MAINE & MARITIMES CORP
General Description of Parent Company and Subsidiaries   2       Employees   4       Affiliates and Associated Companies   5       Financial Information about Geographic Areas   5       Financial Information about Segments   5       Competitive Conditions   5       Company Financial Information   5
Item 2.   Properties, System Security and Reliability   10
Item 4.   Submission of Matters to a Vote of Security Holders   13   PART II
Purchases of Equity Securities   14
Item 7.   Management's Discussion and Analysis of Financial Condition and Results of               Operations   17       Annual Performance Summary   17       Overview of Company Strategy   18       2005 Operating Results for the Consolidated Entity   21       Financial Condition & Management Challenges   23       Detailed Analysis of Changes in Financial Condition by Operating Segment   25       Critical Accounting Policies   33       Off-Balance Sheet Arrangements   36       Liquidity and Capital Resources   38
Item 8.   Financial Statements and Supplementary Data   43       Reports of Independent Registered Public Accounting Firms   43       Statements of Consolidated Operations   45       Statements of Consolidated Cash Flows   46       Consolidated Balance Sheets—Assets   47       Consolidated Balance Sheets—Capitalization and Liabilities   48       Statements of Consolidated Shareholders' Equity   49       Statements of Long-Term Debt   50         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS            1. Accounting Policies   51       2. Income Taxes   61       3. Discontinued Operations—Energy Atlantic   64       4. Segment Information   65       5. Investments in Associated Companies   70       6. Short-Term Credit Arrangements   72                 i             7. Accumulated Other Comprehensive Income (Loss)   74       8. Long-Term Debt   75       9. Stock Compensation Plan   76       10. Benefit Programs   78       11. Fair Value of Financial Instruments   83       12. Commitments, Contingencies and Regulatory Matters   83       13. Guarantor Arrangements   92       14. Acquisitions   92       15. Quarterly Information (Unaudited)   98
Disclosure   99
Item 9B.   Other Information   99   PART III
Item 11.   Executive Compensation   101
Item 13.   Certain Relationships and Related Transactions   101
PART IV
SIGNATURES   103       SCHEDULE II   104       INDEX TO EXHIBITS AND CEO/CFO CERTIFICATIONS   105    ii        Glossary of Terms      AFUDC   Allowances for the cost of equity and borrowed funds used during construction   AMEX   American Stock Exchange   APP   Aroostook Partnership for Progress   BHE   Bangor Hydro-Electric Company   CES   Competitive Energy Supplier   CMMS   Computerized Maintenance Management System   CMP   Central Maine Power Company   Cornwallis   Cornwallis Court Developments Ltd   CPCN   Certificate of Public Convenience and Necessity   DOE   Department of Energy   EA   Energy Atlantic, LLC   Eastcan   Eastcan Consulting Engineers   EMF   Electro-magnetic Fields   Engage   Engage Energy America, LLC   EPS   Earnings per Share   FAME   Finance Authority of Maine   FASB   Financial Accounting Standards Board   FERC   Federal Energy Regulatory Commission   FIN   FASB Interpretation Number   Gould   Gould Electric Company   IBEW   International Brotherhood of Electrical Workers   ISFSI   Independent Spent Fuel Storage Installation   kV   Kilovolt   LEED   Leadership in Energy and Environmental Design   LIBOR   London InterBank Offering Rate   LOC   Letter of Credit   MAM   Maine & Maritimes Corporation   M&R   Morris & Richards Consulting Engineers   Me&NB   Maine & New Brunswick Electrical Power Company, Ltd   Mecel   Mecel Properties Ltd   MEPCO   Maine Electric Power Company, Inc.   MPS   Maine Public Service Company   MPUC   Maine Public Utilities Commission   MPUFB   Maine Public Utility Financing Bank   MTI   Maricor Technologies, Inc.   MW   Megawatt   MWH   Megawatt hour   MY   Maine Yankee   NB Power   New Brunswick Power   NEPOOL   New England Power Pool   NMISA   Northern Maine Independent System Administrator   NOI   Notice of Inquiry   NPCC   Northeastern Power Coordinating Council   NRC   Nuclear Regulatory Commission   NRI   Northeast Reliability Interconnect   OATT   Open Access Transmission Tariff   PCB   Poly Chlorinated Bi-phenol   PPA   Power Purchase Agreement   PUHCA   Public Utility Holding Company Act             iii         REIT   Real Estate Investment Trust   RES   RES Engineering, Inc., now The Maricor Group New England   SEC   Securities and Exchange Commission   SFAS   Statement of Financial Accounting Standards   SOS   Standard Offer Service   TMG   The Maricor Group   TMGC   The Maricor Group, Canada Ltd   TMGNE   The Maricor Group New England   VCC   Vitale, Caturano & Company, Ltd   VEBA   Voluntary Employee Benefit Association   VERP   Voluntary Employee Retirement Program   WPS   WPS Resources Corporation   WPS-PDI   WPS-Power Development, Inc.   WS   Wheelabrator-Sherman    iv             PART I          Item 1.    Business      General           Maine & Maritimes Corporation ("MAM" or the "Company"), a Maine corporation, became a holding company effective June 30, 2003, when all shares of Maine Public Service Company ("MPS") common stock were converted into an equal number of shares of MAM common stock, which are listed on the American Stock Exchange ("AMEX") under the symbol "MAM." MAM is the parent holding company for the following wholly-owned subsidiaries:    1.The Maricor Group ("TMG," formerly known as Maine & Maritimes Energy Services) and its wholly-owned United States subsidiary The Maricor Group New England ("TMGNE," formerly known as RES Engineering, Inc.) and TMG's wholly-owned Canadian subsidiary The Maricor Group, Canada Ltd ("TMGC," formerly Maricor Ltd); 2.Maricor Properties Ltd ("Maricor Properties"), a Canadian subsidiary and its wholly-owned Canadian subsidiaries, Cornwallis Court Developments Ltd ("Cornwallis") and Mecel Properties Ltd ("Mecel"), as well as a 50% owner of Maricor Ashford Ltd; 3.Maricor Technologies, Inc. ("MTI"), a U.S. wholly-owned subsidiary; 4.Maine Public Service Company ("MPS") and its wholly-owned inactive Canadian subsidiary Maine & New Brunswick Electrical Power Company, Ltd ("Me&NB"); and 5.Energy Atlantic, LLC ("EA"), an inactive subsidiary.   Maine & Maritimes Corporation and Subsidiaries      *Maine & New Brunswick Electrical Power Company, Ltd and Energy Atlantic, LLC are inactive companies.  1      General Descriptions of the Parent Company and its Subsidiaries:     •Maine & Maritimes Corporation is a holding company incorporated in the State of Maine, and is the ultimate parent company for all business segments. MAM maintains investments in (a) a regulated electric transmission and distribution utility operating within the State of Maine, United States of America, (b) mechanical, electrical and plumbing/fire protection engineering, facility asset lifecycle management, energy efficiency, and asset development companies within the United States and Canada, (c) real estate investment and development companies in Canada, and (d) a facilities asset lifecycle management and sustainability software development company in the United States. MAM is headquartered in Presque Isle, Maine. •The Maricor Group is an energy asset development and mechanical, electrical and plumbing/fire protection engineering consulting firm providing energy efficiency, facilities lifecycle asset management, facility condition assessment, fee-for-service engineering design and emissions reduction services focusing on sustainability and Leadership in Energy and Environmental Design ("LEED™"). The Maricor Group operates primarily within the New England region of the United States and the eastern Canadian provinces, particularly Atlantic Canada. TMG was formed in November 2003, and is headquartered in Presque Isle, Maine, with offices in Boston, Massachusetts; Moncton and Saint John, New Brunswick; and Halifax, Nova Scotia. •The Maricor Group New England is a mechanical and electrical engineering subsidiary of The Maricor Group with an office in Boston, Massachusetts, offering the services of The Maricor Group within New England, particularly the greater Boston area and other regions of the Commonwealth of Massachusetts. TMGNE was acquired by TMG on June 15, 2004. •The Maricor Group, Canada Ltd is the Canadian subsidiary of The Maricor Group offering its parent company's defined services primarily within the eastern Canadian provinces, particularly Atlantic Canada. Headquartered in Moncton, New Brunswick, it maintains offices in Saint John, New Brunswick, as well as Halifax, Nova Scotia. TMGC acquired its first mechanical and electrical engineering services company, Eastcan Consultants, Inc. ("Eastcan") on December 1, 2003. On June 1, 2004, TMGC acquired Morris & Richards Consulting Engineers ("M&R"). Both companies are now operating divisions of TMGC. •Maricor Properties Ltd is a Canadian real estate development, redevelopment and investment company focused on sustainable development and "smart growth" principles within second and third tier Canadian markets emphasizing the development and revitalization of downtowns and existing suburbs. It seeks to develop or invest in public and private facility projects involving the renewal or development of building infrastructure within revitalization districts promoting renewal of existing areas, thus negating the need for extension of additional infrastructure and promotion of sprawl. It utilizes the services of The Maricor Group in its development and redevelopment projects. Maricor Properties Ltd was organized on May 28, 2004, in Nova Scotia, Canada. •Mecel Properties Ltd is a Canadian subsidiary of Maricor Properties Ltd and currently owns the office building housing the Halifax, Nova Scotia operating division of The Maricor Group, Canada Ltd. It was acquired on June 1, 2004, in conjunction with the acquisition of M&R by TMGC. •Cornwallis Court Developments Ltd is a wholly-owned Canadian subsidiary of Maricor Properties, acquired on October 7, 2005. Cornwallis currently owns and operates the J. Angus MacDonald Building located in Halifax, Nova Scotia, Canada. •Maricor Technologies, Inc., formed on February 14, 2005, is a software technology firm that develops and maintains information-based technologies, which support lifecycle asset management and capital budget planning with an increasing emphasis on capital performance   2        management and asset governance. On February 14, 2005, it purchased, through a three-way transaction, the "Strategic Asset Management" software technology assets of Delinea Corporation of Dallas, Texas, which were formerly owned by HCI Systems Asset Management, LLC. The Maricor Group utilizes the software in the delivery of its lifecycle asset management services and markets its products throughout North America. Maricor Technologies is headquartered in Presque Isle, Maine, with an office in Portland, Maine.      Maricor Technologies' software products currently include "iPlan™," a web-based strategic planning tool used to quantify and prioritize capital investments required to maintain and preserve facilities and infrastructure assets. iPlan™ automates the process of defining an organization's capital needs, and assists in the identification of capital projects, quantifying replacement and renovation costs, and assigning priorities based on various lifecycle, safety, and return-on-investment measures. "Building Blocks™" is a proactive computerized maintenance management system ("CMMS") software solution for managing both the total lifecycle of assets and the daily operation of facilities.    •Maine Public Service Company is a regulated electric transmission and distribution utility serving all of Aroostook County and a portion of Penobscot County in northern Maine. Since March 1, 2000, the date retail electric competition in Maine commenced, customers in MPS's service territory have been purchasing energy from suppliers other than MPS. This energy comes from Competitive Electricity Suppliers ("CES") or, if customers are unable or do not wish to choose a competitive supplier, the Standard Offer Service ("SOS") provider. SOS providers are determined through a bid process conducted by the Maine Public Utilities Commission ("MPUC"). MPS provides the transportation through its transmission and distribution wires infrastructure. Its service area covers approximately 3,600 square miles, with a population of 72,000. The utility is regulated by the Federal Energy Regulatory Commission ("FERC") and the MPUC. MPS is headquartered in Presque Isle, Maine.     MPS was originally incorporated in the United States as the Gould Electric Company ("Gould") in April 1917, by a special act of the Maine legislature in connection with the purchase and lease of all of the assets of the Maine & New Brunswick Electrical Power Company, Ltd, a Canadian company. Following the sale of its assets to Gould, Me&NB remained a subsidiary of Gould, and subsequently MPS. Me&NB was primarily a hydro-electric generating company. It owned and operated the Tinker hydro-electric station in New Brunswick, Canada, until June 8, 1999, when these assets were sold by MPS to WPS Power Development, Inc. ("WPS-PDI"), a subsidiary of WPS Resources Corporation ("WPS").  Following its incorporation in the United States, Gould changed its name to Maine Public Service Company in August 1929. MPS was a privately held subsidiary of the Consolidated Electric & Gas Company until 1947, when its capital stock was sold as a result of Consolidated Electric & Gas Company's forced divestiture. From 1947 until its corporate reorganization in 2003, MPS was the corporate parent and traded under the stock symbol "MAP" on the AMEX. Until its generating assets were sold on June 8, 1999, MPS produced electric energy for retail and wholesale customers. From that date through March 1, 2000, MPS continued to purchase electric energy for sale to these customers. MPS continues to provide transmission services to former wholesale energy customers and transmission and distribution services to retail customers in the service territory; however, it does not provide electric energy supply.  MPS's research and analyses indicate that its service area's economy, once heavily influenced by a significant military presence, continues to be dependent upon agricultural and the forest products industries. Potato farming and processing and the manufacturing of forest products, principally lumber, plywood, and oriented strand board, continue to be dominant economic forces within MPS's service area. The growing of broccoli has added diversity to the region's    3         agricultural economic base. Tourism, particularly related to snowmobiling and skiing, appears to be playing an increasingly significant role in the area's economy. The medical industry represents a significant positive and growing economic force within the region, serving as a leading employer and job creation sector. However, data appears to suggest that the northern Maine economy continues to lag behind national economic trends and is experiencing population losses based on the most recent census data and projections, particularly among the service area's youth and young adults. Attracting new businesses and jobs to northern Maine in an effort to reverse out-migration trends appears to be a continuing challenge to the area's leaders and businesses, including MPS. As a result of its service area's economic challenges, MPS has taken a lead role in forming a public/private partnership for economic progress in cooperation with the Northern Maine Development Commission. Managed by a private-sector investors' council, MPS and its staff are serving as private sector leaders in helping to execute a rational and results-oriented economic development program. The Aroostook Partnership for Progress's ("APP's") efforts are intended to increase the area's emphasis on economic development through improved focus and funding for economic development.  Electric sales in the Company's territory are seasonal, and the Company's results of operations reflect this seasonal nature. The highest usage occurs during the five heating season months, from November through March due to heating-related requirements and shorter daylight hours. The rate year is divided into two periods, with higher rates in place in the winter months to encourage conservation. Also, due to the climate in the northern Maine area, the majority of MPS's construction program is completed during the spring, summer and fall months.    •Maine & New Brunswick Electrical Power Company, Ltd is an inactive Canadian subsidiary of MPS, which, prior to deregulation and generation divestiture, owned MPS's Canadian electric generation assets. Me&NB was incorporated in 1903 under the laws of the Province of New Brunswick, Canada. •Energy Atlantic, LLC is a licensed, but currently inactive, CES of retail electricity, and is classified as discontinued operations. EA formerly competed for electric supply customers within the northern and southern regions of the State of Maine as a CES from March 1, 2000, through February 28, 2004, and also provided the Standard Offer supply for Central Maine Power Company's ("CMP's") territory from March 1, 2000, through February 28, 2002, and 20% of the medium non-residential SOS in MPS's territory from March 1, 2000, through February 28, 2001.    Employees           At the end of 2005, the Company and its subsidiaries had the following employees:         Employees       2005   2004   Maine & Maritimes Corporation   5   5   Maine Public Service Company   140   134   The Maricor Group   68   68   Maricor Technologies, Inc.   6   —               Total   219   207                      The Company's consolidated payroll costs were $12.1 million for 2005 and $9.5 million for 2004. The increase was due primarily to new employees added through TMG's acquisitions during 2004. Approximately 37% of MPS's labor force are members of the Local 1837 of the International Brotherhood of Electrical Workers ("IBEW") and are covered under a collective bargaining agreement. On September 22, 2005, the IBEW 1837 Union approved a four-year collective bargaining agreement  4       for the term of October 1, 2005, through September 30, 2009. No employees of the Company are covered under collective bargaining agreements that will expire within one year.  Affiliates and Associated Companies           Maricor Properties Ltd is an equal partner in Maricor Ashford Ltd, a joint venture with Ashford Investments, Ltd., an unaffiliated real estate management company. Maricor Ashford Ltd is a real estate development and redevelopment company based in Moncton, New Brunswick, Canada. Management reviewed the characteristics of this joint venture in accordance with Financial Accounting Standards Board Interpretation No. 46(R), "Consolidation of Variable Interest Entities, an Interpretation of ARB 51" ("FIN 46(R)"), and determined that Maricor Properties Ltd is not the primary beneficiary of this joint venture. Accordingly, the activity of Maricor Ashford Ltd has been recorded in these financial statements under the equity method, and Maricor Ashford Ltd is not consolidated with these financial statements.          MPS owns 5% of the common stock of Maine Yankee, which operated an 860 MW nuclear power plant (the "Plant") in Wiscasset, Maine. On August 6, 1997, the Board of Directors of Maine Yankee voted to permanently cease power operations and to begin decommissioning the Plant. The Plant experienced a number of operational and regulatory problems and did not operate after December 6, 1996. The decision to close the Plant permanently was based on an economic analysis of the costs, risks and uncertainties associated with operating the Plant compared to those associated with closing and decommissioning it. The Plant's operating license from the Nuclear Regulatory Commission ("NRC") was due to expire on October 21, 2008.          MPS also owns 7.49% of the common stock of Maine Electric Power Company, Inc., ("MEPCO"). MEPCO owns and operates a 345-KV (kilovolt) transmission line about 180 miles long, which connects the New Brunswick Power ("NB Power") system with the New England Power Pool ("NEPOOL").  Financial Information about Geographic Areas           See Note 4 to the attached financial statements.  Financial Information about Segments           See Note 4 to the attached financial statements  Competitive Conditions           See Item 1a. below.  Company Financial Information           The public may read and copy any materials the Company files with the SEC at the SEC's Public Reference Room at 100 F Street, N.E. Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.          The Company is an electronic filer and the SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov. The Company also maintains an Internet site containing such reports at www.maineandmaritimes.com. All such reports, including annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, may be downloaded from such site without charge. Also listed at the Company's site under Investor Relations, Corporate Governance, is the Code of Ethics for Senior Financial Officers and all other Principal Executive Officers and Managers, as well as the Company's policy regarding Insider Trading and Dissemination of Inside Information.  5           Item 1a.    Risk Factors              As with all companies, MAM is exposed to certain risk factors as a result of their operations. MAM has identified the following key risk factors for the company as a whole and also specific to the various industries in which MAM and its subsidiaries operate.  Liquidity and Capital Formation Risk           MAM's current liabilities of $23.17 million as of December 31, 2005, exceed its current assets of $12.68 million by $10.49 million, exposing MAM to the risk of being unable to fulfill its obligations in 2006. However, of these current liabilities, $14.1 million is short-term borrowings, including the lines of credit and one-year notes payable through Royal Bank of Canada. MAM has taken steps to mitigate this short-term risk before and after year-end, including identification of additional sources of financing and options to reduce or defer costs.          In the long term, Management expects MAM's cash flow to improve, with MPS's recovery of deferred fuel and other stranded costs currently deferred by MPS. The current cash expenditures for deferred fuel and Maine Yankee exceed the recovery of stranded costs. With the expiration of the Wheelabrator-Sherman contract in December 2006, this position will reverse, and recovery of stranded costs will exceed the cash outflows.  Lack of Profitable Operations from Unregulated Business           The unregulated business segments which have been added since 2003 have not been profitable to date. Please read the in-depth analysis in the Management's Discussion and Analysis of Financial Condition and Results of Operations. As noted there, Management believes that the success of these ventures is crucial to the future growth of the Company, but can give no assurances as to the success of these ventures.  Acquisition and Integration Risks           The Maricor Group and Maricor Properties have each acquired several companies over the past three years, in conjunction with MAM's growth strategy. The companies face several risks associated with this process, including lack of suitable available targets, insufficient funds for acquisitions to achieve the growth strategy, lack of synergies and the cost of integration. MAM and its subsidiaries mitigate these risks through a due diligence process intended to identify and mitigate these risks throughout and after the acquisition process.  Legislation and Regulation           Changes in legislation and regulation could impact MAM's earnings and operations positively or negatively. Such changes could include changes in tax rates, changes in environmental or workplace laws or changes in regulation of cross-border transactions. For The Maricor Group, public policies related to energy, energy efficiency, asset lifecycle management, and air emissions may impact the overall market, particularly the governmental sectors.          MPS is a regulated utility, operating its distribution activity under the jurisdiction of the Maine Public Utilities Commission and transmission activity under the jurisdiction of the Federal Energy Regulatory Commission. MPUC and FERC regulate the rates MPS is allowed to charge its customers. MPS filed notice with the MPUC on January 10, 2006, under Docket No. 2006-24, that it intended to seek a 4% increase in distribution rates, a procedure expected to last through most of 2006. Further, the transmission formula under which MPS transmission rates have been determined for the past three years is up for review and negotiation for the rates that will go into effect on June 1, 2006. Finally, the rates for recovery of stranded costs are set to expire in December 2006. The outcome of these rate  6       cases could have a positive or negative impact on earnings and cash flow; their ultimate impact is unknown at this time.  Foreign Operations           MAM subsidiaries Maricor Properties, including its subsidiaries Mecel Properties Ltd and Cornwallis Court Developments Ltd and its joint venture Maricor Ashford Ltd, and The Maricor Group, Canada operate in Canada. Me&NB, an inactive subsidiary of MPS, is also based in Canada. There are a number of risks associated with operations outside of the United States, including differences in laws, policies and measures; regulatory requirements affecting trade and investment; differences in social, political, labor, and economic conditions, including foreign exchange rates; difficulties in staffing and managing foreign operations; and potential adverse foreign tax consequences.  General Economic Conditions           MAM, like all other entities, is exposed to a certain amount of risk as a result of the general economic conditions under which it operates. Such risks include the overall economy of the geographic region in which the entity operates, interest rate risk, risk of loss of value of real estate assets and risk of inflation.    Economy of the Region            MPS operations are restricted to a territory in Aroostook County and northern Penobscot County, Maine. Limited population growth and economic expansion in the region could negatively impact the utility's ability to maintain this customer base. MPS has been actively involved with the Aroostook Partnership for Progress, an organization with the mission of enhancing the economy in Aroostook County.          The Maricor Group and its subsidiaries generally operate within Atlantic Canada and New England. The nature of work available may differ depending on various economic and political conditions, including cost of energy, interest rates, and other factors.    Interest Rate Risk            MAM, TMG, Maricor Properties and MPS each have interest rate risk due to variable interest rates on financing arrangements. The Company has mitigated a portion of this risk by fixing interest rates on three MPS variable rate debt issues with a derivative interest rate swap transaction on September 9, 2003. See Item 8 of this Form 10-K, Note 7 to the Consolidated Financial Statements, "Accumulated Other Comprehensive Income (Loss)," which is hereby incorporated by this reference, for a discussion on the impact on MPS's financial statements and further description of the interest rate swaps.          The Company has observed that increasing interest rates generally tend to negatively impact the market for fee-for-service mechanical and electrical engineering services. However, increasing interest rates also appear to increase the demand for energy efficiency and asset lifecycle management services. The Company cannot warrant or predict these economic effects and makes no predictive statement as to future market or competitive trends.    Value of Real Estate            The net book value of Maricor Properties' real estate totaled $7.82 million at December 31, 2005. MAM is exposed to risk associated with the local real estate markets in Moncton, New Brunswick and Halifax, Nova Scotia, and its impact on the value of these properties. The most recent appraisals  7      obtained during 2005 and 2006 indicate that the appraised value of the properties currently exceeds the book value; however, this position could reverse with changes in the real estate markets.    Inflation Risk            MAM is exposed to inflation risk in both the United States and Canada.  Franchises and Competition           Except for consumers served by municipal electric utilities within MPS's service area, MPS has a nearly exclusive franchise to deliver electric energy in its service territory, and has little exposure to risk from competition.          The Maricor Group, Canada Ltd and The Maricor Group New England operate in competitive markets and do not have exclusive franchises. Competition for contracts comes from local, regional and mechanical and electrical engineering firms, as well as local, regional or national energy services, energy asset development and energy controls companies. TMGC also faces risks associated with their relationships with the local architectural firms. The majority of its current business is obtained through local architects, and a deterioration of this relationship could negatively impact financial performance.          Maricor Properties Ltd, Cornwallis Court Developments Ltd and Mecel Properties Ltd compete in the open market for tenants for facilities owned and operated by these subsidiaries. Competition is driven by per square foot lease costs, operating costs, quality of the work environment, availability of parking, management services and other factors that could influence a tenant to lease office space. These companies have greatly mitigated this risk with their existing long-term leases for tenants.          In addition to competition for tenants, the subsidiaries compete in the market with other real estate and development companies regarding the potential acquisition of additional real estate. Market conditions driven by supply and demand issues, as well as interest rates typically drive the subsidiaries' markets to acquire, lease or sell real estate holdings. Maricor Properties and Mecel Properties compete with individual real estate developers, regional real estate developers, real estate investment trusts ("REITs"), national real estate developers, insurance companies and others that invest in commercial real estate.          Maricor Technologies, Inc. competes in the open market and does not have an exclusive franchise. Factors affecting its market include the economic needs of facilities owners, the age of facilities infrastructure, the availability or lack thereof of capital, public policies and other issues. It competes with existing and potential additional providers and/or developers of similar software solutions. Maintaining the market viability of their software assets through product enhancements and new versions is a critical part of ensuring its market competitiveness. Additionally, its competitiveness may be impacted by its ability to expand its product offerings to address a more comprehensive array of facility infrastructure information management and planning needs.  Environmental Risks           MAM, particularly MPS, bear environmental risks associated with former ownership of nuclear, diesel and oil fired generation, as well as the ownership of transformers containing Poly Chlorinated Bi-phenols ("PCB's"). Further, MPS has potential risks concerning claims related to electro-magnetic fields ("EMF's"). While the Company takes significant steps to ensure prudent environmental practices, it cannot assure that risks do not exist from past or future environmental practices. Additionally, while the Company does not believe EMF's represent a danger, particularly due to its lack of ownership of bulk transmission, it cannot warrant that claims could not be filed.  