Agreement shall terminate on,
and no further action or claim with respect thereto may be brought after, the
second anniversary of the Closing Date.

                           (5)  Except as set forth in the proviso to this
clause (5), the indemnity obligations of Seller contained in Section 13.1 with
respect to any Retained Liability shall terminate on, and no action or claim
with respect thereto may be brought after, the second anniversary of the Closing
Date, provided that the indemnity obligations of Seller contained in

<PAGE>

Section 13.1 for (i) Retained Liabilities relating to Taxes shall survive
until the expiration of the applicable statute of limitations (or extensions
or waivers thereof); (ii) Retained Environmental Liabilities with respect to
which Seller had no Knowledge as of the Closing Date shall survive until the
fourth anniversary of the Closing Date; and (iii) Retained Liabilities
described in Sections 2.3(a), (c) and (d), Retained Liabilities relating to
the Proceedings listed in Schedule 2.2(b) as Retained Liabilities, and any
Disclosed Pre-Closing Liability (and any liability or obligation that would
have been a Disclosed Pre-Closing Liability had Seller disclosed such
liability or obligation to Buyer if Seller had Knowledge of such liability or
obligation as of the Closing Date) shall survive for an unlimited period of
time. the Retained Liabilities described in clauses (i) and (iii) of this
Section 13 .3(b)(5) are collectively referred to hereinafter as the
"Specified Retained Liabilities.

                           (6)  The indemnity obligations of Buyer contained
in Section 13.2 with respect to any Assumed Liability shall survive for an
unlimited period of time.

                           (7)  Notwithstanding the foregoing, the Parties
acknowledge that Buyer shall be entitled to indemnification by Seller for
Losses incurred by Buyer in respect of any intentional or reckless
misrepresentation or omission or fraud by Seller without any time limitation
(it being understood that the failure to cure a breach shall not, by itself,
be an intentional or reckless act or omission).

In no event shall any amounts be recovered from Seller or Buyer under Section
13.1 or Section 13.2, respectively, or otherwise for any matter for which a
Claim Notice is not delivered to Seller or Buyer, as the case may be, prior
to the close of business on the applicable date set forth above.

                  (c) Notwithstanding anything to the contrary in this
Agreement, Seller shall not be required to indemnify the Buyer Indemnities,
or be otherwise liable in any way whatsoever to the Buyer Indemnitees, for
any Losses (other than Losses incurred by Buyer in respect of the Specified
Retained Liabilities and any intentional or reckless misrepresentation or
omission or fraud by Seller, it being understood that the failure to cure a
breach shall not, by itself, be an intentional or reckless act or omission
(the "First-Dollar Losses") until the Buyer Indemnitees have suffered Losses
(determined after giving effect to the provisions of Section 13.3(f) and
other than First-Dollar Losses) that, when taken together with all other
claims for Losses (other than First-Dollar Losses) under Section 13.1 of each
of the Related Purchase Agreements, are in excess of a deductible in an
amount equal to two percent (2%) of the total of the Purchase Price plus the
aggregate gross purchase price set forth in each Related Purchase Agreement
that is consummated, after which point Seller will be obligated only to
indemnify the Buyer Indemnitees from and against further Losses other than
First Dollar Losses in

<PAGE>

excess of such deductible. Buyer shall be entitled to indemnification for all
First Dollar Losses.

                  (d) Notwithstanding anything to the contrary in this
Agreement, Seller shall not be required to indemnify the Buyer Indemnitees,
or be otherwise liable in any way whatsoever to the Buyer Indemnitees, for
any Losses (other than First-Dollar Losses) that, when combined with the
aggregate amount of Losses (other than First-Dollar Losses) that are subject
to indemnification by Seller under Section 13.1 of the Related Purchase
Agreements, are in excess of an amount equal to five percent (5%) of the
total of the Purchase Price plus the aggregate gross purchase price set forth
in each Related Purchase Agreement that is consummated. Buyer shall be
entitled to indemnification for all First-Dollar Losses.

                  (e) Except to the extent otherwise expressly provided in
this Agreement, no right to indemnification under this Article XIII shall be
limited by reason of any investigation conducted by any Party at any time or
by the decision by a Party to complete the Closing. Notwithstanding the
foregoing, Buyer acknowledges that Seller's indemnity obligations contained
in Section 13.1 are subject to the applicable limitations set forth in
Section 13.3, and that certain obligations and liabilities of Seller are
included among the Assumed Liabilities.

                  (f) Neither Party shall have liability for any claim or
Loss (A) that is covered by insurance for which the other Party recovers
payments in respect of such Loss or with respect to which the other Party
otherwise recovers payments in respect of such Loss from any other sources
(whether in a lump sum or stream of payments) or (B) that is the type
normally recoverable by the Business through rates, but in each case only to
the extent of such payments or recovery. With respect to insurance proceeds
only, such recovery shall be calculated net of the insured party's
out-of-pocket costs relating to claim preparation and settlement. With
respect to recovery through rates, if the amount of the Losses that is
included in rates is not specifically adjudicated in the related Final Order,
the amount of the Losses included in rates will be calculated as follows: (i)
if the cost associated with the Losses is booked as an item of operating
expense, the amount of such expense included in rates will be the result of
the ratio where total test period operating expenses allowed for ratemaking
purposes in such Final Order is the numerator and Buyer's total requested
test period operating expenses (including the Losses) is the denominator;
(ii) if the cost associated with the Losses is booked as an item of rate
base, the amount of such rate base included in rates will be the result of
the ratio where total test period rate base allowed for ratemaking purposes
in such Final Order is the numerator and Buyer's total requested test period
rate base (including the Losses) is the denominator. Buyer agrees to use its
commercially reasonable efforts to give timely and effective written notice
to the appropriate insurance carrier(s) of any occurrence or circumstances
which, in the

<PAGE>

judgment of Buyer consistent with its customary risk management practices,
appear likely to give rise to a claim against Buyer that is likely to involve
one or more insurance policies of Buyer. Any such notice shall be given in
good faith by Buyer without regard to the possibility of indemnification
payments by Seller under Section 13.1, and shall be processed by Buyer in
good faith and in a manner consistent with its risk management practices
involving claims for which no third party contractual indemnification is
available. Buyer agrees that (i) if it is entitled to receive payment from
Seller for a Loss, and (ii) if Buyer has obtained insurance which may cover
the claim or matter giving rise to such Loss, then (iii) such insurance shall
be primary coverage and Buyer will make a claim under such insurance (if such
claim can be made in good faith) before enforcing its right to receive
payment from Seller. If at any time subsequent to the receipt by a Buyer
Indemnitee of an indemnity payment from Seller hereunder, such Buyer
Indemnitee (or any Affiliate thereof) receives any recovery, settlement or
other similar payment with respect to the Loss for which it receives such
indemnity payment, such Buyer Indemnitee shall promptly pay to Seller an
amount equal to the amount of such recovery, less (for insurance proceeds
only) any out-of-pocket costs incurred by such Buyer Indemnitee (or its
Affiliates) in connection with claim preparation and settlement, but in no
event shall any such payment exceed the amount of such indemnity payment;
PROVIDED, that if such net recovery reduces the amount of Losses actually
incurred by the Buyer Indemnitees to an amount that is then below the
deductible amount set forth in Section 13.3(c) and if Seller has made other
payments to the Buyer Indemnitees for other Losses in excess of such
deductible amount, then Buyer also shall promptly pay to Seller an amount
equal to the portion of such payments made by Seller that Seller would not
have been obligated to make pursuant to Section 13.3(c) had the Losses of the
Buyer Indemnitees not included the Losses covered by such net recovery. No
other cost or expense relating to any such recovery shall reduce the amount
of such payment to Seller.

                  (g) Notwithstanding any language contained in any Related
Document (including deeds and other conveyance documents relating to the Real
Property), the representations and warranties of Seller set forth in this
Agreement will not be merged into any such Related Document and the
indemnification obligations of Seller, and the limitations on such
obligations, set forth in this Agreement shall control. No provision set
forth in any such Related Document shall be deemed to enlarge, alter or amend
the terms or provisions of this Agreement.

         Section 13.4 Claims Procedure.

                  (a) All claims for indemnification under Section 13.1 or
13.2, or any other provision of this Agreement except as otherwise expressly
provided in this Agreement, shall be asserted and resolved pursuant to this
Article XIII. Any Person claiming indemnification hereunder referred to as
the "Indemnified Party" and any Person against whom such claims are asserted
hereunder is

<PAGE>

hereinafter referred to as the "Indemnifying Party." In the event that any
Losses are asserted against or sought to be collected from an Indemnified
Party by a third party, said Indemnified Party shall with reasonable
promptness provide to the Indemnifying Party a Claim Notice. The Indemnifying
Party shall be relieved of its obligations to indemnify the Indemnified Party
with respect to any such Losses only to the extent the Indemnified Party's
delay in notifying the Indemnifying Party thereof in accordance with the
provisions of this Agreement so prejudice the Indemnifying Party's ability to
defend against the Losses. The Indemnifying Party shall have twenty (20) days
from the personal delivery or receipt of the Claim Notice (the "Notice
Period") to notify the Indemnified Party (i) whether or not it disputes the
liability of the Indemnifying Party to the Indemnified Party hereunder with
respect to such Losses and/or (ii) whether or not it desires, at the sole
cost and expense of the Indemnifying Party, to defend the Indemnified Party
against such Losses; provided, however, that any Indemnified Party is hereby
authorized prior to and during the Notice Period to file any motion, answer
or other pleading that it shall deem necessary or appropriate to protect its
interests or those of the Indemnifying Party (and of which it shall have
given notice and opportunity to comment to the Indemnifying Party) and not
prejudicial to the Indemnifying Party. In the event that the Indemnifying
Party notifies the Indemnified Party within the Notice Period that it desires
to defend the Indemnified Party against such Losses, the Indemnifying Party
shall have the right to defend all appropriate proceedings, and with counsel
of its own choosing, which proceedings shall be promptly settled or
prosecuted by them to a final conclusion. If the Indemnified Party desires to
participate in, but not control) any such defense or settlement it may do so
at its sole cost and expense. If requested by the Indemnifying Party, the
Indemnified Party agrees to cooperate with the Indemnifying Party and its
counsel in contesting any Losses that the Indemnifying Party elects to
contest or, if appropriate and related to the claim in question, in making
any counterclaim against the Person asserting the third party Losses, or any
cross complaint against any Person. No claim may be settled or otherwise
compromised without the prior written consent of both the Indemnifying Party
and the Indemnified Party.

                  (b) The Indemnified Party shall provide reasonable
assistance to the Indemnifying Party and provide access to its books, records
and personnel as the Indemnifying Party reasonably requests in connection
with the investigation or defense of the Losses. The Indemnifying Party shall
promptly upon receipt of reasonable supporting documentation reimburse the
Indemnified Party for out-of-pocket costs and expenses incurred by the latter
in providing the requested assistance.

                  (c) With regard to third party claims for which Buyer or
Seller is entitled to indemnification under Section 13.1 or 13.2 such
indemnification shall be paid by the Indemnifying Party

<PAGE>

upon: (i) the entry of an Order against the Indemnified Party and the
expiration of any applicable appeal period; or (ii) a settlement with the
consent of the Indemnifying Party, provided that no such consent need be
obtained if the Indemnifying Party fails to respond to the Claim Notice as
provided in Section 13.4(a). Notwithstanding the foregoing but subject to
Section 13.4(a), and provided that there is no dispute as to the
applicability of indemnification, expenses of counsel to the Indemnified
Party shall be reimbursed on a current basis by the Indemnifying Party as if
such expenses are a liability of the Indemnifying Party.

         Section 13.5 Exclusive Remedy. Except as otherwise provided in
Section 6.4, the rights, remedies and obligations of the Buyer Indemnitees
and the Seller Indemnitees set forth in this Article XIII will be the
exclusive rights, remedies and obligations of such Persons after the Closing
with respect to this Agreement, the events giving rise to this Agreement and
the transactions provided for herein or contemplated hereby or thereby. No
Proceeding for termination or rescission, or claiming repudiation, of this
Agreement or the Bill of Sale may be brought or maintained by either party
against the other following the Closing Date no matter how severe, grave or
fundamental any breach, default or nonperformance may be by one party.
Accordingly, the parties hereby expressly waive and forego any and all rights
they may possess to bring any such Proceeding.

         Section 13.6 Indemnification for Negligence. WITHOUT LIMITING OR
ENLARGING THE SCOPE OF THE INDEMNIFICATION OBLIGATIONS SET FORTH IN THIS
AGREEMENT, AN INDEMNIFIED PARTY SHALL BE ENTITLED TO INDEMNIFICATION
HEREUNDER IN ACCORDANCE WITH THE TERMS HEREOF, REGARDLESS OF WHETHER THE LOSS
OR CLAIM GIVING RISE TO SUCH INDEMNIFICATION OBLIGATION IS THE RESULT OF THE
SOLE, CONCURRENT OR COMPARATIVE NEGLIGENCE, STRICT LIABILITY, VIOLATION OF
ANY LAW OR OTHER LEGAL FAULT OF OR BY SUCH INDEMNIFIED PARTY. THE PARTIES
AGREE THAT THIS PARAGRAPH CONSTITUTES A CONSPICUOUS LEGEND.

         Section 13.7 Waiver and Release.

                  (a) Buyer, on behalf of itself and each other Buyer
Indemnitee, hereby forever waives, relieves, releases and discharges the
Seller Indemnitees and their successors and assigns from any and all rights,
liabilities, Proceedings (including future Proceedings) and Losses of any
Buyer Indemnitee, whether known or unknown at the Closing Date, which any
Buyer Indemnitee has or incurs, or may in the future have or incur, arising
out of or related to any Assumed Environmental Liability.

                  (b) Seller, on behalf of itself and each other Seller
Indemnitee, hereby forever waives, relieves, releases and discharges to Buyer
Indemnitees and their successors and assigns from any and all rights,
liabilities, Proceedings (including future Proceedings) and Losses of any
Seller Indemnitee, whether

<PAGE>

known or unknown at the Closing Date, which any Seller Indemnitee has or
incurs, or may in the future have or incur, arising out of or related to any
Retained Environmental Liabilities.

                                   ARTICLE XIV
                               GENERAL PROVISIONS

         Section 14.1 Expenses. Except as otherwise specifically provided
herein, each Party will pay all costs and expenses of its performance of and
compliance with this Agreement, except Buyer will pay all real estate
transfer taxes and real estate recording fees, if any, including expenses of
counsel associated with real estate title, transfer and recording issues.

         Section 14.2 Notices. All notices, requests and other communications
hereunder shall be in writing and shall be deemed to have been given upon
receipt if either (a) personally delivered, (b) sent by prepaid first class
mail, and registered or certified and a return receipt requested (c) sent by
overnight delivery via a nationally recognized cater or (d) by facsimile with
completed transmission acknowledged:

                  If to Seller, to:

                  Citizens Utilities Company
                  High Ridge Park
                  Stamford, CT 06905
                  Attention: Robert J. DeSantis
                  Telecopier: (203) 614-4625

                  with a copy to:

                  Citizens Utilities Company
                  High Ridge Park
                  Stamford, CT 06905
                  Attention: L. Russell Mitten, II
                  Telecopier: (203) 614-4651

                  and:

                  Citizens Utilities Company
                  High Ridge Park
                  Stamford, CT 06905
                  Attention: J. Michael Love
                  Telecopier: (203) 614-5201

                  and:

                  Fleischman and Walsh, L.L.P.
                  1400 Sixteenth Street, N.W.
                  Washington, D.C. 20036
                  Attention: Jeffry L. Hardin

                  Telecopier: (202) 387-3467

<PAGE>

                  If to Buyer, to:

                  Cap Rock Energy
                  500 W. Wall Street, Suite 400
                  Midland, TX 79701
                  Attention: John D. Parker
                  Telecopier: (915) 684-0333

                  with a copy to:
                  Heller Ehrman White & McAuliffe LLP
                  701 Fifth Avenue, Suite 6100
                  Seattle, WA 98104-7098
                  Attention: Bruce M. Pym
                  Telecopier: (206) 447-0849

or at such other address or number as shall be given in writing by a party to
the other party.

         Section 14.3 Assignment. This Agreement may not be assigned, by
operation of la otherwise, by any party hereto without the prior written
consent of the other party hereto, consent not to be unreasonably withheld;
provided, however, in the event of any such assignment by a party by
operation of law without the consent of the other party as required above,
such other party may consent to such assignment after it has occurred and, in
such event, this Agreement and all provisions hereof shall be binding upon
the Person receiving such assignment by operation of Notwithstanding the
foregoing, (a) Buyer may assign this Agreement, without the prior written
consent of Seller, to any direct or indirect wholly-owned subsidiary of Buyer
provided such subsidiary assumes in writing all of the duties and obligations
of Buyer hereunder (provided that no such assignment by Buyer shall in any
way operate to enlarge, alter or change any obligation due to Seller or
relieve Buyer of its obligations hereunder if such subsidiary fails to
perform such obligations, with the understanding that Buyer shall be jointly
and severally liable with such subsidiary for any nonperformance of Buyer's
obligations hereunder); and (b) Seller may assign all or part of its rights
or delegate all or part of its duties under this Agreement, without the prior
written consent of Buyer, to a qualified intermediary chosen by Seller to
structure all or part of the transactions contemplated hereby as a like-kind
exchange of property covered by Section 1031 of the IRC (provided that no
such assignment by Seller shall in any way operate to enlarge, alter or
change any obligations due to Buyer or relieve Seller of its obligations
hereunder if such qualified intermediary fails to perform such obligations,
with the understanding that Seller shall be jointly and severally liable with
such qualified intermediary for any nonperformance of Seller's obligations
hereunder).

         Section 14.4 Successor Bound. Subject to the provisions of Section
14.3, this Agreement shall be binding upon and inure to

<PAGE>

the benefit of the parties hereto and their respective successors and
permitted assigns.

         Section 14.5 Governing Law. The validity, performance, and
enforcement of this Agreement and all Related Documents, unless expressly
provided to the contrary, shall be governed by the laws of the State of
Delaware without giving effect to the principles of conflicts of law of such
state.

         Section 14.6 Dispute Resolution. Except as otherwise provided in
Sections 3.3(c) and 6.4, and this Section 14.6, any dispute, controversy or
claim between the parties relating to, arising out of or in connection with
this Agreement (or any subsequent agreements or amendments thereto) including
as to its existence, enforceability, validity, interpretation, performance or
breach or as to indemnification or damages, including claims in tort, whether
arising before or after the termination of this Agreement (any such dispute,
controversy or claim being herein referred to as a "Dispute") shall be
settled without litigation and only by use of the following alternative
dispute resolution procedure:

                  (a) At the written request of a party, each party shall
appoint a knowledgeable, responsible representative to meet and negotiate in
good faith to resolve any Dispute. The discussions shall be left to the
discretion of the representatives. Upon agreement, the representatives may
utilize other alternative dispute resolution procedures such as mediation to
assist in the negotiations. Discussions and correspondence among the parties'
representatives for purposes of these negotiations shall be treated as
confidential information developed for the purposes of settlement, exempt
from discovery and production, and without the concurrence of both parties
shall not be admissible in the arbitration described below, or in any
lawsuit. Documents identified in or provided with such communications, which
are not prepared for purposes of the negotiations, are not so exempted and
may, if otherwise admissible, be admitted in the arbitration.

                  (b) If negotiations between the representatives of the parties
do not resolve the Dispute within 60 days of the initial written request, the
Dispute shall be submitted to binding arbitration by a single arbitrator
pursuant to the Commercial Arbitration Rules, as then amended and in effect, of
the American Arbitration Association (the "Rules"). Either party may demand such
arbitration in accordance with the procedures set out in the Rules. The
arbitration shall take place in Phoenix, Arizona. The arbitration hearing shall
be commenced within 60 days of such party's demand for arbitration. The
arbitrator shall have the power to and will instruct each party to produce
evidence through discovery (i) that is reasonably requested by the other party
to the arbitration in order to prepare and substantiate its case and (ii) the
production of which will not materially delay the expeditious resolution of the
dispute being arbitrated; each party

<PAGE>

hereto agrees to be bound by any such discovery order. The arbitrator shall
control the scheduling (so as to process the matter expeditiously) and any
discovery. The parties may submit written briefs. At the arbitration hearing,
each party m;y make written and oral presentations to the arbitrator, present
testimony and written evidence and examine witnesses. No party shall be
eligible to receive, and the arbitrator shall not have the authority to
award, exemplary or punitive damages. The arbitrator shall rule on the
Dispute by issuing a written opinion within 30 days after the close of
hearings. The arbitrator's decision shall be binding and final. Judgment upon
the award rendered by the arbitrator may be entered in any court having
jurisdiction.

                  (c) Each party will bear its own costs and expenses in
submitting and presenting its position with respect to any Dispute to the
arbitrator; provided, however, that if the arbitrator determines that the
position taken in the Dispute by the non-prevailing party taken as a whole is
unreasonable, the arbitrator may order the non prevailing party to bear such
fees and expenses, and reimburse the prevailing party for all or such portion
of its reasonable costs and expenses in submitting and presenting its
position. as the arbitrator shall reasonably determine to be fair under the
circumstances. Each party to the arbitration shall pay one-half of the fees
and expenses of the arbitrator and the American Arbitration Association.

                  (d) Notwithstanding any other provision of this Agreement,
(i) either party may commence an action to compel compliance with this
Section 14.6 and (ii) if any party, as part of a Dispute, seeks injunctive
relief or any other equitable remedy, including specific enforcement, then
such party shall be permitted to seek such injunctive or equitable relief in
any federal or state court or competent jurisdiction before, during or after
the pendency of a mediation or arbitration proceed under this Section 14.6.

         Section 14.7 Cooperation. Each of the parties hereto agrees to use
its commercially reasonable best efforts to take or cause to be taken all
action, and to do or cause to be done all things necessary, proper or
advisable under applicable laws, regulations or otherwise, to consummate and
to make effective the transactions contemplated by this Agreement, including,
without limitation, the timely performance of all actions and things
contemplated by this Agreement to be taken or done by each of the parties
hereto.

         Section 14.8 Construction of Agreement. The terms and provisions of
this Agreement represent the results of negotiations between Buyer and Seller,
each of which has been represented by counsel of its own choosing, and neither
of which has acted under duress or compulsion, whether legal, economic or
otherwise. Accordingly, the terms and provisions of this Agreement shall be
interpreted and construed in accordance with their usual and

<PAGE>

customary meanings, and Buyer and Seller hereby waive the application in
connection with the interpretation and construction of this Agreement of any
rule of law to the effect that ambiguous or conflicting terms or provisions
contained in this Agreement shall be interpreted or construed against the
party whose attorney prepared the executed draft or any earlier draft of this
Agreement. The word "including" in this Agreement shall mean including
without limitation. Words in the singular shall be held to include the plural
and vice versa and words of one gender shall be held to include the other
genders as the context requires. The terms "hereof," "herein," and "herewith"
and words of similar import shall, unless otherwise stated, be construed to
refer to this Agreement as a whole (including all of the Schedules and
Exhibits hereto) and not to any particular provision of this Agreement, and
Article, Section, paragraph, Exhibit and Schedule references are to the
Articles, Sections, paragraphs Exhibits and Schedules to this Agreement
unless otherwise specified.

         Section 14.9 Publicity. No party hereto shall issue, make or cause
the publication of any press release or other announcement with respect to
this Agreement or the transactions contemplated hereby, or otherwise make and
disclosures relating thereto, without the prior written consent of the other
party, such consent not to be unreasonably withheld or delayed; provided,
however, that such consent shall not be required where such release or
announcement is required by applicable law or the rules or regulations of a
securities exchange, in which event the party so required to issue such
release or announcement shall endeavor, wherever possible, to furnish an
advance copy of the proposed release to the other party.