8         Aging Infrastructure and Reliability           MPS has risks associated with aging infrastructure assets that may in some instances be beyond the useful life of the asset. The failure of such assets could result in the loss of power that could result in harm to property or person. MPS works diligently through on-site inspection and testing programs to ensure the integrity of its infrastructure, but cannot warrant that outages will not occur due to the age of some infrastructure. MPS does maintain substantial back-up equipment and the capability to repair or rebuild such assets in a timely manner, including the maintenance of mobile transformers.  Debt Covenants           MAM and certain of its subsidiaries have obtained financing with financial and other covenants, such as debt service coverage ratios. In a default, the lender can require immediate repayment of the debt. This could also trigger increases in interest rates, difficulty obtaining other sources of financing and cross-default provisions within the debt agreements.  Collections Risk           MAM's subsidiaries sometimes extend credit to their customers. This may be regulated, as in the case of MPS, or under the terms of contracts or leases. In these situations, MAM bears the risk that it may not collect these funds. MAM partly mitigates this risk through the use of credit checks and monitoring of the accounts receivable aging. MAM also maintains an allowance for uncollectible accounts for accounts receivable that are unlikely to be collected.  Attraction and Retention of Qualified Employees           MAM primarily operates in service sectors, and is heavily dependent on the attraction and retention of qualified employees, including engineers and electricians. MAM maintains competitive wage and benefits packages for its employees to aid in attracting and retaining staff.  Equity Price Risk           The Maricor Group and its subsidiaries incurred equity price risk when it bought the stock of certain of its subsidiaries. Part of the consideration was MAM stock. In the event that the price of MAM common stock is below a specified price when the seller wishes to dispose of it, The Maricor Group (or the applicable subsidiary) has agreed to pay the difference. There were 41,151 shares outstanding pursuant to this kind of agreement as of December 31, 2005. At a market price of $15.49 per share on that date, the total exposure was approximately $814,000. A $1.00 change in the market price would impact this exposure by approximately $41,000.          Market price protection of a different sort was given by Maricor Technologies when it acquired the HCI assets. Part of the consideration for that acquisition was MAM preferred stock which is convertible into 26,000 shares of MAM common stock on February 15, 2008, subject to some other conditions. To the extent that the market price of MAM common stock is then below $25 per share, the number of shares issuable on conversion is ratably increased, which could result in further dilution of MAM's common stock.  Professional Liability           The Maricor Group and its subsidiaries are subject to risks associated with engineering design errors and/or omissions. The Company carries insurance to address errors and omissions to mitigate certain risks.  9       Technological Obsolescence           Due to the nature of their business, Maricor Technologies is subject to risks associated with changing technologies and obsolescence of their products. As a result, MTI monitors technology and competitor trends to ensure its product offerings remain market competitive.  Weather           MPS and its electric wires infrastructure are at risk to natural phenomena, especially those caused by the weather. Storms, such as ice storms and major winter snow storms may have an impact on the integrity of MPS infrastructure assets in the field.  Vandalism, Terrorism and Other Illegal Acts           MAM and its asset-owning subsidiaries are subject to the risks of damage to others' properties or human harm due to the failure of infrastructure. While MAM and its subsidiaries exercise diligent asset management and asset inspections, it cannot warrant that such risks can be fully eliminated. MPS and its electric wires and information technology infrastructure are particularly at risk to vandalism and acts of terrorism. While the Company takes steps to protect against such illegal acts through various risk insurance policies and other protective measures, including restricting access to assets, it cannot warrant that they cannot happen.  Information Technology           MAM is subject to systemic risks associated with information technology systems that could impact the calculative outcome of billing determinations or the unintended release of confidential consumer information. MAM goes to significant lengths to stress test its systems and protect against such events; however, the Company cannot warrant that such risks do not exist.  Alternative Generation Options           MPS does face technology and product substitution risks associated with the evolution of distributed generation, non-utility generation, and other alternative fuel forms. The primary risk in this area is non-utility generation, which the utility successfully competed with to date. However, as electric commodity prices increase, the viability of alternative fuel from non-utility generation may become more practical. Such projects could result in reduced usage of MPS's delivery system.      Item 2.    Properties              As of December 31, 2005, MPS owned approximately 380 circuit miles of transmission lines and approximately 1,767 miles of distribution lines, all in Aroostook County and a portion of Penobscot County in northern Maine. In addition, MPS owns eight buildings that consist of office, warehouse and/or operating facilities within its service area, as well as various tracts of vacant land. Substantially all of the properties owned by MPS are subject to the liens of its First and Second Mortgage Indentures and Deeds of Trust.          In response to a Maine environmental regulation to phase out PCB transformers, MPS has implemented a program to eliminate transformers on its system that do not meet the new State environmental guidelines. The program is in the process of testing almost 7,400 distribution transformers over a ten-year period. MPS is currently in its fifth year of this ten-year program. In addition, transformers that pass the inspection criteria will be refurbished and refitted with lightning arrestors and animal guards. The current estimated cost of the ten-year program is $2.7 million and, as of December 31, 2005, $1.40 million has been spent to remediate approximately 45% of the transformers in this effort.  10               In March 2005, the FASB issued FASB Interpretation No. 47, "Accounting for Conditional Asset Retirement Obligations" ("FIN 47"), effective for fiscal years ending after December 15, 2005. FIN 47 clarifies the term "conditional asset retirement obligation", used in FASB Statement No. 143, "Accounting for Asset Retirement Obligations", as referring to a "legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity." Based on this interpretation, MPS recognized an associated asset retirement obligation of $1.30 million with the PCB Transformer phase-out program, described more fully in Note 1 of these Consolidated Financial Statements.          Additional assets of the Company include three office buildings owned by Maricor Properties Ltd and its subsidiaries Cornwallis Court Developments Ltd and Mecel Properties Ltd. These office buildings are located in Moncton, New Brunswick and Halifax, Nova Scotia. The Moncton, New Brunswick multi-tenant office building consists of approximately 40,000 square feet and is located along a downtown thoroughfare. The facility houses The Maricor Group, Canada Ltd's Moncton operations, in addition to third party tenants. The J. Angus MacDonald Building, located in downtown Halifax, is a 60,000 square foot facility, and is fully leased to third parties, primarily Canadian government entities. The other Halifax office is approximately 10,000 square feet and is located in a revitalization district near the historic downtown Citadel. The facility houses The Maricor Group, Canada Ltd's Halifax operations.  MPS System Security and Reliability           MPS has implemented a transmission inspection program, part of its asset lifecycle management efforts, and has begun implementation of a distribution inspection program. Such inspection programs include regular testing of transformers located within substations. Management believes that full implementation of asset lifecycle management programs can reduce future demands for capital expenditures related to MPS's renewal and replacement needs. However, before reducing annual capital expenditures, baseline improvements are being undertaken. While future plans will attempt to reduce capital expenditures to a level approximately equal to its rate of depreciation, interim steps may include potential consolidation of facilities to help ensure increased system reliability and reduce long-term costs. Such expenditure levels do not include the possible construction of additional transmission plant as later described.          As a result of uncertainty concerning merchant and non-merchant generation facilities within the Maritimes and northern Maine regions, MPS evaluates system security on an ongoing basis, particularly from an on-peak generation resource perspective. Through load-flow analysis and utilization of specific contingency or transmission outage scenarios, it has been determined that under a single contingency or outage condition and during peak load situations, a system-wide outage is possible if approximately 50 MW's of on-system generation are not operating. Additionally, under certain conditions, the analyses noted that a second contingency or transmission line outage could not be survived within a thirty-minute time frame when similar conditions existed after a single contingency. Although Maine Public Service Company does not have a bulk delivery transmission system as defined by the Northeastern Power Coordinating Council ("NPCC"), MPS is using NPCC's standards for planning criteria. It should be noted that potential contingencies that were studied focused on situations that could impact MPS's transmission and distribution systems, even though certain transmission assets are located in Canada and are owned by other companies or organizations. MPS has load reduction contingency plans to mitigate such conditions or events in the case that a major transmission outage or system outage occurred.          In order to address system security and reliability needs, MPS filed a request with the MPUC requesting authorization to construct, subject to all required permitting, a new 138 kV transmission line that would interconnect with NB Power. This filing is more fully described in Item 3 below and is incorporated by reference herein. MPS believes that the construction of the proposed transmission line,  11       an approximate $4 million regulated investment, would significantly improve system reliability and allow the MPS system to meet NPCC standards for single and dual transmission contingencies. MPS continues to evaluate projects and actions that could increase available and total transmission capacities.      Item 3.    Legal Proceedings      Federal Energy Regulatory Commission 2005 Open Access Transmission Tariff Formula Rate Filing           On May 31, 2005, pursuant to Section 205 of the Federal Power Act, 16 U.S.C. Section 824d, and Title 18 CFR Sections 35.11 and 35.13 of the regulations of the FERC, MPS submitted for filing its proposed revisions to its FERC Open Access Transmission Tariff in Docket No. ER 05 (the "2005 OATT") to modify its transmission rate formula. MPS filed its updated rates under the 2005 OATT formula on June 15, 2005, pursuant to Docket ER00-1053 with an effective date of June 1, 2005, for both wholesale and retail customers, subject to a customer refund that may occur as a result of the proceeding and potential settlement negotiations. The retail transmission revenue requirement was increased by $288,670 on June 1, 2005, under the 2005 OATT. This represented an increase of 8% to the transmission component of retail delivery rates or an overall impact on total retail delivery rates of 0.7%. The primary reasons for the increase were the increase to costs due to mandated Sarbanes-Oxley requirements, and the purchase of a new Oracle-based accounting system.          As part of the settlement data request process, the Company identified adjustments to its FERC Form 1 filing for 2004, which flow through the Company's transmission rate formula. The approximate net impact of these corrections, once implemented, will be to reduce the overall increase to the projected retail transmission revenue and result in a revised projected net increase to the retail transmission revenue requirement of $238,422 instead of the previously projected increase of $388,923. This adjustment will flow through Schedule 1.1.2 of the MPS OATT to be effective June 1, 2006, and will be passed through retail rates on July 1, 2006, when the retail rates are next adjusted. The Company has reported to FERC as scheduled that the parties are proceeding with the settlement process and will continue to provide progress reports as required. Because the Company is currently in the midst of a settlement process, it cannot predict the exact dollar outcome of this proceeding at this time.  MPUC Approves the Pass-Thru of Retail Transmission Rates to MPS Retail Jurisdictional Customers, and the Increase to DSM Mil Rate, MPUC Docket No. 2003-516           Per agreement with the Maine Public Utilities Commission, the new transmission rates for retail customers (above) were put into retail rates on July 1, 2005, to coincide with MPS's related State jurisdictional compliance filing in MPUC Docket No. 2003-516 to increase the DSM Mil Rate. These rates were approved by the MPUC on June 20, 2005. Per this filing, total retail delivery rates increased by 1.1%.  Requests for Issuance of Certificates of Public Convenience and Necessity in Connection With the Construction of a Proposed Transmission Line and Various Transmission Service Reservations           On October 4, 2004, MPS filed a Petition with the MPUC requesting the issuance of Certificate of Public Convenience and Necessity ("CPCN") pursuant to 35-A M.R.S.A. Section 3132 to construct a 138 kV transmission line originating at an existing substation in Limestone, Maine and extending to the Canadian Border near Hamlin, Maine.          The project was proposed in order to ensure the reliability and integrity of the MPS transmission grid under scenarios of reduced on-system generator availability and peak load growth. MPS submitted that the available firm transfer capability of the transmission system when added to the remaining on-system hydro generation was not sufficient to meet peak load conditions, should existing on-system  12       wood-fired generation become unavailable. The proposed line would address this by significantly increasing the load-serving capability of the northern Maine region and would serve to reinforce the vital transmission ties between northern Maine and the New Brunswick transmission grid. Additional benefits of the proposed line include the potential for increasing the number of competitive retail electric suppliers and increasing the attractiveness of the region for development of additional generation, such as wind farms, by providing increased transmission export capacity.          The MPUC Commissioners deliberated the Docket on August 29, 2005, and denied the petition, determining that there was no immediate reliability risk in northern Maine. The Commission concluded that the risk of losing on-system wood-fired generation was not sufficient to warrant the new transmission line. The Commission issued the Order on October 21, 2005, that described actions to be taken by MPS and the Northern Maine Independent System Administrator ("NMISA") to reduce certain risks identified by MPS. The Company filed for reconsideration of the Order on November 8, 2005 based on the likelihood that Linekin Bay Energy Company, LLC may elect to utilize the CPCN filed in this Docket in order to construct transmission facilities necessary to connect their proposed generation project to the MPS electrical system. The Commission approved the request for reconsideration and will revisit the issue on or before March 31, 2006. Additionally, on November 23, 2005, the Commission granted an MPS request for waiver of the specific requirements of the October 21, 2005 Order until the NMISA finalizes currently proposed market rule changes that are currently scheduled to be presented to the Commission on March 1, 2006. Through December 31, 2005, approximately $844,000 was spent on this transmission project. MPS expects to seek recovery of these costs in its transmission rates and is currently pursuing other recovery options. MPS believes it is probable the amounts deferred can be recovered, either through future rate cases or through sale of the assets to a third party.          In September 2004, MPS entered into a Commitment Agreement with NB Power. Under this Agreement, which is subject to MPS obtaining all necessary regulatory approvals, MPS will reserve 35 MW of transmission capacity on the NB Power system in conjunction with the construction of a new 345 kV transmission line to be constructed from Point Lepreau near Saint John, NB to Orrington, Maine. NB Power will own and operate the portion of the line on its side of the border, while Bangor Hydro-Electric Company ("BHE") will own and operate the portion of the line on the U.S. side of the border known as the Northeast Reliability Interconnect ("NRI"). BHE filed for a Certificate of Public Convenience and Necessity for this line on November 5, 2004, in MPUC Docket No. 2004-771. MPS filed a petition with the MPUC seeking approval to make the reservation required under the Commitment Agreement on December 13, 2004, in MPUC Docket No. 2004-775 which was subsequently changed to MPUC Docket No. 2004-538 Phase II. On October 7, 2005 MPS proposed several changes to the Commitment Agreement, to include a reduction in the reservation quantity from 35 MW to 20 MW. Hearings on Phase II were conducted on December 6 and 7, 2005. A Commission Order is expected during March 2006. As noted above, MPS's obligations under the Commitment Agreement are dependent upon securing regulatory approval. MPS cannot predict the outcome of Phase II of this case at this time.      Item 4.    Submission of Matters to a Vote of Security Holders              None.  13          PART II          Item 5.    Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities              Maine & Maritimes Corporation became a holding company effective June 30, 2003. All 1,574,582 shares of MPS common stock were converted on that date into an equal number of shares of MAM common stock, which are listed and traded on the American Stock Exchange under the symbol "MAM". As of March 1, 2006, there were 753 holders of record of the Company's common stock.          Dividend data and market price related to the common stock are tabulated as follows for 2005, 2004 and 2003:                 Dividends       Market Price       Paid Per Share   Declared Per Share       High   Low   2005                           First Quarter   $ 27.79   $ 24.87   $ 0.20   $ 0.25   Second Quarter   $ 27.25   $ 24.04     0.25     0.25   Third Quarter   $ 24.85   $ 19.70     0.25     0.25   Fourth Quarter   $ 19.55   $ 15.25     0.25     0.00                         Total Dividends               $ 0.95   $ 0.75                         2004                               First Quarter   $ 34.75   $ 31.98   $ 0.38   $ 0.38   Second Quarter   $ 34.42   $ 30.20     0.38     0.38   Third Quarter   $ 31.75   $ 29.00     0.38     0.38   Fourth Quarter   $ 29.50   $ 25.40     0.38     0.20                         Total Dividends               $ 1.52   $ 1.34                         2003                               First Quarter   $ 32.26   $ 24.99   $ 0.37   $ 0.37   Second Quarter   $ 32.95   $ 26.36     0.37     0.37   Third Quarter   $ 36.90   $ 31.60     0.37     0.37   Fourth Quarter   $ 35.95   $ 34.37     0.37     0.38                         Total Dividends               $ 1.48   $ 1.49                                  Dividends declared within the quarter are paid on the first day of the next quarter.          To date, the Company's payment of dividends has been based on dividends from MPS, which are limited by restrictions imposed by the MPUC. MPS dividends to MAM are subject to a common dividend payout ratio (dividends per share divided by earnings per share), which cannot exceed 1.0 (i.e. 100%) on a two-year rolling average.          The most recent and current financial and cash flow performance of the Company resulted in no shareholder dividend during the fourth quarter of 2005. Until such performance improves, the Company cannot warrant that it will continue to pay dividends on a quarter-on-quarter basis. The Company's Board of Directors has adopted a dividend policy which provides for a dividend based on 55% to 80% of the net income contribution from MPS, provided that the Company is projected to generate net earnings per share and requisite free cash flows from its regulated and unregulated operations.  14               The Company has determined that the common stock dividends paid in 2005 are fully taxable for federal income tax purposes. These determinations are subject to review by the Internal Revenue Service, and shareholders will be notified of any significant changes.    Securities Authorized for Issuance Under Equity Compensation Plans.       Plan Category    Number of securities to be issued upon exercise of outstanding options, warrants and rights   Weighted-average exercise price of outstanding options, warrants and rights   Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))       (a)    (b)    (c)    Equity compensation plan approved by security holders   21,000   $ 29.80   136,046   Equity compensation plan not approved by security holders   —     n/a   —                   Total   21,000         136,046                            The Company maintains two equity compensation plans. The 2002 Stock Option Plan included 150,000 shares available for issuance. Of this total, 21,000 options have been issued for executive compensation. See Note 9, "Stock Compensation Plan," in Item 8. An additional 20,000 shares were originally available for issuance to the Company's Board of Directors pursuant to the Stock Plan for Outside Directors. There are 7,046 of these shares remaining available for future issuance.    Sale of Unregistered Securities            In February 2005, MAM issued 9,500 shares of preferred stock in conjunction with the acquisition of software now owned by MTI. The entity to which these securities were issued was HCI Systems Asset Management, LLC. No underwriter was used in this transaction. The securities were issued under the exemption provided by Section 4(2) of the Securities Act of 1933 as a transaction by an issuer not involving a public offering.          As mentioned previously, the Company established a stock repurchase program in January 2005 as part of the Dividend Policy announced when the January 3, 2005, dividend was declared. Execution of the share repurchase program will be based on market conditions and is subject to the MAM cash position and investment opportunities. There were no stock repurchases by the Company during 2005.          In June 2004, the Company issued 54,332 shares of its common stock in connection with two acquisitions. On June 1, 2004, the Company, through its Canadian subsidiary, Maricor Ltd, now doing business as The Maricor Group, Canada Ltd, acquired all of the outstanding common shares of Morris & Richard Consulting Engineers Limited, a Canadian-based engineering firm. The persons who acquired the securities were the former principals of M&R. On June 17, 2004, the Company completed a second acquisition by its subsidiary Maine & Maritimes Energy Services Company, now doing business as The Maricor Group, of RES Engineering, Inc., now The Maricor Group New England, of Boston and Hudson, Massachusetts. The person acquiring the shares was the former principal of RES. No underwriter was used in either transaction. Refer to Note 14 to the Consolidated Financial Statements, "Acquisitions." The securities were issued under the exemption provided by Section 4(2) of the Securities Act of 1933 as a transaction by an issuer not involving a public offering.  15             Item 6.    Selected Financial Data              A five-year summary of selected financial data (2001-2005) is as follows:  Five-Year Summary of Selected Financial Data(1) (In thousands of dollars except per share amounts)          2005   2004   2003   2002   2001   Income Statement Data:                                 Revenues   $ 39,974   $ 37,138   $ 31,797   $ 31,401   $ 31,780   Net (Loss) Income From Continuing Operations     (224 )   1,726     2,949     3,090     4,340   Income (Loss) From Discontinued Operations     4     (408 )   (143 )   3,453     897                      Net (Loss) Income Available for Common Stock   $ (220 ) $ 1,318   $ 2,806   $ 6,543   $ 5,237                      Basic (Loss) Earnings Per Share of Common Stock From Continuing Operations   $ (0.13 ) $ 1.07   $ 1.87   $ 1.97   $ 2.76   Basic (Loss) Earnings Per Share of Common Stock From Discontinued Operations     0.00     (0.25 )   (0.09 )   2.19     0.57                      Basic (Loss) Earnings Per Share of Common Stock From Net Income   $ (0.13 ) $ 0.82   $ 1.78   $ 4.16   $ 3.33                      Diluted (Loss) Earnings Per Share of Common Stock From Continuing Operations   $ (0.13 ) $ 1.06   $ 1.86   $ 1.96   $ 2.76   Diluted (Loss) Earnings Per Share of Common Stock From Discontinued Operations     0.00     (0.25 )   (0.09 )   2.19     0.57                      Diluted (Loss) Earnings Per Share of Common Stock From Net Income   $ (0.13 ) $ 0.81   $ 1.77   $ 4.15   $ 3.33                      Dividends Paid per Common Share   $ 0.95   $ 1.52   $ 1.48   $ 1.42   $ 1.31                      Balance Sheet Data:                                 Total Assets(2)(3)   $ 157,775   $ 150,806   $ 141,269   $ 141,986   $ 143,335                      Capitalization:                                 Long-Term Debt Outstanding   $ 38,226   $ 39,380   $ 30,680   $ 33,765   $ 34,940   Less amount due within one year     2,612     2,225     1,450     3,085     1,175                      Long-Term Debt     35,614     37,155     29,230     30,680     33,765   Common Shareholders' Equity(4)     47,786     48,157     46,988     47,029     42,731                      Total Capitalization   $ 83,400   $ 85,312   $ 76,218   $ 77,709   $ 76,496                         (1)Data from periods ending prior to June 30, 2003, is from MPS. (2)For 2005, 2004, 2003 and 2002, total assets reflect the reclassification of accrued removal obligations as a liability from accumulated depreciation. For 2005, the estimated accrued removal obligation includes the PCB Mitigation Project as required under FIN 47.   See Item 1a. "Risk Factors" and Item 7a, "Quantitative and Qualitative Disclosures about Market Risk," incorporated in this section by this reference, concerning material risks and uncertainties which could cause the data reflected herein not to be indicative of the Company's future financial condition or results of operations.    (3)Total assets reflect assets from Discontinued Operations of $235 for 2005, $467 for 2004, $2,024 for 2003, $6,324 for 2002, and $5,632 for 2001. (4)Common Shareholders' Equity reflects equity from Discontinued Operations of $229 for 2005, $451 for 2004, $1,559 for 2003, $5,674 for 2002, and $3,206 for 2001.  16          Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations      Forward-Looking Information           This Management's Discussion and Analysis contains certain forward-looking statements, as defined by the SEC, such as forecasts and projections of expected future performance or statements of Management's plans and objectives. These forward-looking statements may be contained in filings with the SEC and in press releases and oral statements. The reader can identify these statements by the fact that they do not relate strictly to historical or current facts. They use words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe" and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. These statements are based on the current expectations, estimates or projections of Management and are not guarantees of future performance. Some or all of these forward-looking statements may not turn out to be what the Company expected. Actual results could potentially differ materially from these statements. Therefore, no assurance can be given that the outcomes stated in such forward-looking statements and estimates will be achieved.          Factors that could cause actual results to differ materially from our projections include, among other matters, electric utility restructuring; future economic and demographic conditions within MPS's service area and unregulated markets; changes in tax rates; interest rates or rates of inflation; ability to raise capital; pace and success of merger and acquisition efforts; terrorism; changes in the construction industry; changes in Canadian currency rates; length of sales cycles; developments in state, provincial and national legislative and regulatory environments in the United States and Canada; ability to recruit individuals with necessary skill sets; increased competition by existing or new competitors in the Company's unregulated markets; changes in technology; new innovations; changes in NAFTA; increased environmental regulations and other regulatory or market-based conditions.  Annual Performance Summary           Financial results were diminished for the year 2005 compared to 2004 and 2003 due to a myriad of cost factors. During the year MPS's performance was lower than historically expected with cost of service rising such that its return on its distribution rate base was inadequate. TMG did not achieve its targets as a result of a lack of adequate capitalization, costs associated with transitioning acquisitions from small privately held firms to publicly traded company standards, lagging business development, and the slowed pace of accretive acquisitions. MTI's performance was impacted by its lack of business development and need to upgrade its software solutions. Maricor Properties was in a start-up phase during 2005 as real estate assets were leased-up and/or acquired. While MAM's overall financial performance in 2005 was less than anticipated, it made meaningful progress in advancing its growth strategy that remains in its infancy. Management is taking steps to improve future performance and believes it must increase its speed and focus on growing its unregulated operations.          Collectively, MAM's unregulated diversification and growth strategy remains in its infancy stages. It continues to experience cash flow challenges. Management is taking steps to bridge necessary cash flows until 2007 when MAM's cash flow situation should improve. Improved economic performance of existing unregulated subsidiary operations is important and steps are being taken to improve such performance. However, Management believes that adequate capitalization, increased pace of acquisitions, and enhanced business development are critical keys to MAM's unregulated organizations' collective financial performance, both in the near and long-terms.          