         Section 14.10 Waiver. Except as otherwise expressly provided in this
Agreement, neither the failure nor any delay on the part of any party to
exercise any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise or waiver of any such
right, power or privilege preclude any other or further exercise thereof, or
the exercise of any other right, power or privilege available to each party
at law or in equity.

         Section 14.11 Parties in Interest. This Agreement (including the
documents and instruments referred to herein) is not intended to confer upon
any Person, other than the parties hereto and their successors and permitted
assigns, any rights or remedies hereunder; provided, however, that the
indemnification provisions in Article XIII shall inure to the benefit of the
Buyer Indemnitees and the Seller Indemnitees as provided therein.

         Section 14.12 Section and Paragraph Headings. The section and
paragraph headings in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.

         Section 14.13 Amendment. This Agreement may be amended only

<PAGE>

by an instrument in writing executed by the parties hereto.

         Section 14.14 Entire Agreement. This Agreement, the Exhibits and
Schedules hereto and the documents specifically referred to herein and the
Confidentiality Agreement constitute the entire agreement, understanding,
representations and warranties of the parties hereto, and supersede all prior
agreements, both written and oral, between Buyer and Seller. All Exhibits and
Schedules annexed hereto or referred to herein are hereby incorporated in and
made a part of this Agreement as if set forth in full herein. Disclosure of
any fact or item in any Schedule referenced by a particular paragraph or
Section in this Agreement shall, should such fact or item or its contents be
expressly or obviously related to any other paragraph or Section, be deemed
to be disclosed with respect to that other paragraph or Section whether or
not any explicit cross-reference appears therein.

         Section 14.15 Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, and all of
which together shall constitute one and the same instrument.

         Section 14.6 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in
any manner materially adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are
fulfilled to the greatest extent possible.

                      [SIGNATURES APPEAR ON FOLLOWING PAGE]

<PAGE>

         IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.

                            CITIZENS UTILITY COMPANY

                            By:
                               ----------------------------------------
                               Robert J. DeSantis, Chief Financial
                               Officer and Vice President

                            CAP ROCK ELECTRIC COOPERATIVE

                            By:
                               ----------------------------------------
                               Name:
                               Title:

                            CAP ROCK ENERGY CORPORATION

                            By:
                               ----------------------------------------
                               Name:
                               Title:

   [(Signature page to Purchase and Sale Agreement (Vermont Electric) between
  Citizens Utilities Company, Cap Rock Electric Cooperative and Cap Rock Energy
                Corporation, dated as of February 11, 2000.]

<PAGE>

         IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.

                            CITIZENS UTILITY COMPANY

                            By:
                               ----------------------------------------
                               Robert J. DeSantis, Chief Financial
                               Officer and Vice President

                            CAP ROCK ELECTRIC COOPERATIVE

                            By:
                               ----------------------------------------
                               Name:
                               Title:

                            CAP ROCK ENERGY CORPORATION

                            By:
                               ----------------------------------------
                               Name:
                               Title:

            [(Signature page to Purchase and Sale Agreement (Vermont
        Electric) between Citizens Utilities Company, Cap Rock Electric
                  Cooperative and Cap Rock Energy Corporation,
                         dated as of February 11, 2000.]

<PAGE>

                                 EXHIBIT 7.1(g)

                                 [Closing Date]

Citizens Utilities Company
High Ridge Park
Stamford, CT 06905

Ladies and Gentlemen:

         I have acted as counsel to Cap Rock Electric Cooperative, a Texas
corporation, and Cap Rock Energy Corporation, a Texas corporation
(collectively, the "Company"), in connection with the execution and delivery
by the Company, and Citizens Utilities Company, a Delaware corporation
("Seller"), of the Purchase and Sale Agreement, dated as of February___, 2000
(the "Agreement"). Ml capitalized terms used herein without definition shall
have the respective meanings ascribed to them in the Agreement.

         In connection with the opinions expressed below, I have made such
examination of law and have examined originals, or copies certified or
otherwise identified to my satisfaction, of the Agreement, the Bill of Sale
and Assignment and Assumption Agreement, and the other documents delivered by
the Company at Closing pursuant to the Agreement dated the date hereof
(collectively, the "Transaction Documents"), and such corporate documents and
records of the Company, certificates of public officials and of officers of
the Company, and such other documents as I have deemed necessary or
appropriate. With respect to the matters set forth in Paragraph I, I have
relied upon certain documentation received from public officials.

         In making such examination and rendering the opinions set forth
below, I have assumed the genuineness of all signatures, the authenticity of
all documents submitted to me as originals and the conformity to authentic
original documents of all documents submitted to me as certified, conformed
or photostatic copies and the authenticity of the originals of such
documents. As to factual matters material to my opinion, I have had such
discussions with the officers of the Company as I have deemed relevant or
necessary, and, I have assumed, with your permission and without independent
investigation, the truthfulness of all recitals, representations, warranties
and factual matters set forth in all documents, instruments, certificates and
reports I have examined.

         In rendering the opinions set forth below, I have also assumed that
(a) each of the parties to the Agreement and the Transaction Documents other
than the Company is duly organized, validly existing and in good standing
under the laws of the

<PAGE>

jurisdiction of its organization, (b) each of such other parties to the
Agreement and the Transaction Documents has the requisite corporate power and
corporate authority and has taken the corporate action necessary to execute
and deliver the Agreement and the Transaction Documents and to consummate the
transactions contemplated thereby; (c) the Agreement and Transaction
Documents have been duly executed and delivered by each of such other parties
thereto; and (d) the Agreement and the Transaction Documents constitute the
legal, valid and binding obligations of each such other party thereto,
enforceable against such other party in accordance with its respective terms.

         I am a member of the bar of the State of _____, and I express,
subject to the qualifications herein, no opinion as to the laws of any
jurisdiction except the [General Corporation Law] of the State of Texas, the
federal laws of the United States of America (with the exception of federal
antitrust laws and regulations, federal securities laws and regulations,
matters relating to the Communications Act of 1934, as amended, and the rules
and regulations of the Federal Communications Commission), and the laws of
the State of_______ (with the exception of state antitrust or unfair
competition laws and regulations, state securities laws and other statutes,
ordinances, administrative decisions and rules and regulations of counties,
towns, municipalities and special political subdivisions). To the extent that
any matter with respect to which an opinion is rendered herein is governed by
the laws of another jurisdiction other than the [General Corporation Law] of
the State of Texas, I have, with your permission, assumed that the laws of
such other jurisdiction are identical to the laws of the State of_______.

         "Actual Knowledge" as used in this letter means the conscious
awareness of facts or other information by myself or any lawyer in the employ
of the Company who has had active involvement in negotiating the Agreement,
preparing the Transaction- Documents or preparing this letter.

                  The opinions hereinafter expressed are subject to the
following further qualifications:

                  (i)   My opinion is subject to the effect of bankruptcy,
insolvency, fraudulent conveyance, reorganization, arrangement, moratorium or
otherwise similar laws now or hereafter relating to or affecting debtors'
obligations and the rights of creditors generally.

                  (ii)  My opinion is subject to limitations imposed by
general principles of equity upon the specific enforceability of any of the
remedies, covenants or other provisions of the Transaction Documents and upon
the availability of injunctive relief or other equitable remedies, and the
application of principles of equity (regardless of whether enforcements is
considered in proceedings in law or in equity).

<PAGE>

                  (iii) The opinions stated herein are as of the date hereof
and are limited to laws, facts and circumstances in existence on the date
hereof, and I assume no undertaking to advise Seller of any change in the
opinions expressed herein, whether or not material, as a result of any change
in any laws, facts or circumstances pertaining to the Transaction Documents
which may come to my attention after the date hereof.

         Based upon and subject to the foregoing, it is my opinion that as of
the date hereof:

         1. The Company is validly existing and in good standing under the
laws of the State of Texas. The Company has all necessary corporate power to
perform its obligations under the Transaction Documents, and the Company has
all requisite corporate power and authority to own, lease and operate the
Assets and the Business.

         2. All corporate proceedings required to be taken by or on the part
of the Company and the shareholders of the Company to authorize the
execution, delivery and performance of the Transaction Documents, and the
consummation of the transactions contemplated thereby, have been duly and
properly taken. Each of the Transaction Documents has been duly and validly
executed and delivered.

         3. Neither the execution and delivery of the Transaction Documents
by the Company nor the consummation of the transactions contemplated thereby
will: (a) violate or conflict with any provision of the certificate or
articles of incorporation or bylaws of the Company, as amended to date; or
(b) to my Actual Knowledge, violate or conflict with any Legal Requirement or
Order.

         4. The Agreement and other agreements and documents to be executed
pursuant thereto, when executed and delivered by the Company, will constitute
legal, valid and binding obligations of the Company, enforceable against it
in accordance with their respective terms.

         The opinions expressed herein are intended only for your benefit and
use, and may not, without my written consent, be used or relied upon in any
manner for any purpose by any other person or entity.

                                          Very truly yours,

<PAGE>

                                 EXHIBIT 7.2(g)

                                 [Closing Date]

Cap Rock Electric Cooperative
500 W. Wall Street
Suite 400
Midland, TX 79701

Cap Rock Energy Corporation
500 W. Wall Street
Suite 400
Midland, TX 79701

Ladies and Gentlemen:

         I have acted as counsel for Citizens Utilities Company, a Delaware
corporation (the "Company"), in connection with the execution and delivery by
the Company, and Cap Rock Electric Cooperative, a Texas corporation, and Cap
Rock Energy Corporation, a Texas corporation (collectively, "Buyer"), of the
Purchase and Sale Agreement, dated as of February___, 2000 (;he "Agreement").
All capitalized terms used herein without definition shall have the
respective meanings ascribed to them in the Agreement.

         In connection with the opinions expressed below, I have made such
examination of law and have examined originals, or copies certified or
otherwise identified to our satisfaction, of the Agreement, the Bill of Sale
and Assignment and Assumption Agreement, and the other documents delivered by
the Company at Closing pursuant to the Agreement dated the date
hereof(collectively, the "Transaction Documents ); and such corporate
documents and records of the Company, certificates of public officials and of
officers of the Company, and such other documents as I have deemed necessary
or appropriate. With respect to the matters set forth in Paragraph I, I have
relied upon certain documentation received from public officials.

         In making such examination and rendering the opinions set forth
below, I have assumed the genuineness of all signatures, the authenticity of
all documents submitted to me as originals and the -conformity to authentic
original documents of all documents submitted to me as certified, conformed
or photostatic copies and the authenticity of the originals of such
documents. As to factual matters material to our opinion, I have had such
discussions with the officers of the Company as I have deemed relevant or
necessary, and, l have assumed, with your permission and without independent
investigation, the truthfulness of all recitals, representations, warranties
and factual matters set forth in all documents, instruments, certificates and
reports I have examined.

<PAGE>

         In rendering the opinions set forth below, I have also assumed that
(a) each of the parties to the Agreement and the Transaction Documents other
than the Company is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization; (b) each of such
other parties to the Agreement and the Transaction Documents has the
requisite corporate power and corporate authority and has taken the corporate
action necessary to execute and deliver the Agreement and the Transaction
Documents and to consummate the transactions contemplated thereby; (c) the
Agreement and Transaction Documents have been duly executed and delivered by
each of such other parties thereto; and (d) the Agreement and the Transaction
Documents constitute the legal, valid and binding obligations of each such
other party thereto, enforceable against such other party in accordance with
its respective terms.

         I am a member of the bar of the State of New York, and I express,
subject to the qualifications herein, no opinion as to the laws of any
jurisdiction except the General Corporation Law of the State of Delaware, the
federal laws of the United States of America (with the exception of federal
antitrust laws and regulations, federal securities laws and regulations,
matters relating to the Communications Act of 1934, as amended, and the rules
and regulations of the Federal Communications Commission), and the laws of
the State of New York (with the exception of state antitrust or unfair
competition laws and regulations, state securities laws and other statutes,
ordinances, administrative decisions and rules and regulations of counties,
towns, municipalities and special political subdivisions). I am not admitted
to practice in the State of Delaware. To the extent that any matter with
respect to which an opinion is rendered herein is governed by the laws of
another jurisdiction other than the General Corporation Law of the State of
Delaware, I have, with your permission, assumed that the laws of such other
jurisdiction are identical to the laws of the State of New York.

         "Actual Knowledge" as used in this letter means the conscious
awareness of facts or other information by myself or any lawyer in the employ
of the Company who has had active involvement in negotiating the Agreement,
preparing the Transaction Documents or preparing this letter.

         The opinions hereinafter expressed are subject to the following
further qualifications:

                  (i)   This opinion is subject to the effect of bankruptcy,
insolvency, fraudulent conveyance, reorganization, arrangement, moratorium or
otherwise similar laws now or hereafter relating to or affecting debtors'
obligations and the rights of creditors generally.

                  (ii)  This opinion is subject to limitations imposed by
general principles of equity upon the specific enforceability of any of the
remedies, covenants or other provisions of the

<PAGE>

Transaction Documents and upon the availability of injunctive relief or other
equitable remedies, and the application of principles of equity (regardless
of whether enforcements is considered in proceedings in law or in equity).

                  (iii) The opinions stated herein are as of the date hereof
and are limited to laws, facts and circumstances in existence on the date
hereof, and we assume no undertaking to advise Buyer of any change in the
opinions expressed herein, whether or not material, as a result of any change
in any laws, facts or circumstances pertaining to the Transaction Documents
which may come to our attention after the date hereof.

         Based upon and subject to the foregoing, it is my opinion that as of
the date hereof:

                  1. The Company is validly existing and in good standing
under the laws of the State of Delaware. The Company has all necessary
corporate power to perform its obligations under the Transaction Documents,
and the Company has all requisite corporate power and authority to own, lease
and operate the Assets and the Business as presently being conducted.

                  2. All corporate proceedings required to be taken by or on
the part of the Company and the shareholders of the Company to authorize the
execution, delivery and performance of the Transaction Documents, and the
consummation of the transactions contemplated thereby, have been duly and
properly taken. Each of the Transaction Documents has been duly and validly
executed and delivered.

                  3. Neither the execution and delivery of the Transaction
Documents by the Company nor the consummation of the transactions
contemplated thereby will: (a) violate or conflict with any provision of the
certificate or articles of incorporation or bylaws of the Company, as amended
to date; or (b) to my Actual Knowledge, violate or conflict with any Legal
Requirement or Order.

                  4. The Agreement and other agreements and documents to be
executed pursuant thereto, when executed and delivered by the Company, will
constitute legal, valid and binding obligations of the Company, enforceable
against it in accordance with their respective terms.

                  The opinions expressed herein are intended only for your
benefit and use, and may not, without my written consent, be used or relied
upon in any manner for any purpose by any other person or entity.

                                        Very truly yours,

                                        L. Russell Mitten, II

<PAGE>

                                        Vice President-General Counsel,
                                        Citizens Utilities Company

                                 EXHIBIT 8.1(a)

              BILL OF SALE AND ASSIGNMENT AND ASSUMPTION AGREEMENT

         This Bill of Sale and Assignment and Assumption Agreement (this
"Assignment and Assumption") is made as of _______________, between Citizens
Utilities Company, a Delaware corporation ("Transferor"), and Cap Rock Energy
Corporation, a Texas corporation ("Transferee").

         This Assignment and Assumption is entered into pursuant to, and is
subject to, the terms of the Purchase and Sale Agreement, dated as of
February ___, 2000, by and between Transferor and Transferee (the
"Agreement"). Capitalized terms not otherwise defined in this Assignment and
Assumption shall have the meanings given to such terms in the Agreement.

         In consideration of the foregoing premises, the transactions
contemplated by the Agreement, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Transferor does
hereby sell, transfer, assign and convey unto Transferee, its successors and
assigns, all of the Assets, and Buyer does hereby assume and agrees to pay,
perform and discharge when due, all Assumed Liabilities.

         No provisions set forth in this Assignment and Assumption shall be
deemed to enlarge, alter or amend the terms and provisions of the Agreement.
In the event of any conflict between the provisions of this Assignment and
Assumption and the provisions of the Agreement, the Agreement shall control.

         This Assignment and Assumption is made solely for the benefit of
Transferor and Transferee and no third party shall have any right to enforce
its terms or to rely on it.

         This instrument and the rights of the parties under it shall be
governed by and construed in accordance with laws of the State of Delaware,
without regard to its conflicts of laws rules.

         This Assignment and Assumption may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

            [THE REMAINDER OF THIS PAGE INTENTIONALLY IS LEFT BLANK:
                          SIGNATURES ON FOLLOWING PAGE]

<PAGE>

         IN WITNESS WHEREOF, the undersigned have executed this Assignment
and Assumption effective as of the date first written above.

                                   TRANSFEROR:

                                   CITIZENS UTILITIES COMPANY

                                   By:
                                      -------------------------------------
                                      Name:
                                      Title:

                                   TRANSFEREE:

                                   CAP ROCK ENERGY CORPORATION

                                   By:
                                      -------------------------------------
                                      Name:
                                      Title:

114581

Signature Page of Bill of Sale and Assignment and Assumption Agreement between
Transferor and Transferee, dated _______________________

<PAGE>

                                                   Cap Rock Electric Corporative
                                                     Cap Rock Energy Corporation
                                                                Vermont Electric

                        LIST OF SCHEDULES

Schedule 1.1(a)         Excluded Assets
Schedule 1.1(b)         Related Purchase Agreements
Schedule 2.2(b)         Certain Assumed Proceedings
Schedule 5.2            Seller's Authority
Schedule 5.3            Seller's Governmental and Other Required Consents
Schedule 5.5            Encumbrances; Owned Real Property
Schedule 5.6(a)         Financial Statements
Schedule 5.6(b)         Certain Liabilities
Schedule 5.7            Compliance with Legal Requirements; Governmental Permits
Schedule 5.8            Legal Proceedings; Outstanding Orders
Schedule 5.9            Taxes
Schedule 5.10           Intellectual Property
Schedule 5.11           Extraordinary Required Repairs
Schedule 5.12           Material Contracts
Schedule 5.13           Employee Matters
Schedule 5.14           Environmental Matters
Schedule 5.15           Material Adverse Changes
Schedule 5.16           State and Federal Regulatory Matters
Schedule 5.19           Seller's Insurance
Schedule 6.1            Conduct of Business Prior to Closing Date
Schedule 6.2(c)         Citizens' Guarantees and Surety Instruments
Schedule 10.1           Active Employees
Schedule 10.7           Retirees and "Grandfathered Employees"

<PAGE>

                                                   Cap Rock Electric Cooperative
                                                     Cap Rock Energy Corporation
                                                                Vermont Electric

                                 SCHEDULE 1.1(a)

                                 EXCLUDED ASSETS

1.       R/3 Software End-User Value License Agreement, dated February 28, 1997,
         by and between SAP America, Inc. and Citizens Utilities Company,
         together with the licenses for SAP GUI clients that are installed on
         desktop machines.

2.       Software License and Services Agreement, dated September 17, 1996, by
         and between PeopleSoft and Citizens Utilities Company, as amended.

3.       Netscape, Novell, and any other network, Internet and email software
         packages and related licenses owned by Citizens Utilities Company.

<PAGE>

                                                   Cap Rock Electric Cooperative
                                                     Cap Rock Energy Corporation
                                                                Vermont Electric

                                 SCHEDULE 1.1(b)

                           RELATED PURCHASE AGREEMENTS

1.       Purchase and Sale Agreement (Arizona Electric), dated February 11,
         2000, by and among Citizens Utilities Company, Cap Rock Electric
         Cooperative and Cap Rock Energy Corporation.

<PAGE>

                                                   Cap Rock Electric Cooperative
                                                     Cap Rock Energy Corporation
                                                                Vermont Electric

                                 SCHEDULE 2.2(b)

                           CERTAIN ASSUMED PROCEEDINGS

I.       Proceedings to be Assumed Liabilities:

         1.       Arbitration of claim by Vermont Joint Owners for breach of
                  Firm Energy Contract by Hydro-Quebec as a result of failure to
                  provide power during and after January, 1998, ice storm.

         2.       Appeal by Citizens to Vermont Supreme Court of VPSB Order
                  (Docket Nos. 5841/5859) establishing a 5.25 percent return on
                  equity. (See Schedule 5.7, Item I.I).

         3.       There is a Threatened Proceeding regarding an ownership
                  dispute over a vacant parcel of Owned Real Property located
                  adjacent to the Seymour Lake dam site. (See Schedule 5.5,
                  Items I.7 and II.37.).

         4.       There is a Threatened Proceeding regarding whether the
                  easement that Citizens possesses effectively permits Citizens
                  to run a transmission line across the property of a customer
                  in Island Pond. (See Schedule 5.5, Item III.1.)

II.      Proceedings to be Retained Liabilities:

         1.       BARTON VILLAGE. INC.. ET. AL. V. CITIZENS UTILITIES COMPANY.
                                            VERMONT ELECTRIC DIVISION. (FERC
                                            Docket No. EL 92-33-000). This
                                            proceeding was initiated by Barton
                                            Village,          Inc. and several
                                            other Vermont villages complaining
                                            jointly that Vermont Electric failed
                                            to file rates with the FERC for
                                            services it provided to the Villages
                                            during the period, 1963 to 1982.
                                            Citizens' motion to-dismiss is
                                            pending before FERC.

         2.       Employee compensation claims for the following:

                  Carolyn Clapper           Maurice Maeie
                  Thomas Petit              Gerald Gatos
                  Dennis Dion (3)           Haselton Douglas (2)
                  Florion Masse (2)         Steven Coulter (2)
                  Chris Lawson (2)          Marlene Maxwell (2)

<PAGE>

                  David McFadden            Michael Sullivan
                  Matthew Perry             Dale Bacon
                  Kevin Lacoss              Eric Chates
                  Steven Edgerley (2)       Steven Guyette
                  Bruce Montming            Jaque Dalpe
                  Sherman Blow (2)          Dennis Dion
                  Shawn Juaire (2)

<PAGE>

                                                   Cap Rock Electric Cooperative
                                                     Cap Rock Energy Corporation
                                                                Vermont Electric

                                  SCHEDULE 5.2

                               SELLER'S AUTHORITY

1.       Failure to obtain certain Consents listed on Schedule 5.3 or to provide
         notice to certain parties listed on Schedule 5.3 may result in a breach
         of the related Contracts or Legal Requirements upon assignment to
         Buyer.

<PAGE>

                                                   Cap Rock Electric Cooperative
                                                     Cap Rock Energy Corporation
                                                                Vermont Electric

                                  SCHEDULE 5.3

                SELLER'S GOVERNMENTAL AND OTHER REQUIRED CONSENTS

I.       Federal Governmental Bodies

                  A.       U.S. Federal Trade Commission and the U.S. Department
                           of Justice, pursuant to the Hart-Scott-Rodino
                           Antitrust Improvements Act of 1976, as amended.

                  B.       Federal Communications Commission, with respect to
                           the following FCC licenses:

                           1.       WNTF692 - Radio Station License (Private
                                    Operational Fixed Microwave), expires
                                    June 13, 2001.

                           2.       KCD288 - Radio Station License (IW Power),
                                    expires June 4, 2000.

                  C.       Department of Energy, Office of Fossil Energy, with
                           respect to the following:

                           1.       Permit Authorizing Citizens Utilities
                                    Company to Construct, Connect, Operate
                                    and Maintain Electric Transmission
                                    Facilities at the International Border
                                    between the United States and Canada, ERA
                                    Docket No. PP-66, dated June 21, 1979.

                           2.       Presidential Permit PP-80 Authorizing
                                    Citizens Utilities Company to Construct,
                                    Connect, Operate and Maintain Electric
                                    Transmission Facilities Across the
                                    International Border between the United
                                    States and Canada, dated August 5, 1983.

                  D.       Federal Energy Regulatory Commission, for the
                           sale or transfer of the following:

                           1.       License for the Clyde River Project,
                                    No. 2306, dated November 6, 1963. [Note:
                                    Renewed for the year 2000.]
                           2.       Certain transmission facilities and
                                    hydroelectric licenses included among the
                                    Assets.

II.      Vermont Public Service Board

<PAGE>

                  A.       Certificate of Consent of VPSB pursuant to 30 V.S.A.
                           Section 109 for sale of greater than ten percent of
                           in-state property in one year.

                  B.       Certificate of Public Good issued by VPSB to operate
                           within the state of Vermont pursuant to
                           30 V.S.A. Section 102 and/or Section 231.

                  C.       Buyer may require a Certificate of Consent of VPSB
                           pursuant to 30 V.S.A. Section 108 for the Issuance
                           of stocks, bonds, notes or other evidences of
                           indebtedness.

III.     Local and Other State Governmental Bodies

         B.       State of Vermont, Agency of Natural Resources, Department of
                  Environmental Conservation, Waste Management Program,
                  Categorical Certification, dated August 20, -1996, re: wood
                  waste dump pile. (Note: Completion of a transfer form
                  required.)

         B.       State of Vermont, Agency of Natural Resources, Department of
                  Environmental Conservation, Wastewater Management Division,
                  Discharge Permit #3-1040, dated November 9, 1998. (Note:
                  Nontransferable; Buyer needs to apply for a new permit.)

         C.       State of Vermont, Agency of Natural Resources, Department of
                  Environmental Conservation, Air Pollution Control Permit to
                  Operate #OP-95-132, dated May 4, 1999. (Note: Nontransferable;
                  Buyer needs to apply for a new permit.)

IV.      Non-Governmental Third Party Contracts

         A.       Power Purchase and Supply Agreements

                  1.       Amendment No. 5 to Hydro-Quebec Participation
                           Agreement, dated as of October 21, 1993, among
                           various electric utilities, amending and restating
                           Hydro-Quebec Participation Agreement, dated April,
                           1988.

                  2.       Agreement, dated February 25, 1998, between Citizens
                           Utilities Company and Swanton Village Electric
                           Department, re: Swanton's provision of power
                           (Connected Load).

                  3.       Master , dated ____, 1999 by and between Citizens and
                           PG&E Energy Trading - Power, L.P. [Note: No consent
                           required for transfer to an entity succeeding to
                           substantially all the assets of assignor. Assignee
                           must agree to assume all obligations. The Citizens
                           contracting entity,

<PAGE>

                           however, is not clearly defined in Agreement.]

                  4.       Agreement, dated August 1, 1983, by and between
                           Citizens Utilities Company and Public Service Company
                           of New Hampshire. [Note: No consent required for
                           transfer to an entity succeeding to substantially all
                           the assets of assignor; such assignee must be an
                           electric utility and must assume all obligations.]

                  5.       Agency Agreement, effective as of January 14, 2000,
                           between Morgan Stanley Capital Group, Inc. and
                           Citizens Utilities Company, re: management, purchase
                           and sale of Energy and Operating Capability on behalf
                           of Citizens.

         B.       Customer Supply Agreements

                  None.

         C.       Interconnection and Transmission Agreements

                  1.       Agreement for Transmission Service, dated September
                           13, 1996, between Citizens Utilities Company and
                           Swanton Village Electric Department.

                  2.       Phase I Vermont Transmission Line Support Agreement,
                           dated December 1, 1981, among VETCO and various New
                           England utilities, as amended. [Note: Written consent
                           of the other parties is required to assign unless
                           assets are acquired and obligations assumed by
                           another electric utility member of New England Power
                           Pool ("NEPOOL"). Written notice to other parties is
                           required for any assignment.]

                  3.       Phase I Terminal Facility Support Agreement, dated
                           December 1, 1981, among New England Electric
                           Transmission Corporation and various New England
                           utilities, as amended. [Note: Written consent of the
                           other panics is required to assign unless assets are
                           acquired and obligations assumed by another electric
                           utility member of NEPOOL. Written notice to other
                           parties is required for any assignment.]

                  4.       Agreement With Respect To Use Of Quebec
                           Interconnection, dated December 1, 1981, among
                           various New England utilities each of which is a
                           member of NEPOOL. [Note: Written consent of the other
                           parties is required to assign unless assets are
                           acquired and obligations assumed by another electric
                           utility member of NEPOOL. Written notice

<PAGE>

                           to other parties is required for any assignment.]

                  5.       Preliminary Vermont Support Agreement re: Quebec
                           Interconnection, dated May 1, 1981, between VELCO and
                           various Vermont electric distribution utilities.
                           [Note: Written consent of VELCO is required to
                           assign.]

                  6.       Vermont Participation Agreement for Quebec
                           Interconnection, dated July 15, 1982, between VELCO
                           and the Vermont Participants, as amended. [Note:
                           Written consent of the other parties is required to
                           assign unless assets are acquired and obligations
                           assumed by an electric utility that is a member of
                           NEPOOL.]

                  7.       VETCO Capital Funds Support Agreement, dated July 15,
                           1982, between VETCO and the Vermont Participants.
                           [Note: Written consent of the other parties is
                           required to release Citizens of its obligations under
                           the agreement.]

                  8.       Stock Purchase Agreement, dated August 11, 1986,
                           among VELCO and each of the Vermont electric
                           companies participating in Phase I. [Note: Written
                           consent of VELCO is required to release Citizens of
                           its obligations under the agreement. Stock my not be
                           transferred or sold except (1) pursuant to an
                           effective registration statement or (2) pursuant to
                           an opinion of counsel that an exemption from
                           registration is available. (See Schedule 5.9,
                           Item III.2.)]

                  9.       Energy Banking Agreement, dated _______, 1982, among
                           Hydro-Quebec, VELCO, NEET and NEPOOL. [Note: Written
                           notice must be given to Hydro-Quebec in the event a
                           NEPOOL participant terminates its participation in
                           NEPOOL.]

                  10.      Interconnection Agreement, dated _______, 1982,
                           between NEPOOL and Hydro-Quebec, as amended. [Note:
                           Written notice must be given to Hydro-Quebec in the
                           event a NEPOOL participant terminates its
                           participation in NEPOOL.]

                  11.      Phase II New Hampshire Transmission Facilities
                           Support Agreement dated June 1, 1985, between New
                           England Hydro-Transmission Corporation and the New
                           England utilities (VELCO signed on behalf of Citizens
                           Utilities Company), as amended. [Note: written
                           consent of the other parties is required to assign
                           unless (1) sale or merger is approved by New
                           Hampshire Hydro, (2) such sale results in the
                           transfer of substantially all of the assets, and

<PAGE>

                           (3) all obligations are assumed by an electric
                           utility that is a member of NEPOOL. Written notice
                           to other parties is required for any assignment.]

                  12.      Phase II Massachusetts Transmission Facilities
                           Support Agreement dated June 1, 1985; between New
                           England Hydro-Electric Company, Inc. and the New
                           England utilities (VELCO signed as agent for Citizens
                           Utilities Company), as amended. [Note: Written
                           consent of the other parties is required to assign
                           unless (1) sale or merger is approved by New England
                           Hydro, (2) such sale results in the transfer of
                           substantially all of the assets, and (3) all
                           obligations are assumed by an electric utility that
                           is a member of NEPOOL. Prior written notice to other
                           parties is required for any assignment.]

                  13.      Phase II New England Power AC Facilities Support
                           Agreement, dated as of June 1, 1985, between New
                           England Power Company and the New England utilities
                           (VELCO signed as agent for Citizens Utilities
                           Company), as amended. [Note: Written consent of the
                           other parties is required to assign if obligations
                           are not assumed by an electric utility which is a
                           member of NEPOOL. Prior written notice to other
                           parties is required for any assignment.]

                  14.      Phase II Boston Edison AC Facilities Support
                           Agreement, dated as of June 1, 1985, between Boston
                           Edison Company and the New England utilities (VELCO
                           signed as agent for Citizens Utilities Company), as
                           amended. [Note: Written consent of the other parties
                           is required to assign if obligations are not assumed
                           by an electric utility which is a member of NEPOOL.
                           Prior written notice to other parties is required for
                           any assignment.]

                  15.      Amended and Restated Agreement With Respect To Use
                           Of Quebec Interconnection, dated September 1, 1985,
                           among various New England electric utilities. [Note:
                           Written consent of the other parties is required to
                           assign if assets are not acquired and obligations
                           assumed by an electric utility which is a member of
                           NEPOOL. Prior written notice to other parties is
                           required for any assignment.]

                  16.      Equity Funding Agreement for New England
                           Hydro-Transmission Corporation, dated June 1, 1985,
                           among various New England utilities (VELCO signed on
                           behalf of Citizens Utilities Company), as

<PAGE>

                           amended. [Note: Written consent of the other parties
                           is required to relieve assignor of its obligations
                           under the agreement. Prior written notice to other
                           parties is required for any assignment.] (See
                           Schedule 5.5, Item I.10, re: restriction on transfer
                           of common stock.)

                  17.      Equity Funding Agreement for New England
                           Hydro-Transmission Electric Company, Inc., dated
                           June 1, 1985, among various New England utilities
                           (VELCO signed as agent for Citizens Utilities
                           Company), as amended. [Note: Written consent of the
                           other parties is required to relieve assignor of its
                           obligations under the agreement. Prior written
                           notice to other parties is required for any
                           assignment.] (See Schedule 5.5, Item I.11, re:
                           restriction on transfer of common stock.)

                  18.      Letter of Assurances, Consents and Agreements by
                           Citizens Utilities Company to Westminister National
                           Bank PLC, dated February 7, 1989, re: payment
                           obligations under the Facility Support Agreements
                           and Equity Funding Agreements. [Note: Assurance
                           shall not be assignable with the consent of the
                           agent acting for the Majority Banks.]

                  19.      Preliminary Vermont Support Agreement re: Quebec
                           Interconnection - Phase II, dated September 1, 1984,
                           between VELCO and various Vermont utilities. [Note:
                           Written consent of VELCO is required to assign.]

                  20.      Vermont Support Agency Agreement re: Quebec
                           Interconnection - Phase II, dated June 1, 1985,
                           between VELCO and various Vermont electric utilities,
                           as amended. [Note: Written consent of New England
                           Hydro, New England Power Company, Boston Edison
                           Company and VELCO is required to relieve assignor of
                           its obligations unless substantially all its
                           obligations are assumed by an electric utility which
                           is a member of NEPOOL.]

                  21       Vermont Equity Funding and Credit Enhancement Agency
                           Agreement for New England Hydro-Transmission
                           Electric Company, Inc. and New England Hydro
                           Transmission Corporation, dated June 1, 1985,
                           between VELCO and various Vermont utilities, as
                           amended. [Note: Written consent of New England Hydro
                           and VELCO is required to relieve assignor of its
                           obligation. Prior written notice to other parties is
                           required for any assignment.]

                  22.      Phase II Vermont DMNRC Joint-Ownership Agreement,
                           dated January 1, 1988, between Citizens Utilities

<PAGE>

                           Company and Green Mountain Power Corporation. [Note:
                           Notice specifying Ownership Shares to be transferred
                           and the proposed terms and conditions of the sale
                           shall be given to other party no less than three
                           months prior to the consummation of the sale.] (See
                           Schedule 5.5, Item 1.3.)

                  23.      Phase II Vermont DMNRC Support Agreement, dated
                           January 1, 1988, among New England
                           Hydro-Transmission Corporation, Citizens Utilities
                           Company, and Green Mountain Power Corporation.
                           [Note: Written consent of the other parties is
                           required to relieve assignor of its obligation.
                           Prior written notice to other parties is required
                           for any assignment.]

                  24.      Phase II Vermont DMNRC Construction Agreement, dated
                           January 1, 1988, among Vermont Electric Power
                           Company, Inc. and Citizens Utilities Company and
                           Green Mountain Power Corporation. [Note: 30 days'
                           prior written notice to VELCO is required for any
                           assignment. Assignee must provide VELCO written
                           notice within such 30 days that it will assume
                           assignor's obligations.

                  25.      License Agreement, dated January 1, 1988, among
                           Citizens Utilities Company and Green Mountain Power
                           Corporation (collectively "Licensee") and Vermont
                           Electric Transmission Company, Inc., re: operation
                           and maintenance of DMNRC. [Note: Written approval of
                           VETCO is required to assign any portion of
                           agreement. No such approval will release Licensee
                           from any obligation or liability under the
                           agreement.]

                  26.      Prudential Agreement, dated January 1, 1988 among
                           Citizens Utilities Company, Green Mountain Power
                           Corporation, Vermont Electric Transmission Company,
                           Inc. and the Prudential Insurance Company of
                           America, regarding the Mortgage securing notes sold
                           to finance the Vermont portion of Phase 1 and
                           stipulating that the DMNRC does not constitute
                           property subject to the lien of the Mortgage. [Note:
                           Written consent of Prudential Insurance Company is
                           required to transfer Citizens' obligations under
                           this agreement, unless transferring to another Joint
                           Owner who shall assume all such obligations.]

                  27.      1985 Option Agreement, dated December 27, 1985, by
                           and among VELCO, Central Vermont Public Service
                           Corporation, Green Mountain Power Corporation and
                           Citizens Utilities Company.

<PAGE>

                  28.      1985 Four Party Agreement, dated July 1, 1985, by
                           and among VELCO, Central Vermont Public Service
                           Corporation, Green Mountain Power Corporation and
                           Citizens Utilities Company.

                  29.      Substation Participation Agreement, between VELCO
                           and various Vermont utilities.

                  30.      Highgate Operating and Management Agreement, dated
                           August 1, 1984, by and among VELCO and the various
                           Vermont electric utilities.

                  31.      Agreement for Joint Ownership, Construction and
                           Operation of Highgate Transmission Interconnection,
                           dated August 1, 1984, as amended, by and among
                           various electric distribution companies. (See
                           Schedule 5.5, Item I.5.)

                  32.      Highgate Construction Agreement, dated August 1,
                           1984, as amended, by and among VELCO and various
                           electric distribution companies.

                  33.      Highgate Transmission Agreement, dated August 1,
                           1984, as amended, by and among various electric
                           distribution companies.

                  34.      Letter Agreement, dated June 26, 1985, between
                           Village of Orleans Electric Department and Citizens
                           Utilities Company, re: power transmission contract,
                           as amended.

                  35.      Letter Agreement, dated June 26, 1985, between
                           Swanton Village Electric Light Department and
                           Citizens Utilities Company, re: power transmission
                           contract, as amended.

                  36.      Letter Agreement, dated June 26, 1985, between
                           Village of Enosberg Falls, Inc. and Citizens
                           Utilities Company, re: power transmission contract,
                           as amended.

                  37.      Letter Agreement, dated June 26, 1985, between
                           Village of Barton, Inc. and Citizens Utilities
                           Company, re: power transmission contract, as
                           amended.

         D.       Software Licenses

                  1.       Software License and Services Agreement, dated April
                           30, 1997, as amended, between Citizens Utilities
                           Company and H.T.E., Inc.

                  2.       Windmil and Light Table for Windows Engineering
                           Analysis Software Agreement, dated July 17, 1998,

<PAGE>

                           between Citizens Utilities Company and Milsoft
                           Integrated Solutions, Inc.

<PAGE>

                                                   Cap Rock Electric Cooperative
                                                     Cap Rock Energy Corporation
                                                                Vermont Electric

                                  SCHEDULE 5.5

                           ENCUMBRANCES: REAL PROPERTY

I.       Encumbrances

         1.       There is a right of first refusal in the Joint User Agreement,
                  dated November 15, 1994, as amended, between Citizens
                  Utilities Company and Mountain Cable Company d/b/a Adelphia
                  Cable Communications involving the sale or assignment of pole
                  space to a non-electric company entity. An assignment to Buyer
                  would not trigger this right of first refusal.

         2.       The deed for the Border Substation contains a restrictive
                  covenant mandated by the VTDEC as part of the remediation
                  required for PCBs discovered on the parcel. (See Schedule
                  5.14, Item IV.C and Schedule 5.5, Item II.11.)

         3.       Pursuant to the Phase II Vermont DMNRC Joint-Ownership
                  Agreement, dated January 1, 1988, between Citizens Utilities
                  Company and Green Mountain Power Corporation ("GMPC"), GMPC
                  has a right a first refusal to purchase pro rata the Ownership
                  Share to be transferred on equal or better terms than those
                  offered to the Buyer. No right of first refusal applies from a
                  transfer by merger or acquisition of substantially all the
                  electric utility property or generating facilities of a Joint
                  Owner. (See Schedule 5.3, Item IV.C.22 and Schedule 5.12, Item
                  III.R.1.)

         4.       Seller's shares of common stock in VELCO may not be
                  transferred, unless they are first offered to the holders of
                  common stock in VELCO in proportion to such holders
                  holdings.(See Schedule 5.9, Item III.1 and 2.)

         5.       Pursuant to the Agreement for Joint Ownership, Construction
                  and Operation of Highgate Transmission Interconnection, dated
                  August 1, 1984, as amended, by and among various electric
                  distribution companies, the other parties have a right a first
                  refusal to purchase pro rata the Ownership Share to be
                  transferred on equal or better terms than those offered to the
                  Buyer. No right of first refusal applies from a transfer by
                  merger or acquisition of substantially all the electric
                  utility property or generating facilities of a Joint Owner.
                  (See Schedule 5.3, Item IV.C.31 and Schedule 5.12, Item
                  III.S.5.)
<PAGE>

         6.       The Mortgage and Security Agreement, dated September 1, 1986,
                  between Vermont Electric Transmission Company, Inc. and the
                  Prudential Insurance Company of America, re: Phase I HVDC,
                  encumbers the Vermont portion of the HVDC with a mortgage
                  lien. (See Schedule 5.12, Item III.K.2.)

         7.       There is a Threatened Proceeding regarding an ownership
                  dispute over a vacant parcel of Owned Real Property located
                  adjacent to the Seymour Lake dam site. (See Item II.37, hereof
                  and Schedule 5.8, Item I.5.)

         8.       There is a Threatened Proceeding regarding whether the
                  easement that Citizens possesses effectively permits Citizens
                  to run a transmission line across the property a customer in
                  Island Pond. (See Schedule 5.8, Item I.6.)

         9.       The State of Vermont possesses a right of first
                  refusal to purchase parcels it leases from Citizens pursuant
                  to the Lease, dated February 17, 1956, between Citizens
                  Utilities Company and the Fish and Game Service of the State
                  of Vermont. [Note: the Led pertains to a portion of the owned
                  Real Property referenced in Schedule 5.5, Items II.36, 37 and
                  38, and a portion of the owned Real Property referenced in
                  Schedule 5.5; Items II.43.] (See Schedule 5.12, Item X.G.)

         10.      Seller may not transfer any of its common stock in New England
                  Hydro-Transmission Corporation (1.1588% equity ownership
                  interest) to any other person unless such person is an Equity
                  Sponsor or meets the requirements for being an Equity Sponsor
                  undo Sections 4B, 4C or 4D of the Equity Funding Agreement
                  (See Schedule 5.9, Item III. Schedule 5.12, Item III.N.8 and
                  Schedule 5.3, Item IV.C.16)

         11.      Seller may not transfer any of its common stock in New England
                  Hydro-Transmission Company, Inc. (1.1588% equity ownership
                  interest) to any other person unless such person is an Equity
                  Sponsor or meets the requirements for being an Equity Sponsor
                  under Sections 4B, 4C or 4D of the Equity Funding Agreement.
                  (See Schedule 5.9, Item III.4, Schedule 5.12, Item III.N.9 and
                  Schedule 5.3, Item IV.C.17)

II       Owned Real Property

        1.        Address: 0.5 acres in Alburg, Vermont (Book 36, Page 180)
                  Use: Alburg Sub station.

         2.       Address: 0.97 acres in Barton, Vermont (Book 77, Page

<PAGE>

                  322-324)
                  Use: Burton Hill Substation.

         3.       Address: 0.057 acres in Barton, Vermont (Book C, Page 242)
                  Use: Burton Hill Sub station.

         4.       Address: 0.4 acres in Berkshire, Vermont, (Book 28, Page 238)
                  Use:     Berkshire Sub station.

         5.       Address: 0.93 acres in Berkshire, Vermont (Book 30, Page None)
                  Use: Berkshire Substation.

         6.       Address: 1.41 acres in Brighton, Vermont (Book 44,
                  Page 233-234)
                  Use: Brighton Substation.

         7.       Address: 0.29 acres in Canaan, Vermont (Book 30, Page 593)
                  Use:     Canaan Substation.

         8.       Address: 0.06 acres in Derby, Vermont (Book 37, Page 453)
                  Use: Derby Substation.

         9.       Address: 0.31 acres in Derby, Vermont (Book 122, Page 270)
                  Use: Derby Substation.

         10.      Address: 0.046 acres in Derby, Vermont (Book 74, Page 212)
                  Use: Derby Line Substation.

         11.      Address: 0.25 acres in Derby, Vermont (Book 37, Page 3 16)
                  Use:     Derby Line Substation. [Note: Deed contains
                  Restrictive covenant.] (See Schedule 5.5, Item I.2 and
                  Schedule 5.14, Item IV.C.)

         12.      Address: 0.46 acres in Enosburg, Vermont (Book 49,
                  Page 396-397)
                  Use: ROW

         13.      Address: 0.4 acres in Glover, Vermont (Book 15, Page 109)
                  Use:     Former Stockroom.

         14.      Address: 1 acre in Grand Isle, Vermont (Book 43, Page 683)
                  Use:     Stockroom.

         15.      Address: 1.52 acres in Highgate, Vermont (Book 52, Page
<PAGE>

                  405)
                  Use:     Former Substation.

         16.      Address: 8 acres in Highgate, Vermont (Book 52, Page 57)
                  Use: ROW.

         17.      Address: 9.1 acres in Highgate, Vermont (Book 52, Page 102)
                  Use:     ROW.

         18.      Address: 20.6 acres in Highgate, Vermont (Book 36, Page 497)
                  Use:     ROW.

         19.      Address: 0.2 acres in Irasburg, Vermont (Book 28, Page 458)
                  Use:     Irasburg Substation.

         20.      Address: 0.01 acres in Irasburg, Vermont (Book 23, Page 19)
                  Use:     ROW

         21.      Address: 100 acres in Jay, Vermont (Book 14, Page 295)
                  Use:     Jay Substation.

         22.      Address: 5.34 acres in Newport, Vermont (Book 38, Page 436)
                  Use: ROW.

         23.      Address: 125 acres in Newport, Vermont (Book 85, Page 268)
                  Use:     ROW.

         24.      Address: 0;5 acres in Newport, Vermont (Book 68, Page 478480)
                  Use:     Coventry St. Substation.

         25.      Address: 0.229 acres in Newport, Vermont (Book 47, Page 217)
                  Use: Newport Substation.

         26.      Address: 0.22 acres in Newport Ctr., Vermont (Book 7,
                  Page 364)
                  Use: Newport Ctr. Sub station.

         27.      Address: 0.36 acres in Rich, Vermont (Book 47, Page 322)
                  Use:     Stockroom.

         28.      Address: 0.25 acres in Richford, Vermont (Book 31, Page 196)
                  Use:     Former Sub station.
<PAGE>

         29.      Address: 0.23 acres in Richford, Vermont (Book 49, Page 145)
                  Use:     Former Substation.
         30.      Address: 2.0 acres in Richford, Vermont (Book 47, Page 458459)
                  Use:     Richford Substation.