Management does recognize a number of short-term financial and operating challenges; however, we believe our long-term outlook is encouraging. To improve long-term shareholder value and earnings, Management believes that the Company must increase its pace of organic and inorganic unregulated growth, while forming capital in an equally timely manner supportive of such growth. As previously noted, Management does not believe a status quo or "stay as you are" strategic option exists to create  17       long-term shareholder value for MAM. Further, given the impact of electric deregulation, generation divestiture, and disaggregation of the electric utility industry within Maine, combined with the lagging economy of MPS's service area, Management does not believe reverting solely to its core regulated wires business can generate adequate long-term shareholder value. However, Management also believes that its regulated operation's performance must be continually enhanced. As a result of increasing costs of service, MPS filed in March 2006 a request for a distribution rate increase. The outcome of this docket will not be known, in all probability, until the third quarter of 2006. Although a request for an increase in distribution rates has been made, MPS cannot predict the outcome or the rate of increase that may be allowed. Further, given recent interest in MPS's service area by several wind generators, there are over 500 MW's of proposed wind generation planned for the utility's service area. Should these projects move forward, they hold potential for contract work associated with the construction of additional transmission and substation facilities, as well as the potential rebuilding of part or all of MPS's transmission system funded by the developers. While MPS cannot predict with certainty that these projects will be constructed, Management does believe they are potentially positive projects for its service area.          Through more timely execution of MAM's inorganic unregulated growth strategy, including formation of growth capital, as well as improved organic growth, and MPS's proposed distribution rate increase, Management is focused on increasing earnings across all business lines. Should the Company not achieve a level of unregulated growth consistent with the need to create long-term shareholder value within a reasonable timeframe, Management and the Board of Directors will need to assess strategic alternatives to its current growth strategy. Resulting actions could involve the sale or partial sale of certain or all unregulated assets or other alternatives, recognizing the need to act prudently in protecting and enhancing long-term shareholder value. Further, if the Company does not receive an adequate distribution rate increase to cover its utility costs and allowing for a fair return on rate base, Management will need to assess its strategic options to preserve and grow shareholder value. However, Management does believe that the timely and efficient implementation of the Company's growth strategy, cost control within its utility operations, and implementation of prudent rate increase requests when warranted can result in achieving desired long-term shareholder value.          Given MAM's need to reinvest in its future and expand its scale to improve its overall financial performance, particularly its unregulated operations, Management cannot warrant that it will continue to pay dividends at historic levels or on a continuing basis until its cash flows and earning performances improve. Further, Management believes that it must address the under capitalization issues facing the Company before considering a dividend for its common shareholders. However, it is the goal of Management to expeditiously enhance the performance of the Company and to continue as a yield and growth-at-a-reasonable price stock. Management believes its strategy is sound and that meaningful progress is being made in the firm's overall structural and economic transition.  Overview of Company Strategy           MAM's overall strategy was developed in response to a number of converging macro-economic trends that Management believes will drive market opportunities both in the near and long-term. The year 2005 underscored the reality that turbulence within the energy industry, exacerbated by geo-political conflicts and growing third-world demand for energy, are predicted to have significant price, supply, and security impacts on businesses and organizations within North America. While an increasing emphasis is being placed on supply-side issues by North American governments, we see expanding governmental mandates and a renewed customer-driven need to improve energy efficiency and control energy-related costs. As energy-related issues remain at the forefront of public policy issues, and an increasing cost and reliability concern for businesses and organizations, MAM believes there will be an increasing demand for energy efficiency-related services and solutions, including an expanded market-place interest in "on-site" and alternative energy electric generation.  18               While energy costs and reliability remain a concern, businesses and organizations are facing a significant financial challenge as they realize the economic threats created by escalating deferred maintenance liabilities. As businesses and organizations underfunded their capital renewal and asset maintenance programs year after year, many are now faced with staggering deferred maintenance liabilities. In many cases the deferred maintenance on facility and energy-related assets threatens the continued viability of such assets. Increasingly, MAM believes businesses and organizations are requiring more intensive capital expenditure planning, working to ensure that every capital dollar spent is the most optimal investment they can make. Further, to address burgeoning deferred maintenance liabilities, organizations are looking to advanced business processes that can help extend the functional and economic lifecycle of physical assets. MAM believes that by enhancing the energy efficiency and controlling organizations energy-related expenditures that an entity can "free-up" capital to address their deferred maintenance liabilities. Further, by designing and building new energy-related and energy efficient facilities-related infrastructure, operating costs can be reduced while built environment assets are renewed.          While energy and deferred maintenance liabilities are of growing concern within the marketplace, Management believes there is an increasing North American awareness of climate change and the need to address emissions reductions. We believe that energy efficiency, alternative "on-site" generation, and sustainable asset management techniques are key to reducing emissions from the built environment. We continue to see growing business interests and government mandates to address climate change, particularly within the northeast United States and Canada. As more and more businesses and governments adopt a sustainable approach to their actions, we believe opportunities will evolve related to the market demand for sustainable asset management and energy-related solutions.          As evidenced by the passage of the Sarbanes-Oxley Act and other regulatory actions, there are increasing interests in and growing mandates to improve the transparency of asset governance reporting. Businesses and organizations are being pressed to provide increasing details concerning the performance of owned assets, both from an economic and environmental perspective. Consequently, we also see an emergence of market interests in improved asset governance reporting, a critical part of MTI's sustainability-centric solutions that also address organization's energy, emissions reductions, and deferred maintenance needs.          We believe the convergence of these issues will create a substantial marketplace demand, with current solutions and services being minimal. Addressing these issues and advancing businesses' and organizations' achievement of a stakeholder-centric "triple bottom line" requires the integration of physical, intellectual, and technology-based assets that when combined result in dynamic solutions to growing challenges regarding the aging infrastructure, climate change, energy pricing and security, and our ability to support the changing needs of society. Through the amalgamation of diverse, but relevant skills and technologies in the building sciences, engineering, information technology, and energy consulting fields, MAM is positioning itself to be a leading professional services, product and asset-based solutions company.          MAM's unregulated operations are increasingly focused on sustainable solutions, progressively building professional services competencies to provide products, services, and solutions, such as, but not limited to (a) sustainable university and college campus planning with a strong focus on on-campus energy infrastructure, (b) energy efficiency evaluations and solutions focused on the governments, hospitals, universities, schools, institutional and office commercial markets, (c) sustainable asset management ranging from facility infrastructure condition assessments to capital planning to facility renewal, (d) on-site energy asset development including co-generation, alternative fuel and distributed generation solutions, (e) energy supply management, (f) sustainable real estate development and renewal, including public and private partnerships such as the construction and ownership of university dormitories, (g) sustainable and transparent asset governance and reporting, and (h) LEED™ engineering design services.  19               MAM's execution strategy involves a combination of organic and inorganic strategies. However, key to amassing the requisite talent and core competencies is a proposed aggressive acquisitions program. Simply hiring one individual talent at a time will not enable the necessary ramping-up of the business to achieve the required scale and desired level of profitability. Recognizing that there are limited acquisition opportunities across North America, MAM's efficiency in identifying potential targets, undertaking due diligence, forming capital and closing transactions in a timely manner is critical. Given that few, if any, potential acquisition candidates exist today that provide the array of proposed integrated sustainable services, products, and assets, MAM recognizes its need to acquire companies that bring discreet portions of the value proposition and amalgamate integrated services offerings across acquired companies through the organic development of a high level business development and transaction structuring organization. Such a high level, organically grown business development staff will require experienced individuals with a high degree of relative domain knowledge, as well as experience in structuring financial transactions, often referred to as financial engineers. Through these senior staff members, solutions to clients' needs are crafted using multiple discreet offerings or capabilities, integrated into a seamless solution. Each individual offering will continue to be sold on a "one-off" basis, such as selling engineering design services. However, the more complex and higher value integrated offerings will be sold and managed by a higher level business development organization currently being organized and staffed.          While Management believes MAM's strategy is well-aligned with existing and projected macro-economic trends, it believes its success will depend on the Company's ability to expeditiously (a) recruit, train and execute a high level business development organization, (b) to identify, undertake due diligence, acquire and integrate multiple companies providing required core competencies and (c) to form adequate working and growth capital to support the Company's organic and inorganic growth strategies. Management further believes, given its holding company structure, that the Company's unregulated operations must achieve increased scale, allowing for necessary critical mass to support corporate-related costs and ensure meaningful contribution to earnings per share.          MAM's strategy includes the continuing operation of its regulated utility, Maine Public Service Company. However, given the projected decline in its regulatory rate base, Management believes earnings may decline somewhat and then become more stable. MPS will continue to be challenged by cost pressures and, while a long-term meaningful contributor to earnings per share, Management does not believe it can create growing long-term shareholder value unless unregulated operations are grown in a more expeditious manner.  20       2005 Operating Results for the Consolidated Entity   Net Income and Earnings per Share          2005   2004   2003         (Dollars in Thousands Except per Share Amounts)      Income (Loss) from Continuing Operations                         Regulated Electric Utility   $ 2,264   $ 3,042   $ 3,131       Unregulated Engineering Services     (689 )   (488 )   11       Unregulated Real Estate Holdings     (115 )   (22 )   —       Unregulated Software Technology     (318 )   —     —       Other*     (1,366 )   (806 )   (193 )                  Income (Loss) from Continuing Operations     (224 )   1,726     2,949     Income (Loss) from Discontinued Operations     4     (408 )   (143 )                  Net (Loss) Income   $ (220 ) $ 1,318   $ 2,806                    Basic Earnings (Loss) Per Share   $ (0.13 ) $ 0.82   $ 1.78                       *The "Other" line includes activities of the holding company, including corporate costs directly associated with unregulated operations, common costs not allocated to the regulated utility and inter-company eliminations.          Net income above is allocated based upon the segment allocation as presented in Item 8, Note 4 of the Notes to Consolidated Financial Statements, "Segment Information."          In 2005, Maine & Maritimes continued implementation of its growth and diversification strategy by acquiring real estate, forming a real estate joint venture, and actively seeking further mergers and acquisitions. In addition, Maricor Technologies, an early stage information and software products development venture, was formed in the first quarter of 2005 to serve the sustainable lifecycle management and facilities and infrastructure governance target markets.          Total revenues increased $2.84 million or 7.6% compared with 2004. Earnings results during 2005 reflect the challenges and evolution of our growth strategy which began in late 2003 and is still in its formative years. During 2005, the Company sustained a consolidated net loss of $220,000 compared with a net profit of $1.32 million in 2004. In 2005, MAM's utility operations contributed $2.26 million in net income, which was offset by TMG's losses of $689,000, MTI's start-up losses of $318,000, Maricor Properties start-up losses of $115,000, and $1.36 million in other corporate costs directly associated with the unregulated subsidiaries, common costs not allocated to the regulated utility and inter-company eliminations. Greater detail is provided for each segment later in this section.          There are a number of factors influencing the downward change in earnings from the prior year. Most notably are the following categories and approximate pre-tax expense impact:    •A continuing reduction in MPS's allowed rate of return on its stranded costs of approximately $522,000, •Higher costs of compliance and governance mostly due to Sarbanes-Oxley of $658,000, •Costs to retain key employees in all business segments of $95,000, •Increase in workers compensation insurance expenses at MPS of $205,000, •Increased amortization costs of software at MTI of $298,000, •One time write-off of external costs associated with a terminated acquisition of $123,000,   21          •Increased transportation expenses at MPS of $244,000, due to increases in fuel costs, repair and labor costs, •Increased expenses related to software research and development for MTI of $102,000, and •Increased rental expenses of $18,000.           Other categories of cost increases include, but are not limited to, continued integration costs, increased investments in business development, added software maintenance costs, additional interest expense, and sales administration costs on new products and services for our unregulated businesses.          Consolidated net income in 2004 decreased by $1.49 million from 2003. As described more fully below, the decrease in income is the result of losses from the Company's discontinued EA operations, losses associated with start up operations and integration of The Maricor Group acquisitions, and increased general and administrative costs associated with Sarbanes-Oxley compliance costs, implementation of the Company's Oracle-based financial system and increased regulatory compliance costs.    Consolidated Interest Expense            Interest Expense is accrued on the Company's long-term debt and short-term credit arrangements in accordance with debt agreements and was $3.0 million, $2.4 million, and $1.6 million for the years ending December 31, 2005, 2004, and 2003, respectively. Increases in interest expense were a result of increased debt for acquisitions, as well as increased borrowings to fund operations resulting from the deferring of MPS's stranded cost recovery and continued investments in unregulated subsidiaries start-up related operating costs in excess of their revenues. Interest expense has also been impacted by increases in interest rates on variable rate borrowings.    Income Tax Expense/Benefit            Income tax expense for MPS was $1.5 million, $1.2 million and $1.4 million in 2005, 2004 and 2003, respectively. The income tax benefit for the unregulated subsidiary was $1.7 million, $797,000 and $98,000 in 2005, 2004 and 2003, respectively.    Taxes Other Than Income            Taxes other than income, which are mostly property taxes for MPS and payroll taxes for all companies, were $1.8 million in 2005, $1.7 million in 2004, and $1.5 million in 2003.    Consolidated Capital & Construction Program            Expenditures on capital improvements, additions, replacements and equipment for the years ended December 31, 2005, 2004, and 2003, along with estimated expenditures for 2006 are as follows:         2006   2005   2004   2003       (Unaudited Estimates)                Maine Public Service   $ 3,394   $ 4,822   $ 6,276   $ 4,609   The Maricor Group     —     238     258     46   Maricor Properties Ltd     686     409     1,974     —   Maricor Technologies, Inc.     490     446     —     —   Other Subsidiaries     —     —     3     221                   Total   $ 4,570   $ 5,915   $ 8,511   $ 4,876                    22        Financial Condition & Management Challenges           Maine & Maritimes has made significant progress in implementing its overall growth strategy. However, it continues to be faced with challenges post-deregulation and generation divestiture associated with transitioning from a vertically integrated regulated electric utility to a diversified portfolio of both regulated and unregulated businesses. Our short-term challenges include (a) cash flow limitations anticipated during 2006, but significantly improving beginning in 2007 as a result of recovery of deferred stranded cost collections, (b) lagging earnings, (c) the lack of speed of implementation of MAM's overall growth strategy, (d) the need to improve market traction of unregulated operations' business development efforts and expand into higher value product and service lines, (e) the ability to raise adequate capital without significant dilution to shareholders, and (f) increasing and continuing costs from being a micro-cap publicly traded company associated with acquisition integration costs (those costs associated with transitioning the acquisition of smaller private companies to publicly traded company standards), compliance and regulatory reporting. These issues individually and collectively reflect the reality that MAM's current scale of unregulated operations cannot adequately carry the burden of corporate allocations and direct costs. These relatively fixed corporate costs include, but are not necessarily limited to governance, holding company administration, risk management, regulatory compliance and reporting costs. While the scale of unregulated operations does not fully support its allocation of corporate costs, their contribution to these relatively fixed costs limit the cost burden on regulated operations.          The most recent and current financial and cash flow performances of the Company resulted in no shareholder dividend during the fourth quarter of 2005. Until such performance improves, the Company cannot warrant that it will resume paying dividends on a quarter-on-quarter basis. In the near-term, the Company may be required to reinvest in the Company and in investments that have the potential for increasing long-term shareholder value. Such a transition may be viewed as a delayed response to the financial and business model impact of deregulation and resulting generation divestiture.          Management believes it is essential that we continue to expand our unregulated revenue opportunities through both organic and inorganic growth to provide the scale necessary to cover corporate costs and generate positive cash flows and earnings to help ensure long-term shareholder value. Although MAM has a long history within its regulated market, changes associated with deregulation and its new unregulated operations outside our utility's traditional regulated service area reflect in many ways the characteristics of a start-up to early stage growth company, requiring establishment of brand recognition and creditability in the marketplace. In order to succeed in our growth strategy, Management believes that MAM must increase its focus on and leveraging of growth capital, while increasing the pace of acquisitions. Management does not believe a status quo "stay as you are" or return to our utility core strategy is economically viable in the long-run.          Management believes that the passage of the 2005 US Energy Policy Act and resulting changes to the Public Utilities Holding Company Act ("PUCHA") may have a significant impact on the regulated electric utility or network utility industries. Specifically, we anticipate a potentially robust electric utility or network utility consolidation market during the foreseeable future. Such consolidation may result in the electric utility wires industry becoming a decreasing per unit cost industry with continued unbundling of products and services analogous to the evolution of the telecommunications industry. Management believes that through consolidation and the increasing of scale of operations, large utilities may achieve a number of leverageable synergies that result in decreased per unit costs, such as billing, metering, customer service, information technology, regulatory, governance and administrative. While Management cannot be assured of this potential trend, most recent activity appears to reflect this trend. Consequently, monitoring the impact and implications of the repeal of PUCHA will be an important aspect of determining MAM's long-term strategy.  23               During 2006, MAM will experience working capital challenges. This challenge is directly attributable to primarily two factors. These include, but are not necessarily limited to, the historical decision to defer full recovery of MPS's stranded costs associated with its Wheelabrator-Sherman non-utility generator contract until the 2007 through 2012 timeframe and the lagging pace of revenues and earnings of unregulated operations through both organic and inorganic activities. While 2006 presents a cash flow challenge related to the deferring and levelizing stranded cost recovery, free cash flows are projected to improve significantly from 2007 through 2012. This is due to the expiration of the Wheelabrator-Sherman contract in December 2006 and the collection of associated deferred stranded cost revenues during the next approximate six years. Management and the Board are taking actions to address our short-term operational cash flow short fall during 2006, such as leveraging equity positions associated with unregulated real estate assets, improving overall performance of all business segments, controlling capital expenditures, and instituting more rigid cost controls. It is likely that the Company and its subsidiaries may require increased short-term borrowings to bridge the deferral of the stranded costs cash collections and until increased market traction and scale of unregulated operations can be attained.          As noted, Management believes the scale of unregulated operations must be increased to address the burden of corporate-related costs. During 2005, MAM continued its acquisition efforts, acquiring certain software assets through Maricor Technologies, Inc., and purchasing Cornwallis Court Developments Ltd, the owner of a 60,000 square foot fully leased office facility in Halifax, Nova Scotia. However, significant time and effort during the year were spent evaluating a potential acquisition, Steven Winter Associates, Inc., a leading building sciences and energy efficiency professional services firm. Based on a number of factors, the decision was made not to acquire the firm. Consequently, anticipated revenues and earnings did not evolve from the proposed acquisition. MAM, particularly as it relates to the continued growth of TMG and TMGC, must intensify its efforts to target, evaluate, and acquire leading and accretive firms within the sustainable building sciences, energy efficiency, asset development and management, and professional consulting engineering space. However, Management cannot predict with certainty its ability to identify and successfully acquire such firms on a timely basis.          Related to MAM's ability to acquire accretive firms on a timely basis is its ability to raise capital to fund such acquisitions. Management believes the financing of future actions will involve differing forms of debt and equity, including, but not necessarily limited to, private placement of common stock, preferred stock issuance, convertible debt, conventional debt and venture capital. The actual cost of capital of such strategies depends on the exact structure and transaction, as well as the actual share price at the time of a transaction. In addition, depending on the structure and transaction, as well as the success of an acquisition or financing, share dilution may occur. In contrast, Management also believes that shareholder value can be created through the targeted and timely acquisition of key companies within TMG's competitive space that add value to the firm's value proposition.          In addition to acquisitions, MAM and more particularly TMG and MTI, must increase their market traction through improved business development efforts and increased sales of higher value products and services. TMG and TMGC have historically utilized a "seller-doer" professional services model. Given the "start-up" costs of a full-time professional business development and transaction structuring staff, adequate funding and staffing have not been available to date to enhance organic sales growth. TMGC has started the process of staffing a professional business development staff with the required domain knowledge to structure higher value customer-centric solutions. However, given cash flow and earnings challenges, organic growth tends to be more challenging in the near-term than acquisitions. Nonetheless, Management is pursuing a strategy to increase TMG's focus on expanding professional business development.          Prior to late 2005, MTI's marketing was done through a channel market agreement with its sister company, TMG. In order to enhance market traction and improve sales, MTI has employed its own full-time sales staff and is pursuing a broader range of channel marketing partners. While MTI is  24       challenged financially to adequately staff its business development and transaction structuring staff, progress is being made. Nonetheless, improving market penetration is a key challenge and opportunity for MTI.          Management has and continues to evaluate means to control corporate-related costs to decrease holding company cost allocations to its subsidiaries. While actions have been put in place to control and/or limit costs, most are deemed essential costs, particularly due to MAM's publicly traded status. Costs associated with corporate services tend to have a minimum threshold of cost that can service increasingly larger subsidiary operations without requiring a correlated increase in corporate-related costs. Consequently, Management does not believe significant reductions in corporate-related costs can be achieved and that increasing the scale of unregulated operations is the most viable means to offset such costs.          While Management believes cash flows will improve beginning in 2007 and is encouraged by the progress of unregulated operations, it also recognizes that a successful regulatory ruling concerning MPS's distribution rate case is important. MPS continues to monitor its costs, however, there is a minimum scale of operations required to ensure reliable customer service and effective asset management. Given the low customer density and highly forested characteristics of MPS's service area, the utility faces the need to manage and maintain a disproportionate number of miles of line per customer served, recognizing the rural nature of its service area. Further, natural increases in costs associated with insurances, workers compensation, increasing diesel fuel costs, increasing costs of direct material inputs and inflation, to name a few, are outpacing the rate of increases in MPS's allowed rates. Given the limited year-on-year load growth of MPS's service area, natural increases in costs continue to outpace growth.          Management does recognize a number of short-term financial and operating challenges. However, we believe our long-term outlook is encouraging. To improve long-term shareholder value and earnings, Management believes that the Company must increase its pace of organic and inorganic growth, while forming capital in an equally timely manner supportive of such growth. As previously noted, Management does not believe a status quo or "stay as you are" strategy will create long-term shareholder value for MAM. Further, given the impact of electric deregulation, generation divestiture, and disaggregation of the electric utility industry within Maine, combined with the lagging economy of MPS's service area, Management does not believe reverting to its core regulated wires business can generate adequate long-term shareholder value. Through more timely execution of MAM's inorganic growth strategy, including formation of growth capital, as well as improved organic growth, Management is focused on increasing earnings across all business lines. Should the Company not achieve a level of unregulated growth consistent with the need to create long-term shareholder value within a reasonable timeframe, Management and the Board of Directors will need to assess strategic alternatives to its current growth strategy. Resulting actions could involve the sale or partial sale of certain or all unregulated assets or other alternatives, recognizing the need to act prudently in protecting and enhancing long-term shareholder value. Management does believe that the timely and efficient implementation of the Company's growth strategy can result in long-term shareholder value.  