         31.      Address: 0.003 acres in Richford, Vermont (Book 31, Page 460)
                  Use:     Former Switchyard.

         32.      Address: 0.4 acres in Richford, Vermont (Book 64, Page 394)
                  Use:     HK Webster Substation.

         33.      Address: 0.01 acres in Sheldon, Vermont (Book 26, Page 305)
                  Use:     None.

         34.      Address: 3.71 acres in South Hero, Vermont (Book 40, Page 193)
                  Use:     South Hero Substation.

         35.      Address: 0.2 acres in Troy, Vermont (Book 32, Page 408)
                  Use:     Troy Substation.

         36.      Address: 0.50 acres in Charleston, Vermont (Book 23, Page 554)
                  Use:     Charleston Hydro. (See Schedule 5.5, Item I.9.)

         37.      Address: 2.00 acres in Charleston, Vermont (Book 23, Page 554)
                  Use:     Charleston Hydro. (See Schedule 5.5, Item I.9.)

         38.      Address: 0.25 acres in Charleston, Vermont (Book 23,
                  Page 554)
                  Use: Charleston Hydro. (See Schedule 5.5, Item I.9.)

         39.      Address: 100 acres in Charleston, Vermont (Book 23, Page 101)
                  Use:     Charleston Hydro.

         40.      Address: 1.83 acres in Charleston, Vermont (Book 43, Page 233)
                  Use: Charleston Hydro.

         41.      Address: 0.33 acres in Charleston, Vermont (Book 44, Page 101)
                  Use: Charleston Hydro.

         42.      Address: 3.3 acres in Charleston, Vermont (Book 17, Page 219)
                  Use: Charleston Hydro. (See Schedule 5.5, Item I.9.)
<PAGE>

         43.      Address: 10.0 acres in Charleston, Vermont (Book 26, Page 262)
                  Use: Charleston Hydro.
         44.      Address: 200 acres in Derby, Vermont (Book 41, Page 590)
                  Use: Clyde Pond Hydro. (See Schedule 6.1, Item 3.)

         45.      Address: 1.4 acres in Derby, Vermont (Book 41, Page 590)
                  Use: Clyde Pond Hydro. (See Schedule 6.1, Item 3.)

         46.      Address: 1.3 acres in Derby, Vermont (Book 41, Page 590)
                  Use: Clyde Pond Hydro. (See Schedule 6.1, Item 3.)

         47.      Address: 4.5 acres in Derby, Vermont (Book 38, Page 51)
                  Use:     Potential Hydro.

         48.      Address: 3.4 acres in Derby, Vermont (Book 89, Page 399)
                  Use:     Clyde Pond.

         49.      Address: 6.7 acres in Derby, Vermont (Book 89, Page 401)
                  Use:     Clyde Pond.

         50.      Address: 7.2 acres in Derby, Vermont (Book 89, Page 402-404)
                  Use: Clyde Pond.

         51.      Address: 16.6 acres in Derby, Vermont (Book 79, Page 337-338)
                  Use: Clyde Pond.

         52.      Address: Derby, Vermont (Book 49, Page 24)
                  Use: Clyde Pond

         53.      Address: 4.2 acres in Derby, Vermont (Book 118, Page 219-241)
                  Use: Clyde Pond.

         54.      Address: .046 acres in Derby, Vermont (Book 74, Page 214)
                  Use: Clyde Pond.

         55.      Address: 63 acres in Derby, Vermont (Book 50, Page 363)
                  Use: Clyde Pond Hydro.

         56.      Address: 0.68 acres in Derby, Vermont (Book 37, Page 326)
                  Use: Potential Hydro.

         57.      Address: Derby, Vermont (Book 45, Page 134)
                  Use: Potential Hydro.
<PAGE>

         58.      Address: 67 acres in Derby, Vermont (Book 54, Page 456)
                  Use: Clyde Pond Hydro.
         59.      Address: Derby, Vermont (Book 41, Page 374)
                  Use: Clyde Pond Hydro.

         60.      Address: No acreage (Flowage rights) in Derby, Vermont (Book
                  47, Page 308)
                  Use: Clyde Pond Hydro.

          61.     Address: 20 acres in Derby, Vermont (Book 88, Page 119-121)
                  Use: Clyde Pond.

         62.      Address: 19.9 acres in Derby, Vermont (Book 88, Page 119-121)
                  Use: Clyde Pond.

         63.      Address: 10 acres in Derby, Vermont (Book 37, Page 548)
                  Use: Potential Hydro.

         64.      Address: 5 acres in Derby, Vermont (Book 129, Page 327)
                  Use: Clyde River.

         65.      Address: 4.0 acres in Derby, Vermont (Book 37, Page 325)
                  Use: Potential Hydro.

         66.      Address: Derby, Vermont (Book 37, Page 319)
                  Use: Clyde River.

         67.      Address: 56 acres in Derby, Vermont (Book 50, Page 448)
                  Use: Clyde Pond. (See Schedule 5.12, Item X.F.)

         68.      Address: 50 acres in Derby, Vermont (Book 98, Page 262-263)
                  Use: Clyde Pond.

         69.      Address: 1.0 acres in Newport, Vermont (Book 5, Page 154)
                  Use: Clyde River Hydro.

         70.      Address: 0.5 acres in Newport, Vermont (Book 8, Page 125)
                  Use: Clyde River.

         71.      Address: 6.0 acres in Newport, Vermont (Book 23, Page 152)
                  Use: Clyde River Hydro.

         72.      Address: 1.0 acres in Newport, Vermont (Book 22, Page 380)
                  Use: Clyde River.
<PAGE>

         73.      Address: 50 acres in Newport, Vermont (Book 23, Page 230)
                  Use: Clyde River Hydro.

         74.      Address: 0.1 acres in Newport, Vermont (Book 6, Page 383)
                  Use: Clyde River Hydro.

         75.      Address: 6.0 acres in Newport, Vermont (Book 11, Page 583)
                  Use: Clyde River.

         76.      Address: 4.0 acres in Newport, Vermont (Book 11, Page 242)
                  Use: Clyde River Hydro.

         77.      Address: 0.5 acres in Newport, Vermont (Book 11, Page 242)
                  Use: Clyde River Hydro.

         78.      Address: 4.2 acres in Newport, Vermont (Book 42, Page 213)
                  Use: Clyde River Hydro.

         79.      Address: 1.0 acres in Newport, Vermont (Book 34, Page 382)
                  Use: Clyde River.

         80.      Address: 10 acres in Newport, Vermont (no Book or Page listed)
                  Use: Clyde River Hydro.

         81.      Address: 29.75 acres in Troy, Vermont (Book 34, Page 143)
                  Use: Potential Hydro.

         82.      Address: 1.5 acres in Troy, Vermont (Book 24, Page 200)
                  Use: Troy Hydro.

         83.      Address:. 2.5 acres in Grand Isle, Vermont (Book 57, Page 480)
                  Use: Former Stockroom.

         84.      Address: .1 acre in Morgan, Vermont (Book 23, Page 554)
                  Use: Charleston Hydro.

         [Note: Citizens Resources Company is willing to sell to the Buyer of
         Vermont Electric the following two parcels located in Derby, Vermont
         for the fair market value of such parcels, if such parcels remain
         available for sale on the Closing Date:

                  1.       19.9 acres located at the junction of the 1-91 access
                           road and Town Highway 41, near Clyde Pond;
<PAGE>

                           and

                  2.       20 acres located West of 1-91 and South and East of
                           Clyde Pond and North of the access road leading from
                           the City of Newport to Exit 27 of 1-91.] (See
                           Schedule 6.1, Item 1.)

III.     Missing Easements

         1.       There is a Threatened Proceeding regarding whether the
                  easement that Citizens possesses effectively permits Citizens
                  to run a transmission line across the property of a customer
                  in Island Pond. (See Schedule 5.8, Item 1.6.)

IV.      Lease Defaults

         None.

<PAGE>

                                                   Cap Rock Electric Cooperative
                                                     Cap Rock Energy Corporation
                                                                Vermont Electric

                                 SCHEDULE 5.6(a)

                              FINANCIAL STATEMENTS

                                  see Attached.

<PAGE>

                            Citizens Energy Services
                    Proforma Balance Sheet- Vermont Electric
                               September 30, 1999
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                          Consolidated
                                                 Property Level              Corporate         Consolidated Electric
                                                       Subtotal            Adjustments                  Sector Total
<S>                                              <C>                      <C>                  <C>

Cash and Cash Equivalents                                10,310                (10,310)                            -
Accounts Receivable-Utilities                         2,815,992                      -                     2,815,992
Accounts Receivable-Other                             1,543,821                 20,066                     1,563,887
Reserve for Doubtful Accounts                           (55,891)                     -                       (55,891)
Materials & Supplies                                    661,328                      -                       661,328
Prepayments                                               6,380                  1,464                         7,844
Other Current Assets                                     10,225                      -                        10,225
  Total Current Assets                                 4,991163                 11,220                     5,003,385

Property, Plant and Equipment                        65,983,452                  7,500                    63,990,952
Construction Work in Process                          2,212,469                 15,045                     2,227,514
Accumulated Depreciation                            (22,575,690)                     -                   (22,575,690)
  Total Fixed Assets                                 45,620,231                 22,545                    45,642,776

Preliminary Survey and Investigation                    494,124                      -                       494,124
Clearing Account                                        (26,228)                26,227                            (0)
Deferred Debits                                      12,924,168             (12,588)15)                      335,853
Regulatory Assets                                       176,013             12,586,065                    12,762,078
Other Assets                                                  -                (12,145)                      (12,145)
  Total Non-Current                                  13,568,078                  1,832                    13,579,910

  Total Assets                                       64,180,474                 45,597                    64,226,071

Accounts Payable                                      1,741,345               (217,294)                    1,524,051
Customer Deposits                                       105,584                      -                      105,5114
Incense Taxes Accrued                                  (695,840)              (120,405)                     (816,245)
<PAGE>

Other Taxes Accrued                                     324,504                    986                       325,490
Interest Accrued                                         60,400                      -                        60,400
Other Current and Accrued Liabilities                        (0)               643,745                       643,745
Current portion of LTD (CR)                                   -                  3,000                         3,000
  Total Current and Accrued Liabilities               1,535,994                310,032                     1,846,025

Subordinate Investment Notes                              4,071                      -                         4,071
Current Portion of LTD (DR)                                   -                 (3,000)                       (3,000)
  Total Long Term Debt                                    4,071                 (3,000)                        1,071

Customer Advances for Construction                            -                      -                             -
Regulatory Liabilities                                        -                      -                             -
Other Deferred Credits                                   23,116                 13,208                        36,924
Other Payables                                                -                621,133                       621,133
  Total Non-Current Liabilities                          23,716                634,341                       658,057

Total Shareholder's Equity                           62,616,693               (895,776)                   61,720,917

  Total Liabilities and Equity                       64,180,474                 45,597                    64,226,071
</TABLE>
NOTES TO FINANCIAL STATEMENT:

1.       For the Proforma Balance Sheet, Deferred Income Taxes, Contributions In
         Aid of Construction and FASB 109 adjustments recorded as Regulatory
         Assets and Regulatory Liabilities have been eliminated for statement
         presentation.
2.       FASB 106 liability allocation based on actuarial report as of 12/31/98.
3.       Pension liability allocation based on 1998 expense calculation.
4.       All assets which are non exclusive have been removed for presentation
         purposes.

<PAGE>

Citizens Energy Services
Proforma Balance Sheet Property Subtotal By State
September 30, 1999
(Unaudited)

<TABLE>
<CAPTION>
                                                                  State of Vermont
                                                                       Vermont
                                                                      Electric
<S>                                                               <C>

Property, Plant and Equipment                                           65,983,452
Construction work In Process                                             2,212,469
Accumulated Depreciation                                               (22,575,690)
  Net Fixed Assets                                                      45,620,231

Cash and Cash Equivalents                                                   10,310
Accounts Receivable-Utilities                                            2,815,992
Accounts Receivable-Other                                                1,543,821
Reserve for Doubtful Accounts                                              (55,891)
Materials & Supplies                                                       661,328
Special Deposits                                                                 -
Prepayments                                                                  6,380
Other Current Assets                                                        10,225
  Total Current Assets                                                   4,992,165

Preliminary Survey and Investigation                                       494,124
Clearing Assets                                                            (26,228)
Deferred Debits                                                         12,924,168
Regulatory Assets                                                          176,013
  Total Non-Current                                                     13,568,078

   Total Assets                                                         64,180,474

Total Shareholder's Equity                                              62,616,693

Subordinate Investment Notes                                                 4,071
  Total Long Term Debt                                                       4,071

Accounts Payable                                                         1,741,345
Customer Deposits                                                          105,584
Income Taxes Accrued                                                      (695,840)
Other Taxes Accrued                                                        324,504
Interest Accrued                                                            60,400
Other Current and Accrued Liabilities                                           (0)
  Total Current and Accrued Liabilities                                  1,535,994

Minority Interest                                                                -
Convertible Securities                                                           -

<PAGE>

Customer Advances for Construction                                               -
Deferred Income Taxes                                                           (0)
Regulatory Liabilities                                                           -
Other Deferred Credits                                                      23,716
Other Payables                                                                   -
  Total Non-Current Liabilities                                             23,716

Balance Account                                                                  -

  Total Liabilities and Equity                                          64,180,474
</TABLE>
<PAGE>

                            Citizens Energy Services
                 Proforma Income Statement- Vermont Electric (A)
                  For the Nine Months Ended September 30, 1999
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                    Consolidations/         Consolidated
                                            Property Level              Corporate               Electric
                                                  Subtotal            Adjustments           Sector Total
<S>                                         <C>                     <C>                     <C>

Electric Revenue                                 19,177343                708,899              19,886242

Electric Energy & Fuel Oil Purchased            12,270,659                      -             12,270,659
Other O&M Expenses                               4,686,869             (2,049,957)             2,636,912
Taxes Other Than Income                          1,182,230                      -              1,182,230
Total operating Expenses                        18,139,758             (2,049,957)            16,089,801

EBITDA                                           1,037,585              2,758,856              3,796,441

Depreciation & Amortization Expense              2,190,092                (12,995)             2,177,097

Income From operations                          (1,152,507)             2,771,851              1,619,344

Allowance for Funds Used
  During Construction                               17,787                 (6,636)                11,151
Investment Income                                   35,424                      -                 35,424
Interest & Dividends From
  Associated Companies                                   -                      -                      -
Miscellaneous Non-Operating Income                   1,304                 (1,304)                     0
Other Income(Deductions)                          (486,186)                     -               (486,186)
Total Other Income(Deductions)                    (431,670)                (7,940)              (439,610)

Operating Income Before Interest
  Expense and Income Taxes                      (1,584,178)             2,763,911              1,179,733

Interest on Long Term Debt                               -                      -                      -
Amortization of Debt Discount                            -                      -                      -
Other Interest Expense                               9,466                      -                  9,466
Allowance for Borrowed Funds (Cr.)                       -                 (6,636)                (6,636)
<PAGE>

Total Interest Expense                               9,466                 (6,636)                 2,830

Operating Income Before Income Taxes            (1,593,644)             2,770,547              1,176,903
</TABLE>

NOTES TO THE FINANCIAL STATEMENTS:
(A)      The following consolidated Income Statement and the consolidating
         Income Statement have been prepared excluding special items related to
         separation and Y2K costs.

<PAGE>

Citizens Energy Services
Proforma Income Statement Property Subtotal By State
For the 9 Months Ended September 30, 1999
(Unaudited)

<TABLE>
<CAPTION>
                                                                      State of Vermont
                                                                           Vermont
                                                                          Electric
<S>                                                                   <C>
Water & Wastewater Revenue                                                        -
Electric Revenue                                                         19,177,343
Gas Revenue                                                                       -
Other Revenue                                                                     -
  Total Operating Revenue                                                19,177,343

Electric Energy & Fuel Oil Purchased                                     12,270,659
Natural Gas Purchased                                                             -
Other O&M Expenses                                                        4,686,869
  Total Operation & Maintenance Expenses                                 16,957,528

Depreciation & Amortization Expense                                       2,190,092
Taxes Other Than Income                                                   1,182,230
  Total Operating Expenses                                                3,372,322

Income From Operations                                                   (1,152,507)

Allowance for Funds Used During Construction                                 17,787
Investment Income                                                            35,424
Interest & Dividends From Associated Companies                                    -
Miscellaneous Non-Operating Income                                            1,304
Other Income(Deductions)                                                   (436,186)
Tax Effect (Dr.)                                                                  -
 Total Other Income                                                        (431,670)

Operating Income Before Interest Expense
  and Income Taxes                                                       (1,584,178)

Interest on Long Term Debt                                                        -
Amortization of Debt Discount                                                     -
Other Interest Expense                                                        9,466
Allowance for Borrowed Funds (Cr.)                                                -
 Total Interest Expense                                                       9,466

Operating Income Before Income Taxes                                     (1,593,644)
</TABLE>
<PAGE>

                                                   Cap Rock Electric Cooperative
                                                     Cap Rock Energy Corporation
                                                                Vermont Electric

                                 SCHEDULE 5.6(b)

                               CERTAIN LIABILITIES

1.       The Hydro-Quebec Contracts contains "step-up" provisions that state
         that if any party defaults on its obligations under the Contracts to
         purchase power front Hydro-Quebec, the other parties will assume
         responsibility for the defaulting party's share on a pro-rata basis.
         (See Schedule 5.12 , Items I.C. and D.) The H-Q/JVO Contract provides
         for up to 350 MW of power and associated energy to be delivered to the
         Vermont utilities, in varying amounts under several schedules, between
         1990 and 2020. Currently, the H-Q/VJO Contract's pricing exceeds market
         level. As of December 31, 1999, Citizens' obligation under the
         Hydro-Quebec Contracts is approximately 10% of the total.

<PAGE>

                                                   Cap Rock Electric Cooperative
                                                     Cap Rock Energy Corporation
                                                                Vermont Electric

                                  SCHEDULE 5.7
            COMPLIANCE WITH LEGAL REQUIREMENTS: GOVERNMENTAL PERMITS

I.       Violations.

         1.       By VPSB Orders entered on June 16, July 21, and August 28,
                  1997, and September 15, 1998, Citizens was placed on
                  regulatory probation. Such probation is continuing.

II.      Missing Permits.

         1.       Item III.A set forth on Schedule 5.14 (Environmental Matters)
                  is incorporated herein by reference.

<PAGE>

                                                   Cap Rock Electric Cooperative
                                                     Cap Rock Energy Corporation
                                                                Vermont Electric

                                  SCHEDULE 5.8

                      LEGAL PROCEEDINGS; OUTSTANDING ORDERS

I.       Proceedings

         1.       Arbitration of claim by Vermont Joint Owners for breach of
                  Firm Energy Contract by Hydro-Quebec as a result of failure to
                  provide power during and after January, 1998, ice storm.

         2.       Appeal by Citizens to Vermont Supreme Court of VPSB Order
                  (Docket Nos. 584115859) establishing a 5.25 percent return on
                  equity. (See Schedule 5.7, Item I.1).

         3.       BARTON VILLAGE, INC., ET. AL. V. CITIZENS UTILITIES COMPANY,
                  VERMONT ELECTRIC DIVISION. (FERC Docket No. EL 92-33-000).
                  This proceeding was initiated by Barton Village, Inc. and
                  several other Vermont villages complaining jointly that
                  Vermont Electric failed to file rates with the FERC for
                  services it provided to the Villages during the period, 1963
                  to 1982. Citizens' motion to dismiss is pending before FERC.

         4.       Employee compensation claims for the following:

                  Carolyn Clapper         Maurice Maeie
                  Thomas Petit            Gerald Gatos
                  Dennis Dion (3)         Haselton Douglas (2)
                  Florion Masse (2)       Steven Coulter (2)
                  Chris Lawson (2)        Marlene Maxwell (2)
                  David McFadden          Michael Sullivan
                  Matthew Perry           Dale Bacon
                  Kevin Lacoss            Eric Chates
                  Steven Edgerley (2)     Steven Guyette
                  Bruce Montming          Jaque Dalpe
                  Sherman Blow (2)        Dennis Dion
                  Shawn Juaire (2)

         5.       There is a Threatened Proceeding regarding an ownership
                  dispute over a vacant parcel of Owned Real Property located
                  adjacent to the Seymour Lake dam site. (See Schedule 5.5,
                  Items I.7 and II.37.)

         6.       There is a Threatened Proceeding regarding whether the
                  easement that Citizens possesses effectively permits Citizens
                  to run a transmission line across the property of a customer
                  in Island Pond. (See Schedule 5.5, Item III.1.)
<PAGE>

         7.       The Proceedings listed on Schedule 5. 16 (State and Federal
                  Regulatory Matters) are incorporated by reference.

II       Outstanding Orders

         1        FERC DOCKET 94-1561, re: settlement of the FERC wholesale
                  distribution proceedings. The Settlement established an
                  Independent Audit procedure designed to ensure that rates are
                  based on an appropriate level of transmission plant, and to
                  determine whether additional refunds by Citizens, or
                  repayments by the customers, should be made. The Independent
                  Audit is currently being conducted by Management Resources
                  International, Inc. ("MRI"). The parties have agreed to use
                  this same Independent Audit procedure to address the June 16,
                  1997 Order of the VPSB (Docket No. 5841).

         2.       VPSB DOCKET NOS. 5841/5859. Citizens was placed on probation
                  in Vermont and issued a conditional certificate of public good
                  to operate in Vermont.

         3.       YPSB DOCKET NO 6332. Memorandum of Understanding, dated
                  January 27, 2000, between the Vermont Department of Public
                  Service and Citizens Utilities Company, re: grant of temporary
                  rate increase pending final determination of permanent rates.
                  (See Schedule 5.16, Item I.A)

         4.       FERC DOCKET NOS. ER95-1586-000, EL96-17-000. AND OA96-184-000.
                  Settlement Agreement among Citizens Utilities Company,
                  Burlington Electric Department, The Vermont VillAges, Vermont
                  Marble Power Division of OMYA, Inc., the Vermont Department of
                  Public Service, Central Vermont Public Service Corporation,
                  and Vermont Public Power Supply Authority, approved by the
                  Federal Energy Regulatory Commission on November 13, 1997,
                  tendered for filing with the FERC on December 15, 1997, and
                  January 23, 1998, as amended, and relating to Open Access
                  Transmission Tariff of the Vermont Electric Division of
                  Citizens Utilities Company, conformed to reflect provisions of
                  the Settlement Agreement, and Tariff Amendment tendered for
                  filing with the FERC on March 28, 1997, effective March 31,
                  1997. (See Schedule 5.12, Items III.B through G.)

<PAGE>

                                                   Cap Rock Electric Cooperative
                                                     Cap Rock Energy Corporation
                                                                Vermont Electric

                                  SCHEDULE 5.9

                                      TAXES

I.       Pending Audits or Examinations: None.

II.      Waivers of Statutes of Limitations:

         FEDERAL:   1  Seller has signed a waiver that extends the statute of
                       limitations until December 31, 2000 for the tax year
                       ending December 31, 1995.

         STATE:     1. Seller has signed a waiver that extends the statute of
                       limitations until March 31, 2000 relating to the State of
                       Connecticut tax filings for the years ending
                       December 31, 1993 and December 31, 1994.

                    2. Seller has signed a waiver that extends the statute of
                       limitations until December 31, 2000 relating to the State
                       of Louisiana tax filings for the years ending
                       December 31, 1991 through December 31, 1996.

III.     Equity Interests:

         1.       Seller owns 2,135 shares of Vermont Electric Power Company,
                  Inc. ("VELCO") Class B Common Stock. (See Schedule 5.5, Item
                  I.4.)