Detailed Analysis of Changes in Financial Condition by Operating Segment     Unregulated Engineering Services            The building sciences, energy efficiency, asset management and development, and engineering services segment's growth strategy expands MAM's business and revenue models to a professional services model allowing for revenue generation through a combination of pricing options including, but not necessarily limited to fee-for-service hourly rates, flat fees, percentage-of-construction projects, shared savings, and performance contracting. Through the delivery of customer-centric technical consulting, engineering design and sustainable solutions regarding the asset management, development,  25      renewal, and expansion of facilities and on-site energy utilities infrastructure serving such facilities, we ultimately seek to purchase, design, construct, own, lease and/or operate on-site energy infrastructure and facilities. Revenues from such potential asset-based projects range from fee-for-service design fees to long-term leases to long-term contracts for output. This operating segment includes The Maricor Group parent company and its subsidiaries, The Maricor Group New England and The Maricor Group, Canada Ltd. Its primary geographic markets are New England and Atlantic Canada with an expanding focus across the country of Canada. Its vertical market focus includes local, state, provincial and national governments, schools, universities, hospitals, institutional and non-retail commercial.          Unregulated engineering services operations began in November 2003 with the creation of The Maricor Group and The Maricor Group, Canada Ltd followed by the acquisition of Eastcan Consultants, Inc. in Moncton, New Brunswick, Canada in December of that year. Morris & Richard Consulting Engineers, Ltd., located in Halifax, Nova Scotia, Canada and RES Engineering, Inc. located in Hudson and Boston, Massachusetts were acquired on June 1, 2004, and June 15, 2004, respectively.         2005   2004   2003   Net (Loss) Income—Unregulated Engineering Services (in thousands)     (689 )   (488 )   11   (Loss) Earnings Per Share from Unregulated Engineering Services   $ (0.42 ) $ (0.30 ) $ 0.01            The results by division are as follows:         2005   2004   2003   The Maricor Group Parent Company   $ (386 ) $ (423 ) $ —   The Maricor Group New England     (243 )   55     —   The Maricor Group, Canada Ltd.     (60 )   (120 )   11                Net (Loss) Income—Unregulated Engineering Services   $ (689 ) $ (488 ) $ 11                         TMG's (the parent company) loss of approximately $386,000, or ($0.24) per share in 2005, compares to a loss of $423,000 or ($0.26) per share in 2004. The 2005 loss consisted of $117,000 of interest expense, $45,000 of corporate D&O and medical insurance, $144,000 of legal and consulting costs, and other smaller expenses. The 2004 loss was largely attributable to sales, marketing and integration costs during the start-up and acquisition periods for this segment.          The Maricor Group New England division lost $243,000 or ($0.15) per share in 2005, and had net income of $55,000 or $0.03 per share in 2004. This division was acquired in June 2004. The 2004 results represent only six months of activity, compared to twelve months in 2005. TMGNE's loss was attributable to, but not necessarily limited to, costs associated with consolidating operations from Hudson to Boston, Massachusetts, employee transitioning costs associated with the geographic consolidation and purchase of RES, and lagging market traction due to insufficient business development efforts.          The Maricor Group, Canada Ltd division lost $60,000, or ($0.04) per share in 2005 and $120,000 or ($0.07) per share in 2004. The 2004 loss at TMGC was also largely attributable to sales, marketing and integration costs during the start-up and acquisition periods. The 2004 results for TMGC include only six months of activity for the M&R division, which was acquired in June 2004, and a full year of activity for the Eastcan division, which was acquired in December 2003.          Management has and is undertaking steps to address the lagging performance of TMG and its subsidiaries. Business operations related to TMGNE's Hudson office have ceased, as operations are consolidated in its expanded Boston office, reflecting the reality that most of the subsidiary's market and customer base is in the Greater Boston area. While overall staffing experienced some downsizing due to the consolidation of the two offices, additional hires have been and are being made, seeking to  26       upgrade skills sets in the process. In addition, as MAM migrates toward greater decentralization, subsidiaries are encouraged to be more independent and entrepreneurial, operating under enterprise-wide policies, in an attempt to minimize corporate allocations and unnecessary bureaucracy. Such decentralization is designed to promote decision-making closer to the customer and actual profit and loss center. Further, as mentioned, there is an increased focus on sales, expanding from the "seller-doer" model only to a full-time professional business development staff capable of selling and structuring higher value offerings in the sustainable lifecycle asset management and energy efficiency areas, while implementing continuing cost controls. However, the long-term profitability of TMG and its subsidiaries is clearly dependent upon achieving increased revenues resulting from increased investments in marketing and sales personnel and processes, diversifying sales away from a predominance of design engineering services and the "seller-doer" model to high level business development, structuring staff capable of selling higher margin products and services, and increasing the overall scale of the unregulated subsidiaries through timely strategic acquisitions.    Unregulated Engineering Services—Operating Revenue            TMG and its subsidiaries' revenues for the years ended December 31, 2005, 2004 and 2003 (in thousands of dollars):         2005   2004   2003   The Maricor Group New England   $ 2,064   $ 1,282   $ —   The Maricor Group, Canada Ltd     3,227     2,130     57                Total Unregulated Engineering Operating Revenue   $ 5,291   $ 3,412   $ 57                         Total revenue is up 55% from 2004 to 2005, primarily due to the acquisitions of M&R and RES in June 2004. These subsidiaries contributed $2.19 million more revenue in 2005 than 2004. Revenue at the Moncton division, which operated for a full year in both 2004 and 2005, was $1.33 million in 2005, compared to $1.11 million in 2004, up 20% year-over-year.          The principal types of projects producing revenue for the three companies were the original acquisitions' primary historical business line, mechanical and electrical engineering design and design/build projects on a fee-for-service basis with an increasing emphasis on energy efficiency, particularly within Canada. Increasingly, TMG is focusing on sustainable facility lifecycle asset management, energy efficiency and emissions reductions offerings, as well as development of end-user energy assets, such as central utility plants, all typically higher value and higher margin offerings.    Unregulated Engineering Services Operating Expenses           2005   2004   2003       (In thousands of dollars)    Unregulated Operation & Maintenance   $ 5,928   $ 3,963   $ 40   Depreciation     21     7     —   Amortization     126     30     —   Taxes Other than Income     73     52     —   Income Taxes     (510 )   (254 )   6                Total Operating Expenses   $ 5,638   $ 3,798   $ 46                         The Operation and Maintenance expenses above consist primarily of $5.15 million of direct labor expenses, direct contract costs, marketing, sales, and business development expenses, labor, overheads, and consulting services for developing business relationships and re-branding this business segment as The Maricor Group of companies. The remaining expenses of approximately $778,000 consist of legal,  27       consulting, insurance, travel, occupancy, office supplies and other administrative and general expenses. These costs increased $1.97 million or 49% over 2004. The majority of this increase, approximately $1.79 million, was from including the full year of activity for TMGNE and TMGC in 2005, compared to only the partial year in 2004 from the time of acquisition of M&R and RES through December 31.    Unregulated Real Estate Subsidiary Results            The following section details the operations of the unregulated real estate operating segment, including Maricor Properties Ltd and its subsidiaries, Mecel Properties Ltd, and Cornwallis Court Developments Ltd.          Unregulated real estate operations began in June 2004 with the formation of Maricor Properties and the acquisition of Mecel Holdings from the original owners of Morris & Richard Consulting Engineers, which was purchased by TMG. Mecel Holdings, later eliminated and changed to Mecel Properties, Ltd, owns an approximate 10,000 square foot facility leased to TMGC's Halifax, Nova Scotia division. These lease revenues are eliminated in consolidation. In August 2004, Maricor Properties purchased an approximate 40,000 square foot office building located at 77 Vaughan Harvey Boulevard in the downtown area of Moncton, New Brunswick. The vacant facility was in need of revitalization, which was undertaken using the expertise of TMGC to upgrade the facilities mechanical and electrical systems, with additional architectural, aesthetic and landscaping improvements. The facility was partially leased (approximately 40%) during 2005 to a third party tenant and TMGC's Moncton division. Lease revenues from TMGC's Moncton division are also eliminated in consolidation. In late 2005, Management was successful in leasing-up the facility with leases with third parties being signed during early 2006 and tenant improvements under construction in early 2006 as well. The leasing of the facility will have a positive impact on Maricor Properties in 2006.          In October 2005, Maricor Properties acquired Cornwallis Court Developments Ltd, the owner of an approximate 60,000 square foot office facility fully leased near the Citadel in downtown Halifax, Nova Scotia. The facility is predominately leased to the Nova Scotia provincial government and the Canadian federal government under long-term leases. In addition, during the year Maricor Properties entered into a new 50/50 joint venture, Maricor Ashford Ltd, with Ashford Investments Ltd, an Atlantic Canadian real estate development, investment and management company. The joint venture was created to expand both organizations' investment goals, as well as to implement a more aggressive development program and expand third party facilities management activities. In approximately one and a half years, Maricor Properties, with little capital investment by its parent company, has amassed real estate with appraised values of over $10.2 million CDN, as compared to an approximate purchase price of $9.1 million CDN, including approximately $1.5 million in renovations and tenant up-lifts in the Vaughan Harvey Building. Maricor Properties current properties are nearly completely leased, not including several thousand square feet reserved for the expansion of TMGC in Moncton.         2005   2004     Net Loss—Unregulated Real Estate (in thousands)     (115 )   (22 )   Loss Per Share from Unregulated Real Estate   $ (0.07 ) $ (0.01 )            Maricor Properties' net loss in 2005 was $93,000 more than the net loss for 2004. It should be noted that 2004 represented approximately half a year of performance due to its creation mid-year 2004. Of this loss in 2005, $80,000 was attributable to depreciation expense on the buildings. As noted, throughout 2005, Maricor Properties primarily leased space to the TMGC division of The Maricor Group, with only one third-party tenant. However, beginning with the acquisition of Cornwallis Court Developments Ltd, and the signing of additional leases in 2006 at the Vaughan Harvey Boulevard building, Maricor Properties has expanded its third-party tenant base, cash flows and expected earnings. Maricor Properties does expect additional expenses in 2006 associated with Maricor Ashford Ltd and its planning and implementation of potential real estate development projects proposed within Atlantic  28       Canada. In addition, Maricor Ashford Ltd continues to evaluate and consider additional investments in existing real properties within Atlantic Canada.          Prior to the creation of Maricor Ashford Ltd, facility management was performed under contract by Ashford Properties, a subsidiary of Ashford Investments. Subsequent to the development of the joint venture, Maricor Ashford has assumed responsibility for Maricor Properties' and its subsidiaries' real estate and currently utilizes a services agreement that effectively seconds members of Ashford Properties' facility management staff until an adequate critical mass of owned and third party property management contracts can be secured to justify the expansion of its facility management staff.    Unregulated Software Technology Results            Maricor Technologies, Inc., was created in February 2005, followed by the acquisition of certain lifecycle asset management and capital budget planning software assets from Delinea Strategic Asset Management. MTI incurred a loss of $318,000 during 2005. Of this amount, $298,000 is attributable to the amortization of software costs, partly offset by an income tax benefit of approximately $119,000. Throughout 2005, the focus of MTI was on expansion of its asset management and capital planning software solutions supporting its existing customers, while increasing its market competitiveness. Additional 2005 focus was directed toward customer retention post-acquisition of the iPlan™ and Building Blocks™ software solutions. MTI was highly successful in 2005 in retaining its existing customer base and has begun its marketing and sales expansion targeting new customers and expanded channel marketing partners.          Recognizing increasing market demand for facilities-related software solutions that support sustainability and energy management, MTI entered into technology agreements with the Battelle Memorial Institute and GridLogix to support a streamlined energy capital planning process for facilities and demand-side management programs. These new products are projected for release during the first half of 2006.    Regulated Utility Operations            The following discussion includes the operations of MPS and Me&NB:         2005   2004   2003   Net Income—Regulated Electric Utility (in thousands)   $ 2,264   $ 3,042   $ 3,131   Earnings Per Share from Regulated Electric Utilities   $ 1.38   $ 1.89   $ 1.99            MPS's core T&D earnings were $2.26 million for 2005, compared to $3.04 million and $3.13 million in 2004 and 2003, respectively. As explained more fully below, the operating expenses of the utility increased approximately $1.47 million in 2005, compared to 2004. Operation & maintenance expense increased $287,000, or 2%, while amortization of stranded costs increased $522,000. These decreases in net income were partly offset by an increase in regulated utility revenue of $580,000, or approximately 2%, and the expiration of a special discount for which MPS did not have recovery from ratepayers, which reduced 2004 non-operating income by $153,000.  29         Regulated Utility Operating Revenue            Consolidated revenues and Megawatt Hours ("MWH") for the years ended December 31, 2005, 2004 and 2003, are as follows (in thousands of dollars):         2005   2004   2003       Dollars   MWH   Dollars   MWH   Dollars   MWH   Residential   $ 14,220   180,108   $ 13,830   176,407   $ 13,264   175,435   Large Commercial     5,227   170,906     5,059   171,263     4,791   165,467   Medium Commercial     5,521   106,525     5,488   107,607     5,292   106,073   Small Commercial     6,890   92,960     6,651   90,032     6,400   89,882   Other Retail     829   3,394     823   3,376     788   3,357                         Total Regulated Retail     32,687   553,893     31,851   548,685     30,535   540,214                                  Other Regulated Operating Revenue     1,627         1,883         1,213                                Total Regulated Revenue   $ 34,314       $ 33,734       $ 31,748                                         Revenue in all regulated retail customer classes increased in 2005, compared to 2004. Sales to residential customers in 2005 increased $390,000 or 2.8% over 2004. This increase was driven primarily by the 3,701 MWH or 2.1% increase in volume, partly due to an increase in the number of customers, and partly due to an increase in the volume of usage by customers.          While large commercial customer sales volume decreased slightly over 2004, revenue increased from $5.06 million in 2004 to $5.23 million in 2005, an increase of $168,000 or 3.3%. The largest increase was $183,000 from one large customer which was in business for all of 2005, but only three months of 2004.          The volume of sales to medium service customers decreased approximately 1%, or 1,082 MWH, due to a 1% decrease in the number of customers. Revenue dollars increased slightly, up $33,000. Small commercial sales had the largest increase in volume, up 2,928 MWH or 3.3% in 2005, compared to 2004. The increase in volume is primarily among the local potato growers and their higher costs for storage of the 2004 crops in 2005. This additional volume resulted in an increase in revenue of $239,000 or 3.6%.          Other operating revenue decreased by $256,000 from 2004 to 2005. The largest decreases were in miscellaneous and other electric revenues, associated with contracted utility work.          For 2004, the regulated retail sales volume was 548,685 MWH, an increase of 1.6% over 2003 sales of 540,214 MWH. Sales to residential customers in 2004 were consistent with sales in 2003, increasing by 972 MWH or 0.6%. The increase in revenue from residential customers was primarily attributable to the November 1, 2003 rate increase. The volume of sales to large commercial customers increased 5,796 MWH or 3.5% from 2003 to 2004. Several of the Company's large commercial customers have undergone renovations or expanded production during 2004, leading to the increase in volume.          Sales to medium commercial customers increased 1.4% or 1,534 MWH from 2003 to 2004. There was a 2.3% increase in the number of medium service customers, year over year. Small commercial customer sales volume of 90,032 MWH in 2004 was consistent with the sales of 89,882 MWH in 2003.          Other regulated retail revenue increased slightly from 3,357 MWH in 2003 to 3,376 MWH in 2004.          Other operating revenue increased $670,000 from 2003 to 2004. The largest increase was transmission revenue, which is up approximately $290,000 due to increases in the FERC transmission rates. Special discounts also increased $234,000.  30               For more information on regulatory orders including the most recent rate increases, see Part I, Item 3, "Legal Proceedings."    Regulated Utility Expenses            For the years ended December 31, 2005, 2004 and 2003, regulated operation and maintenance expenses and stranded costs are as follows  (in thousands of dollars):         2005   2004   2003     Regulated Operation and Maintenance                         Transmission and Distribution   $ 3,985   $ 3,142   $ 3,114       Customer Service     1,004     1,346     1,452       Administrative and General     9,363     9,577     8,242                        Total Regulated Operation and Maintenance   $ 14,352   $ 14,065   $ 12,808                    Stranded Costs                         Wheelabrator-Sherman   $ 7,045   $ 7,025   $ 7,260       Maine Yankee     3,215     3,274     2,661       Seabrook     1,538     1,538     1,538       Amortization of Wheelabrator-Sherman Restructuring Payment     1,451     1,451     1,451       Deferred Fuel     (2,996 )   (3,557 )   (3,558 )     Amortization of Gain from Asset Sale     —     —     (443 )     Special Discounts     280     280     280                      Total Stranded Costs   $ 10,533   $ 10,011   $ 9,189                             Transmission and distribution expenses increased by $843,000 or 26.8% in 2005 compared to 2004. The largest increase in 2005 was transportation expenses allocated to transmission & distribution activities, which increased approximately $469,000 over 2004. This was a result of both an increase in the cost pool of $244,000, which includes fuel costs, repair costs and labor costs for employees working in the garage, and an increase in the rates at which the dollars are applied. Also, in past years under the PCB mitigation program, the transformers were removed from the field and brought on-site for testing. In 2005, MPS changed their testing program to now do sampling in the field, and only remove the transformer if it is contaminated, a more efficient process that costs less overall, but shifted additional dollars to expense, rather than capital costs. This has increased the expense portion of this program by approximately $95,000. Other significant costs during 2005 include additional labor overheads of $44,000, and an increase of $57,000 in external tree-trimming costs. The remaining change is due to other, smaller changes year-over-year.          Transmission and distribution expenses were $3.14 million in 2004, an increase of $28,000 or 0.9% from $3.11 million in 2003. Transmission expenses decreased approximately $8,000 during this period, offset by an increase in distribution expenses of $36,000.          Customer service expenses have decreased $342,000 or 25.4% from 2004. Historically, MPS has reserved for under- and over-collections on SOS accounts receivable, assuming the risk for these receivables. However, MPS has the right to increase or decrease the withholding rate in the next SOS contract to collect the historical under-withholding, as well as the current estimate of uncollectible amounts. Therefore, MPS does not have risk for these receivables, and has removed the reserve from this balance. This resulted in a $310,000 decrease in bad debt expense.  31                  Customer service expenses decreased $106,000, from $1.45 million in 2003 to $1.35 million in 2004. The largest decrease was in meter reading expenses, which were reduced by $70,000 in 2004, because automatic meter reading was in place for one-third of our customers for a portion of 2003 and during 2004.          Administrative and general expenses were down slightly from $9.58 million in 2004 to $9.36 million in 2005. Legal expenses for regulatory issues decreased $132,000 year-over-year, primarily due to reduced legal costs associated with the transmission rate filings. The net health insurance cost to the company also decreased by $103,000 from 2004 to 2005. Finally, general advertising expenses decreased from $185,000 in 2004 to $80,000 in 2005. These decreases were partly offset by an increase in administrative and general salaries of approximately $177,000. The remaining change in administrative and general costs is due to other smaller changes in activity from 2004 to 2005.          Administrative and general expenses in 2004 were $9.58 million, an increase of $1.34 million from 2003. Costs allocated to MPS by MAM for services such as Sarbanes-Oxley compliance, legal and audit services and corporate governance totaled $2.28 million in 2004, compared to $876,000 for the last six months of 2003. As a result of an MPUC order in its rate case in the third quarter of 2003, MPS was allowed to recognize a regulatory asset and reduce operating expenses by $402,000 for certain voluntary early retirement costs expensed in the fourth quarter of 2002. Amortization of these costs in 2004 totaled $57,000. Other employee benefits, excluding the impact of the voluntary early retirement plan ("VERP"), increased approximately $315,000, primarily due to increases in employee medical expenses and pension expenses. Hosting fees for the Company's Oracle-based financial system increased expenses by $338,000 for 2004, compared to 2003. The Company has also expanded its regional economic development program, incurring an additional $97,000 of costs during 2004. Legal expenses incurred directly by MPS increased $136,000 from 2003 to 2004. Total expenditures for legal services by MPS decreased during that same period; however, more of the 2003 costs were related to regulatory proceedings, including the alternative rate plan, and therefore were deferred, than in 2004.          The increases in stranded costs from 2003 to 2004 and 2004 to 2005 reflect the increase in revenue requirements approved in MPUC Docket No. 2003-666. The rates per this docket were implemented March 1, 2004.          The stranded costs for Wheelabrator-Sherman as well as $3.0 million and $3.1 million of the stranded costs for Maine Yankee for 2005 and 2004, respectively, represent actual cash expenses during the year. Other costs represent actual amortization or recognition of regulatory assets and regulatory liabilities.    Unregulated Energy Marketing—Energy Atlantic Discontinued Operations            On March 1, 2004, EA suspended all active operations and was classified as a discontinued operation in accordance with FASB No. 144, as discussed in more detail below. EA participated in the wholesale power market from 1999 until March 1, 2000, when it began selling energy in the retail electricity market within the State of Maine. The retail market consists of two sectors, Standard Offer Service ("SOS") and Competitive Energy Supply ("CES"). The MPUC periodically requests bids from CES providers for SOS in each utility service territory.          In connection with its February 21, 2003, announced withdrawal from the retail electricity markets in northern Maine, EA ceased all of its energy marketing activities in MPS's service territory, as well as the balance of the State, effective March 1, 2004, with the intent to stay inactive until market conditions, the availability of supply, the mandate for stringent credit requirements and the risk environment improved. EA continued to serve its existing contracts in Maine through their expiration on February 27, 2004. CES sales, primarily in northern Maine, were approximately $6.1 million in 2003.  32               Although Management will continue to monitor both U.S. and Canadian deregulated markets to evaluate the merits of possible re-entry into the deregulated electric energy retail market, it is doubtful that market conditions, credit requirements and risks will become favorable for re-entry. Management does not foresee re-entry into the CES market in the near future and cannot predict if or when it may re-activate EA. EA has no employees and its operations have been discontinued.          The Company recognized income (loss) from discontinued operations of $4,000, $(408,000), and $(143,000) for the years ended December 31, 2005, 2004 and 2003, respectively, classified as discontinued operations in the Statement of Consolidated Operations. The 2005 net income from discontinued operations represents the continued activity to finalize the shutdown of EA's operations. This activity is expected to be complete in April 2006. The 2004 net loss represents additional software lease expense of $181,000, recognized on the buy-out of a software lease by EA, $172,000 for employee severance payments, and a loss on disposal of fixed assets of $69,000.          The following table summarizes the statement of operations for EA and the corporate services provided to EA for each of the past three years:         Year Ended December 31,         2005   2004   2003     Revenue   $ —   $ 572   $ 6,064     Expenses     —     (1,164 )   (6,343 )   Other Deductions, Income and Interest     2     (86 )   26                    Pretax Income (Loss) from Discontinued Operations     2     (678 )   (253 )   Income Taxes     2     270     110                    Income (Loss) from Discontinued Operations   $ 4   $ (408 ) $ (143 )                  Loss per Share from Discontinued Operations (Basic and Diluted)   $ —   $ (0.25 ) $ (0.09 )                           The major classes of assets and liabilities of the discontinued operations included in the Company's consolidated balance sheets as of December 31, 2005, 2004 and 2003, are as follows (in thousands of dollars):         2005   2004   2003   Assets                     Cash and Cash Equivalents   $ —   $ 183   $ 1,161   Income Tax Benefit (Intercompany)     235     263     68   Accounts Receivable     —     —     711   Other Assets     —     21     84                  Total Assets   $ 235   $ 467   $ 2,024                Liabilities                        Accounts Payable   $ 6   $ 67   $ 263   Other Liabilities     —     —     488                  Total Liabilities   $ 6   $ 67   $ 751                 Critical Accounting Policies           In preparing the financial statements in accordance with generally accepted accounting principles, Management must often make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures at the date of the financial statements and during the reporting period. Some of those judgments can be subjective and complex, and actual results could  33       differ from those estimates. The Company's most critical accounting policies include regulatory assets and liabilities, revenue recognition, goodwill and intangible assets and software amortization, and which are described in detail below.    Regulatory Assets and Liabilities            Pursuant to Statement of Financial Accounting Standards No. 71 ("SFAS 71"), "Accounting for the Effects of Certain Types of Regulation", the Company capitalizes, as regulatory assets, incurred and accrued costs that are probably recoverable in future electric rates. It also records, as regulatory liabilities, obligations to refund previously collected revenue or to spend revenue collected from customers on future costs.          Unfunded future income taxes and deferred income taxes are amortized as the related temporary differences reverse. Unamortized loss on debt retirements is amortized over the lives of the related debt issues. Nuclear plant obligations, deferred fuel costs, other regulatory assets and other regulatory liabilities are amortized over various periods in accordance with MPS's current rate plans. MPS earns a return on substantially all regulatory assets for which funds have been spent.          The Company believes that MPS's electric transmission and distribution operations continue to meet the requirements of SFAS 71, and that regulatory assets associated with those operations, as well as any generation-related costs that the MPUC has determined to be recoverable from ratepayers, also meet the criteria. At December 31, 2005, $62.37 million of regulatory assets remained on MPS's books. These assets will be amortized over various periods in accordance with MPUC approved rate orders.    Revenue Recognition            MPS records an estimate for revenue for electricity delivered, but not yet billed to customers. This estimate requires MPS to make certain assumptions. A change in those assumptions could cause the amounts reported as revenues to change.          In July 2000, MPS began recording the difference between the approved tariff rate for two large industrial customers and their current special discount rates, under contracts approved by the MPUC, as accrued revenue. The resulting deferred asset will be subsequently collected in rates as approved by the MPUC. During 2005 and 2004, $280,000 was recognized as stranded costs associated with these two contracts. The MPUC approved a third special discount during 2004 in Docket No. 2004-88, under which MPS has deferred $495,000 and $248,000 as of December 31, 2005 and 2004, respectively. Recovery of this special discount has not yet begun.          Maricor Technologies, Inc. is engaged as a seller and licensor of software. Generally, revenue will be recognized in accordance with Statement of Position No. 97-2 ("SOP 97-2"), "Software Revenue Recognition", as amended, and Statement of Position No. 98-9 ("SOP 98-9"), "Modification of SOP 97-2, Software Revenue Recognition, with Respect to Certain Transactions." For multiple element license arrangements, the license fee is allocated to the various elements based on evidence of fair value. When a multiple element arrangement includes rights to post-contract customer support, the portion of the license fee allocated to support is recognized ratably over the term of the arrangement.          EA's sales for the years presented were CES sales to individual retail customers within the State of Maine, all of which expired by February 27, 2004. EA negotiated the price directly with the customer, maintained customer service responsibility and had collection risk. CES activity is recorded on a gross basis to include the related revenues and purchased power expenses. Additionally, EA's activity has been accounted for as non-trading since Management has determined it does not meet the definition of a trader as defined in EITF Issue 98-10, "Accounting for Energy Trading and Risk Management Activities", which was amended by EITF Issue 02-03, "Accounting for Contracts Involved in Energy  34       Trading and Risk Management Activities." Refer to Note 3 to the Consolidated Financial Statements, "Discontinued Operations—Energy Atlantic" for further discussion.    Percentage-of-Completion Accounting for TMG Contracts            Revenues and profits from The Maricor Group's engineering contracts are recognized on a percentage-of-completion basis for the period. Costs incurred to date are divided by total estimated costs to obtain the percentage completed. This percentage multiplied by the total estimated profit is the gross profit earned to date on the contract. Gross profit earned to date on the contract plus costs incurred to date on the contract equals revenues recognized to date. Revenue recognized to date compared to billings to date results in either under- or over-billings. Losses on contracts are recognized in full if there is evidence that an overall loss will be sustained. The provision is computed on the basis of the total estimated cost to complete the contract and reflects all elements of costs included in contract costs. Costs incurred on approved change orders are treated as job costs for that particular job. Costs incurred on unapproved change orders are treated as costs in the period in which they are incurred if it is not probable that the costs will be recovered through a change in the contract price. If it is probable that the cost will be recovered through a change in the contract price, the costs are deferred until there is an agreed upon change in the contract price.          In accordance with normal practice in the construction industry, The Maricor Group includes in current assets and current liabilities amounts related to construction contracts realizable and payable over a period in excess of one year. Deferred contract revenue represents the excess of billings to date over the amount of contract costs and profits (or contract revenue) recognized to date on the percentage of completion accounting method on certain contracts. Deferred contract revenues related to The Maricor Group's contracts were $132,000 and $109,000 at December 31, 2005 and 2004, respectively. Unbilled contract revenue represents the excess of contract costs and profits (or contract revenue) recognized to date on the percentage of completion accounting method over billings to date on the remaining contracts. Unbilled contract revenue results when the appropriate contract revenue amount has been recognized in accordance with the percentage-of-completion accounting method, but a portion of the revenue recorded cannot be billed currently due to the billing terms defined in the contract and/or costs, recorded at estimated realizable value, related to unapproved change orders or claims incurred. Unbilled contract revenue related to The Maricor Group's contracts was $816,000 and $399,000 at December 31, 2005 and 2004, respectively.    Goodwill and Acquired Intangibles            The Company's business acquisitions may result in goodwill and other intangible assets, which affect the amount of future period amortization expense and possible impairment expense that the Company will incur. The Company has adopted Statement of Financial Accounting Standards No. 142 ("SFAS 142"), "Goodwill and Other Intangible Assets", which requires that the Company, on an annual basis, calculate the fair value of the reporting units that contain the goodwill and compare that to the carrying value of the reporting unit to determine if impairment exists. Impairment testing must take place more often if circumstances or events indicate a change in the impairment status. In calculating the fair value of the reporting units, Management relies on a number of factors including operating results, business plans, economic projections, anticipated future cash flows, and transactions and market place data. There are inherent uncertainties related to these factors and Management's judgment in applying them to the analysis of goodwill impairment. If actual fair value is less than the Company's estimates, goodwill and other intangible assets may be overstated on the balance sheet and a charge would need to be taken against net earnings.          MAM selected November 30 as the date for their annual impairment test. Management has concluded that no impairment exists as of the test date of November 30, 2005, or at December 31, 2005.  35         Amortizable Intangible Assets            The Company has identifiable intangible assets from the acquisition of unregulated mechanical and electrical engineering companies. These intangible assets are identified as the expected profit from the backlog of projects in progress as of the date of acquisition and from the value derived from the client lists from these service firms. These assets are amortized over their estimated useful lives, which are approximately one year for the backlog and three years for the client lists.    Pension and Other Post-Retirement Benefit Plans            MPS has pension and other post-retirement benefit plans, principally healthcare benefits, covering substantially all of its employees and retirees. In accordance with Statement of Financial Accounting Standards No. 87 ("SFAS 87"), "Employer's Accounting for Pensions," and Statement of Financial Accounting Standards No. 106 ("SFAS 106"), "Employer's Accounting for Post-retirement Benefits Other Than Pensions," the valuation of benefit obligations and the performance of plan assets are subject to various assumptions. The primary assumptions include the discount rate, expected return on plan assets, rate of compensation increase, health care cost inflation rates, expected years of future service under the pension benefit plans and the methodology used to amortize gains or losses. Changes in those assumptions could also have a significant effect on the Company's non-cash pension income or expense or the Company's post-retirement benefit costs. For additional information on the Company's benefit plans, see Note 10 to the Consolidated Financial Statements, "Benefit Programs," which is incorporated in this section by this reference.    Capitalized Software Costs            Maricor Technologies allocated $1.56 million to software costs related to the acquisition of their lifecycle asset management software in February 2005. Since that point, Maricor Technologies has capitalized an additional $101,000 of software development costs for software held for sale, in accordance with Statement of Financial Accounting Standards No. 86 ("SFAS 86"), "Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed." The estimated useful life is determined by product, and ranges from three to five years. Management has made a determination that no impairment exists at December 31, 2005.          Maricor Technologies expensed approximately $113,000 of research and development costs during 2005.    Income Taxes            Statement of Financial Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes," requires an asset and liability approach to accounting and reporting income taxes. SFAS 109 prohibits net-of-tax accounting and requires the establishment of deferred taxes on all differences between the tax basis of assets or liabilities and their basis for financial reporting. For the years ended December 31, 2005, and 2004, management evaluated the deferred tax asset valuation and determined that no valuation allowance was needed.          MPS has deferred investment tax credits and amortizes the credits over the remaining estimated useful life of the related utility plant. MPS records regulatory assets or liabilities related to certain deferred tax liabilities or assets, representing its expectation that, consistent with current and expected ratemaking, these taxes will be recovered from or returned to customers through future rates.  Off-Balance Sheet Arrangements           Except for operating leases used for office and field equipment, vehicles and computer hardware and software, accounted for in accordance with Financial Accounting Standards No. 13 ("FAS 13"),  36       "Accounting for Leases" and noted in Note 12 to these financial statements, the Company has no other off-balance sheet arrangements. See Item 8 of this Form 10-K, Note 12 to Consolidated Financial Statements, "Commitments, Contingencies and Regulatory Matters," under "Off-Balance Sheet Arrangements" for a summarization of payments for leases for a period in excess of one year for the years ended December 31, 2005 and 2004.          Maricor Properties Ltd is an equal partner in Maricor Ashford Ltd, a joint venture with Ashford Investments, Ltd., an unaffiliated real estate management company. Maricor Ashford Ltd is a real estate development and redevelopment company based in Moncton, New Brunswick, Canada. Management reviewed the characteristics of this joint venture in accordance with Financial Accounting Standards Board Interpretation No. 46(R), "Consolidation of Variable Interest Entities, an Interpretation of ARB 51" ("FIN 46(R)"), and determined that Maricor Properties Ltd is not the primary beneficiary of this joint venture. Accordingly, the activity of Maricor Ashford Ltd has been recorded in these financial statements under the equity method, and Maricor Ashford Ltd is not consolidated with these financial statements. Maricor Properties' investment in the joint venture totaled $46,000 at December 31, 2005. Also, Maricor Properties recognized $52,000 or 50% of the loss of Maricor Ashford as equity earnings in 2005.    Table of Contractual Obligations            The following table summarizes our contractual obligations as of December 31, 2005 (in thousands of dollars):         Payments Due By Period   Contractual Obligations    Total   Less than 1 year   1-3 years   3-5 years   More than 5 years   Long-Term Debt Obligations   $ 38,226   $ 2,612   $ 5,403   $ 4,531   $ 25,680   Operating Lease Obligations*     940     249     435     256     —   Financial System Hosting Contract     4,600     575     1,150     1,150     1,725   Employment Agreements     440     195     230     15     —                      Total   $ 44,206   $ 3,631   $ 7,218   $ 5,952   $ 27,405                         *MPS has one lease for a right-of-way with an undefined term. Because the amount of the liability cannot be determined, this lease has been excluded from the "More than 5 years" column. This lease payment is approximately $30,000 per year.    Maricor Properties Leases            Maricor Properties leases office space to the Moncton and Halifax operating divisions of The Maricor Group, Canada Ltd. Maricor Properties also has leases for office space to outside third parties. All of these leases are operating leases and any intercompany profit from rental revenue has been eliminated in consolidation. The minimum lease revenue expected from the third party lease arrangements does not include utilities and maintenance expenses that will be paid by the third parties.  5-Year Minimum Lease Payments for External Party Leases      2006   $ 474,000   2007   $ 467,000   2008   $ 467,000   2009   $ 440,000   2010   $ 377,000    37      Liquidity and Capital Resources           The Company's cash and cash equivalents decreased from $1.19 million at December 31, 2004, to $781,000 at December 31, 2005. Net Cash Flow Provided by Operating Activity decreased by approximately $2.27 million, largely the result of decreased net income in unregulated operations, increased accounts receivable, decreased accounts payable, and increased benefit obligations.          The Company's "Statements of Consolidated Cash Flows," of the Company's Consolidated Financial Statements as presented in Item 8 of this Form 10-K, reflects the Company's liquidity and sources of operating capital. Cash flow provided by operating activities in 2005 was $2.49 million, while net loss for the year was $220,000. The change in deferred regulatory and debt issuance costs was $4.08 million, principally the deferral of additional WS stranded cost, which was partially offset by an increase in deferred income taxes of $1.67 million. Net cash flow provided by financing activities totaled $4.62 million. During 2005, the Company had debt retirements of $6.46 million, including re-financings at MAM and TMG, as well as MPS bond repayments, and other note repayments, $2.2 million in long-term debt for refinancing acquisition debt, as well as MPS's refinancing of its short-term borrowings (see Notes 6 and 8 to the Consolidated Financial Statements). In 2005, the Company also paid $1.23 million in dividends and increased short-term borrowings by $10.11 million. In 2005, $7.53 million of net cash flow was used for investing activities. The Company invested $5.92 million in fixed assets, and $1.96 million in the acquisition of Cornwallis Court Developments Ltd. During 2005, $350,000 was received for the partial redemption of Maine Yankee common stock.          Cash flow provided by operating activities in 2004 was $4.76 million, while net income for the year was $1.32 million. The change in deferred regulatory and debt issuance costs of $4.42 million, principally the deferral of additional WS stranded cost, which was partially offset by an increase in deferred income taxes of $808,000, were both less than 2003. Net cash flow provided by financing activities totaled $4.53 million. During 2004, the Company borrowed $10.2 million in long-term debt to fund $4.2 million for two engineering companies and a real estate acquisition, as well as MPS's refinancing of its short-term borrowings. In 2004, the Company paid $1.83 million in dividends, used $1.5 million for sinking fund payments to retire long-term debt and reduced short-term borrowings by $2.34 million. In 2004, $12.44 million of net cash flow was used for investing activities. The Company invested $8.51 million in Fixed Assets; $6.28 million at MPS, $258,000 at TMG and $1.97 million at Maricor Properties Ltd, principally its purchase of the Vaughan Harvey Property in Moncton, New Brunswick, Canada. In addition, the Company invested $3.5 million in TMG, principally its purchase of Morris & Richard Consulting Engineers, Ltd. and RES Engineering, Inc. Finally, $601,000 was deposited in a restricted investment, primarily related to the above acquisitions. During 2004, $200,000 was received for the partial redemption of Maine Yankee common stock.          As part of the refinancing of short-term borrowing during 2005, MAM and certain of its subsidiaries agreed to certain financial and other covenants, such as debt service coverage ratios. In the event of a default, the various lenders could require immediate repayment of the debt. A default could also trigger increases in interest rates, difficulty obtaining other sources of financing and cross-default provisions within the debt agreements.          Due to negative cash flows from stranded cost deferrals for MPS and cash requirements for TMG, Maricor Properties and MTI, Management is working to ensure the Company has adequate credit facilities for 2006 to cover sinking fund payments, construction activities and other financial and working capital obligations.          The Company has the ability to raise capital through the issuance of common and preferred stock. The Company is authorized by its Articles of Incorporation to issue up to 5,000,000 shares of common stock and 500,000 shares of preferred stock. MPS can also issue $2.5 million of first mortgage bonds and $15.8 million of second mortgage bonds without bondable property additions.  38               The Company's common stock was used to finance the acquisition of The Maricor Group's subsidiaries. In the event that the price of MAM common stock is below a specified price when the current shareholders wish to sell it, The Maricor Group has agreed to pay the difference. There were 41,151 shares outstanding pursuant to this kind of agreement as of December 31, 2005. At a market price of $15.49 per share on that date, the total exposure was approximately $814,000.          In accordance with rate stipulations approved by the MPUC, for ratemaking purposes, MPS is required to maintain a capital structure not to include more than 51% common equity for the determination of delivery rates.          In the order approving the reorganization of MPS and the formation of Maine & Maritimes Corporation, the parties stipulated to the following conditions. The following relate to the availability of capital resources for MAM via its relationship with MPS:    •MPS will not make any loan to, or guarantee or assume any obligation of, MAM or any of its affiliates without prior MPUC approval. •The MPUC will not place additional restrictions, in advance, on the dividend policy of MPS. The Board of Directors of MPS will continue to set dividend policy for MPS with due regard for the financial performance, needs and health of MPS and the maintenance of a safe, efficient and reasonable capital structure. Commencing on July 1, 2003, if at any time MPS's common dividend payout ratio (dividends per share divided by earnings per share) exceeds 1.0 (i.e. 100%) on a two-year rolling average basis, MPS will notify the MPUC in writing within thirty (30) days of the end of the calendar quarter (the initial two year period was April 1, 2001 through March 31, 2003.) The required notification should explain the circumstances (extraordinary or not) of this event and the financial condition of MPS. Moreover, the MPUC reserved the right in the future, should financial circumstances warrant, to impose limitations on the dividend policy of MPS. As of December 31, 2005, this limitation has not been exceeded; therefore, such notification to the MPUC has not been required. •Securities issuances by MPS will be done independently of MAM and subject to such MPUC approvals as required. The proceeds of any securities issued by MPS will be used exclusively by MPS for its business. •MAM's total non-utility investment, excluding accumulated unregulated retained earnings, will not exceed fifty million dollars (US$50,000,000) and such amount will exclude retained earnings from EA, provided that MPS may at any time seek an enlargement of this limitation for good cause shown. •Without prior MPUC approval, MAM will not sell, pledge or otherwise transfer any common stock of MPS. •To protect and maintain the financial integrity of the regulated utility, MPS and MAM agreed to maintain the common equity ratio of MPS at a level of not less than forty eight percent (48%) of the total capital at all times, provided that the MPUC may establish, for good cause shown, a lower ratio in connection with its authorization of a future debt issuance proposed by MPS. Total capital is defined as the sum of the following components: common equity, preferred equity, long-term debt, current maturities long-term debt, long-term capital leases, current maturities long-term capital leases, and short-term debt.    Reorganization Into Holding Company           On October 4, 2002, MPS's Board of Directors authorized MPS to reorganize into a holding company structure. As a result, on June 30, 2003, MPS became a wholly-owned subsidiary of MAM, the new holding company, following shareholder and several regulatory bodies. Me&NB remained a  39       subsidiary of MPS, and will remain so until all obligations have terminated, at which time it is proposed the subsidiary may be dissolved. The ownership of EA was also transferred to the holding company, MAM. To achieve this corporate structure, stock in MPS was exchanged for stock in the new holding company through a "reverse triangular merger." MPS undertook the reorganization in order to maintain its focus on its core regulated business, while at the same time positioning MAM for more diversified growth.          Following the July 1, 2003, completion of the reorganization, shares of MPS common stock were converted on the books (with no exchange of certificates) into the same number of shares of common stock of MAM. The MAM common stock shares are currently traded on the AMEX under the ticker symbol "MAM."  Maine Yankee           MPS owns 5% of the common stock of Maine Yankee Atomic Power Company ("MY"), which operated an 860 MW nuclear power plant in Wiscasset, Maine, that has ceased power operations and is now in the final stages of decommissioning.          Based on the decommissioning of the Yankee Atomic nuclear plant, MPS believes it is entitled to recover substantially all of its share of such costs from its customers and, as of December 31, 2005, is carrying on its consolidated balance sheet a regulatory asset and a corresponding liability in the amount of $10.8 million, which reflects MPS's 5% share of Maine Yankee's most recent estimate of the remaining decommissioning costs, less actual decommissioning payments made since then, and discounted by a risk-free interest rate.          In accordance with its 1999 FERC rate case settlement, on October 20, 2003, MY filed a revised formula rate schedule with the FERC, proposing an effective date of January 1, 2004, when major decommissioning activities were expected to be nearing completion. The filing contained a revised decommissioning cost estimate and collection schedule to assure that adequate funds are available to safely and promptly decommission the Plant and operate and manage the independent spent fuel storage installation ("ISFSI"). In the filing, MY also requested a change in its billing formula and an increase in the level of collection for certain post-retirement benefits. To meet these needs, MY proposed to collect an additional $3.77 million per year through October 2008, over current decommissioning collection levels, exclusive of any income-tax liability, for the decommissioning and spent-fuel management expense, and to collect the amounts needed to replenish its Spent Fuel Trust for funds previously used for ISFSI construction from November 2008 through October 2010. On September 16, 2004, the FERC approved the new rates pursuant to a settlement reached by the active parties which reflected substantially similar terms to those proposed by MY in its October 2003 filing. MPS's share of this increase, approximately $189,000, will be recovered as stranded costs.          Federal legislation enacted in 1987 directed the Department of Energy ("DOE") to proceed with the studies necessary to develop and operate a permanent high-level waste repository at Yucca Mountain in Nevada. The project has encountered significant delays, and the DOE indicated that the permanent disposal site was not expected to open before 2012, although originally scheduled to open in 1998. Maine Yankee cannot predict when or whether the Yucca Mountain project or any other project that would provide interim storage will be completed.          As an interim measure, until the DOE meets its contractual obligation to dispose of its spent fuel, MY constructed an ISFSI, utilizing dry-cask storage, on the Plant site and completed the transfer of the spent fuel and a comparatively small amount of greater-than-Class C waste to the ISFSI in February 2004. MY's current cost estimate is based on an assumption of long-term on-site storage. In accordance with a plan approved by the Securities and Exchange Commission, Maine Yankee has started the redemption of its common stock periodically through 2008.  40       Regulatory Proceedings           For regulatory proceedings, see Part I, Item 3, "Legal Proceedings," which is incorporated in this section by this reference.      Item 7a.    Quantitative and Qualitative Disclosures about Market Risk—              The following represents Maine & Maritimes Corporation's more significant risks. While every effort is made to describe the character of the organization's risks, it cannot warrant that this list is all inclusive. The Company, where possible, does take steps in each of the following areas to attempt to mitigate such risks.    (a)The Company had material interest rate risk until MPS fixed interest rates on three variable rate debt issues on September 9, 2003, with a derivative interest rate swap transaction. Upon execution of the interest rate swaps on September 9, 2003, MPS effectively fixed through maturity the rates on the 1996 Series due in 2021 and the 2000 Series due in 2025 at 4.57% and 4.68%, respectively. The rate on the 1998 Notes due in 2008 was also fixed at 2.79% through maturity. As of December 31, 2005, the 1996 and 2000 Series and the 1998 FAME Notes had outstanding balances of $13.6 million, $9.0 million and $5.01 million, respectively. The fixed rates are higher than the previous floating rates and continue to be as of the date of this filing. Although incurring no up-front cost to execute the swaps, MPS is currently incurring increased interest expenses. However, Management believes that the fixing of interest rates over the terms of the debt will serve to protect both shareholders and consumers from what it believes to be upward variable interest rate pressures. See Item 8 of this Form 10-K, Note 7 to the Consolidated Financial Statements, "Accumulated Other Comprehensive Income (Loss)," which is hereby incorporated by this reference, for a discussion on the impact on MPS's financial statements and further description of the interest rate swaps.     As discussed in previous Form 8-K, 10-K and 10-Q quarterly filings, MPS had partially mitigated its risk by purchasing a 6% interest rate cap on its two tax-exempt bonds, the 1996 Series and the 2000 Series, issued on MPS's behalf by the Maine Public Utility Financing Bank. The interest rate cap on the 1996 and 2000 Series expired in November 2003. MPS also purchased a 7% interest rate cap, which expires in 2008, for MPS's Taxable Electric Rate Stabilization Revenue Notes issued in 1998 on its behalf by the Finance Authority of Maine ("FAME"). Further discussion on these debt issues and the associated interest rate caps is contained in Item 8 to the Consolidated Financial Statements, "Long-Term Debt," and is hereby incorporated by this reference.    (b)The Company's unregulated real estate development and investment subsidiary, Maricor Properties Ltd, and its subsidiaries, Cornwallis Court Developments Ltd and Mecel Properties Ltd, are subject to certain risks and uncertainties including, but not necessarily limited to interest rate risks associated with variable interest rates, shifts in local real estate market conditions; market-based competition; the inability to fully lease rental properties; facility performance related to unforeseen or unknown structural, mechanical and/or electrical systems failures; unexpected increases in property rehabilitation costs; new government regulations; and tenant credit and default risks. (c)Transactions with Me&NB; The Maricor Group, Canada Ltd; and Maricor Properties Ltd are subject to foreign currency translation risk. Income and expenses are translated at average rates of exchange for the period of time the income is earned or the expenses are incurred. Assets and liabilities are translated at year-end exchange rates.   41          (d)The Maricor Group and its subsidiaries incurred equity price risk when it bought the stock of certain of its subsidiaries. Part of the consideration was MAM stock. In the event that the price of MAM common stock was below a specified price when the seller wished to dispose of it, The Maricor Group (or the applicable subsidiary) agreed to pay the difference. There are currently 41,151 shares outstanding pursuant to this kind of agreement. At a market price of $15.49 per share at December 31, 2005, the total exposure is approximately $814,000. A $1.00 change in the market price would impact this exposure by approximately $41,000.     Market price protection of a different sort was given by Maricor Technologies when it acquired the HCI assets. Part of the consideration there was MAM preferred stock which is convertible into 26,000 shares of MAM common stock on February 15, 2008, subject to some other conditions. To the extent that the market price of MAM common stock is then below $25 per share, the number of shares issuable on conversion is ratably increased, which could result in further dilution of MAM's common stock.    42                 Item 8.    Financial Statements and Supplementary Data          REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM   To the Board of Directors and Shareholders of Maine & Maritimes Corporation:          We have audited the accompanying consolidated balance sheets and consolidated statements of long-term debt of Maine & Maritimes Corporation (the "Company") as of December 31, 2005 and 2004, and the related consolidated statements of operations, shareholder's equity and cash flows for the years then ended. Our audits also included the financial statement schedule for the years ended December 31, 2005 and 2004, listed in the Index at Item 15(a)(2). These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.          We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.          In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2005 and 2004, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.          Our audits were performed for the purpose of forming an opinion on the consolidated financial statements taken as a whole. The schedule listed in the index at Item 15(a)(2) is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. In our opinion, the schedule referred to above presents fairly, in all material respects, the financial data required to be set forth therein in relation to the basic financial statements taken as a whole for the years ended December 31, 2005 and 2004.  Vitale, Caturano & Co., Ltd. Boston, MA March 24, 2006  43      Report of Independent Registered Public Accounting Firm   To the Directors and Shareholders of Maine & Maritimes Corporation:          In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) on Page 102 present fairly, in all material respects, the results of the operations of Maine & Maritimes Corporation and its subsidiaries and their cash flows for the year ended December 31, 2003, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 16(a)(2) on Page 105, presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audit. We conducted our audit of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.  