         2.       Seller has an interest in Vermont Electric Transmission
                  Company, Inc. ("VETCO") through its ownership of 4,503 shares
                  of Class C Common Stock of VELCO. (See Schedule 5.5, Item 1.4,
                  Schedule 5.3, Item IV.C.8, and Schedule 5.12, Item III.L.3.)
                  [Note: Stock my not be transferred or sold except (1) pursuant
                  to an effective registration statement or (2) pursuant to an
                  opinion of counsel that an exemption from registration is
                  available.]

         3.       Seller has a 1.1588% equity ownership interest in New England
                  Hydro-Transmission Corporation. (See Schedule 5.5, Item I.10,
                  re: restriction on transfer of common stock, Schedule 5.3,
                  Item IV.C.16 and Schedule 5.12, Item III.N.8)

         4.       Seller has a 1.1588% equity ownership interest in New

<PAGE>

                  England Hydro-Transmission Electric Company, Inc. (See
                  Schedule 5.5, Item I.10, re: restriction on transfer of common
                  stock, Schedule 5.3, Item IV.C.17 and Schedule 5.12,
                  Item III.N.9).

<PAGE>

                                                   Cap Rock Electric Cooperative
                                                     Cap Rock Energy Corporation
                                                                Vermont Electric

                                  SCHEDULE 5.10

                              INTELLECTUAL PROPERTY

I.       PATENTS, TRADEMARKS, SERVICE MARKS AND COPYRIGHTS: See attached.

II.      INFRINGEMENTS:

         1.       Applications identified with a "+" (plus sign) on the attached
                  chart have been refused registration by the U.S. Patent and
                  Trademark Office due to the possible confusion with Citizens
                  Gas Light & Coke (not affiliated with Seller).

<PAGE>

                                                   Cap Rock Electric Cooperative
                                                     Cap Rock Energy Corporation
                                                                Vermont Electric

                                  SCHEDULE 5.11

                         EXTRAORDINARY REQUIRED REPAIRS

None.

<PAGE>

                                                   Cap Rock Electric Cooperative
                                                     Cap Rock Energy Corporation
                                                                Vermont Electric

                                  SCHEDULE 5.12

                               MATERIAL CONTRACTS

I.       POWER PURCHASE AND SUPPLY AGREEMENTS

         A.       Operating Agreement No. 8, dated August 1, 1993, between
                  Hydro-Quebec and Citizens Utilities Company, re: tertiary
                  energy.

         B.       Amendment No. 5 to Hydro-Quebec Participation Agreement, dated
                  as of October 21, 1993, among various electric utilities,
                  amending and restating Hydro-Quebec Participation Agreement,
                  dated April, 1988.

         C.       Firm Power and Energy Contract, dated December 4, 1987,
                  between Hydro-Quebec and Vermont Joint Owners, as amended.

         D.       Letter Agreement, dated August 17, 1999, between Citizens
                  Utilities Company and Burlington Electric Department, re:
                  lease of BED's share of HVDC Phase 1 Interconnection.

         E.       Agreement, dated February 25, 1998, between Citizens Utilities
                  Company and Swanton Village Electric Department, re: Swanton's
                  provision of power (Connected Load).

         F.       Master Agreement, dated ____, 1999 by and between Citizens and
                  PG&E Energy Trading - Power, L.P.

         G.       Agreement, dated August 1, 1983, by and between Citizens
                  Utilities Company and Public Service Company of New Hampshire.

         H.       Service Agreement, dated September 23, 1999, by and between
                  Citizens Utilities Company, Vermont Division and PECO Energy
                  Company, pursuant to PECO's FERC Electric Tariff Volume 1.

         I.       Operating Agreement No. 11 (Assured Tertiary Energy),
                  effective July 1, 1994, between Hydro-Quebec and Citizens
                  Utilities.

         J.       Operating Agreement (CITIZ-1999-01 Tertiary Energy
                  (Seasonal)), effective October 1, 1999, between Hydro-Quebec
                  and Citizens Utilities.
<PAGE>

         K.       Agency Agreement, effective as of January 14, 2000, between
                  Morgan Stanley Capital Group, Inc. and Citizens Utilities
                  Company, re: management, purchase and sale of Energy and
                  Operating Capability on behalf of Citizens.

II.      CUSTOMER SUPPLY AGREEMENTS

         A.       Special Contract #356 between Citizens and Barrup Farms, Inc.
                  d/b/a Green Mountain Mulch, dated November 24, 1998, approved
                  by the Public Service Board on February 5, 1999.

         B.       Special Contract # 322 between Citizens and LaBranche Lumber
                  Company approved by the Public Service Board on September 9,
                  1998.

III.     INTERCONNECTION AND TRANSMISSION AGREEMENTS

         A.       Agreement for Transmission Service, dated September 13, 1996,
                  between Citizens Utilities Company and Swanton Village
                  Electric Department.

         B.       Letter Agreement, dated June 26, 1985, between Village of
                  Orleans Electric Department and Citizens Utilities Company,
                  re: power transmission contract.

         C.       Letter Agreement, dated June 26, 1985, between Swanton
                  Electric Light Department and Citizens Utilities Company, re:
                  power transmission contract.

         D.       Letter Agreement, dated June 26, 1985, between Village of
                  Enosberg Falls, Inc. and Citizens Utilities Company, re: power
                  transmission contract.

         E.       Letter Agreement, dated June 26, 1985, between Village of
                  Barton, Inc. and Citizens Utilities Company, re: power
                  transmission contract.

         F.       Block Loading Facilities Transmission Agreement, dated
                  February 15, 1989, by and among Central Vermont Public Service
                  Corporation, Vermont Marble Company, Village of Barton
                  Electric Department, Village of Enosburg Water and Light
                  Department, Village of Swanton Electric Department and
                  Citizens Utilities Company.

         G.       Open Access Transmission Tariff of the Vermont Electric
                  Division of Citizens Utilities Company, conformed to reflect
                  provisions of the Settlement Agreement, and Tariff Amendment
                  tendered for filing with the FERC on March 28, 1997, effective
                  March 31, 1997. (See Schedule 5.8, Item II.4.)

         H.       Agreement, dated May 31, 1989, between Citizens
<PAGE>

                  Utilities Company (successor-in-interest to Franklin Electric
                  Light Company, Inc.) and Vermont Marble Company, re: Highgate
                  Transmission Interconnection.

         I.       Phase I Basic Participation Agreements:

                  1.       Phase I Vermont Transmission Line Support Agreement,
                           dated December 1, 1981, among VETCO and various New
                           England utilities, as amended.

                  2.       Phase I Terminal Facility Support Agreement dated
                           December 1, 1981, among New England Electric
                           Transmission Corporation and various New England
                           utilities, as amended.

                  3.       Agreement With Respect To Use Of Quebec
                           Interconnection, dated December 1, 1981, among
                           various New England utilities each of which is a
                           member of NEPOOL.

                  4.       Agreement Amending NEPOOL Power Pool Agreement,
                           dated December 1,  1981, among NEPOOL participants.

         J.       Vermont Phase I Participation Agreements:

                  1.       Preliminary Vermont Support Agreement re: Quebec
                           Interconnection, dated May 1, 1981, between VELCO
                           and various Vermont electric distribution utilities.

                  2.       Preliminary Quebec Interconnection Support Agreement,
                           dated May 1, 1981, among various New England electric
                           utilities and NEPOOL, as amended.

         K.       Vermont Phase I Debt-Financing Documentation:

                  1.       $37,000 Note Agreement, dated September 1, 1986,
                           between VETCO and the Prudential Insurer Company.

                  2.       Mortgage and Security Agreement, dated September 1,
                           1986, between Vermont Electric Transmission Company,
                           Inc. and the Prudential Insurance Company of America.
                           (See Schedule 5.5, Item 1.6.)

                  3.       VELCO Assignment Letter to VETCO and NEET of Certain
                           Rights Into and Under the VELCO Participation
                           Agreement.

         L.       VETCO Equity Support Agreements:

                  1.       VETCO Capital Funds Agreement, dated July 15, 1982.

<PAGE>

                  2.       VETCO Capital Funds Support Agreement, dated July 15,
                           1982, between VETCO and the Vermont Participants.

                  3.       Stock Purchase Agreement, dated August 11, 1986,
                           among VELCO and each of the Vermont electric
                           companies participating in Phase I. (See Schedule
                           5.9, Item III.2.)

         M.       Phase I Agreements between NEPOOL and Hydro-Quebec:

                  1.       Vermont Participation Agreement for Quebec
                           Interconnection, dated July 15, 1982, between VELCO
                           and the Vermont Participants, as amended.

                  2.       Energy Contract, dated _______, 1982, between
                           Hydro-Quebec and NEPOOL.

                  3.       Energy Banking Agreement, dated         , 1982,
                           among Hydro-Quebec, VELCO, MET and NEPOOL.

                  4.       Interconnection Agreement, dated _______, 1982,
                           between NEPOOL and Hydro-Quebec, as amended.

         N.       Phase II Basic Participation Agreements:

                  1.       Preliminary Quebec Interconnection Support Agreement,
                           dated September 1, 1984, among NEPOOL participants,
                           as amended.

                  2.       Phase II New Hampshire Transmission Facilities
                           Support Agreement dated June 1, 1985, between New
                           England Hydro-Transmission Corporation and the New
                           England utilities (VELCO signed on behalf of Citizens
                           Utilities Company), as amended by Amendment Nos. 1-8.

                  3.       Phase II Massachusetts Transmission Facilities
                           Support Agreement dated June 1, 1985, between New
                           England Hydro-Transmission Corporation and the New
                           England utilities (VELCO signed as agent for Citizens
                           Utilities Company), as amended by Amendment No. 7.

                  4.       Phase II New England Power AC Facilities Support
                           Agreement, dated as of June 1, 1985, between New-
                           England Power Company and the New England utilities
                           (VELCO signed as agent for Citizens Utilities
                           Company), as amended by Amendment Nos. 1-5.

                  5.       Phase II Boston Edison AC Facilities Support
                           Agreement, dated as of June 1, 1985, between New
                           England Power Company and the New England
<PAGE>

                           utilities (VELCO signed as agent for Citizens
                           Utilities Company), as amended by Amendment
                           Nos. 1-5.

                  6.       Amended and Restated Agreement With Respect To
                           Use Of Quebec Interconnection, dated September 1,
                           1985, among various New England electric utilities.

                  7.       Agreement Amending NEPOOL Agreement, dated
                           September 1, 1985, among NEPOOL members.

                  8.       Equity Funding Agreement for New England
                           Hydro-Transmission Corporation, dated June 1, 1985,
                           among various New England utilities (VELCO signed on
                           behalf of Citizens Utilities Company), as amended.
                           (See Schedule 5.5, item I.10, re: restriction on
                           transfer of common stock.)

                  9.       Equity Funding Agreement for New England
                           Hydro-Transmission Electric Company, Inc., dated
                           June 1, 1985, among various New England utilities
                           (VELCO signed as agent for Citizens Utilities
                           Company), as amended. (See Schedule 5.5, Item I.11,
                           re: restriction on transfer of common stock.)

         O.       Phase U Credit Agreements:

                  1.       Credit Agreement, dated February 9, 1989, among
                           New England Hydro Finance Company, Inc., New England
                           Hydro-Transmission Electric Company, Inc. and New
                           England Hydro-Transmission Corporation, the Banks
                           named therein, and the National Westminister Bank,
                           PLC, as agent for such Banks.

                  2.       Letter of Assurances, Consents and Agreements
                           by Citizens Utilities Company to Westminister
                           National Bank PLC, dated February 7, 1989, re:
                           payment obligations under the Facility Support
                           Agreements and Equity Funding Agreements.

         P.       Vermont Phase II Participation Agreements:

                  1.       Preliminary Vermont Support Agreement re: Quebec
                           Interconnection - Phase II, dated September 1, 1984,
                           between VELCO and various Vermont utilities.

                  2.       Vermont Support Agency Agreement re: Quebec
                           Interconnection - Phase II, dated June 1, 1985,
                           between VELCO and various utilities, as amended.

                  3.       Vermont Equity Funding and Credit Enhancement Agency
                           Agreement for New England Hydro-Transmission Electric
                           Company, Inc. and New

<PAGE>

                           England Hydro Transmission Corporation, dated June 1,
                           1985, between VELCO and various Vermont utilities, as
                           amended.

         Q.       Phase II Agreement between NEPOOL and Hydro-Quebec:

                  1.       Firm Energy Contract, dated October 4, 1984, between
                           Hydro-Quebec and NEPOOL Phase II Participants.

         R.       Vermont DMNRC Agreements:

                  1.       Phase II Vermont DMNRC Joint-Ownership Agreement,
                           dated January 1, 1988, between Citizens Utilities
                           Company and Green Mountain Power Corporation. (See
                           Schedule 5.5, Item 1.3.)

                  2.       Phase II Vermont DMNRC Support Agreement, dated
                           January 1, 1988, among New England Hydro-Transmission
                           Corporation and Citizens Utilities Company and Green
                           Mountain Power Corporation.

                  3.       Phase II Vermont DMNRC Operating and Management
                           Agreement, dated January 1, 1988, among Vermont
                           Electric Power Company, Inc. and Citizens Utilities
                           Company and Green Mountain Power Corporation.

                  4.       Phase II Vermont DMNRC Construction Agreement,
                           dated January 1, 1988, among Vermont Electric Power
                           Company, Inc. and Citizens Utilities Company and
                           Green Mountain Power Corporation.

                  5.       License Agreement, dated January 1, 1988, among
                           Citizens Utilities Company and Green Mountain Power
                           Corporation (collectively "Licensee") and Vermont
                           Electric Transmission Company, Inc., re: operation
                           and maintenance of DMNRC.

                  6.       Prudential Agreement, dated January 1, 1988, among
                           Citizens Utilities Company, Green Mountain Power
                           Corporation, Vermont Electric Transmission Company,
                           Inc. and the Prudential Insurance Company of America,
                           regarding the Mortgage securing notices sold to
                           finance the Vermont portion of Phase I and
                           stipulating that the DMNRC does not constitute
                           property subject to the lien of the Mortgage.

         R.       VELCO and Citizens Utilities Company Agreements:

                  1.       1985 Option Agreement, dated December 27, 1985, by
                           and among VELCO, Central Vermont Public Service
                           Corporation, Green Mountain Power Corporation and
<PAGE>

                           Citizens Utilities Company.

                  2.       1985 Four Party Agreement, dated July 1, 1985, by
                           and among VELCO, Central Vermont Public Service
                           Corporation, Green Mountain Power Corporation and
                           Citizens Utilities Company.

                  3.       Substation Participation Agreement, between VELCO
                           and various Vermont utilities.

                  4.       Highgate Operating and Management Agreement, dated
                           August 1, 1984, by and among VELCO and the various
                           Vermont electric utilities.

                  5.       Agreement for Joint Ownership, Construction and
                           Operation of Highgate Transmission Interconnection,
                           dated August 1, 1984, as amended, by and among
                           various electric distribution companies. (See
                           Schedule 5.5, Item 1.5.)

                  6.       Highgate Construction Agreement, dated August 1,
                           1984, as amended, by and among VELCO and various
                           electric distribution companies.

                  7.       Highgate Transmission Agreement, dated August 1,
                           1984, as amended, by and among various electric
                           distribution companIes.

IV.      REAL PROPERTY LEASE AGREEMENTS

         None.

V.       CONSTRUCTION AND OUTSOURCING AGREEMENTS

         A.       Consultant Services Master Agreement, dated April 18, 1999,
                  between Energy Initiatives, Inc. and Citizens Utilities
                  Company.

         B.       Consultant Services Master Agreement, dated March 5, 1996,
                  between Citizens Utilities Company and Power Systems
                  Engineering, Inc.

         C.       Contract to Deliver Residential Energy Services, dated June 4,
                  1998, between Vermont Energy Investment Corporation, Inc. and
                  Citizens Utilities Company.

         D.       Letter Agreement, dated July 23, 1999, between Citizens
                  Utilities Company and Navigant Consulting, Inc./Reed, re:
                  consulting services.

         E.       Letter Agreement, dated July 24, 1998, between Citizens
                  Utilities Company and the State of Vermont Office of Economic
                  Opportunity, re: piggybacking weatherization assistance
                  program activities with the residential
<PAGE>

                  retrofit program.

         F.       Amended and Restated Consultant Agreement, dated September 30,
                  1994, by and among Citizens Utilities Company and Jane Gates
                  Merriam, David H. Gates, George W. Gates, Hugh H. Gates,
                  Richard G. Davis, Marjorie Gates Irish and Carroll G. Hull.

         G.       Letter Agreement, dated September 9, 1994, between FELCO
                  Foundation and Citizens Utilities Company, re: contribution
                  pledge.

VI.      EQUIPMENT LEASES

         None.

VIII.    INTELLECTUAL PROPERTY LICENSES

         A.       H.T.E., Inc. Software License and Services Agreement, dated
                  April 30, 1997, as amended, between Citizens Utilities Company
                  and H.T.E., Inc.

         B.       Software Sublicense Agreement, dated __, 19__, between Vermont
                  Electric Power Company, Inc. and Citizens Utilities Company.

         C.       Windmil and Light Table for Windows Engineering Analysis
                  Software Agreement, dated July 17, 1998, between Citizens
                  Utilities Company and Milsoft Integrated Solutions, Inc.

         D.       Technical Services Agreement, dated April 18, 1994, as
                  amended, between Citizens Utilities Company and Phoenix
                  Engineering, Inc.

IX.      COLLECTIVE BARGAINING AGREEMENTS

         A.       The Collective Bargaining/Union Agreement described in
                  Schedule 5.13 (Employee Matters) is hereby incorporated herein
                  by reference.

X.       OTHER CONTRACTS

         A.       Joint Pole Ownership Agreement, dated January 26, 1995,
                  between Franklin Telephone Company, Inc. and Citizens
                  Utilities Company.

         B.       Joint User Agreement, dated November 15, 1994, as amended,
                  between Citizens Utilities Company and Mountain Cable Company
                  d/b/a Adelphia Cable Communications.

         C.       Joint Ownership Agreement, dated February 1, 1984, between
                  Citizens Utilities Company and New England
<PAGE>

                  Telephone and Telegraph Company.

         D.       Memorandum of Understanding in Docket No. 5980, dated April
                  30, 1999, among Citizens, the Vermont Department of Public
                  Service and other Vermont electric utilities.

         E.       Bilateral Agreement between the Department of Public Service
                  and Citizens Utilities Company in Docket No. 5980, dated May
                  6, 1999.

         F.       Lease, dated September 22, 1986, between Albert A. Floury and
                  Citizens Utilities Company, re: residence adjacent to Clyde
                  River Hydro Electric Project. (Concerns a two acre portion on
                  the parcel listed on Schedule 5.5, Item II.67.)

         G.       Lease, dated February 17, 1956, between Citizens
                  Utilities Company and the Fish and Game Service of the State
                  of Vermont re: Echo and Pensioner hydro facilities. (See
                  Schedule 5.5, Items 1.9 and II.36, 37, 38 and 42.)

XI.      IDRB DOCUMENTS

         None.

<PAGE>

                                                   Cap Rock Electric Cooperative
                                                     Cap Rock Energy Corporation
                                                                Vermont Electric

                         SCHEDULE 5.13 EMPLOYEE MATTERS

I.       EMPLOYEE PLANS                   PROVIDERS OF SERVICE

         Citizens Pension Plan            N/A

         Citizens 401k Savings            Putnam
         Plan

         Citizens Utilities Company       Salomon Smith Barney
         1992 Employee Stock Purchase
         Plan

         Health Care Plan                 North American Benefits (third
                                          party administrator)

         Citizens Utilities Company       North American Benefits (third
         Dental Plan                      party administrator)

         Vision Service Plan              Vision Service Provider

         Long Term Salary Continuance     CIGNA
         Plan

         Travel Accident Insurance        Continental

         Basic Group Life Insurance       CIGNA

         CUC Flexible Spending            North American Benefits
         Accounts                         (third part administrator)

         Citizens Incentive Plan          N/A

         Equity Incentive Plan            N/A

         Citizens Executive Deferred      Putnam
         Savings Plan

         Employee Manuals for Vermont     N/A

         Citizens Retiree Medical Plan    NABN (third party administrator)

II.      COLLECTIVE BARGAINING/UNION AGREEMENTS:

         A.       Labor Agreement, dated December 18, 1996, between
                  International Brotherhood of Electrical Workers Local 300 and
                  Citizens Utilities Company, expiring March 31, 2000.
<PAGE>

III.     EMPLOYMENT/MANAGERIAL/ADVISORY/CONSULTING/CONFIDENTIALITY/ OTHER
         AGREEMENTS:

         None.

<PAGE>

                                                   Cap Rock Electric Cooperative
                                                     Cap Rock Energy Corporation
                                                                Vermont Electric

                                  SCHEDULE 5.14

                              ENVIRONMENTAL MATTERS

I.       NOTICES OF VIOLATIONS.

         None.

II.      PROCEEDINGS.

         None.

III.     NOTICES OF MISSING PERMITS.

         A.       Section 401 Water Quality Certificate from the Vermont Agency
                  of Natural Resources is needed to complete the relicensing of
                  the Clyde River Hydroelectric Project. [Note: Application is
                  pending.]

IV.      REMEDIATION ACTIVITY.

         A.       PINE HILL WAREHOUSE. As a result of an EPA investigation,
                  contamination was detected in several areas. Citizens
                  participated in a voluntary clean up action. Regular
                  monitoring of PCB-bioremediation is continuing by Citizens,
                  which reports to the Vermont Department of Environmental
                  Conservation ("VTDEC"). (See Schedule 5.5, Item II.58)

         B.       GRAND ISLE PROPERTY. Investigations revealed that portions of
                  the property were contaminated with low levels of PCBs. After
                  removal and disposal of soil and debris, VTDEC issued a
                  designation of "Site Management Activity Completed" for that
                  site. (See Schedule 5.5, Item II.14)

         C.       BORDER SUBSTATION. A release of transformer oil containing
                  PCBs occurred. VTDEC determined that the contamination did not
                  pose a threat to human health or the environment. Thus,
                  subject to a restrictive covenant being placed in the deed for
                  the parcel, the site was given a designation of "Site
                  Management Activity Completed." (See Schedule 5.5, Items 1.2
                  and II.11)

         V.       SUPERFUND SITES.

                  None.
<PAGE>

                                                   Cap Rock Electric Cooperative
                                                     Cap Rock Energy Corporation
                                                                Vermont Electric

                                  SCHEDULE 5.15

                             MATERIAL ADVERSE CHANGE

None.

<PAGE>

                                                   Cap Rock Electric Cooperative
                                                     Cap Rock Energy Corporation
                                                                Vermont Electric

                                  SCHEDULE 5.16

                      STATE AND FEDERAL REGULATORY MATTERS

I.       Pending Filings

         A.       VPSB Docket No. 6332, re: tariff filing of Citizens Utilities
                  Company requesting a 10.48% rate increase to take effect
                  January 14, 2000. [Note: A Memorandum of Understanding, dated
                  January 27, 2000, between the Vermont Department of Public
                  Service and Citizens Utilities Company, grants a temporary
                  rate increase pending final determination of permanent rates.
                  (See Schedule 5.8, Item II.3)]

II.      Other Pending Regulatory Proceedings

         A.       VPSB DOCKET NOS. 5841/5859. Citizens placed on probation in
                  Vermont and issued a conditional certificate of public good to
                  operate in Vermont.

         B.       VPSB DOCKET NO. 6290. Investigation into the establishment of
                  guidelines for distributed utility planning by Vermont
                  electric distribution utilities.