PricewaterhouseCoopers LLP Boston, MA February 23, 2004  44             MAINE & MARITIMES CORPORATION AND SUBSIDIARIES         Statements of Consolidated Operations         (In thousands of dollars, except share information)                 Year Ended December 31,         2005   2004   2003     Operating Revenues                         Regulated   $ 34,299   $ 33,733   $ 31,739       Unregulated     5,383     3,399     58       Rental Income     292     6     —                        Total Operating Revenues     39,974     37,138     31,797                    Operating Expenses                         Regulated Operation & Maintenance     14,352     14,065     12,808       Unregulated Operation & Maintenance     8,798     5,243     892       Depreciation     2,957     2,648     2,647       Amortization of Stranded Costs     10,533     10,011     9,189       Amortization of Intangibles     491     224     206       Taxes Other Than Income     1,801     1,655     1,460       Provision for Income Taxes—Regulated     1,505     1,234     1,364       Benefit of Income Taxes—Unregulated     (1,700 )   (797 )   (98 )                      Total Operating Expenses     38,737     34,283     28,468                    Operating Income     1,237     2,855     3,329                    Other Income (Deductions)                         Equity in Income of Associated Companies     129     204     272       Interest and Dividend Income     24     2     (19 )     Allowance for Equity Funds Used During Construction     23     42     46       Provision for Income Taxes     (2 )   (7 )   (43 )     Other—Net     (114 )   (314 )   (339 )                      Total     60     (73 )   (83 )                  Income Before Interest Charges     1,297     2,782     3,246                    Interest Charges                         Long-Term Debt and Notes Payable     2,956     2,360     1,633       Less Stranded Costs Carrying Charge     (1,427 )   (1,289 )   (1,323 )     Less Allowance for Borrowed Funds Used During Construction     (8 )   (15 )   (13 )                      Total     1,521     1,056     297                    Net (Loss) Income from Continuing Operations     (224 )   1,726     2,949                    Discontinued Operations                         Income (Loss) from Discontinued Operations     2     (678 )   (253 )     Income Tax Benefit     2     270     110                    Income (Loss) from Discontinued Operations, Net of Tax     4     (408 )   (143 )   Net (Loss) Income Available for Common Stockholders   $  (220 ) $  1,318   $  2,806                    Average Shares Outstanding—Basic     1,636,322     1,612,696     1,575,066     Average Shares Outstanding—Diluted     1,636,322     1,625,821     1,582,941     Basic (Loss) Earnings Per Share of Common Stock From Continuing Operations   $  (0.13 ) $  1.07   $  1.87     Basic Loss Per Share of Common Stock From Discontinued Operations     0.00     (0.25 )   (0.09 )                  Basic (Loss) Earnings Per Share of Common Stock From Net (Loss) Income   $ (0.13 ) $ 0.82   $ 1.78                    Diluted (Loss) Earnings Per Share of Common Stock From Continuing Operations   $ (0.13 ) $ 1.06   $ 1.86     Diluted Loss Per Share of Common Stock From Discontinued Operations     0.00     (0.25 )   (0.09 )                  Diluted (Loss) Earnings Per Share of Common Stock From Net (Loss) Income   $ (0.13 ) $ 0.81   $ 1.77                     See Notes to Consolidated Financial Statements  45             MAINE & MARITIMES CORPORATION AND SUBSIDIARIES         Statements of Consolidated Cash Flows         (In thousands of dollars)                 Year Ended December 31,         2005   2004   2003     Cash Flow From Operating Activities                         Net (Loss) Income   $ (220 ) $ 1,318   $ 2,806       Adjustments to Reconcile Net (Loss) Income to Net Cash Provided by Operations:                           Depreciation     2,958     2,642     2,655         Amortization of Intangibles     450     256     206         Amortization of Seabrook Costs     1,538     1,538     1,538         Amortization of Deferred Gain from Asset Sale     —     —     (443 )       Bad Debt Expense     (90 )   466     297         Deferred Income Taxes—Net     1,666     808     3,206         Deferred Investment Tax Credits and Excess Deferred Income Taxes     (25 )   (28 )   (30 )       Loss on Disposal of Fixed Assets     —     69     —         Allowance for Funds Used During Construction     (31 )   (57 )   (59 )       Income on Tax-Exempt Bonds-Restricted Funds     —     —     (8 )       Change in Deferred Regulatory and Debt Issuance Costs     (4,083 )   (4,420 )   (6,829 )       Amortization of W/S Upfront Payment     1,451     1,451     1,451         Change in Benefit Obligations     303     1,158     464         Change in Current Assets and Liabilities:                             Accounts Receivable and Unbilled Revenue     (570 )   (221 )   (574 )         Other Current Assets     (63 )   (559 )   (190 )         Accounts Payable     (506 )   440     (145 )         Other Current Liabilities     (341 )   (59 )   (242 )       Other—Net     52     (39 )   (234 )                  Net Cash Flow Provided By Operating Activities   $ 2,489   $ 4,763   $ 3,869                    Cash Flow From Financing Activities                         Dividend Payments     (1,227 )   (1,834 )   (2,931 )     Retirements of Long-Term Debt     (6,458 )   (1,500 )   (3,085 )     Additions of Long-Term-Debt     2,200     10,200     —       Short-Term Borrowings (Repayments), Net     10,109     (2,339 )   3,349                    Net Cash Flow Provided By (Used For) Financing Activities   $ 4,624   $ 4,527   $ (2,667 )                  Cash Flow From Investing Activities                         Drawdown of Tax-Exempt Bond Proceeds     —     —     2,064       Stock Redemption from Associated Company     350     200     525       Acquisitions, Net of Cash Acquired     (1,956 )   (3,529 )   (527 )     Change in Restricted Investments     (4 )   (601 )   —       Investment in Fixed Assets     (5,915 )   (8,511 )   (4,876 )                  Net Cash Flow Used For Investing Activities   $ (7,525 ) $ (12,441 ) $ (2,814 )                  Decrease in Cash and Cash Equivalents     (412 )   (3,151 )   (1,612 )   Cash and Cash Equivalents at Beginning of Period     1,193     4,344     5,956                    Cash and Cash Equivalents at End of Period   $ 781   $ 1,193   $ 4,344                    Supplemental Disclosure of Cash Flow Information:                       Cash Paid During the Period for:                         Interest   $ 2,884   $ 2,064   $ 1,253       Income Taxes   $ 4   $ 303   $ 785     Non-Cash Investing Activities:                         Value of Common Stock Issued for Acquisition   $ —   $ 1,677   $ 194       Value of Preferred Stock Issued for Acquisition   $ 950   $ —   $ —      See Notes to Consolidated Financial Statements  46             MAINE & MARITIMES CORPORATION AND SUBSIDIARIES         Consolidated Balance Sheets         (In thousands of dollars)                 December 31,         2005   2004     ASSETS                 Plant                   Electric Plant in Service   $ 98,998   $ 96,309       Non-Utility Plant     10,217     3,500       Less Accumulated Depreciation     (40,845 )   (39,713 )                   Net Plant in Service     68,370     60,096       Construction Work-in-Progress     1,883     1,021                       Total     70,253     61,117     Investment in Associated Companies     1,994     2,383                 Net Plant and Investments in Associated Companies     72,247     63,500                 Current Assets:                   Cash and Cash Equivalents     781     1,193       Accounts Receivable (less allowance for uncollectible accounts of $372 in 2005 and $690 in 2004)     7,963     7,746       Unbilled Revenue     1,071     1,044       Inventory     600     604       Income Tax Refund Receivable     973     863       Prepayments     479     469       Unbilled Contract Revenue     816     399                       Total     12,683     12,318                 Regulatory Assets:                   Uncollected Maine Yankee Decommissioning Costs     10,795     14,148       Recoverable Seabrook Costs     11,669     12,778       Regulatory Assets—Deferred Income Taxes     5,794     6,659       Regulatory Assets—Post-Retirement Medical Benefits     115     243       Deferred Fuel and Purchased Energy Costs     29,906     25,544       Regulatory Asset—Power Purchase Agreement Restructuring     1,451     2,902       Unamortized Premium on Early Retirement of Debt     1,308     1,290       Deferred Regulatory Costs     1,334     1,306                       Total     62,372     64,870                 Other Assets                   Intangible Assets (net of accumulated amortization of $284 in 2005 and $60 in 2004)     103     78       Goodwill     6,374     5,753       Unamortized Debt Issuance Costs     424     609       Restricted Investment (at cost, which approximates market)     2,453     2,980       Miscellaneous     1,119     698                       Total     10,473     10,118                 Total Assets   $ 157,775   $ 150,806                  See Notes to Consolidated Financial Statements  47             MAINE & MARITIMES CORPORATION AND SUBSIDIARIES         Capitalization and Liabilities         (In thousands of dollars)                 December 31,       2005   2004   Capitalization (see accompanying statements):                 Shareholders' Equity   $ 47,786   $ 48,157     Long-Term Debt     35,614     37,155                 Total     83,400     85,312             Current Liabilities:                 Long-Term Debt Due Within One Year     2,612     2,225     Notes Payable to Banks     14,098     3,989     Accounts Payable     4,465     4,978     Accounts Payable—Associated Companies     250     258     Accrued Employee Benefits     1,433     1,355     Dividends Payable     —     327     Customer Deposits     36     26     Interest Accrued     146     75     Deferred Contract Revenue     132     109                 Total     23,172     13,342             Deferred Credits and Other Liabilities:                 Accrued Removal Obligations     5,683     4,213     Carrying Value of Interest Rate Hedge     1,387     1,471     Uncollected Maine Yankee Decommissioning Costs     10,795     14,148     Other Regulatory Liabilities     458     318     Deferred Income Taxes     27,333     26,845     Accrued Postretirement Benefits and Pension Costs     4,655     4,480     Investment Tax Credits     106     131     Miscellaneous     786     546                 Total     51,203     52,152             Commitments, Contingencies, and Regulatory Matters (Note 12)               Total Capitalization and Liabilities   $ 157,775   $ 150,806              See Notes to Consolidated Financial Statements  48          MAINE & MARITIMES CORPORATION AND SUBSIDIARIES    Statements of Consolidated Shareholders' Equity (In thousands of dollars, except share information)              Number of Shares                                         Common   Preferred   Common   Preferred                                 Accumulated Other Comprehensive Income (Loss)             Issued and Outstanding   Treasury   Issued and Outstanding   Par Value* Issued ($7/Share)   Paid-In Capital   Par Value* Issued ($0.01/Share)   Paid-In Capital   Retained Earnings   Treasury Stock   Total     Balance, December 31, 2002   1,867,250   (293,135 ) —   $ 13,071   $ 51   $ —   $ —   $ 40,503   $ (6,596 ) $ —   $ 47,029                                            Formation of MAM June 30, 2003   (292,668 ) 292,668         (2,049 )   (53 )               (4,484 )   6,586           —     Stock Issued   5,930   467         42     167                       10           219     Net Income                                         2,806                 2,806     Other Comprehensive Loss:                                                                   Changes in Value of Foreign Exchange Translation Loss, Net of Tax Benefit of $4                                                     (5 )   (5 )     Interest Rate Hedge, Net of Tax Benefit of $473                                                     (712 )   (712 )                                                                  Total Other Comprehensive Loss                                                           (717 )                                                                  Total Comprehensive Income                                                           2,089     Dividend ($1.49 per share)                                         (2,349 )               (2,349 )                                          Balance, December 31, 2003   1,580,512   —   —     11,064     165     —     —     36,476     —     (717 )   46,988                                            New Stock Issued   55,142             386     1,319                                   1,705     Net Income                                         1,318                 1,318     Other Comprehensive Income (Loss):                                                                   Changes in Value of Foreign Exchange Translation Loss, Net of Tax Provision of $319                                                     478     478       Interest Rate Hedge, Net of Tax Benefit of $114                                                     (172 )   (172 )                                                                  Total Other Comprehensive Income                                                           306                                                                    Total Comprehensive Income                                                           1,624     Dividend ($1.34 per share)                                         (2,160 )               (2,160 )                                          Balance, December 31, 2004   1,635,654   —   —     11,450     1,484     —     —     35,634     —     (411 )   48,157                                            New Stock Issued   1,125       9,500     8     25     —     950                       983     Stock Contingency from Acquisitions (see Note 14)                       (122 )                                 (122 )   Net Loss                                         (220 )               (220 )   Other Comprehensive Income:                                                                   Changes in Value of Foreign Exchange Translation Gain, Net of Tax Provision of $98                                                     153     153       Unrealized Gain on Investments Available for Sale, Net of Tax Provision of $4                                                     11     11       Interest Rate Hedge, Net of Tax Provision of $33                                                     51     51                                                                    Total Other Comprehensive Income                                                           215                                                                    Total Comprehensive Loss                                                           (5 )   Dividend ($0.75 per share)                                         (1,227 )               (1,227 )                                          Balance, December 31, 2005   1,636,779   —   9,500   $ 11,458   $ 1,387   $ —   $ 950   $ 34,187   $ —   $ (196 ) $ 47,786                                               *MAM had five million shares of $7 per share common stock authorized as of December 31, 2005, and 2004. At December 31, 2005, 2004 and 2003, MAM had 500,000 shares of $.01 per share preferred stock authorized.  See Notes to Consolidated Financial Statements.  49             MAINE & MARITIMES CORPORATION AND SUBSIDIARIES         Statements of Long-Term Debt             2005   2004       (In thousands of dollars)    Maine Public Service Company                 Maine Public Utility Financing Bank, Public Utility Revenue                 Bonds:                   Refunding Series 1996: Due 2021—Variable Interest Payable Monthly (3.65% as of December 31, 2005)   $ 13,600   $ 13,600       Series 2000: Due 2025—Variable Interest Payable Monthly (3.65% as of December 31, 2005)     9,000     9,000     Finance Authority of Maine:                   1998 Taxable Electric Rate Stabilization Revenue Notes: Due 2008—Variable Interest Payable Monthly (4.35% as of December 31, 2005)     5,005     6,630     Bank of America, N.A. (Formerly Fleet National Bank)                   $6,000,000, 7 Year Term Loan Due November 1, 2011—Variable Interest Payable Monthly (5.79% as of December 31, 2005)     5,350     5,950   The Maricor Group                 Banknorth N.A.:                   $2,200,000, 10 Year Term Loan Due September 1, 2014—Variable Interest Rate, Payable Monthly, Interest Only Through September 1, 2007 (4.28% as of December 31, 2004)     —     2,200       Katahdin Trust Company:                   $2,200,000, 5 Year Term Loan Due December 29, 2010—Variable Interest Rate, Payable Monthly, Interest Only Through November 29, 2007 (7.17% as of December 31, 2005)     2,200     —   Maricor Properties                 The Standard Life Assurance Company:                   $4,400,000 CDN, 7 Year Mortgage on J. Angus MacDonald Building, Principal and Interest Payable Monthly at an Interest Rate of 6.44% Per Annum     3,071     —   Maine & Maritimes                 Katahdin Trust Company:                   $2,000,000, 2 Year Term Loan Due September 12, 2006, Variable Interest Rate Payable Monthly, Interest Only Through September 12, 2006, (4.83% as of December 31, 2004)     —     2,000               Total Outstanding     38,226     39,380     Less—Amount Due Within One Year     2,612     2,225                 Total   $ 35,614   $ 37,155                      Current maturities and redemption requirements for the succeeding five years and thereafter are as follows (in thousands of dollars):     Long-Term Debt:           2006   $ 2,612     2007     2,897     2008     2,506     2009     1,415     2010     3,116     Thereafter     25,680    See Notes to Consolidated Financial Statements.  50             NOTES TO CONSOLIDATED         FINANCIAL STATEMENTS      1.    ACCOUNTING POLICIES    Consolidation and Basis of Presentation           The accompanying consolidated financial statements include the accounts of Maine & Maritimes Corporation (the "Company" or "MAM") and the following wholly-owned subsidiaries and affiliates:    1.The Maricor Group ("TMG", formerly known as Maine & Maritimes Energy Services) and its wholly-owned United States subsidiary The Maricor Group New England ("TMGNE", formerly known as RES Engineering, Inc.) and TMG's wholly-owned Canadian subsidiary The Maricor Group, Canada Ltd ("TMGC," formerly Maricor Ltd); 2.Maricor Properties Ltd ("Maricor Properties"), a Canadian subsidiary and its wholly-owned Canadian subsidiaries, Cornwallis Court Developments Ltd ("Cornwallis") and Mecel Properties Ltd ("Mecel"), as well as a 50% owner of Maricor Ashford Ltd; 3.Maricor Technologies, Inc. ("MTI"), a U.S. wholly-owned subsidiary; 4.Maine Public Service Company ("MPS") and its wholly-owned inactive Canadian subsidiary Maine & New Brunswick Electrical Power Company, Ltd ("Me&NB"); and 5.Energy Atlantic, LLC ("EA"), a wholly-owned inactive subsidiary.           MAM, a utility holding company organized effective June 30, 2003, owns all of the common stock of the above primary subsidiaries. Primary subsidiaries, including MPS, TMG, and Maricor Properties Ltd own all the common stock of their secondary subsidiaries. MAM is listed on the American Stock Exchange ("AMEX") under the symbol MAM.          Maine Public Service Company is a regulated electric transmission and distribution utility serving all of Aroostook County and a portion of Penobscot County in northern Maine. Since March 1, 2000, the date retail electric competition in Maine commenced, customers in MPS's service territory have been purchasing energy from suppliers other than MPS. This energy comes from Competitive Electricity Suppliers ("CES") or, if customers are unable or do not wish to choose a competitive supplier, the Standard Offer Service ("SOS") provider. SOS providers are determined through a bid process conducted by the Maine Public Utilities Commission ("MPUC"). MPS provides the transportation through its transmission and distribution wires infrastructure. Its service area covers approximately 3,600 square miles, with a population of 72,000. The utility is regulated by the Federal Energy Regulatory Commission ("FERC") and the Maine Public Utilities Commission ("MPUC"). MPS is headquartered in Presque Isle, Maine.          The Maricor Group and The Maricor Group, Canada Ltd were organized on November 6, 2003, and November 12, 2003, respectively. On June 15, 2004, The Maricor Group acquired RES Engineering Inc. (now The Maricor Group New England), a Massachusetts corporation providing mechanical and electrical engineering services located in Boston, Massachusetts. In separate transactions, The Maricor Group, Canada Ltd acquired Eastcan Consultants, Inc. ("Eastcan"), a New Brunswick, Canada corporation and its subsidiaries and affiliates effective December 1, 2003; and Morris & Richard Consulting Engineers, Ltd. ("M&R"), a Nova Scotia, Canada corporation and its subsidiaries and affiliates effective June 1, 2004. Both companies are mechanical and electrical engineering firms with principal places of business located in New Brunswick and Nova Scotia, Canada respectively. Except for TMGNE, the subsidiaries and affiliates of each acquired company were  51       amalgamated into a single entity, The Maricor Group, Canada Ltd (formerly Maricor, Ltd) which is a wholly-owned subsidiary of The Maricor Group.          Maricor Properties Ltd was organized on June 1, 2004, in connection with the M&R acquisition, and was the entity that acquired, through the amalgamation of the M&R subsidiaries and affiliates, Mecel Properties Limited, a Nova Scotia, Canada corporation. The Mecel real estate (an office building located in Halifax, Nova Scotia) is currently occupied and used as the principal place of business of the Morris & Richard division of The Maricor Group, Canada Ltd. On August 13, 2004, Maricor Properties Ltd completed the acquisition of a multi-tenant mid-rise office facility at 77 Vaughan Harvey Boulevard in the downtown area of Moncton, New Brunswick, Canada (the "Vaughan Harvey Property") from Sun Life Assurance Company of Canada ("Sun Life"). Maricor Properties Ltd has undertaken significant renovations of the office complex, particularly related to mechanical and electrical systems, as well as certain exterior and interior renovations. Mechanical and electrical engineering services in connection with the renovations were provided by The Maricor Group, Canada Ltd. The Maricor Group, Canada Ltd's Moncton office, relocated to the facility during the fourth quarter of 2004.          On August 12, 2005, Maricor Properties Ltd entered into an agreement with Ashford Investments, Inc. to form a joint venture named Maricor Ashford Ltd. Maricor Ashford Ltd will become the development and redevelopment arm of Maricor Properties, also with plans to migrate to the offering of facility management services, leveraging the current capabilities of Ashford Investments, Inc., Maricor Technologies, and The Maricor Group, Canada Ltd.          On October 7, 2005 Maricor Properties Ltd acquired Cornwallis Court Developments Ltd, the owner of the J. Angus MacDonald Building located in Halifax, Nova Scotia, Canada, a 60,000 square foot office facility constructed in or about 1992 and currently leased primarily to various Canadian governmental agencies.          On February 22, 2005, the Company announced the formation of Maricor Technologies, Inc., a wholly-owned, software technology-based subsidiary. Concurrently, MTI acquired lifecycle asset management and capital budget planning software assets that complements MAM's U.S. and Canadian engineering and facilities lifecycle asset management services companies. MTI is expanding its technology platform to address capital performance management and asset governance software needs. MTI is headquartered in Presque Isle, Maine, with an office in Portland, Maine.          All inter-company transactions between MAM and its direct and indirect subsidiaries have been eliminated in consolidation.  Labor Agreements           Approximately 37% of the MPS labor force are members of the Local 1837 Unit 11 of the International Brotherhood of Electrical Workers ("IBEW") and are covered under a collective bargaining agreement. On September 22, 2005, the IBEW 1837 Unit 11 Union approved a four-year collective bargaining agreement for the term of October 1, 2005, through September 30, 2009. The key provisions of this contract include wage increases of 4.0% for the first year and 3.25% for each year thereafter, increases in contributions to health insurance premiums, deductibles, medical and prescription co-payments to be paid by the employees, and ineligibility for pension and post-retirement benefits for new union employees hired on or after January 1, 2006, and October 1, 2005, respectively. MPS also reserved the right to resume negotiations on other potential changes to these plans during the contract period. To compensate new employees covered under the collective bargaining agreement for their ineligibility for the pension plan, they receive a 4.0% match under the Company's 401(k) plan.  52       Regulations           MPS is subject to the regulatory authority of the Maine Public Utilities Commission ("MPUC") and the Federal Energy Regulatory Commission ("FERC"). As a result of the ratemaking process, the applications of accounting principles by the Company differ in certain respects from applications by non-regulated businesses.  Use of Estimates           The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.  Deferred Fuel and Purchased Energy Costs           Certain Wheelabrator-Sherman ("WS") fuel costs and the sharing provisions for Maine Yankee replacement power costs were deferred for future recovery as defined in MPS's rate plan until March 1, 2000. All other fuel and purchased power costs were expensed as incurred. These costs are currently being recovered in rates and the related deferred asset is being amortized, accordingly. Beginning March 1, 2002, and until the WS contract terminates in December 2006, the excess of the cost over the sales price of WS fuel is being deferred. The resulting deferred asset is expected to be collected in future rates as approved by the MPUC. With the expiration of their stranded cost rates on December 31, 2006, MPS will be before the MPUC for a stranded cost rate case during 2006.  Regulatory Assets and Liabilities           Pursuant to Statement of Financial Accounting Standards No. 71 ("SFAS 71"), "Accounting for the Effects of Certain Types of Regulation", the Company capitalizes, as regulatory assets, incurred and accrued costs that are probable of recovery in future electric rates. It also records, as regulatory liabilities, obligations to refund previously collected revenue or to spend revenue collected from customers on future costs.          Unfunded future income taxes and deferred income taxes are amortized as the related temporary differences reverse. Unamortized loss on debt retirements is amortized over the lives of the related debt issues. Nuclear plant obligations, deferred fuel costs, other regulatory assets and other regulatory liabilities are amortized over various periods in accordance with MPS's current rate plans. MPS earns a return on substantially all regulatory assets for which funds have been spent.          The Company believes that MPS's electric transmission and distribution operations continue to meet the requirements of SFAS 71, and that regulatory assets associated with those operations, as well as any generation-related costs that the MPUC has determined to be recoverable from ratepayers, also meet the criteria. At December 31, 2005, $62.37 million of regulatory assets remained on MPS's books. These assets will be amortized over various periods in accordance with MPUC approved rate orders.  Revenue Recognition           MPS records an estimate for revenue for electricity delivered, but not yet billed to customers. This estimate requires MPS to make certain assumptions. A change in those assumptions could cause the amounts reported as revenues to change.          In July 2000, MPS began recording the difference between the approved tariff rate for two large industrial customers and their current special discount rates, under contracts approved by the MPUC, as accrued revenue. The resulting deferred asset will be subsequently collected in rates as approved by  53      the MPUC. During 2005 and 2004, $280,000 was recognized as stranded costs associated with these two contracts. The MPUC approved a third special discount during 2004 in Docket No. 2004-88, under which MPS has deferred $495,000 and $248,000 as of December 31, 2005 and 2004, respectively. Recovery of this special discount has not yet begun.          Maricor Technologies, Inc. is engaged as a seller and licensor of software. Revenue will be recognized in accordance with Statement of Position No. 97-2 ("SOP 97-2"), "Software Revenue Recognition", as amended, and Statement of Position No. 98-9 ("SOP 98-9"), "Modification of SOP 97-2, Software Revenue Recognition, with Respect to Certain Transactions." For multiple element license arrangements, the license fee is allocated to the various elements based on evidence of fair value. When a multiple element arrangement includes rights to post-contract customer support, the portion of the license fee allocated to support is recognized ratably over the term of the arrangement.          EA's sales for the years presented were CES sales to individual retail customers within the State of Maine, all of which expired by February 27, 2004. EA negotiated the price directly with the customer, maintained customer service responsibility and had collection risk. CES activity is recorded on a gross basis to include the related revenues and purchased power expenses. Additionally, EA's activity has been accounted for as non-trading since Management has determined it does not meet the definition of a trader as defined in EITF Issue 98-10, "Accounting for Energy Trading and Risk Management Activities", which was amended by EITF Issue 02-03, "Accounting for Contracts Involved in Energy Trading and Risk Management Activities." Refer to Note 3 to the Consolidated Financial Statements, "Discontinued Operations—Energy Atlantic" for further discussion.  Percentage-of-Completion Accounting for TMG Contracts           Revenues and profits from The Maricor Group's engineering contracts are recognized on a percentage-of-completion basis for the period. Costs incurred to date are divided by total estimated costs to obtain the percentage completed. This percentage multiplied by the total estimated profit is the gross profit earned to date on the contract. Gross profit earned to date on the contract plus costs incurred to date on the contract equals revenues recognized to date. Revenue recognized to date compared to billings to date results in either under- or over-billings. Losses on contracts are recognized in full if there is evidence that an overall loss will be sustained. The provision is computed on the basis of the total estimated cost to complete the contract and reflects all elements of costs included in contract costs. Costs incurred on approved change orders are treated as job costs for that particular job. Costs incurred on unapproved change orders are treated as costs in the period in which they are incurred if it is not probable that the costs will be recovered through a change in the contract price. If it is probable that the cost will be recovered through a change in the contract price, the costs are deferred until there is an agreed upon change in the contract price.          In accordance with normal practice in the construction industry, The Maricor Group includes in current assets and current liabilities amounts related to construction contracts realizable and payable over a period in excess of one year. Deferred contract revenue represents the excess of billings to date over the amount of contract costs and profits (or contract revenue) recognized to date on the percentage of completion accounting method on certain contracts. Deferred contract revenues related to The Maricor Group's contracts were $132,000 and $109,000 at December 31, 2005 and 2004, respectively. Unbilled contract revenue represents the excess of contract costs and profits (or contract revenue) recognized to date on the percentage of completion accounting method over billings to date on the remaining contracts. Unbilled contract revenue results when the appropriate contract revenue amount has been recognized in accordance with the percentage-of-completion accounting method, but a portion of the revenue recorded cannot be billed currently due to the billing terms defined in the contract and/or costs, recorded at estimated realizable value, related to unapproved change orders or claims incurred. Unbilled contract revenue related to The Maricor Group's contracts was $816,000 and $399,000 at December 31, 2005 and 2004, respectively.  