         C.       VPSB DOCKET NO. 6270. Investigation into petition of sixteen
                  (16) Vermont electric utilities for alteration, modification
                  and construction of power purchase agreements between
                  qualifying facilities and Vermont Electric Power Producers,
                  Inc., and for amendment of Vermont Public Service Board Rule
                  4.100.

         D.       VPSB DOCKET NO 6181. Investigation into the use of a net
                  metering system for the purchase and sale of electricity from
                  small electrical generating systems to and from electric
                  companies.

         E.       VPSB DOCKET NOS. 6140/6140-A. Investigation into the reform of
                  Vermont's electric power supply.

         F.       VPSB DOCKET NO. 5980. Investigation into the Department of
                  Public Service's proposed Energy Efficiency Plan.

         G.       VPSB DOCKET NO. 5854. Investigation into the restructuring of
                  the electric utility industry in Vermont.

         H.       VPSB DOCKET NO 5496. Investigation into the electric
                  distribution line extension policies for the purpose of

<PAGE>

                  developing Board rules related to line extensions.

         I.       Pending application with the Vermont Agency of Natural
                  Resources for a Section 401 Water Quality Certificate for the
                  Clyde River Hydroelectric Project. (See Schedule 5.14, Item
                  III.A.)

         J.       Application to Amend License for the Clyde River Project, No.
                  2306, filed with FERC on June]6, 1999. (See Schedule 5.3, Rem
                  1.C.1.)

         K.       Application for new License for the Clyde River; Project, No.
                  2306, filed with FERC in December, 1991. (See Schedule 5.3,
                  Item I.C.1.)

         L.       Citizens received a jurisdictional ruling from the District
                  Commission (a local, multi-county, environmental commission)
                  which requires the Company to consider the entire road
                  right-of-way (50 feet) in determining whether proposed line
                  construction is of sufficient magnitude to trigger Act 250
                  jurisdiction.

         M.       The Proceedings that resulted in Orders of the VPSB and FERC
                  listed in Schedule 5.8, Item II are incorporated herein by
                  reference.

<PAGE>

                                                   Cap Rock Electric Cooperative
                                                     Cap Rock Energy Corporation
                                                                Vermont Electric

                                  SCHEDULE 5.19

                               SELLER'S INSURANCE

<PAGE>

<TABLE>
<CAPTION>
Insurance                 Policy No.       Broker        Company         Limits of                     Deductible        Expiration
                                        (Consultant)                     Liability                                          Date
<S>                   <C>              <C>             <C>            <C>                             <C>                 <C>
All Risk              24020010.00      Direct Writer   Arkwright      Property Damage: See Schedule   Various. Refer to   10/01/2001
(including Boiler                                      Mutual Ins.    on Page 1 for Sub-limits        Schedule on Page 1
& machinery,                           (Marsh USA      Co.
EDP & Fine Arts                        Inc.)
Comprehensive         861-86-35        Marsh USA       National Union $10,000.000 except; $100.000    $25.000; None for   09/01/20
Blanket Crime                          Inc.            Fire Ins. Co.  Securities Forgery Credit Card  Credit Card
                                                                      Forgery and $19.000 Loss of     Forgery Money
                                                                      Accounting Records              Orders &
                                                                                                      Counterfeit
                                                                                                      Currency. Loss of
                                                                                                      Accounting
                                                                                                      Records or
                                                                                                      Securities Forgery.
Workers               WC189158667      Marsh USA       CNA            WC: Statutory Benefits          $500,000 per        06/01/2001
Compensation &                         Inc.                           Employers Liability: $500,000   occurrence
Employers                                                             each accident $509,000 each
Liability                                                             employee (Disease); $500.000
                                                                      policy limit (Disease):
                                                                      Unlimited where required by
                                                                      law
General Liabilty      GL 166793803     Marsh USA       CNA            $500.000 each occurrence        N/A: all claims     06/01/2000
                                       Inc.                           combined single limit for bodily reimbursed 100%
                                                                      injury & property damage        by Citizens
Auto Liability        BUA166793817     Marsh USA       CNA            $500.000 each occurrence        N/A: all claims     06/01/2000
                                       Inc.                           combined single limit for bodily reimbursed 100%
                                                                      injury & property damage        by Citizens
                                                                      (including Auto Physical
                                                                      Damage - Comprehensive
                                                                      Coverage only - collision
                                                                      coverage is excluded)

Excess Liability      X0187A1A99       Marsh USA       AEGIS          $35,000,000 in excess of        $500,000 Pollution  06/01/2000
                                                                      Employers Liability, General    Liability.
                                                                      Liability & Auto Liability      $5,000,000 Non-
                                                                      policy deductibles              owned Aviation.
                                                                                                      $250,000 each
<PAGE>
                                                                                                      claimant/$1MM
                                                                                                      any one occ. -
                                                                                                      Employment
                                                                                                      Practices
2nd Layer Excess      878153100        Self-Procured   Lexington      $25,000,000 in excess of        $35,000,000         06/01/2000
Lability                               (Marsh USA      Insurance      $35,000,000 underlying          retention per
(Non-Gas Operations                                    Inc.)          Company                         occurrence
Only)                                                  (Bermuda)
Non-Owned Aircraft    360AC-255186     Marsh USA       USAIG          $5,000.000                      None                06/01/2000
Liability
Directors & Officers  811534-70-C      Marsh USA       Federal        $35,000,000                     $5,000 each Officer 05/01/2000
Liability                                              Insurance                                      & Director:
                                                       Company                                        $ 10,000 aggregate;
                                                                                                      $250,000 Corporate
                                                                                                      reimbursement
Fiduciary/Pension     811534-70-C      Marsh USA       Federal        $15.000,000                     None                05/01/2000
Trust Liability                                        Insurance
                                                       Company
Special Coverage      GA06096650       Marsh USA       Gulf           $20,000,000                     None                01/19/01
                                                       Insurance
                                                       Company
Other Broker Policy
Group Travel          5R83080860       AON             Continental    5x salary for all Officers &    None                02/01/00
                                       Consulting,     Casualty- Co.  Employee Directors, Non
                                       Inc.                           Employee Directors & all
                                       (Not Marsh)                    other Employees subject to a
                                                                      $150,000 minimum and a
                                                                      $1,500,000 maximum.
</TABLE>
<PAGE>

                                                   Cap Rock Electric Cooperative
                                                     Cap Rock Energy Corporation
                                                                Vermont Electric

                                  SCHEDULE 6.1

                    CONDUCT OF BUSINESS PRIOR TO CLOSING DATE

1.       Citizens may convey to the North Country Career Center (with the Town
         of Derby acting as interim agent) approximately 62 acres of real
         property consisting of approximately 40 of the 67 acres in Derby,
         Vermont (Book 54, Page 456; see Schedule 5.5, Item II.58),
         approximately 2 acres in Derby, Vermont (Book 41, Page 590; see
         Schedule 5.5, Items II.45 and 46), and 20 acres located West of I-91
         and South and East of Clyde Pond (see Schedule 5.5, Item II, Note No.
         2)

2.       Citizens may sell its Generation Assets located in the State of
         Vermont.

3.       Citizens may sell a portion of its owned Real Property' in Derby,
         Vermont (identified on Schedule 5.5, Items II.44, 45 and 46) to the
         State of Vermont for the relocation of the Route 105 Bridge.

<PAGE>

                                                   Cap Rock Electric Cooperative
                                                     Cap Rock Energy Corporation
                                                                Vermont Electric

                                SCHEDULE 6.2.(c)

                   CITIZENS GUARANTEES AND SURETY INSTRUMENTS

None.

<PAGE>

                                                   Cap Rock Electric Cooperative
                                                     Cap Rock Energy Corporation
                                                                Vermont Electric

                                  SCHEDULE 10.1

                                ACTIVE EMPLOYEES
<TABLE>
<CAPTION>
       Description                          Annual Salary
<S>                                         <C>
Mgr, VT Electric                              97,850.00
Supt, Production                              82,400.00
Supt, T&D Ops                                 83,162.25
Office Manager & Chief Acct                   60,000.00
Coord, Compliance                             61,750.00
Coord, Compliance                             48,000.00
Residential Services Admin                    44,032.50
E/S Admin/Key Accts Rep                       45,421.00
Coord, Special Project                        41,869.50
Mgr, Customer Service                         43,878.00
Admin Assistant & Asst Supt                   43,157.00
Coord, Special Project                        41.419.00
Analyst, Operations                           53,000.00
Clerical                                       7,696.00
Clerical                                      27,788.80
Sys Dispatcher 1St Class                      41,704.00
Sys Dispatcher 1St Class                      41,704.00
Sys Dispatcher 1St Class                      41,704.00
Sys Dispatcher 1St Class                      41,704.00
Sys Dispatcher 1St Class                      41,704.00
Sys Dispatcher 1St Class                      41,704.00
Sr Clerk. Office                              28,246.40
Sr Clerk, Office                              28,246.40
Rep, Cust Svc                                 27,331.20
Rep, Cust Svc                                 27,331.20
Rep, Cust Svc                                 25,750.40
Meter Reader/Install                          31,491.20
Meter Reader/Install                          31,491.20
Meter Reader/Install                          31,491.20
Lineman 1st Class                             41,932.80
Lineman 1st Class                             41,932.80
Lineman 1st Class                             41,932.80
District Rep                                  44,928.00
Foreman                                       43,534.40
District Pep                                  44,928.00
Lineman 1st Class                             41,932.80
Lineman 1st Class                             41,932.80
Lineman 1st Class                             41,932.80
Lineman 1st Class                             41,932.80
District Rep                                  44,928.00
Lineman 1st Class                             41,932.80
Foreman                                       43,534.40
Lineman 1st Class                             41,932.80
Linenan 3rd Class                             38,251.20
<PAGE>

Lineman 1st Class                             41,932.80
District Rep                                  44,928.00
Mechanic                                      31,158.40
Foreman, Electrical Maintenance               44,262.40
Representative,DSM                            23,750.40
Pt - Assist Secretary                         18,540.00
</TABLE>
<PAGE>

                                                   Cap Rock Electric Cooperative
                                                     Cap Rock Energy Corporation
                                                                Vermont Electric

                                  SCHEDULE 10.7

                     RETIREES AND "GRANDFATHERED EMPLOYEES"

I        Retirees

<TABLE>
<CAPTION>
               FIRST            BIRTH      HIRE      RETIRE    SPOUSE     MEDICAL     DENTAL
LAST NAME      NAME     SEX     DATE       DATE       DATE     COVERED   COVERAGE    COVERAGE     LIFE   DEP LIFE
---------      ----     ---     ----       ----       ----     -------   --------    --------     ----   --------
<S>         <C>         <C>   <C>        <C>       <C>          <C>       <C>        <C>        <C>      <C>
SINON       PAULINE J    F    6/5/33     11/9/70   7/6/93          Y        Y           N        10,000      0
BEAN        NILES A      M    5/31/23    4/8/58    12/31/95        Y        Y           N        10,000      0
HAMMMOND    LUCILLE B    F    9/10/32    8/14/78   12/31/94        N        Y           N        10,000      0
KEEFE       DAVID J      M    3/30/23    3/24/47   10/30/93        N        Y           N        10,000      0
</TABLE>

II.                 Grandfathered Employees

<TABLE>
<CAPTION>
                    Name                                      Hire Date       Birthdate
                    ----                                      ---------       ---------
                    <S>                                       <C>             <C>
                    Clapper,Carolyn J.                        03/07/77        06/07/40
</TABLE>

III.                Eligible Union Employees

[Note: Retiree Medical may be eliminated prior to Closing. The union employees
that have asterisks following their names below will become "grandfathered
employees" upon the elimination of such benefits.]

<TABLE>
<CAPTION>
                    Name                                      Hire Date       Birthdate
                    ----                                      ---------       ---------
                    <S>                                       <C>             <C>
                    Allard,Michael R.                         05/03/1976      12/21/1953
                    Bacon,Dale B.                             12/16/1985      05/13/1952
                    Bernier,Susan L.                          04/21/1994      03/31/1969
                    Blow,Sherman L.*                          10/13/1970      01/28/1940
                    Carr,Michelle A.                          08/19/1985      03/25/1968
                    Chapdelaine,Lise A.                       10/21/1992      04/01/1960
<PAGE>

                    Chates,Eric D.                            07/06/1992      02/06/1959
                    Coulter,Steven D.                         08/19/1985      07/23/1957
                    Daggett,David F                           11/02/1987      04/26/1948
                    Dalpe,Jacques V.*                         10/02/1965      04/03/1939
                    Dean,Louis R.*                            02/16/1970      06/13/1941
                    Dion,Dennis P.*                           12/09/1983      12/19/1944
                    Edgerley,Steven H.*                       04/21/1969      09/03/1944
                    Fortin,Yvon D.                            02/05/1990      04/05/1952
                    Gates,Donald Noble                        08/30/1993      05/29/1965
                    Gates,Gerald Harrison                     08/30/1993      05/10/1961
                    Hall,Larry R.                             03/30/1998      09/17/1951
                    Harlamert,Debra L.                        09/22/1997      01/01/1955
                    Haselton,Douglass K.                      12/01/1991      10/12/1953
                    Hinton,Mark S.                            11/19/1990      09/11/1960
                    Juaire,Shawn M.                           04/01/1991      12/08/1965
                    Kilby,Deborah J                           08/02/1993      08/08/1946
                    Lacoss,Kevin W                            09/21/1987      07/25/1958
                    Lamoureux Jr,Marcel                       01/15/1993      09/09/1966
                    Lawson,Chris Duane                        09/26/1994      01/14/1959
                    Maxwell,Marlene A.                        06/10/1991      04/09/1968
                    Maynard,Burton William                    08/30/1993      03/14/1964
                    McFadden,David W.                         10/31/1966      07/16/1945
                    McMullen,Danny B.                         08/15/1971      10/07/1955
                    Mercy,Evan J.                             10/27/1986      12/24/1959
                    Richardson,James L.                       11/03/1980      06/11/1950
                    Sullivan,Michael E                        03/01/1989      05/30/1967
                    Viens,Margaret                            08/13/1993      12/05/1964
                    Wheeler,Janet Marie                       04/01/1996      10/12/1951
                    Young,Gary W.                             02/17/1987      09/13/1960
</TABLE><PAGE>

                                                                      E99-11-024
                                                                          CON

                              POWER SALES AGREEMENT

                                     between

                          ELECTRIC CLEARINGHOUSE, INC.

                                       and

                       CAP ROCK ELECTRIC COOPERATIVE, INC.

Sales by Electric Clearinghouse Inc. will be made
pursuant to Electric Clearinghouse, Inc.'s FERC Rate
Schedule No. 1 (Docket No. ER94-968)

<PAGE>

                              TABLE OF CONTENTS

<TABLE>
<S>                                                                   <C>
ARTICLE 1
    DEFINITIONS                                                          1

ARTICLE 2
    TRANSACTIONS AND COMMITMENTS OF THE PARTIES                          3

ARTICLE 3
    QUANTITY AND INTERRUPTIONS OF FIRM TRANSACTIONS                      4

ARTICLE 4
    RELIABILITY GUIDELINES                                               5

ARTICLE 5
    PRICE                                                                5

ARTICLE 6
    TERM AND DEFAULT                                                     5

ARTICLE 7
    BILLING AND PAYMENT                                                  8

ARTICLE 8
    DELIVERY POINT, TITLE TRANSFER AND LIABILITY                         9

ARTICLE 9
    ASSIGNMENT AND SUCCESSION                                           10

ARTICLE 10
    FORCE MAJEURE                                                       11

ARTICLE 11
    TAXES                                                               11

ARTICLE 12
    MISCELLANEOUS                                                       12

EXHIBIT "A"
    FORM OF CONFIRMATION LETTER
</TABLE>

<PAGE>

                              POWER SALES AGREEMENT

         THIS POWER SALES AGREEMENT (the "Agreement"), made and entered into
this 1st day of May, 1999 by and between Electric Clearinghouse, Inc., a
Texas corporation, hereinafter referred to as Cap Rock Electric Cooperative,
Inc., (Counterparty), a Texas corporation, hereinafter referred to as
"Counterparty" or "Buyer" (individually, the "Party" and collectively, the
"Parties").

                                   WITNESSETH:

         WHEREAS, ECI and Counterparty are not end users of Power and the
Power purchased hereunder will not be used for Counterparty's consumption; and

         WHEREAS, ECI and Counterparty may from time to time enter into Power
purchase and sale Transactions pursuant to which ECI delivers and sells Power
and Counterparty receives and purchases Power at one or more mutually
agreeable Delivery Points; and

         WHEREAS, the Parties desire to set forth certain terms and
conditions applicable to these transactions;

         NOW, THEREFORE, in consideration of the mutual agreements, covenants
and conditions herein contained, ECI and Counterparty hereby agree as follows:

                                   ARTICLE 1.
                                   DEFINITIONS

          In addition to terms defined elsewhere in this Agreement, the
following definitions shall apply hereunder:

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

         "BUSINESS DAY" means any day on which Federal Reserve member banks
in New York City are open for business.

         "BUYER" means the Party to a Transaction hereunder who is obligated
to purchase Power during the Period of Delivery specified for that
Transaction.

         "CONFIRMATION LETTER" means a written notice setting forth the
specific terms of a Transaction substantially in the form set forth on
Exhibit "A".

         "CONTRACT PRICE" means the agreed price for the purchase and sale of
Power in a Transaction.

<PAGE>

         "CONTRACT QUANTITY" means that quantity of Power which Seller agrees
to sell to Buyer, and which Buyer agrees to purchase from Seller, in a
Transaction.

         "DELIVERY POINT" means the point(s) of delivery agreed to in the
Transaction.

         "INTEREST RATE" means the lesser of (i) Prime Rate plus two percent
and (ii) the maximum lawful rate permitted by applicable law.

         "NATURE OF TRANSACTION" means whether the Transaction is nonfirm, as
set forth in Section 2.2 of this Agreement, or firm, as set forth in Section
2.3 of this Agreement.

         "NEW TAXES" means (i) any Taxes enacted and effective after the date
the New Tax Affected Transaction ("New Tax Affected Transaction" as defined
in Section 11.2 of this Agreement) was entered into, including, without
limitation, that portion of any Taxes or New Taxes that results in an
increase in liability to either Party, or (ii) any law, order, rule or
regulation, or interpretation thereof, enacted and effective after the date
the New Tax Affected Transaction was entered into resulting in such an
increase.

         "PENALTIES" means any fees, liabilities, assessments or similar
charges assessed by a Transmission Provider as a result of a Party's failure
to comply with its obligations hereunder.

         "PERIOD OF DELIVERY" means the period of time measured from the date
deliveries are to commence under a Transaction through the date deliveries
are to terminate under a Transaction, which period shall not exceed twelve
(12) months.

         "POWER" means electric capacity and/or energy.

         "PRIME RATE" means for any date, the per annum rate of interest
announced from time to time by Citibank, N.A., as its "prime" rate for
commercial loans, effective for such date as established from time to time by
such bank.

         "REGULATORY APPROVALS" means, for any Transaction. all applicable
state and federal regulatory authorizations, consents. or approvals required
for the Transaction to occur.

         "SCHEDULE" OR "SCHEDULING" means communicating with and confirming
with a Transmitting Utility that a particular amount of Power is to be
delivered or received and providing all such information and satisfying all
such requirements as may be necessary to cause such Transmitting Utility to
recognize and confirm the delivery or receipt of the Power

         "SELLER" means the Party to a Transaction hereunder who is
obligated to sell Power during the Period of Delivery specified for that
Transaction.

         "SYSTEM RESOURCES" means the electrical systems on which, or the
third parties with which, Buyer and Seller have arranged, respectively, to
make on behalf of Seller or to take on behalf of Buyer delivery of Power
under this Agreement.

         "TAXES" means all ad valorem, property, occupation, utility, gross
receipts, sales, use, excise and other taxes, governmental charges, emission
allowance costs, licenses, permits and assessments, other than taxes based on
net income or net worth.

                                       2
<PAGE>

         "TRANSACTION" means a particular, specifically agreed to purchase or
sale of Power to be performed under this, as evidenced by the agreement of
the Parties documented in accordance with Section 2.1 of this Agreement.

         "TRANSMITTING UTILITY" means the utility or utilities transmitting
Power (not Buyer or Seller) to or from the Delivery Point(s) in an individual
Transaction hereunder.

                                   ARTICLE 2.
                   TRANSACTIONS AND COMMITMENTS OF THE PARTIES

         2.1      FORM OF CONTRACT. A Transaction shall be entered upon
agreement of the Parties in writing, including an electronic means of
communication, or orally. The specific terms of individual Transactions for
the sale and delivery and purchase and receipt of Power hereunder shall be
established by the Parties at the time the Transaction is agreed to and shall
be confirmed by the Parties in the manner set forth in this Section 2.l. The
specific terms to be established by the Parties shall include at a minimum
(i) the Period of Delivery, (ii) the Contract Price, (iii) the Delivery
Point(s), (iv) the Contract Quantity and (v) the Nature of Transaction. Each
Transaction, and the Confirmation Letter, shall constitute an integral part
of this Agreement and shall be read and construed as one with this Agreement.
Any conflict not reasonably capable of reconciliation between this Agreement
and the Confirmation Letter shall be resolved in favor of the Confirmation
Letter. This Agreement does not obligate either Party to engage in any
specific Transaction.

         2.2      NONFIRM TRANSACTIONS. For purposes of this Agreement, a
Transaction shall be deemed nonfirm to the extent either Party may be excused
from Scheduling Power for any reason specified in the documentation of the
Transaction (other than an event of force majeure as defined in Article 10).
In the event and to the extent the Transaction is a nonfirm Transaction,
neither Party shall be liable in damages or otherwise to the other for an
interruption of the Scheduling of Power due to one or more event(s) or
cause(s) specified in the documentation of the Transaction. except and to the
extent a Party fails to give to the other Party timely notice of
interruption. Either Party may, at its sole discretion and without liability
(except for failure to provide notice of interruption within the time
specified for such notice in the documentation of the Transaction).
interrupt. in whole or in part, the Scheduling of Power at any time for any
reason, provided that notice of interruption shall be given to the other
Party, and that no such interruption shall be retroactive to any time prior
to giving of notice of interruption. In the event the interrupting Party
fails to give timely notice of interruption. the interrupting Party" shall be
liable only for direct actual damages (as set forth in Section 3.2 below)
resulting from the failure to timely notify and shall only be liable in the
event the non interrupting Party has exercised all reasonable efforts to
Minimize and avoid such damages. The Parties hereby agree that such actual
direct damages shall he computed in the same manner as damages for the
interruption of firm transactions as set forth in Article 3 hereof with
respect to volumes of Power not scheduled for delivery or receipt prior to
notice of interruption and that such damages shall be the sole and exclusive
remedy for such event. Both Parties hereby stipulate that such liquidated
damages are reasonable in light of the anticipated harm and the difficulty of
estimation or calculation of actual damages and each Party hereby waives the
right to contest such damages as an unreasonable penalty.

         2.3      FIRM TRANSACTIONS. For purposes of this Agreement, a
Transaction shall be deemed firm to the extent, as specified in the terms of
a Confirmation Letter, a Party may be excused from either Scheduling and
delivering, if the Party is the Seller, or Scheduling and if the Party is the
Buyer, the Contract Quantity only for reasons of force majeure, as defined in
Section 10.1 of this

                                       3
<PAGE>

Agreement, or pursuant to the provisions of the last sentence of this
Section. If a Transaction is a firm Transaction and a Party interrupts either
the Scheduling and delivering, if the Party is the Seller, or Scheduling and
receiving, if the Party is the Buyer, of Power for reasons other than those
authorized in the prior sentence, then the interrupting Party shall have the
obligations set forth in Section 3.2 of this Agreement. In addition, the
Parties may agree in specific Transactions to specific circumstances under
which either Party may interrupt without liability.

                                   ARTICLE 3.
                 QUANTITY AND INTERRUPTIONS OF FIRM TRANSACTIONS

         3.1      QUANTITY. The quantity of Power to be Scheduled for
delivery and receipt, subject to the other provisions of the Agreement and in
each Transaction hereunder, shall be the Contract Quantity. The Seller and
the Buyer shall be responsible for any transmission losses and loss charges
relating to the transmission of Power, in the case of the Seller, to the
Delivery Point, and in the case of the Buyer, from the Delivery Point.

         3.2      INTERRUPTIONS OF FIRM TRANSACTIONS. If the Transaction is a
firm Transaction, then with respect to the unauthorized failure to Schedule
in whole or in part deliveries or receipts in accordance with this Agreement:

         (a)      As an alternative to the liquidated damages provision of
         Section 3.2(b) below, if the Parties both agree, the nonperforming
         Party may Schedule deliveries or receipts, as the case may be, pursuant
         to such terms as the Parties agree in order to discharge some or all of
         the obligation to pay liquidated damages. In the absence of such
         agreement, the liquidated damages provisions of Section 3.2(b) below
         shall apply.

         (b)      If Seller fails to Schedule for delivery the Contract Quantity
         then Seller shall pay Buyer an amount for each unit of such deficiency
         equal to the positive difference between (i) the price at which Buyer
         is, or would be, able to obtain comparable supplies of Power at a
         commercially reasonable price and (ii) the applicable Contract Price
         (as adjusted to reflect reasonable differences in transmission costs,
         if any). If Buyer fails to Schedule for receipt the Contract Quantity,
         Buyer shall pay Seller on the date payment would otherwise be due in
         accordance with this Agreement an amount for each unit of such
         deficiency equal to the positive difference between (i) the applicable
         Contract Price (as adjusted to reflect reasonable differences in
         transmission costs. if any) and (ii) the price at which Seller is or
         would be able to sell comparable supplies of Power at a commercially
         reasonable price. The Parties agree further that such payments will
         become immediately due and payable hereunder and that the non-
         performing Party will pay the aggrieved Party and amounts due pursuant
         to this Section 3.2(b) immediately upon demand within two (2) Business
         Days of receipt by the non-performing Party of a demand for payment
         setting forth the basis and calculation of the amount demanded, such
         demand to be sent in accordance with Section 12.3.

         (c)      Both Parties hereby stipulate that the liquidated damages set
         forth in Section 3.2(b) above are reasonable in light of the
         anticipated harm and the difficulty of estimation or calculation of
         actual damages and each Party hereby waives the right to contest such
         damages as unfair, unreasonable, inadequate or void as a penalty.

                                       4
<PAGE>

         (d)      In the event either Buyer or Seller fails to pay to the other
         Party any amounts in accordance with Section 3.2(b) above when due, the
         aggrieved Party shall have the right to suspend performance under the
         Transaction for which such amounts are due until such amounts plus
         interest, at the Interest Rate, have been paid, and/or exercise any
         remedy available at law or in equity to enforce payment of such amount
         plus interest at the Interest Rate.

         (e)      Unless otherwise specifically agreed in writing, the remedy
         set forth in this Section 3.2 shall be the sole and exclusive remedy of
         the aggrieved Party for the failure of the other Party to sell or
         purchase the Contract Quantity and all other damages and remedies are
         hereby waived, provided that this provision in no way limits the
         Parties' indemnification obligations as set forth in other provisions
         of this Agreement.

                                   ARTICLE 4.
                            RELIABILITY GUIDELINES

         4.1      RELIABILITY GUIDELINES. Each Party agrees to specifically
adhere to the applicable operating policies, criteria and/or guidelines of
the North American Electric Reliability Council ("NERC") and any regional or
subregional requirement.

                                   ARTICLE 5.
                                     PRICE

         5.1      PRICE. Buyer agrees to pay Seller the Contract Price for
Power Scheduled. The Contract Price will be the total consideration paid by
Buyer to Seller for Power Scheduled hereunder subject to Article 11.

                                    ARTICLE 6.
                                TERM AND DEFAULT

         6.1      TERM. Subject to the other provisions of this Agreement.
the term of this Agreement shall commence on the date first written above and
shall remain in effect until terminated by either Party upon 30 days prior
written notice; provided, however. no such termination notice shall be
effective as to any ongoing Transaction hereunder until both Parties have
fulfilled all their obligations hereunder with respect to such Transaction.

         6.2      EVENTS OF DEFAULT. A Party shall be deemed in default
under this Agreement upon the occurrence of any one or more of the following
events (an "Event of Default"):

         (a)      FAILURE TO PAY. Unexcused failure by a Party to make timely
         payment of any amounts. not in dispute due to the other Party under
         this Agreement, within three (3) Business Days of the non-paying
         Party's receipt of a written demand for such payment;

         (b)      BREACH OF AGREEMENT. Unexcused failure by a Party to perform
         fully any other material provision of this Agreement within five (5)
         Business Days of the non-performing Party's receipt of a written
         demand for such performance (where timely payment of liquidated
         damages constitutes performance);

         (c)      RECEIVERSHIP. Appointment of a receiver or liquidator or
         trustee of such Party or of any of the property of such Party by order
         of a court of competent jurisdiction;

                                       5
<PAGE>

         (d)      BANKRUPTCY. Filing by such a Party of a voluntary petition in
         bankruptcy under any provision of any Federal or State bankruptcy law
         or consent to the filing of any bankruptcy or reorganization petition
         against it under any similar law; filing of a petition or answer or
         consent seeking relief or assisting in seeking relief in a proceeding
         under any of the provisions of the Federal Bankruptcy Code, as it now
         exists or as it may be amended or pursuant to any other similar State
         statute applicable to such Party, as it is or may be in effect or an
         answer admitting the material allegations of a petition filed against
         it in such a proceeding; or if such Party makes a general assignment
         for the benefit of its creditors, admits in writing its inability to
         pay its debts generally as they become due; or if such Party consents
         to the appointment of a receiver(s) or trustee(s) or liquidator(s) of
         it or of all or part of its property; and

         (e)      ASSURANCE. The failure to provide adequate assurance of its
         ability to perform all of its outstanding obligations to the
         Non-Defaulting Party under this Agreement, any Transaction or otherwise
         within a period not to exceed 48 hours (but at least one Business Day)
         of a demand therefore when the Non-Defaulting Party has reasonable
         grounds for insecurity.

         6.3      RIGHTS OF NON-DEFAULTING PARTY. When an Event of Default
exists, the Party not in default (the "Non-Defaulting Party") shall have the
right:

         (a)      To terminate this Agreement in accordance with the provisions
                  in Section 6.4 and/or:

         (b)      To pursue any other remedy provided under this and/or;

         (c)      To suspend Scheduling, receipt and/or delivery of Power
                  hereunder.

         6.4      TERMINATION RIGHTS AND RIGHT TO CURE. If a Party is in
default hereunder (the "Defaulting Party"), then the Non-Defaulting Party
may, at its option, notify in writing the Defaulting Party of the effective
date of termination of the Agreement if the default is not cured as
hereinafter provided. If the Defaulting Party does not remedy the default
within the cure period provided in Section 6.2, the Non-Defaulting Party
shall have the right to liquidate and terminate all Transactions then
outstanding between the parties (except to the extent that in the good faith
opinion of the Non-Defaulting Party certain of such Transactions may not be
closed out and liquidated under applicable law) at any time and from time to
time. and shall calculate, in a commercially reasonable manner, a Settlement
Amount for each such Transaction that is a Firm Transaction as of the time of
its termination or as soon thereafter as is reasonably practicable and shall
net such Settlement Amounts in the manner provided for in Section 6.4(b).

         (a)      "Settlement Amount" shall mean with respect to a Firm
         Transaction and the NonDefaulting Party. the losses and costs (or
         gains). expressed in U.S. Dollars. that such party incurs as a result
         of the liquidation, including, but not limited to, losses and costs (or
         gains) based upon the then current replacement value of such Firm
         Transaction together with, at the Non-Defaulting Party's option, but
         without duplication, all losses and costs which such party incurs as a
         result of maintaining, terminating, obtaining, or re-establishing any
         hedge or related trading positions. The Settlement Amount shall be due
         to or from the Non-Defaulting Party as appropriate. In calculating a
         Settlement Amount, the Non-Defaulting Party shall discount to present
         value (in a commercially reasonable manner based on the Prime Rate for
         the applicable period) any amount that would otherwise have been due at
         a later date and shall add interest at the Prime Rate to and amount due
         prior to the date of the calculation.

                                       6
<PAGE>

         (b)      The Non-Defaulting Party shall set off (i) all such Settlement
         Amounts that are due to the Defaulting Party, plus any Margin then
         available to the Non-Defaulting Party, plus- (at the Non-Defaulting
         Party's election) any or all other amounts due to the Defaulting Party
         under the Agreement against (ii) all such Settlement Amounts that are
         due to the Non-Defaulting Party, plus any Margin then available to the
         Defaulting Party. plus (at the Non-Defaulting Party's election) any or
         all other amounts due to Non-Defaulting Party under the Agreement, so
         that all such amounts shall be netted to a single liquidated amount
         (the "Termination Payment") payable by one Party to the other. "Margin"
         shall m&an cash, securities or other property held by or due from one
         Party to guarantee or secure obligations of the other Party under the
         Agreement.

         (c)      Notice that a liquidation pursuant to the Section 6.4 has
         occurred shall be given by the Non-Defaulting Party to the Defaulting
         Party before the close of business on the Business Day following such
         liquidation, provided that failure to give such notice shall not affect
         the validity or enforceability of the liquidation or give rise to any
         claim by the Defaulting Party against the Non-Defaulting Party. The
         notice shall specify the amount of the Termination Payment and whether
         it is owed by or to the Defaulting Party. The Termination Payment shall
         be made by the Party that owes it on the second Business Day after such
         notice is given.

         (d)      Notwithstanding any contrary provision of this Section 6.4,
         where an Event of Default specified in Section 6.2(d) is governed by a
         system of laws that does not permit the liquidation of Transactions to
         take place upon or after the occurrence of the relevant Event of
         Default in accordance with the other terms of this Section 6.4. the
         liquidation of all outstanding Transactions shall automatically take
         place upon the occurrence of such an Event of Default as of a time
         immediately preceding the occurrence of such Event of Default and, upon
         the occurrence of any such automatic liquidation, the Defaulting Party
         shall indemnify the Non-Defaulting Party on demand against all expense,
         loss, damage or liability that the Non-Defaulting Party may incur in
         respect of the Agreement as a consequence of movements in Power prices
         or other relevant prices or rates between the date of such automatic
         liquidation and the Business Day on which the Non-Defaulting Party
         first becomes aware that such automatic liquidation has occurred.

         (e)      If the Defaulting Party disputes the Non-Defaulting Party"s
         calculation of the Termination Payment. in whole or in part, the
         Defaulting Party shall, within two (2) Business Days of receipt of
         Non-Defaulting Party's calculation of the Termination Payment, provide
         to the Non-Defaulting Party a detailed written explanation of the basis
         for such dispute and, if the Termination Payment is due from the
         Defaulting Party", shall promptly pay to the Non-Defaulting Party such
         portion thereof as is conceded to be correct. The Parties shall make
         every attempt to resolve such dispute amicably.

         6.5      SETOFFS. Without limiting its rights under this Article 6
or otherwise after an Event of Default, the Non-Defaulting Party may from
time to time set off any or all amounts the Defaulting Party owes to it
against any or all amounts it owes the Defaulting Party (whether under the
Agreement or otherwise and whether or not then due), provided that any amount
not then due is included in such setoff shall be discounted to present value
(in the manner specified in Section 6.4) as at the time of setoff (to take
account of the period between the date of setoff and the date on which such
amount would have otherwise been due).

         6.6      SUSPENSION OF PERFORMANCE. ln addition to the Seller's
remedies under this Article 6 hereof, if either Party is in default under
Article 7 and such failure is not remedied within five (5) Business Days of
the Defaulting Party receiving written notice of such failure, the other
Party shall have

                                       7
<PAGE>

the right to suspend performance under any or all Transactions until such
amount, including interest at the Interest Rate, is paid; provided, if the
Defaulting Party, in good faith, disputes the amount of any such billing or
part thereof and pays to the other Party the undisputed amounts, the other
Party shall continue to perform hereunder.

         6.7      OTHER TERMINATING EVENTS. In the event Buyer is regulated
by a federal, state or local regulatory body, and such body shall disallow
all or any portion of any costs incurred or yet to be incurred by Buyer under
any provision of this Agreement or in respect of any Transaction, such action
shall not operate to- excuse Buyer from performance of any obligation
hereunder nor shall such action give rise to any right of Buyer to any refund
or retroactive adjustment of the Price of any Transaction. Notwithstanding
the foregoing, if performance by either Party (an "Affected Party") under
this Agreement or in respect of any Transaction becomes subject to regulation
of any kind whatsoever under any law, rule, regulation, order or the like,
including any change by the Federal Energy Regulatory Commission regarding a
Party's authority to sell wholesale power at market-based rates, to a greater
or different extent than that existing on the Effective Date and such
regulation either (i) renders this Agreement illegal or unenforceable. or
(ii) would render performance by the Affected Party of some or all
outstanding Transactions (the "Affected Transactions") illegal, unenforceable
or commercially impracticable, or (iii) materially adversely affects the
business of such Affected Party with respect to its financial position or
otherwise, then such Party (or either Party if both Parties are Affected
Parties) may declare a termination of the Affected Transactions in the manner
contemplated by Section 6.4 above, which shall be referred to hereinafter as
declaring an Early Termination Date. In the event of such a declaration. the
Affected Party shall provide the other Party written notice. which notice
shall specify the basis for declaring such Early Termination Date and (in the
circumstances described in clause (ii) above) identify which Transactions are
Affected Transactions, If an Early Termination Date is declared under
circumstances described in clause (i) above, both Parties shall calculate
their respective Gains, Losses or Costs in respect of terminated Transactions
as provided in Section 6.4, and endeavor in good faith to agree upon the
Termination Payment payable by either Party, and if an Early-Termination Date
is declared under circumstances described in clause (ii) or (iii) above, only
the Party that is not the Affected Party" shall calculate its Gains, Losses
and Costs in respect of all terminated Transactions and notify the Affected
Party of the Termination Payment, as provided in Section 6.4. Only the
Affected Transactions shall be terminated on the Early Termination Date under
the circumstances described in clause (ii) above. All other Transactions
shall remain unaffected as if no Early Termination Date had been declared.

                                   ARTICLE 7.
                              BILLING AND PAYMENT

         7.1      STATEMENTS. For each Transaction. Seller shall render to
Buyer (by facsimile to the facsimile number specified for invoices in Section
12.3 of this Agreement) for each calendar month during which purchases/sales
are made, a statement setting forth the total quantity of Power Buyer was
obligated to purchase under this Agreement at the Delivery Point(s) during
the preceding month and the amounts due to Seller from Buyer therefor.

         7.2      PAYMENTS. On or before ten (10) days after receipt of
Seller's statement or if such day is not a Business Day, the immediately
preceding Business Day, Buyer shall render to Seller by electronic funds
transfer (wire transfer or ACH), the amount set forth on such statement to
the payment address provided in Section 12.3 of this Agreement. If Buyer
fails to pay all of the amount of any statement when that amount becomes due,
Buyer shall pay Seller a late charge on the unpaid balance that shall accrue
on each calendar day from the due date at the Interest Rate. If Buyer, in
good faith, disputes

                                       8
<PAGE>

any part of any statement, Buyer shall provide a written explanation of the
basis for the dispute and pay the portion of such statement conceded to be
correct no later than the due date as calculated in accordance with the
preceding sentence.

         7.3      AUDIT. Each Party or any third party representative of a
Party has the right, at its sole expense and during normal working hours, to
examine the records of the other Party to the extent reasonably necessary to
verify the accuracy of any statement, charge or computation made pursuant to
the provisions of this Agreement. If any such examination reveals any
inaccuracy in any statement, the necessary adjustments in such statement and
the payments thereof shall be made prior to the lapse of two years from the
rendition thereof, and provided further that this provision of this Agreement
will survive any termination of the Agreement for a period of two years from
the date of such termination for the purpose of such statement and payment
objections.

         7.4      PAYMENT NETTING. Payments in the same currency owing by
each Party under this Agreement shall be offset on a monthly basis so that
only the net amount shall be paid by the Party having the greater payment
obligation during relevant calendar month. The payment date subject to this
Section 7.4 shall be the 25th day of the relevant calendar month following
the month of deliveries, or if such day is not a Business Day, the
immediately preceding Business Day.

                                   ARTICLE 8.
                   DELIVERY POINT, TITLE TRANSFER AND LIABILITY

         8.1      DELIVERY POINT. Seller shall deliver and Buyer shall
receive the Contract Quantity at the Delivery Point.

         8.2      TITLE TRANSFER. Title to, possession of, and risk of loss
of Power shall transfer from Seller to Buyer at the applicable Delivery
Point. Seller warrants title to the Power sold and delivered hereunder and
the right of Seller to sell such Power.

         8.3      PENALTIES. Buyer shall assume all liability for and
reimburse Seller within thirty (30) days of presentation of invoice for any
Penalties incurred as a result of Buyer's failure to (i) notify Seller of a
failure to Schedule or a change in a Schedule or (ii) abide by a Transmitting
Utility-'s tariff and scheduling policies. Seller shall assume all liability
for and reimburse Buyer within thirty (30) days of presentation of invoice
for any Penalties incurred as a result of Seller's failure to (i) notify
Buyer of a failure to Schedule or a change in a Schedule or (ii) abide by a
Transmitting Utility's tariff and scheduling policies. The parties shall
promptly notify each other as soon as possible of any imbalance that is
occurring or has occurred. and shall cooperate to eliminate imbalances and
minimize Penalties to the extent possible.

         8.4      SELLER INDEMNIFICATION. Seller hereby agrees to indemnify,
defend and hold harmless Buyer, its agents, servants, partners, officers,
directors and employees (collectively, "Buyer's Indemnitees") of each, from
and against any and all losses, claims damages or liabilities to third
parties (including reasonable attorneys' fees actually incurred and
including, without limitation, penalties or fines imposed by government
authorities) relating to Power delivered under this Agreement until such
Power has been delivered to Buyer at the Delivery Point including, without
limitation, the loss or claims for loss or damage to property, except to the
extent caused by the fraud, negligence or the willful misconduct or breach of
obligation under this Agreement of the Buyer's Indemnitees and provided that
Seller shall be promptly notified in writing of any such claim or suit
brought against any such Buyer

                                       9
<PAGE>

Indemnitee and shall be permitted, upon accepting financial responsibility,
to control a defense against or settlement (other than any settlement
involving criminal liability or admission of guilt or responsibility by such
Buyer Indemnitee) of such claim or suit through counsel of its choice. The
foregoing notwithstanding, Seller's obligations under This Agreement towards
any Buyer Indemnitee are conditioned upon such Buyer Indemnitee providing
such cooperation as Seller may reasonably request in connection with its
defense or settlement of the claim or suit against such Buyer Indemnitee.

         8.5      BUYER INDEMNIFICATION. Buyer hereby agrees to indemnify,
defend and hold harmless Seller, it agents, servants, partners, officers,
directors and employees (collectively, "Seller's Indemnitees") of each, from
and against any and all losses, claims damages or liabilities to third
parties (including reasonable attorneys' fees actually incurred and
including, without limitation, penalties or fines imposed by governmental
authorities) relating to Power received under this Agreement by Buyer at and
after the Delivery Point, including, without limitation, the loss or claims
for loss or damage to property, except to the extent caused by the fraud,
negligence or the willful misconduct or breach of obligation under this
Agreement of Seller's Indemnitees and provided that Buyer shall be promptly
notified in writing of any such claim or suit brought against any such Seller
Indemnitee and shall be permitted, upon accepting financial responsibility,
to control a defense against or settlement (other than any settlement
involving criminal liability or admission of guilt or responsibility by such
Seller Indemnitee) of such claim or suit through counsel of its choice. The
foregoing notwithstanding, Buyer's obligations under this Agreement towards
any Seller Indemnitee are conditioned upon such Seller Indemnitee providing
such cooperation as Buyer may reasonably request in connection with its
defense or settlement of the claim or suit against such Seller Indemnitee.

         8.6 LIMITATION OF LIABILITY. FOR BREACH OF ANY PROVISION FOR WHICH
AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS PROVIDED IN THIS AGREEMENT, THE
LIABILITY OF THE DEFAULTING PARTY SELL BE LIMITED AS SET FORTH IN SUCH
PROVISION, AND ALL OTHER DAMAGES OR REMEDIES HEREBY ARE WAIVED. IF NO REMEDY
OR MEASURE OF DAMAGES IS EXPRESSLY PROVIDED, THE LIABILITY OF THE DEFAULTING
PARTY SELL BE LIMITED TO DIRECT, ACTUAL DAMAGES ONLY AND ALL OTHER DAMAGES
AND REMEDIES ARE WAIVED. IN NO EVENT SELL EITHER PARTY BE LIABLE TO THE OTHER
PARTY FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES
IN TORT, FOR CONTRACT OR OTHERWISE.

         8.7      NO RECOURSE. The obligations of the Parties under this
Agreement are obligations of the Parties only. and no recourse shall be
available against any officer, director, stockholder, or partner of a Party
or its Affiliate except to the extent that an Affiliate provides a guaranty.

                                   ARTICLE 9.
                           ASSIGNMENT AND SUCCESSION

         9.1      ASSIGNMENT AND SUCCESSION. Neither Party shall assign this
Agreement or its rights hereunder without the prior written consent of the
other Party, which consent shall not be unreasonably withheld or delayed.
Upon any assignment made in compliance with this Section 9.1, this Agreement
shall inure to and be binding upon the successors and assigns of the
assigning Parties. Notwithstanding the foregoing, either Party may, without
the need for consent from the other Party (and without relieving itself from
liability hereunder), (a) transfer, pledge, or assign this Agreement as
security for any financing with financial institutions; (b) transfer or
assign this Agreement to an Affiliate of such Party provided that such
Affiliate has substantially equivalent financial capability to that of the
assigning Party, or (c) transfer or assign this Agreement to any creditworthy
person or entity succeeding to all or

                                       10
<PAGE>

substantially all of the assets of such Party; provided, however, that any
such assignee shall agree to be bound by the terms and conditions hereof,

                                  ARTICLE 10.
                                 FORCE MAJEURE

         10.1     FORCE MAJEURE. In the event either Party is rendered
unable, by an event of FORCE MAJEURE, to carry out wholly or in part its
obligations under a Transaction and such Party gives notice and full
particulars of such event of FORCE MAJEURE to the other Party as soon as
practicable after the occurrence of the event relied on, then the obligations
of the Party affected by such event of FORCE MAJEURE pursuant to such
Transaction, other than the obligation to make payments then due or becoming
due hereunder, shall be suspended from the inception and throughout the
period of continuance of any such inability so caused, but for no longer
period, and such event of FORCE MAJEURE shall, so far as practicable, be
remedied with all reasonable dispatch; provided, however, that no provision
of this Agreement shall be interpreted to require Seller to deliver, or Buyer
to receive, Power at points other than the Delivery Point(s). The term "FORCE
MAJEURE" means any cause the Party claiming FORCE MAJEURE (the "Claiming
Party"), or the Claiming Party's System Resources, was unable. in the
exercise of due diligence and in the observance of the applicable operating
policies, criteria and/or guidelines of NERC and any regional or subregional
requirement, to avoid and which is beyond the control, and without the fault
or negligence. of the Claiming Party or the Claiming Party's System
Resources. FORCE MAJEURE includes. but is not restricted to: flood;
earthquake: tornado; storm; fire; civil disturbance or disobedience; labor
dispute: labor shortage; sabotage; action or restraint by court order or
public or governmental authority (so long as the Claiming Party has not
applied for or assisted in the application for, and has opposed where and to
the extent reasonable, such government action); and government action that
results in the price at which Power may be made available under a Transaction
being fixed or established by any government authority at a level that
results in a price that may be charged under that Transaction that (i) in the
case of Seller, is lower than the Contract Price and (ii) in the case of
Buyer. is higher than the Contract Price: provided, however, that such
government action does not include the imposition of any Taxes. Nothing
contained herein shall be construed to require a Claiming Party to settle any
strike or labor dispute. In a firm Transaction, interruption by a
Transmitting Utility shall not be deemed to be an event of FORCE MAJEURE
unless (i) the Party contracting with such Transmitting Utility shalt have
made arrangement with such Transmitting Utility for the firm transmission of
the Power to be Scheduled hereunder and (ii) such interruption is due to an
event of FORCE MAJEURE (or similar occurrence) as defined under the
Transmitting Utility"s tariff.