54       Goodwill and Acquired Intangibles           The Company's business acquisitions result in goodwill and other intangible assets, which affect the amount of future period amortization expense and possible impairment expense that the Company will incur. The Company has adopted Statement of Financial Accounting Standards No. 142 ("SFAS 142"), "Goodwill and Other Intangible Assets," which requires that the Company, on an annual basis, calculate the fair value of the reporting units that contain goodwill and compare that to the carrying value of the reporting unit to determine if impairment exists. Impairment testing must take place more often if circumstances or events indicate a change in the impairment status. In calculating the fair value of the reporting units, Management relies on a number of factors including operating results, business plans, economic projections, anticipated future cash flows, and transactions and market place data. There are inherent uncertainties related to these factors and Management's judgment in applying them to the analysis of goodwill impairment. If actual fair value is less than the Company's estimates, goodwill and other intangible assets may be overstated on the balance sheet and a charge would need to be taken against net earnings.          MAM selected November 30 as the date for their annual impairment test. Management has concluded that no impairment exists as of November 30, 2005.  Amortizable Intangible Assets           The Company has identifiable intangible assets from the acquisition of unregulated mechanical and electrical engineering companies. These intangible assets are identified as the expected profit from the backlog of projects in progress as of the date of acquisition and from the value derived from the client lists from these service firms. These assets are amortized over their estimated useful lives, which are approximately one year for the backlog and three years for the client lists.  Pension and Other Post-Retirement Benefit Plans           The Company has pension and other post-retirement benefit plans, principally healthcare benefits, covering substantially all of its employees and retirees. In accordance with Statement of Financial Accounting Standards No. 87, "Employer's Accounting for Pensions," and Statement of Financial Accounting Standards No. 106, "Employer's Accounting for Post-retirement Benefits Other Than Pensions," the valuation of benefit obligations and the performance of plan assets are subject to various assumptions. The primary assumptions include the discount rate, expected return on plan assets, rate of compensation increase, health care cost inflation rates, expected years of future service under the pension benefit plans and the methodology used to amortize gains or losses. Changes in those assumptions could also have a significant effect on the Company's non-cash pension income or expense or the Company's post-retirement benefit costs. For additional information on the Company's benefit plans, see Note 10 to the Consolidated Financial Statements, "Benefit Programs," which is incorporated in this section by this reference.  Capitalized Software Costs           Maricor Technologies capitalized $1.56 million of software costs with the acquisition of their lifecycle asset management software in February 2005. Since that point, Maricor Technologies has capitalized an additional $101,000 of software development costs for software held for sale, in accordance with Statement of Financial Accounting Standards No. 86 ("SFAS 86"), "Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed." The estimated useful life is determined by product, and ranges from three to five years. Management has made a determination that no impairment exists as December 31, 2005.          Maricor Technologies expensed approximately $113,000 of research and development costs during 2005.  55       Asset Retirement Obligations           In June 2001, the FASB issued Statement of Financial Accounting Standards No. 143 ("SFAS 143"), "Accounting for Asset Retirement Obligations." SFAS 143 requires an entity to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred and to capitalize the cost by increasing the carrying amount of the related long-lived asset. The liability is adjusted to its present value periodically over time, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement, the entity either settles the obligation at its recorded amount or incurs a gain or a loss. For rate-regulated entities, any timing differences between rate recovery and book expense would be deferred as either a regulatory asset or a regulatory liability. The Company's adoption of SFAS 143 as of January 1, 2003, did not have a material effect on its financial position or results of operations. There was no effect on net income. SFAS 143 provides that if the requirements of SFAS 71 are met, a regulatory liability should be recognized for the difference between removal costs collected in rates and actual costs incurred. As of December 31, 2005, 2004, and 2003, accrued removal obligations totaling approximately $4.4 million, $4.2 million and $4.0 million, respectively, which had previously been embedded within accumulated depreciation, were reclassified as a regulatory liability.          In March 2005, the FASB issued FASB Interpretation No. 47, "Accounting for Conditional Asset Retirement Obligations" ("FIN 47"), effective for fiscal years ending after December 15, 2005. FIN 47 clarifies the term "conditional asset retirement obligation", used in FASB Statement No. 143, "Accounting for Asset Retirement Obligations", as referring to "legal obligation to perform an asset retirement activity in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity." Based on this interpretation, during 2005 MPS recognized an associated asset retirement obligation of $1.30 million with the Poly Chlorinated Bi-Phenol Transformer phase-out program, by reducing accumulated depreciation and increasing the accrued removal obligation. This adjustment did not impact net income.  Financial Instruments           MPS has certain financial instruments, interest rate caps and swaps, on three variable-rate long-term debt issues that qualify as derivatives. Interest rate caps involve the exchange of cash for a cap on the interest rate MPS can be charged. Interest rate swaps involve the exchange of cash and the exchange of a variable-rate payment for a fixed-rate payment. On January 1, 2001, the Company adopted Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"), as amended by SFAS 137, 138 and 149, which establishes accounting and reporting standards for derivative instruments and for hedging activities. SFAS 133 requires that an entity recognize derivatives as either assets or liabilities on the balance sheet and measure those instruments at fair value. The accounting for changes in the fair value of the derivative depends on the intended use of the derivative and the resulting designation. See Note 7, "Accumulated Other Comprehensive Income (Loss)" for additional disclosure regarding the treatment of these interest rate instruments.  Foreign Exchange           MAM accounts for the operations of its Canadian subsidiaries in accordance with Statement of Financial Accounting Standards No. 52 ("SFAS 52"), "Foreign Currency Translation". Income statement activity is translated at the average rate for the period. The balance sheet is translated at the exchange rate as of the end of the period. During 2005 and 2004, this impact increased other comprehensive income by $153,000 and $478,000, respectively, net of income tax.  56       Income Taxes           Statement of Financial Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes," requires an asset and liability approach to accounting and reporting income taxes. SFAS 109 prohibits net-of-tax accounting and requires the establishment of deferred taxes on all differences between the tax basis of assets or liabilities and their basis for financial reporting. For the years ended December 31, 2005, and 2004, management evaluated the deferred tax asset valuation and determined that no valuation allowance was needed.          MPS has deferred investment tax credits and amortizes the credits over the remaining estimated useful life of the related utility plant. MPS records regulatory assets or liabilities related to certain deferred tax liabilities or assets, representing its expectation that, consistent with current and expected ratemaking, these taxes will be recovered from or returned to customers through future rates.  Accounts Receivable & Reserve           The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of the Company's customers to make required payments. The Company estimates its anticipated losses from doubtful accounts based on historical collection history as well as by specifically reserving for known doubtful accounts. Estimating losses from doubtful accounts is inherently uncertain because the amount of such losses depends substantially on the financial condition of the Company's customers, and the Company typically has limited visibility as to the specific financial state of its customers. If the financial condition of the Company's customers were to deteriorate beyond estimates, resulting in an impairment of their ability to make payments, the Company would be required to write off additional accounts receivable balances, which would adversely impact the Company's net earnings, cash flows and balance sheet.  Utility Plant           Utility plant for MPS is stated at original cost of contracted services, direct labor and materials, as well as related indirect construction costs including general engineering, supervision, and similar overhead items and allowances for the cost of equity and borrowed funds used during construction ("AFUDC"). The cost of utility plant which is retired and the related cost of removal, less salvage, are charged to accumulated depreciation, consistent with utility industry practice. The cost of maintenance and repairs, including replacement of minor items of property, are charged to maintenance expense as incurred. MPS's property, with minor exceptions, is subject to first and second mortgage liens.          Costs which are disallowed or are expected to be disallowed for recovery through rates are charged to expense at the time such disallowance is probable.  Long-Lived Assets           The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to the future net cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds their fair value. Judgments made by the Company relate to the expected useful lives of long-lived assets and its ability to realize any undiscounted cash flows in excess of the carrying amounts of such assets and are affected by factors such as the ongoing maintenance and improvements of the assets, changes in the expected use of the assets, changes in economic conditions, changes in operating performance and anticipated future cash flows. Since judgment is involved in determining the fair value of long-lived assets, there is risk that the carrying value of the Company's long-lived assets may require  57       adjustment in future periods. If actual fair value is less than the Company's estimates, long-lived assets may be overstated on the balance sheet and a charge would need to be taken against net earnings.  Depreciation and Amortization           Utility plant depreciation is provided on a composite basis using the straight-line method, based on rates approved by the MPUC and the FERC. The composite depreciation rate, expressed as a percentage of average depreciable plant in service, was approximately 3.22%, 3.21%, and 3.20% for 2005, 2004, and 2003, respectively.          Bond issuance costs and premiums paid upon early retirements are amortized over the terms of the related debt. Recoverable Seabrook costs and deferred regulatory expenses are amortized over the period allowed by regulatory authorities in the related rate orders. Recoverable Seabrook costs are being amortized principally over thirty years (See Note 12, "Commitments, Contingencies and Regulatory Matters—Seabrook Nuclear Power Project").          Depreciation of fixed assets at TMG is straight-line based on the remaining useful life of the asset. New computer hardware and software are depreciated over three years; leasehold improvements are depreciated over the life of the lease; and office equipment is depreciated over three years.          Depreciation of Fixed Assets at TMGC and Maricor Properties is on a basis equivalent to Canadian tax law provisions, as follows: buildings are depreciated at 4% per year; computer hardware is depreciated at 30% per year; computer software is depreciated at 100% per year; automobiles are depreciated at 30% per year; and office equipment is depreciated at 20% per year.          The client list intangible asset acquired by The Maricor Group in the purchase of Eastcan, M&R and RES is amortized on a three-year straight-line basis. The amortization of backlog intangible assets acquired by those purchases is based on the actual profit in the backlog recognized during the period.  Investments in Associated Companies           The Company records its investments in Associated Companies (See Note 5, "Investments in Associated Companies") using the equity method.  Pledged Assets           The common stock of Me&NB is pledged as additional collateral for the first and second mortgage and collateral trust bonds of MPS. Substantially all of the assets of MAM, excluding those of MPS, are pledged as collateral for the Bank of America financing.          The real estate acquired by Maricor Properties Ltd at 77 Vaughan Harvey Boulevard, Moncton, New Brunswick, Canada is the subject of a $2.3 million CDN loan from Royal Bank of Canada, and is also secured by a $1.73 million USD guarantee by Bank of America.          The Standard Life Assurance Company mortgage, assumed as part of the acquisition of Cornwallis Court Developments Ltd, is secured by a first mortgage on the J. Angus MacDonald building, with a balance of $3.07 million USD at December 31, 2005.  Inventory           Inventory is stated at average cost.  Cash and Cash Equivalents           For purposes of the Statements of Consolidated Cash Flows, the Company considers all highly liquid securities with a maturity, when purchased, of three months or less to be cash equivalents.  58                 The Company maintains deposits with reputable national banks in excess of the $100,000 FDIC insurance limit, but Management believes the risk that access to these deposits could be restricted is remote.  Restricted Investments           At December 31, 2005, the Company had $2.45 million of restricted investments. MPS was required to establish a Capital Reserve Fund held by the Trustee of MPS's 1998 Taxable Electric Stabilization Revenue Notes, which accounted for $2.38 million of the restricted investments. Approximately $65,000 of insurance proceeds on an MPS substation incident is also held by the Trustee of MPS's first and second mortgage bonds. At December 31, 2004, the Company's restricted investments balance of $2.98 million represented the $2.38 million Capital Reserve Fund, the $65,000 of insurance proceeds and $535,000 held in escrow as a working capital holdback of TMG in conjunction with the June 2004 acquisition of TMGNE.  Stock Option Plan           At December 31, 2005, the Company had a stock-based employee compensation plan, which is described more fully in Note 9, "Stock Compensation Plan." The Company accounts for this plan in accordance with the expense provisions of Statement of Financial Accounting Standards No. 123 ("SFAS 123"), "Accounting for Stock Based Compensation."  Reclassifications           Certain reclassifications have been made to the 2004 and 2003 financial statement amounts in order to conform to the 2005 presentation.  Earnings per Share           Basic earnings per share ("EPS") is determined by dividing net income by the weighted-average number of shares of common stock outstanding during the period. The weighted-average common shares outstanding for diluted EPS include the incremental effect of stock options and preferred shares issued. See Note 9, "Stock Compensation Plan" for calculation of basic and diluted earnings per share.  New Accounting Pronouncements           On October 13, 2004, the FASB ratified Emerging Issues Task Force ("EITF") Issue No. 04-1 ("EITF 04-1"), effective for business combinations consummated, and goodwill impairment tests performed, in reporting periods beginning after that date. EITF 04-1 is applicable when two parties that have a pre-existing contractual relationship enter into a business combination. The business combination could also include settlement of this pre-existing contractual relationship. Such settlement would require accounting separate from the business combination. If it is determined that assets of the acquired entity that are related to a pre-existing contractual relationship with the acquiring entity should be recognized as part of the business combination, EITF 04-1 also considers whether the acquiring entity should recognize those assets as intangible assets apart from goodwill. Adoption of EITF 04-1 did not have a material impact on the Company's financial statements at December 31, 2005.          In December 2003, the FASB issued FASB Interpretation No. 46R, "Consolidation of Variable Interest Entities, an interpretation of ARB 51" ("FIN 46R"). FIN 46R provides guidance on the identification of entities for which control is achieved through means other than through voting rights ("variable interest entities") and on the determination of when such entities are required to be included in the consolidated financial statements of the business enterprise that holds an interest in the variable interest entity. This new model for consolidation applies to an entity in which either (1) the  59       equity investors do not have a controlling financial interest or (2) the equity investment at risk is insufficient to finance that entity's activities without receiving additional subordinated financial support from other parties. In addition, FIN 46R requires additional related disclosures. Certain disclosure provisions of FIN 46R apply to all financial statements issued after January 31, 2003; the consolidation provisions apply to variable interest entities created after January 31, 2003; and to variable interest entities in which an enterprise obtains an interest after that date; and the remaining provisions, with the exception of interest in special purpose entities, apply at the end of the first fiscal year or interim period ending after March 15, 2004, to variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. Application for interest in special purpose entities is required for periods after December 15, 2003. The adoption of the required provisions of FIN 46R as of December 31, 2003 did not have a material impact on the consolidated financial statements. The adoption of the remaining provisions of FIN 46R as of March 31, 2004, did not have a material impact on the consolidated financial statements.          In December 2003, the FASB also issued the revision of Financial Accounting Standards No. 132, "Employer's Disclosures about Pension and Other Post-retirement Benefits—An Amendment of FASB Statements No. 87, 88 and 106" ("FAS 132-(R)"). FAS 132-(R) revises employer's disclosure requirements for pension plans and other post-retirement plans by requiring additional disclosures about the assets, obligations, cash flows and net periodic benefit cost of defined benefit pension plans and other defined benefit post-retirement plans. There are additional disclosure requirements for both annual and interim reporting periods. FAS 132-(R), is effective for fiscal years ending after December 15, 2003, and for interim reporting periods starting after December 15, 2003. FAS 132-(R) did not impact the Company's financial position or statement of operations.          On April 30, 2003, the FASB issued Financial Accounting Standards No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities" ("FAS 149"). FAS 149 amends and clarifies the accounting guidance on (1) derivative instruments (including certain derivative instruments embedded in other contracts) and (2) hedging activities that fall within the scope of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("FAS 133"). FAS 149 amends FAS 133 to reflect decisions that were made: as part of the process undertaken by the Derivatives Implementation Group ("DIG"), which necessitated amending FAS 133; in connection with other projects dealing with financial instruments; and regarding implementation issues related to the application of the definition of a derivative. FAS 149 also amends certain other existing pronouncements, which will result in more consistent reporting of contracts that are derivatives in their entirety or that contain embedded derivatives that warrant separate accounting. FAS 149 is effective (1) for contracts entered into or modified after September 30, 2003, with certain exceptions, and (2) for hedging relationships designated after June 30, 2003. The guidance is to be applied prospectively. The adoption of this statement did not have a material impact on the Company's financial position or results of operations.          On May 15, 2003, the FASB issued Financial Accounting Standards No. 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity" ("FAS 150"). FAS 150 changes the accounting for certain financial instruments that, under previous guidance, could be classified as equity or "mezzanine" equity, by now requiring those instruments to be classified as liabilities (or assets in some circumstances) in the statement of financial position. FAS 150 requires disclosure regarding the terms of those instruments and settlement alternatives. FAS 150 affects an entity's classification of the following freestanding instruments: mandatorily redeemable instruments; financial instruments to repurchase an entity's own equity instruments; financial instruments embodying obligations that the issuer must or could choose to settle by issuing a variable number of its shares or other equity instruments based solely on (a) a fixed monetary amount known at inception or (b) something other than changes in its own equity instruments. FAS 150 does not apply to features embedded in a financial instrument that is not a derivative in its entirety. The guidance in FAS 150 is  60       generally effective for all financial instruments entered into or modified after May 31, 2003, and is otherwise effective at the beginning of the first interim period beginning after June 15, 2003. The adoption of this statement did not have a material impact on the Company.          FASB Statement No. 123 (Revised 2004), Share-Based Payment ("SFAS 123(R)") was issued in December 2004. SFAS 123(R) replaces SFAS No. 123, Accounting for Stock-Based Compensation ("SFAS 123"), and supersedes APB Opinion No. 25,  Accounting for Stock Issued to Employees. SFAS 123(R) requires companies to recognize the compensation cost related to share-based payment transactions with employees in the financial statements. The compensation cost is measured based upon the fair value of the instrument issued. Share-based compensation transactions with employees covered within SFAS 123(R) include stock options, restricted share plans, performance-based awards, share appreciation rights, and employee stock purchase plans. SFAS 123 included a fair-value-based method of accounting for share-based payment transactions with employees, but allowed companies to continue to apply the guidance in APB 25 provided that they disclose in the footnotes to the financial statements the pro forma net income if the fair-value-based method been applied. The Company currently uses the fair-value-based method for recognition of compensation expense under SFAS 123. SFAS 123(R) requires the use of the modified prospective application transition method. The modified prospective application transition method requires the application of this standard to:    •All new awards issued after the effective date; •All modifications, repurchases or cancellations of existing awards after the effective date; and •Unvested awards at the effective date.           For unvested awards, the compensation cost related to the remaining "requisite serve' that has not been rendered at the effective date will be determined by the compensation cost calculated currently for either recognition under SFAS 123. The Company will be adopting the modified prospective application of SFAS 123(R) in the first quarter of 2006. Based on the current options outstanding, the Company does not anticipate the adoption of this statement to result in the recognition of material additional compensation cost in the year of adoption.  2.     INCOME TAXES           A summary of Federal, Canadian and State income taxes charged (credited) to income is presented below. For accounting and ratemaking purposes, income tax provisions (benefits) included in "Operating Expenses" reflect taxes applicable to revenues and expenses allowable for ratemaking purposes on MPS regulated activities and unregulated activities for MAM, TMG, Me&NB, TMGC,  61       Maricor Properties, Mecel Properties Ltd, and MTI. The tax effect of items not included in rate base or normal operating activities is allocated to "Other Income (Deductions)."         2005   2004   2003         (In thousands of dollars)      Current income taxes                         Federal   $ (392 ) $ (401 ) $ 492       State     (86 )   121     327       Foreign     (587 )   (202 )   (58 )                  Total current income taxes     (1,065 )   (482 )   761                    Deferred income taxes                         Federal   $ 813   $ 585   $ 388       State     79     99     80       Foreign     3     —     —                    Total deferred income taxes     895     684     468                    Investment credits, net     (25 )   (28 )   (30 )                      Total income taxes   $ (195 ) $ 174   $ 1,199                    Allocated to:                       Operating income                           —Regulated   $ 1,505   $ 1,234   $ 1,364         —Unregulated     (1,700 )   (797 )   (98 )                  Subtotal     (195 )   437     1,266     Discontinued Operations     (2 )   (270 )   (110 )                  Total Operating     (197 )   167     1,156     Other income     2     7     43                    Total   $ (195 ) $ 174   $ 1,199                             The effective income tax rates differ from the U.S. statutory rate as follows:         2005   2004   2003     Statutory Rate   34.0 % 34.0 % 34.0 %   Holding Company Formation   1.4   (0.4 ) 2.5     State Income Taxes   5.0   5.1   4.4     Carrying Charge(1)   0.0   (5.3 ) (11.2 )   Book to Accrual Adjustments(2)   2.9   (12.7 ) 0.0     Excess Canadian Tax   5.7   1.8   (1.9 )   Equity Earnings in Joint Venture Companies, Less Dividends(3)   4.2   (1.7 ) (1.2 )   Depreciation Flow-through on Property(4)   (14.3 ) (3.8 ) 1.8     Investment Tax Credit Amortization   6.0   (1.9 ) (0.7 )   Other   2.2   (3.4 ) 2.3                      Effective Rate   47.1 % 11.7 % 30.0 %                     (1)As explained more fully in Note 12, "Commitments, Contingencies and Regulatory Matters", during the course of Docket No. 2003-666, the MPUC reviewed the manner in which MPS was recovering and accounting for its carrying charges associated with the deferred fuel element of its stranded cost. Under the stipulation approved in that Docket, MPS will record deferred income tax  62       expense associated with deferred fuel carrying charges during the rate effective period from March 1, 2004, through December 31, 2006, as compared to past treatment where such expense was deferred for future recovery.    (2)The book to accrual adjustments represent tax true-up items recognized in the current year which relate to prior period items. (3)Maine Public Service Company's net income includes the equity earnings in two joint venture companies which are accounted for under the equity method. Their equity earnings are excluded from MPS taxable income, and the dividends received are included in taxable income. Deferred taxes are not provided on the equity earnings or the dividends, since the joint venture companies dividend out essentially all of their earnings on a monthly basis, making the timing difference minimal. (4)According to regulated utility income tax accounting rules, MPS does not provide deferred income tax on certain timing differences related to accelerated depreciation on Asset Depreciation Range property which was originally placed in service during the years 1971 through 1980.          The elements of deferred income tax expense (credit) are as follows (in thousands of dollars):         2005   2004   2003     Temporary Differences at Statutory Rates:                       Seabrook—costs   $ (613 ) $ (614 ) $ (614 )   Liberalized depreciation     262     478     467     Deferred fuel     1,740     1,808     1,420     Deferred regulatory expense     (146 )   (36 )   239     Flexible pricing revenue     51     58     (104 )   Accrued pension and postretirement benefits     115     (335 )   (132 )   Wheelabrator-Sherman power purchase restructuring     (579 )   (579 )   (579 )   Generating Asset Sale     —     —     178     Reacquired debt     (77 )   (83 )   (85 )   Software Amortization     114     —     —     Other     28     (13 )   (322 )                  Total temporary differences—statutory rates   $ 895   $ 684   $ 468                             The Company has not accrued U.S. income taxes on the undistributed earnings of Me&NB, as the withholding taxes due on the distribution of any remaining amount would be principally offset by foreign tax credits. No dividends were received from Me&NB in 2005, 2004 or 2003.          As required by SFAS 109, Management of the Company has evaluated the positive and negative evidence bearing upon the realizability of the Company's deferred tax assets, which consist principally of pension and post-retirement benefits and OCI—interest rate hedge. For the year ended December 31, 2005, Management evaluated the deferred tax asset valuation allowance and determined that no valuation was needed.  63               The following summarizes accumulated deferred income tax (assets) and liabilities established on temporary differences under SFAS 109 as of December 31, 2005 and 2004 (in thousands of dollars):         2005   2004     Seabrook   $ 6,350   $ 6,964     Property     8,899     9,068     Flexible pricing revenue     584     925     Deferred fuel     11,931     9,832     Wheelabrator-Sherman up-front payment     579     1,158     Pension and post-retirement benefits     (938 )   (945 )   OCI     (142 )   (272 )   Other     70     115                 Net accumulated deferred income taxes   $ 27,333   $ 26,845                  3.     DISCONTINUED OPERATIONS—ENERGY ATLANTIC           On March 1, 2004, EA suspended all active operations and has been classified as a discontinued operation in accordance with FASB No. 144. The Company recognized income (loss) from discontinued operations of $4,000, $(408,000), and $(143,000) for the years ended December 31, 2005, 2004 and 2003, respectively, classified as discontinued operations in the Statement of Consolidated Operations. The 2005 net income from discontinued operations represents the continued activity to finalize the shutdown of EA's operations. This activity is expected to be complete in April 2006. The 2004 net loss represents additional software lease expense of $181,000, recognized on the buy-out of a software lease by EA, $172,000 for employee severance payments, and a loss on disposal of fixed assets of $69,000.          