                                   ARTICLE 11.
                                     TAXES

         11.1     ALLOCATION OF AND INDEMNITY FOR TAXES. The Contract Price
paid hereunder includes full reimbursement for and Seller is liable for and
shall pay or cause to be paid, or reimburse Buyer if Buyer shall have paid,
all Taxes applicable to the Power sold hereunder prior to the Delivery
Point(s) ("Seller's Taxes"). In the event Buyer is required to rem it any of
Seller's Taxes. the amount thereof shall be deducted from any sums becoming
due to Seller hereunder. Seller shall indemnify, defend and hold Buyer
harmless from any liability against all Seller's Taxes. The Contract Price
does not include reimbursement for and the Buyer is liable for and shall pay,
cause to be paid or reimburse Seller if Seller shall have paid, all Taxes
applicable to the Power sold hereunder at and after delivery at the Delivery
Point(s) including Taxes imposed by a taxing authority with jurisdiction over
the Buyer ("Buyer's

                                       11
<PAGE>

Taxes"). Buyer shall indemnify, defend and hold Seller harmless from any
liability against all Buyer's Taxes.

         11.2     NEW TAX. If any New Tax is imposed for which Buyer or
Seller is responsible, (i) if such New Tax can be passed by Buyer to another
person or entity, Buyer shall pay. cause to be paid or reimburse the Seller
for such New Tax; (ii) if (i) does not apply, the Party affected by the New
Tax ("New Tax Affected Party") may require the other Party to enter into good
faith negotiations to apportion liability for the New Tax equitably between
the Parties. If, after fifteen Business Days the Parties are not able to
resolve the issue, the New Tax Affected Party may terminate such "New Tax
Affected Transaction", upon thirty days written notice. Unless otherwise
agreed, the New Tax Affected Transaction shall be liquidated as though the
New Tax Affected Party has defaulted on the New Tax Affected Transaction
without taking into effect the impact of the New Tax.

         11.3     COOPERATION. Both parties shall use reasonable efforts to
administer this Agreement and implement the provisions in accordance with
their intent to minimize Taxes. If the Buyer is entitled to an exemption from
any Taxes under this Agreement, Buyer shall be responsible for furnishing an
exemption certificate to Seller in order to obtain the exemption.

                                   ARTICLE 12.
                                  MISCELLANEOUS

         12.1     REGULATORY. It is understood by the Parties that this
Agreement and performance hereunder is subject to all present and future
valid and applicable laws, orders, statutes, and regulations of courts or
regulatory bodies (state or federal) having jurisdiction over Seller.
Counterparty, or any Transaction hereunder. The rights of the Parties
hereunder to Schedule the purchase and sale of Power shall not be effective
until all Regulatory Approvals have been obtained; PROVIDED, HOWEVER, that if
Regulatory Approvals are not issued by applicable governmental authorities by
the scheduled commencement of such Transaction, either Party may terminate
such Transaction without further obligation or liability to the other Party.

         12.2     AUTHORIZATIONS. The Parties hereto represent that they have
(or will have at the time of documentation of any Transaction and at the time
of delivery or receipt of Power thereunder) all requisite corporate and
governmental authorizations necessary or proper to consummate such
Transactions.

         12.3     NOTICES. Any notice, request, demand, statement, or payment
provided for in this Agreement shall be confirmed in writing and shall be
made as specified below, provided, however, that notices of interruption and
communications to Transmitting Utility(ies) may he provided verbally,
effective immediately and, upon request, confirmed in writing. A notice sent
by facsimile transmission shall be deemed received by the close of the
Business Day on which such notice was transmitted or such earlier time as
confirmed by the receiving Party and notice by overnight mail or courier
shall be deemed to have been received two (2) Business Days after it was sent
or such earlier time as is confirmed by the receiving Party unless it
confirms a prior verbal communication in which case any such notice shall be
deemed received on the day sent. The addresses of the Parties are as follows:

ECI:
NOTICES & CORRESPONDENCE                     PAYMENTS BY ELECTRONIC FUNDS
TRANSFER

Electric Clearinghouse, Inc.                 The First National Bank of Chicago

                                       12
<PAGE>

1000 Louisiana                               Account Title: Electric
Suite 5800                                     Clearinghouse, Inc.
Houston, Texas 77002-5050                    Account Number: 552 7651
Attn: Director, Trading & Operations         ABA Number: 071 000 013

COUNTERPARTY:
NOTICES & CORRESPONDENCE                     INVOICES

ATTENTION: JOHN PARKER VP/CFO                SAME
-------------------------------------        ----------------------------------
CAP ROCK ELECTRIC
-------------------------------------        ----------------------------------
500 W. WALL ST., SUITE 400
-------------------------------------        ----------------------------------
MIDLAND, TX  79701
-------------------------------------        ----------------------------------
                                             FAX No.:  915-684-0333
                                                     --------------------------

or to such other address as Counterparty or Company shall from time to time
designate by letter properly addressed.

         12.4     ENTIRETY. This Agreement, the Exhibits hereto, and the
documentation of each Transaction hereunder pursuant to Section 2. I
constitute the entire agreement between the Parties hereto. There are no
prior or contemporaneous agreements or representations affecting the same
subject matter other than those herein expressed. Except for those matters
which, in accordance with Section 2.1 of this Agreement, may be resolved by
verbal agreement between the Parties and documented, it is further agreed
that no amendment, modification or change herein shall be enforceable, except
as specifically provided for in this Agreement, unless reduced to writing and
executed by both Parties.

         12.5     GOVERNING LAW. INCLUDING ANY COUNTERCLAIMS AND CROSS CLAIMS
ASSERTED IN SUCH ACTION, THIS AGREEMENT SELL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF TEXAS, WITHOUT REGARD TO THE LAWS OF TEXAS
REQUIRING THE APPLICATION OF THE LAWS OF ANOTHER STATE.

         12.6     NON-WAIVER. No waiver by either Party hereto of any one or
more defaults by the other in the performance of any of the provisions of
this Agreement shall be construed as a waiver of any other default or
defaults whether of a like kind or different nature. Any delay, less than any
applicable statutory period of limitations, in asserting or enforcing any
rights under this Agreement. shall not be deemed a waiver of such rights.
Failure of either Party to enforce any provision of this Agreement or to
require performance by the other Party of and of the provisions hereof shall
not be construed to waive such provision, or to affect the validity of this
Agreement or any part thereof, or the right of either Party thereafter to
enforce each and every provision hereof.

         12.7     SEVERABILITY. Except as otherwise stated herein, any
provision, article or section declared or rendered unlawful by a court of law
or regulatory agency with jurisdiction over the Parties, or deemed unlawful
because of statutory change. will not otherwise affect the lawful obligations
that arise under this Agreement.

         12.8     HEADINGS. The headings used for the Articles herein are for
convenience and reference purposes only and shall in no way affect the
meaning or interpretation of the provisions of this Agreement.

                                       13
<PAGE>

         12.9     SECURITY. Should Counterparty's ability to make payment
under this Agreement become unsatisfactory to ECI in its reasonably exercised
discretion at any time during which this Agreement is in effect, ECI may
require at its option either (i) the posting of a letter of credit, or (ii)
cash prepayments or, (iii) other security in a form acceptable to it before
proceeding with any Transaction pursuant to this Agreement. Any credit
agreement between the Parties shall become part of this Power Sale Agreement
and any Transactions hereunder.

         12.10    CONFIDENTIALITY. Neither Party shall disclose the terms of
any Transaction to a third party (other than such Party's and its affiliates'
employees, lenders, counsel or accountants) except in order to comply with
any applicable law, order, regulator or exchange rule; provided each Party
shall notify the other Party of any proceeding of which it is aware that may
result in disclosure and use reasonable efforts to prevent or limit the
disclosure. The provisions of the Agreement other than the terms of any
Transaction are not subject to this confidentiality obligation. The Parties
shall be entitled to all remedies available at law or in equity to enforce,
or seek relief in connection with, this confidentiality obligation; provided,
all monetary damages shall be limited to actual direct damages and a breach
of this section shall not give rise to a right to suspend or terminate any
ongoing Transaction under this Agreement.

         12.11    SURVIVAL. Any provision of this Agreement (including, but
not limited to, indemnification provisions) that expressly or by implication
comes into or remains in force following the termination or expiration of
this Agreement shall survive such termination or expiration.

         12.12    RECORDING. Each Party consents to the recording of all
telephone conversations between its employees and the employees of the other
Party. Any such recordings may be introduced to prove the intent of a
Transaction; provided, however, that nothing herein shall be construed as a
waiver of any objection to the introduction of such evidence on the grounds
of relevance. Absent manifest error, any conflict between such a recording
and written documentation of a Transaction that is executed by both parties
shall be resolved in favor of such written documentation.

         12.13    UNIFORM COMMERCIAL CODE/WARRANTY. Except as otherwise
provided for herein. the provisions of the Uniform Commercial Code ("UCC") of
the state whose laws govern this Agreement shall be deemed to apply to all
transactions, and energy and capacity shall be deemed to be goods for
purposes of the UCC. EXCEPT AS EXPRESSLY SET FORTH HEREIN, SELLER EXPRESSLY
NEGATES ANY REPRESENTATION OR WARRANTY, WRITTEN OR ORAL, EXPRESS OR IMPLIED,
INCLUDING, WITHOUT LIMITATION, ANY REPRESENTATION OR WARRANTY WITH RESPECT TO
CONFORMITY OR MODELS OR SAMPLES, MERCHANTABILITY, OR FITNESS FOR ANY
PARTICULAR PURPOSE.

         12.14    REPRESENTATIONS. In connection with the negotiation of the
entering into, and The confirming of the execution of this Contract. each
Party represents that: (i) it is acting as principal (and not as agent or in
any other capacity. fiduciary or otherwise): (ii) the other party is not
acting as a fiduciary or financial or investment advisor for it; (iii) it is
not relying upon any representations (whether written or oral) of the other
party other than the representations expressly set forth in this Contract;
(iv) the other party has not given to it (directly or indirectly through any
other person) any advice, counsel. assurance, guarantee, or representation
whatsoever as to the expected or projected success, profitability, return,
performance, result, effect, consequence, or benefit (either legal,
regulatory, tax, financial, accounting, or otherwise) of this Contract; (v)
it has consulted with its own legal, regulatory, tax, business, investment.
financial, and accounting advisors to the extent it has deemed necessary, and
it has made its own investment, hedging, and trading decisions based upon its
own judgment and upon any

                                       14
<PAGE>

advice from such advisors as it has deemed necessary, and not upon any view
expressed by the other party; (vi) all trading decisions have been the result
of arms length negotiations between the parties; and (vii) it is entering
into this Contract with a full understanding of all of the risks hereof and
thereof (economic and otherwise), and it is capable of assuming and willing
to assume (financially and otherwise) those risks.

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement in
duplicate originals to be effective as of the day and year first written
above.

"ECI"                                       "Counterparty"

ELECTRIC CLEARINGHOUSE, INC.                CAP ROCK ELECTRIC COOPERATIVE, INC.

By: /s/ Matthew Schatzman                   By /s/ John D. Parker
   ----------------------------               ----------------------------------

Name: Matthew Schatzman                     Name: John D. Parker
     --------------------------                  -------------------------------

Title: Executive Vice President             Title: VP/CFO
      -------------------------                   ------------------------------

                                       15
<PAGE>

BUYER
Address
Address
Atm:
                  19
                                   EXHIBIT "A"
                           FORM OF CONFIRMATION LETTER

RE: Power Sales Agreement Dated:
(ECLContract#: ____________
Confirmation Number:

                               CONFIRMATION LETTER

This letter shall confirm the agreement reached ON ___________ 19 between
______________ "Buyer") and Electric Clearinghouse, Inc. ("Seller") regarding
the purchase of Power under the terms and conditions as follows:

PERIOD U/DELIVERY:

CONTRACT QUANTITY.

NATURE OF TRANSACTION, (FIRM/NON-FIRM)

(TON/RACE PRICE:

DELIVERY POINT:

SCHEDULING:

$_______/MWI-I

SPECIAL PROVISIONS:
SEE ADDENDUM II ATTACHED HERETO AND B THIS REFERENCE MADE A

<PAGE>

THIS CONFIRMATION LETTER IS BEING PROVIDED PURSUANT TO AND IN ACCORDANCE WITH
THE POWER SALES AGREEMENT ("AGREEMENT") REFERENCED ABOVE, BETWEEN BUYER AND
SELLER, AND CONSTITUTES PART OF AND IS SUBJECT TO ALL OF THE TERMS AND
PROVISIONS OF SUCH AGREEMENT. NOTWITHSTANDING ANY CONTRARY PROVISIONS IN THE
AGREEMENT, ANY CONFLICT BETWEEN THIS CONFIRMATION LETTER AND THE AGREEMENT
SHALL BE RESOLVED IN FAVOR OF THIS CONFIRMATION LETTER. TERMS USED BUT NOT
DEFINED HEREIN SHALL HAVE THE MEANINGS ASCRIBED TO THEM IN THE AGREEMENT.

PLEASE CONFIRM THAT THE TERMS STATED HEREIN ACCURATELY REFLECT THE AGREEMENT
BETWEEN YOU AND ECI BY RETURNING AN EXECUTED COPY OF THIS LETTER BY FACSIMILE TO
TIC! AT 713-767-8693. IF YOU DO NOT RETURN THIS CONFIRMATION LETTER OR OBJECT TO
THIS CONFIRMATION LETTER WITHIN TWO (2) BUSINESS DAYS OF YOUR RECEIPT OF IT, YOU
WILL HAVE ACCEPTED AND AGREED TO ALL OF THE TERMS INCLUDED HEREIN, INCLUDING THE
TERMS AND PROVISIONS OF THE AGREEMENT. IF YOU HAVE ANY QUESTIONS, PLEASE CALL ME
AT 713-767-8200/8848.

"SELLER"                               "BUYER"

ELECTRIC CLEARINGHOUSE, INC.

BY:                                    BY:
   ------------------------------         ------------------------------

NAME:                                  NAME:
     ------------------------------         ----------------------------

TITLE:                                 TITLE:
      ---------------------------            ---------------------------

DATE:                                  DATE:
     ----------------------------           ----------------------------

<PAGE>

DAMAGES FOR NON-PERFORMANCE:

NOTWITHSTANDING ANYTHING IN THE AGREEMENT TO THE CONTRARY, THE PARTIES' SOLE
REMEDIES FOR FAILURE TO PERFORM IN ACCORDANCE WITH THE TERMS OF THIS
TRANSACTION SHALL BE AS FOLLOWS: IF THIS TRANSACTION IS FIRM, PERFORMANCE IS
EXCUSED ONLY IF RENDERED IMPOSSIBLE BY AN EVENT OF FORCE MAJEURE, AS DEFINED
IN THE AGREEMENT. IF SELLER FAILS TO DELIVER POWER AND/OR CAPACITY IN
ACCORDANCE WITH THE TERMS HEREIN, SELLER SHALL BE LIABLE TO BUYER [OR BUYER'S
REASONABLY-INCURRED COST OF REPLACING THE POWER AND/OR CAPACITY SELLER FAILED
TO DELIVER TO THE EXTENT THOSE COSTS EXCEED THE CONTRACT PRICE STATED HEREIN.
IF BUYER FAILS TO TAKE POWER AND/OR CAPACITY IN ACCORDANCE WITH THE TERMS
HEREIN, BUYER SHALL BE LIABLE TO SELLER FOR THE POSITIVE DIFFERENCE BETWEEN
THE CONTRACT PRICE STATED HEREIN FOR THE POWER AND/OR CAPACITY BUYER FAILED
TO TAKE AND THE AMOUNT FOR WHICH SELLER, USING COMMERCIALLY REASONABLE
EFFORTS TO MITIGATE DAMAGES, IS ABLE TO RESELL THE POWER AND/OR CAPACITY
BUYER FAILED TO TAKE. IF THE TRANSACTION IS NON-FIRM OR INTERRUPTIBLE, EITHER
PARTY MAY INTERRUPT DELIVERIES OR RECEIPTS HEREUNDER WITHOUT PENALTY. BOTH
PARTIES HEREBY STIPULATE FLOAT SUCH LIQUIDATED DAMAGES ARE REASONABLE IN
LIGHT OF TILE ANTICIPATED HARM AND THE DIFFICULTY OF ESTIMATION OR
CALCULATION OF ACTUAL DAMAGES AND EACH PARTY HEREBY WAIVES THE RIGHT TO
CONTEST SUCH DAMAGES AS AN UNREASONABLE PENALTY. NEITHER PARTY SHALL HE
LIABLE TO THE OTHER FOR ANY CONSEQUENTIAL, INCIDENTAL, PUNITIVE OR SPECIAL
DAMAGES TIN FAILURE TO DELIVER OR RECEIVE POWER IN ACCORDANCE WITH THE TERMS
OF THIS TRANSACTION.

TAXES:

(1) EXPENSES: SELLER SHALL BE RESPONSIBLE FOR ANY COSTS OR CHARGES IMPOSED ON
OR ASSOCIATED WITH THE DELIVERY OF THE CONTRACT QUANTITY, INCLUDING CONTROL
AREA SERVICES, INADVERTENT POWER FLOWS. PENALTIES OR SIMILAR CHARGES IMPOSED
BY THE TRANSMISSION PROVIDER, TRANSMISSION LOSSES AND CHARGES RELATING TO THE
TRANSMISSION OF THE CONTRACT QUANTITY, UP TO THE DELIVERY POINT. BUYER SHALL
HE RESPONSIBLE FOR ANY COSTS OR CHARGES IMPOSED ON OR ASSOCIATED WITH THE
CONTRACT QUANTITY, INCLUDING CONTROL AREA SERVICES, INADVERTENT POWER FLOWS,
PENALTIES OR SIMILAR CHARGES IMPOSED BY THE TRANSMISSION PROVIDER,
TRANSMISSION LOSSES AND LOSS CHARGES RELATING TO THE TRANSMISSION OF THE
CONTRACT QUANTITY, AT AND FROM THE DELIVER POINT.

(2) ALLOCATION OF AND INDEMNITY FOR TAXES: THE CONTRACT PRICE PAID HEREUNDER
INCLUDES LULL REIMBURSEMENT FOR AND SELLER IS LIABLE FOR AND SHALL PAY OR
CAUSE TO BE PAID. OR REIMBURSE BUYER IF BUYER SHALL HAVE PAID, ALL TAXES
APPLICABLE TO THE POWER SOLD HEREUNDER PRIOR TO THE DELIVERY POINT(S)
("SELLER'S TAXES"). IF BUYER IS REQUIRED TO REMIT ANY OF SELLER'S TAXES, THE
AMOUNT THEREOF SHALL BE DEDUCTED FROM AN SUMS BECOMING DUE TO SELLER
HEREUNDER. SELLER SHALL

<PAGE>

INDEMNIFY, DEFEND AND HOLD BUYER HARMLESS FROM ANY LIABILITY AGAINST ALL
SELLER'S TAXES. THE CONTRACT PRICE DOES NOT INCLUDE REIMBURSEMENT FOR AND THE
BUYER IS LIABLE FOR AND SHALL PAY. CAUSE TO BE PAID OR REIMBURSE SELLER IF
SELLER SHALL HAVE PAID, ALL TAXES APPLICABLE TO THE POWER SOLD HEREUNDER AT
AND AFTER DELIVERY AT THE DELIVERY POINT(S) INCLUDING TAXES IMPOSED BY A
TAXING AUTHORITY WITH JURISDICTION OVER THE BUYER ("BUYER'S TAXES"). BUYER
SHALL INDEMNIFY, DEFEND AND HOLD SELLER HARMLESS FROM ANY LIABILITY AGAINST
ALL BUYER'S TAXES. IF THE BUYER IS ENTITLED TO

<PAGE>

AN EXEMPTION FROM ANY TAXES UNDER THIS TRANSACTION, BUYER SHALL BE
RESPONSIBLE FOR FURNISHING AN EXEMPTION CERTIFICATE TO SELLER IN ORDER TO
OBTAIN THE EXEMPTION. "TAXES." MEANS- ALL AD VALOREM, PROPERTY, OCCUPATION,
UTILITY, GROSS RECEIPTS, SALES, USE, EXCISE AND OTHER TAXES, GOVERNMENTAL
CHARGES, EMISSION ALLOWANCE COSTS, LICENSES, PERMITS AND ASSESSMENTS, OTHER
THAN TAXES BASED ON NET INCOME OR NET WORTH.

(3) NEW TAXES: IF ANY NEW TAX IS IMPOSED FOR WHICH BUYER OR SELLER IS
RESPONSIBLE, (i) IF SUCH NEW TAX CAN BE PASSED BY BUYER TO ANOTHER PERSON OR
ENTITY, BUYER SHALL PAY, CAUSE TO BE PAID OR REIMBURSE THE SELLER FOR SUCH
NEW TAX; (ii) IF (i) DOES NOT APPLY, THE PARTY AFFECTED BY THE NEW TAX ("NEW
TAX AFFECTED PARTY") MAY REQUIRE THE OTHER PARTY TO ENTER INTO GOOD FAITH
NEGOTIATIONS TO APPORTION LIABILITY FOR THE NEW TAX EQUITABLY BETWEEN THE
PARTIES. IF, AFTER FIFTEEN BUSINESS DAYS THE PARTIES ARE NOT ABLE TO RESOLVE
THE ISSUE, THE NEW TAX AFFECTED PARTY MAY TERMINATE SUCH "NEW TAX AFFECTED
TRANSACTION", UPON THIRTY DAYS WRITTEN NOTICE. UNLESS OTHERWISE AGREED, THE
NEW TAX AFFECTED TRANSACTION SHALL BE LIQUIDATED AS THOUGH THE NEW TAX
AFFECTED PARTY HAS DEFAULTED ON THE NEW TAX AFFECTED TRANSACTION WITHOUT
TAKING INTO EFFECT THE IMPACT OF THE NEW TAX. "NEW TAXES" MEANS (i) ANY TAXES
ENACTED AND EFFECTIVE AFTER THE DATE THIS TRANSACTION WAS ENTERED INTO,
INCLUDING, WITHOUT LIMITATION, THAT PORTION OF ANY TAXES OR NEW TAXES THAT
RESULTS IN AN INCREASE IN LIABILITY TO EITHER PARTY, OR (ii) ANY LAW, ORDER,
RULE OR REGULATION, OR INTERPRETATION THEREOF, ENACTED AND EFFECTIVE AFTER
THE DATE THIS TRANSACTION WAS ENTERED INTO RESULTING IN SUCH AN INCREASE.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00021-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00021-of-00352.parquet"}]]