The following table summarizes the statement of operations for EA and the corporate services provided to EA for each of the past three years:         Year Ended December 31,         2005   2004   2003     Revenue   $ —   $ 572   $ 6,064     Expenses     —     (1,164 )   (6,343 )   Other Deductions, Income and Interest     2     (86 )   26                    Pretax Income (Loss) from Discontinued Operations     2     (678 )   (253 )   Income Taxes     2     270     110                    Income (Loss) from Discontinued Operations   $ 4   $ (408 ) $ (143 )                  Loss per Share from Discontinued Operations (Basic and Diluted)   $ —   $ (0.25 ) $ (0.09 )                   64              The major classes of assets and liabilities of the discontinued operations included in the Company's consolidated balance sheets as of December 31, 2005, 2004 and 2003, are as follows (in thousands of dollars):         2005   2004   2003   Assets                     Cash and Cash Equivalents   $ —   $ 183   $ 1,161   Income Tax Benefit (Intercompany)     235     263     68   Accounts Receivable     —     —     711   Other Assets     —     21     84                  Total Assets   $ 235   $ 467   $ 2,024                Liabilities                     Accounts Payable   $ 6   $ 67   $ 263   Other Liabilities     —     —     488                  Total Liabilities   $ 6   $ 67   $ 751                 4.     SEGMENT INFORMATION           The Company is organized based on products and services. Management monitors the operations of the Company in the following operating segments:    •Regulated electric utility: MPS and its inactive wholly-owned Canadian subsidiary, Me&NB; •Unregulated engineering services: The Maricor Group and all of its subsidiaries and product and service lines; •Unregulated real estate development and investments: Maricor Properties Ltd and its subsidiaries Mecel Properties Ltd and Cornwallis Court Developments Ltd, and all of their real estate holdings; •Unregulated software technology: Maricor Technologies, Inc.; •Unregulated energy marketing: EA, an inactive subsidiary; and •Other: Corporate costs directly associated with the unregulated subsidiaries, common costs not allocated to the regulated utility and inter-company eliminations.           The segment information for 2004 and 2003 has been reclassified to conform to the 2005 presentation.  65                 The accounting policies of the segments are the same as those described in Note 1, "Summary of Significant Accounting Policies." MAM did not have any material assets or operations until it became a holding company on June 30, 2003; however, MPS incurred expenses associated with the formation of MAM, which totaled approximately $638,000 for the year ended December 31, 2003. MAM provides certain administrative support services to MPS, TMG, Maricor Properties, MTI and their subsidiaries. The cost of services provided to MPS is billed to MPS based on a combination of direct charges and allocations. The cost of corporate services provided to the other unregulated entities remains at the holding company, and is not allocated or charged to the various subsidiaries. MPS also provides services to MAM and other affiliates. These services are billed to MAM at cost through inter-company transactions.             Twelve Months Ended December 31, 2005 Unregulated             Regulated Electric Utility   Engineering Services   Real Estate Holdings   Software Technology   Energy Marketing   Other   Total         (In thousands of dollars)      Revenue from External Customers                                                 Regulated   $ 34,314   $ —   $ —   $ —   $ —   $ (15 ) $ 34,299       Unregulated     —     5,291     —     115     —     (23 )   5,383       Rental Income     —     —     501     —     —     (209 )   292                                    Total Operating Revenues     34,314     5,291     501     115     —     (247 )   39,974                                Operating Expenses                                                 Regulated Operation & Maintenance     14,352     —     —     —     —     —     14,352       Unregulated Operation & Maintenance     —     5,928     272     630     —     1,968     8,798       Depreciation     2,781     21     154     —     —     1     2,957       Amortization of Stranded Cost     10,533     —     —     —     —     —     10,533       Amortization     365     126     —     —     —     —     491       Taxes Other than Income     1,671     73     —     23     —     34     1,801       Income Taxes     1,506     (510 )   (91 )   (222 )   —     (878 )   (195 )                                  Total Operating Expenses     31,208     5,638     335     431     —     1,125     38,737                                Operating Income (Loss)     3,106     (347 )   166     (316 )   —     (1,372 )   1,237                                Other Income (Deductions)                                                 Equity in Income of Associated Companies     182     —     (52 )   —     —     (1 )   129       Interest and Dividend Income     55     42     1     —     —     (74 )   24       Other Income (Deductions)     (39 )   (2 )   (28 )   —     —     (24 )   (93 )                                  Total Other Income (Deductions)     198     40     (79 )   —     —     (99 )   60                                Income (Loss) Before Interest Charges     3,304     (307 )   87     (316 )   —     (1,471 )   1,297     Interest Charges     1,040     382     202     2     —     (105 )   1,521                                Income (Loss) from Continuing Operations     2,264     (689 )   (115 )   (318 )   —     (1,366 )   (224 )   (Loss) Income from Discontinued Operations, Net     —     —     —     —     (1 )   5     4                                Net Income (Loss)   $ 2,264   $ (689 ) $ (115 ) $ (318 )   (1 ) $ (1,361 ) $ (220 )                              Total Assets   $ 137,440   $ 11,527   $ 8,476   $ 1,706   $ 235   $ (1,609 ) $ 157,775                                Capital Expenditures   $ 4,822   $ 238   $ 409   $ 446   $ —   $ —   $ 5,915                                 66                 Twelve Months Ended December 31, 2004 Unregulated             Regulated Electric Utility   Engineering Services   Real Estate Holdings   Software Technology   Energy Marketing   Other   Total         (In thousands of dollars)      Revenue from External Customers                                                 Regulated   $ 33,734   $ —   $ —   $ —   $ —   $ (1 ) $ 33,733       Unregulated     —     3,412     54     —     —     (61 )   3,405                                    Total Operating Revenues     33,734     3,412     54     —     —     (62 )   37,138                                Operating Expenses                                                 Regulated Operation & Maintenance     14,065     —     —     —     —     —     14,065       Unregulated Operation & Maintenance     —     3,963     48     —     —     1,232     5,243       Depreciation     2,635     7     5     —     —     1     2,648       Amortization of Stranded Cost     10,011     —     —     —     —     —     10,011       Amortization     194     30     —     —     —     —     224       Taxes Other than Income     1,603     52     —     —     —     —     1,655       Income Taxes     1,234     (254 )   (7 )   —     —     (536 )   437                                    Total Operating Expenses     29,742     3,798     46     —     —     697     34,283                                Operating Income (Loss)     3,992     (386 )   8     —     —     (759 )   2,855                                Other Income (Deductions)                                                 Equity in Income of Associated Companies     204     —     —     —     —     —     204       Interest and Dividend Income     17     4     1     —     —     (20 )   2       Other Deductions     (186 )   (8 )   —     —     —     (85 )   (279 )                                  Total Other Income (Deductions)     35     (4 )   1     —     —     (105 )   (73 )                              Income (Loss) Before Interest Charges     4,027     (390 )   9     —     —     (864 )   2,782     Interest Charges     985     98     31     —     —     (58 )   1,056                                Income (Loss) from Continuing Operations     3,042     (488 )   (22 )   —     —     (806 )   1,726     (Loss) Income from Discontinued Operations, Net     —     —     —     —     (380 )   (28 )   (408 )                              Net Income (Loss)   $ 3,042   $ (488 ) $ (22 ) $ —   $ (380 ) $ (834 ) $ 1,318                                Total Assets   $ 137,742   $ 9,941   $ 2,773   $ —   $ 467   $ (117 ) $ 150,806                                Capital Expenditures   $ 6,276   $ 258   $ 1,974   $ —   $ —   $ 3   $ 8,511                                 67                 Twelve Months Ended December 31, 2003 Unregulated             Regulated Electric Utility   Engineering Services   Real Estate Holdings   Software Technology   Energy Marketing   Other   Total         (In thousands of dollars)      Revenue from External Customers                                                 Regulated   $ 31,748   $ —   $ —   $ —   $ —   $ (9 ) $ 31,739       Unregulated     —     57     —     —     —     1     58                                    Total Operating Revenues     31,748     57     —     —     —     (8 )   31,797                                Operating Expenses                                                 Regulated Operation & Maintenance     12,851     —     —     —     —     (43 )   12,808       Unregulated Operation & Maintenance     638     40     —     —     —     214     892       Depreciation     2,647     —     —     —     —     —     2,647       Amortization of Stranded Cost     9,189     —     —     —     —     —     9,189       Amortization     206     —     —     —     —     —     206       Taxes Other than Income     1,460     —     —     —     —     —     1,460       Income Taxes     1,364     6     —     —     —     (104 )   1,266                                    Total Operating Expenses     28,355     46     —     —     —     67     28,468                                Operating Income (Loss)     3,393     11     —     —     —     (75 )   3,329                                Other Income (Deductions)                                                 Equity in Income of Associated Companies     298     —     —     —     —     (26 )   272       Interest and Dividend Income     21     —     —     —     —     (40 )   (19 )     Other Deductions     (258 )   —     —     —     —     (78 )   (336 )                                  Total Other Income (Deductions)     61     —     —     —     —     (144 )   (83 )                              Income (Loss) Before Interest Charges     3,454     11     —     —     —     (219 )   3,246     Interest Charges     323     —     —     —     —     (26 )   297                                Income (Loss) from Continuing Operations     3,131     11     —     —     —     (193 )   2,949     (Loss) Income from Discontinued Operations, Net     —     —     —     —     (80 )   (63 )   (143 )                              Net Income (Loss)   $ 3,131   $ 11   $ —   $ —   $ (80 ) $ (256 ) $ 2,806                                Total Assets   $ 135,870   $ 1,169   $ —   $ —   $ 2,024   $ 2,206   $ 141,269                                Capital Expenditures   $ 4,609   $ 46   $ —   $ —   $ —   $ 221   $ 4,876                                 68                 The following tables present the operations and assets of the Company by geographic location:  Financial Information about Foreign and Domestic Operations (In thousands of U.S. dollars)          2005   2004   2003     Revenues:                         Revenues from Domestic Operations:                           Maine Public Service Company   $ 34,314   $ 33,734   $ 31,748         The Maricor Group     2,064     1,282     —         Maricor Technologies, Inc.     115     —     —                        Subtotal     36,493     35,016     31,748                      Revenues from Foreign Operations:                           The Maricor Group, Canada     3,227     2,130     57         Maricor Properties Ltd     501     54     —         Maine & New Brunswick     —     —     —                        Subtotal     3,728     2,184     57                        Other*     (247 )   (62 )   (8 )                      Total Operating Revenues   $ 39,974   $ 37,138   $ 31,797                    Inter-Company Revenues:                            Inter-Company Revenues from Domestic Operations:                           Maine Public Service Company   $ 15   $ —   $ —         The Maricor Group     —     —     —         Maricor Technologies, Inc.     19     —     —                        Subtotal     34     —     —                      Inter-Company Revenues from Foreign Operations:                           The Maricor Group, Canada     58     53     —         Maricor Properties Ltd     209     54     —         Maine & New Brunswick     —     —     —                        Subtotal     267     107     —                        Other*     —     —     —                        Discontinued Operations     —     —     9                        Total Inter-Company Revenues   $ 301   $ 107   $ 9                    Operating Income:                            Operating Income (Loss) from Domestic Operations:                           Maine Public Service Company   $ 3,118   $ 4,009   $ 3,316         The Maricor Group     (481 )   (345 )   —         Maricor Technologies, Inc.     (316 )   —     —                        Subtotal     2,321     3,664     3,316                      Operating Income (Loss) from Foreign Operations:                           The Maricor Group, Canada     134     (41 )   11         Maricor Properties Ltd     166     8     —         Maine & New Brunswick     (12 )   (17 )   77                        Subtotal     288     (50 )   88                        Other*     (1,372 )   (759 )   (75 )                      Total Operating Income (Loss)   $ 1,237   $ 2,855   $ 3,329                     69             2005   2004   2003     Net Income:                         Net Income (Loss) from Domestic Operations:                           Maine Public Service Company   $ 2,261   $ 3,054   $ 2,994         The Maricor Group     (629 )   (368 )   —         Maricor Technologies, Inc.     (318 )   —     —                        Subtotal     1,314     2,686     2,994                      Net Income (Loss) from Foreign Operations:                           The Maricor Group, Canada     (60 )   (120 )   11         Maricor Properties Ltd     (115 )   (22 )   —         Maine & New Brunswick     3     (12 )   137                        Subtotal     (172 )   (154 )   148                        Other*     (1,361 )   (834 )   (256 )                      Discontinued Operations     (1 )   (380 )   (80 )                      Total Net Income (Loss)   $ (220 ) $ 1,318   $ 2,806                    Identifiable Assets:                            Identifiable Assets from Domestic Operations:                           Maine Public Service Company   $ 137,312   $ 137,572   $ 134,996         The Maricor Group     4,207     3,882     —         Maricor Technologies, Inc.     1,706     —     —                        Subtotal     143,225     141,454     134,996                      Identifiable Assets from Foreign Operations:                           The Maricor Group, Canada     7,320     6,059     1,169         Maricor Properties Ltd     8,476     2,773     —         Maine & New Brunswick     128     170     874                        Subtotal     15,924     9,002     2,043                        Other*     (1,609 )   (117 )   2,206                        Discontinued Operations     235     467     2,024                        Total Identifiable Assets   $ 157,775   $ 150,806   $ 141,269                       *The "Other" line includes activities of the holding company, including corporate costs directly associated with unregulated operations, common costs not allocated to the regulated utility and inter-company eliminations.  5.     INVESTMENTS IN ASSOCIATED COMPANIES   Maricor Ashford Ltd           Maricor Properties Ltd is an equal partner in Maricor Ashford Ltd, a joint venture with Ashford Investments, Ltd., an unaffiliated real estate management company. Maricor Ashford Ltd is a real estate development and redevelopment company based in Moncton, New Brunswick, Canada. Management reviewed the characteristics of this joint venture in accordance with Financial Accounting Standards Board Interpretation No. 46(R), "Consolidation of Variable Interest Entities, an Interpretation of ARB 51" ("FIN 46(R)"), and determined that Maricor Properties Ltd is not the primary beneficiary of this joint venture. Accordingly, the activity of Maricor Ashford Ltd has been recorded in these financial statements under the equity method, and Maricor Ashford Ltd is not consolidated with these financial statements. Maricor Properties' investment in the joint venture totaled $46,000 at December 31, 2005. Also, Maricor Properties recognized $52,000 or 50% of the loss of Maricor Ashford as equity earnings in 2005.  70       Maine Yankee and MEPCO           MPS owns 5% of the common stock of Maine Yankee Atomic Power Company ("Maine Yankee"), a jointly-owned nuclear electric power company, and 7.49% of the common stock of the MEPCO, a jointly-owned electric transmission company. MPS records its investment in MEPCO and Maine Yankee using the equity method.          Dividends received during 2005, 2004 and 2003 from Maine Yankee were $91,000, $355,000 and $301,000, respectively, and from MEPCO $174,000, $7,000 and $99,000, respectively. In 2005, 2004 and 2003, MPS also received Maine Yankee stock redemptions of $350,000, $200,000 and $525,000, respectively. Substantially all earnings of Maine Yankee and MEPCO are distributed to investor companies. Condensed financial information (unaudited) for Maine Yankee and MEPCO is as follows  (in thousands of dollars) :         Maine Yankee   MEPCO       2005   2004   2003   2005   2004   2003   Earnings                                       Operating revenues   $ 60,060   $ 62,032   $ 53,222   $ 3,339   $ 3,628   $ 3,792   Earnings applicable to Common Stock     1,879     2,494     3,217     988     1,207     1,258   Company's equity share of net earnings   $ 94   $ 125   $ 161   $ 74   $ 90   $ 94   Investment                                       Total assets   $ 451,377   $ 478,299   $ 561,523   $ 9,927   $ 8,966   $ 8,100   Less:                                       Long-term debt     —     —     2,680     —     —     —   Other liabilities and deferred credits     422,511     442,486     514,423     3,167     898     1,142                         Net assets   $ 28,866   $ 35,813   $ 44,420   $ 6,760   $ 8,068   $ 6,958   MPS's equity in net assets   $ 1,443   $ 1,791   $ 2,221   $ 506   $ 604   $ 521            In accordance with a plan approved by the Securities and Exchange Commission, Maine Yankee has started the redemption of its common stock periodically through 2008. Shares redeemed through December 31, 2005, are as follows:     Maine Yankee Board Meeting    Total Shares Redeemed   MPS Shares   Amounts Received   Date Received   September 27, 2001   75,200   3,760   $ 499,484   October 4, 2001   June 27, 2002   22,600   1,130   $ 150,110   July 11, 2002   September 26, 2002   33,900   1,695   $ 225,166   October 4, 2002   December 18, 2002   33,800   1,690   $ 224,502   January 9, 2003   September 25, 2003   45,200   2,260   $ 300,222   October 14, 2003   December 17, 2003   30,100   1,505   $ 199,926   January 7, 2004   March 29, 2005   52,700   2,635   $ 350,037   April 13, 2005                        293,500   14,675   $ 1,949,447                         71        6.     SHORT-TERM CREDIT ARRANGEMENTS           The following table summarizes the balances outstanding under the Company's short-term credit arrangements at December 31, 2005 and 2004:         2005   2004   Maine Public Service Company                 Bank of America, N.A. (Formerly Fleet National Bank):                   $10,000,000, 3 Year Revolving Working Capital Line of Credit   $ 7,900   $ —     The Bank of New York:                   A Loan     —     3,000       B Loan     —     200   The Maricor Group                   TD BankNorth, N.A.:                   $1,000,000 Revolving Working Capital Credit Arrangement     —     789     Katahdin Trust Company:                   $1,000,000 Secured Revolving Working Capital Credit Arrangement     1,000     —   Maricor Properties                   Royal Bank of Canada:                   $2,300,000 CDN 1 Year Revolving Term Note     1,978     —       $2,000,000 CDN 1 Year Revolving Term Note     1,720     —   Maine & Maritimes                   Bank of America, N.A. (Formerly Fleet National Bank):                   $4,000,000, 3 Year Revolving Working Capital Line of Credit     1,500     —                 Total   $ 14,098   $ 3,989                      On October 7, 2005, MPS arranged a three-year, $10 million revolving, working capital line of credit with Bank of America as Agent, secured by $6.0 million of first mortgage bonds. This line of credit replaces the former $6 million line of credit with Bank of New York as Agent. Interest rates on the new facility are 30-, 60-, or 90-day LIBOR plus 1.375% or Bank of America's prime rate. This line of credit is subject to certain financial covenants, measured quarterly beginning December 31, 2005. These covenants include a minimum tangible net worth, a minimum debt service coverage ratio and a maximum debt-to-total capital ratio. Failure to comply with these covenants could result in a 400 basis point increase in the interest rate or calling of the outstanding balance of the Line. As of December 31, 2005, there was $7.9 million outstanding on this line of credit, with $2.1 million available.          Prior to the $10.0 million line of credit from Bank of America, MPS had a revolving credit arrangement with two banks for borrowings up to $6 million, which was secured by a $6 million first mortgage bond. These agreements contained certain restrictive covenants including interest coverage tests and debt-to-equity ratios, similar to those under the new line of credit. MPS could utilize, at its discretion, two types of loan options: A Loans, which were provided on a pro rata basis in accordance with each participating bank's share of the commitment amount, and B Loans, which were provided as arranged between MPS and each of the participating banks. The A Loans, at MPS's option, bore interest equal to either the agent bank's prime rate or LIBOR-based pricing. MPS also paid a quarterly commitment fee of .50% of the unused portion of the A Loans. The B Loans bore interest as arranged between MPS and the participating bank. As of December 31, 2004, A Loans of $3,000,000 were outstanding under the revolving credit arrangement at an interest rate of 3.6875%; B Loans of $200,000 were outstanding at an interest rate of 4.04%. As of December 31, 2003, A Loans for $5.0 million were outstanding under the revolving credit arrangement at an interest rate of 2.5625%, as well as a B Loan  72       of $200,000 of 2.76%. At December 31, 2004, and 2003, the unused portion of the MPS $6.0 million revolving credit line was $2.8 million and $0.8 million, respectively.          On October 1, 2003, MPS executed an additional unsecured $3 million line of credit with the Bank of New York. This new facility expired on December 31, 2004; therefore, there was no balance outstanding or available as of December 31, 2004. At December 31, 2003, there was $1.0 million outstanding on this line of credit at an interest rate of 2.8125% and $2.0 million of available capacity.          On July 28, 2005, MAM arranged a $750,000 unsecured, ninety-day working capital line of credit with Katahdin Trust Company. The interest rate on this loan was three-month LIBOR plus 3.0%. The proceeds were used for general corporate purposes for the interim period prior to arranging the $4.0 million revolving line of credit at MAM.          On October 21, 2005, MAM arranged a new, three-year $4.0 million revolving line of credit with Bank of America for working capital, letters of credit and the repayment of the $750,000 Katahdin Trust Company ninety-day line of credit. $1.73 million of the $4 million line of credit is in the form of a letter of credit securing a loan from Royal Bank of Canada which loan was used toward the acquisition of Cornwallis Court Developments. The MAM line of credit is secured by a general security interest in the business assets of MAM, excluding the assets of MPS. The interest rate is 30, 60 or 90 day LIBOR plus 2.0% or Bank of America's prime rate. The loan agreement contains certain financial covenants, measured quarterly beginning December 31, 2005, which require MAM to maintain a minimum tangible net worth, a minimum debt service coverage ratio and a maximum debt-to-total capital ratio. Failure to comply with these covenants could result in a 400 basis point increase in the interest rate or calling of the outstanding balance of the Line. At December 31, 2005, there was $1.5 million outstanding on this line of credit, with $770,000 available.          On October 7, 2005, in connection with the acquisition of Cornwallis Court Developments, Maricor Properties Ltd entered into a $2.0 million CDN, one-year loan from Royal Bank of Canada. This loan is secured by a $2.0 million CDN ($1.73 million USD) letter of credit in favor of Royal Bank of Canada from Bank of America.          On October 31, 2005, Maricor Properties Ltd arranged a $2.3 million CDN, one-year revolving term loan with Royal Bank of Canada, the proceeds of which were used to repay Katahdin Trust Company's $2.0 US million term loan for the acquisition and renovation of the Vaughan Harvey property. The term of the RBC note is one-year at Royal Bank of Canada's prime rate plus 0.50%. This loan is secured by a collateral mortgage on the Vaughan Harvey Boulevard property in Moncton, New Brunswick, by a $570,000 CDN guarantee from Mecel Holdings and a collateral mortgage covering the Mecel Holdings property in Halifax, Nova Scotia. This loan is also guaranteed by MAM, limited to $1.73 million.          On August 12, 2004, Maine & Maritimes Corporation entered into a $2.0 million, unsecured, two-year term loan with Katahdin Trust Company. The proceeds of the loan were used to acquire and renovate the Vaughan Harvey Boulevard property in Moncton, New Brunswick, Canada. The loan required interest-only payments from September 12, 2004, through maturity at a variable interest rate of Three-Month LIBOR plus 2.65%. This loan was repaid with the proceeds of the $2.3 million CDN note from Royal Bank of Canada, described above.          On November 29, 2005, The Maricor Group entered into a $1.0 million, secured revolving credit arrangement for working capital borrowings with Katahdin Trust Company. The proceeds of the loan were used to repay and refinance the $1.0 million, revolving credit facility with BankNorth N.A. (now TD BankNorth). The interest rate on this loan is at a variable interest rate of three-month LIBOR plus 2.75%. This loan is guaranteed by MAM and by The Maricor Group, Canada Ltd. The loan agreement contains certain financial covenants, measured quarterly beginning December 31, 2005, which require MAM to maintain a minimum tangible net worth, a minimum debt service coverage ratio and a  73       maximum debt-to-total capital ratio and require The Maricor Group to maintain a minimum debt service coverage ratio. The agreement requires that the outstanding balance be paid down to a zero balance for 30 consecutive days every year. There was $1.0 million outstanding on this line of credit at December 31, 2005, with no funds available.          The Maricor Group had a revolving credit arrangement with BankNorth N.A. (now TD BankNorth) for working capital borrowings up to $1.0 million, which was paid down prior to expiration with the proceeds from the $1.0 million Katahdin Trust Company revolving credit arrangement. This revolving credit arrangement was arranged on September 21, 2004, and was for a term of one year. The agreement contained certain covenants regarding debt service coverage beginning in 2005 and was secured by substantially all of the assets of TMGNE and The Maricor Group, Canada Ltd. The agreement also required that the outstanding balance be paid down to a zero balance for 30 consecutive days every year commencing January 1, 2005. The interest rate on this loan was one-month LIBOR plus 2.0%. This loan was guaranteed by Maricor, Ltd, RES Engineering and by MAM.  7.     ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)           MPS has three issues of long-term debt with variable interest rates. Pursuant to its rate order in MPUC Docket 2003-85, MPS agreed to fix its interest rates and the MPUC allowed recovery of the fixed interest costs in rates. On September 9, 2003, MPS executed swap agreements for the three variable-rate issues, locking in the rates over the remaining terms of the issues. For the Finance Authority of Maine ("FAME") 1998 Taxable Elective Rate Stabilization Revenue Notes due 2008, the effective fixed interest rate has been set at 2.79%. For the two series of tax-exempt bonds issued by the Maine Public Utilities Financing Bank ("MPUFB"), the effective fixed interest rates for the 1996 Series due 2021 and the 2000 Series due 2025 are 4.57% and 4.68%, respectively.          At December 31, 2005, the fair value of these qualified cash flow hedges was $(1.39) million, reflecting a change in swap rates since the execution date. For the year ended December 31, 2005, the difference between the fixed rates and the underlying variable rates on the issues of approximately $437,000 was charged to interest expense. Although the fixed interest rates were higher than the underlying variable rates, a portion of the MPUC approved rate increase was to cover this difference. Management believes that the fixing of interest rates over the terms of the Company's debt will prove to protect both shareholders and consumers from upward variable debt pressures. The gain in fair value on the interest rate swaps from December 31, 2004, as compared to December 31, 2005, of $84,000 less the deferred tax of $33,000 has been recorded as Other Comprehensive Income (Loss), affecting common shareholder's equity. Gains or losses in the fair market value of the interest rate swaps do not impact net income or the revenues of the Company, unless MPS's shareholder's common equity falls below the minimum allowable 48 percent of common equity rates, the floor established by the MPUC Order in Docket No. 2002-676 authorizing the formation of the holding company, MAM.          On November 20, 2000, MPS purchased an interest cap of 6% that applied to the 2000 and 1996 Series of Maine Public Utilities Financing Bank's ("MPUFB") bonds issued on behalf of MPS with outstanding balances of $9 million and $13.6 million, respectively. The interest cap expired in November 2003.          On June 1, 1998, MPS purchased an interest rate cap of 7% at a cost of $172,000, to expire June 8, 2008, on $11,450,000 of FAME's Taxable Electric Rate Stabilization Notes, Series 1998A, issued on behalf of MPS. In accordance with the rate treatment prescribed by the MPUC, the original cost of the interest rate cap has been amortized along with other issuance costs with $45,000, $62,000 and $79,000 remaining at the end of 2005, 2004 and 2003, respectively, as a regulatory asset. The provider of the cap estimated its fair value at December 31, 2005 at approximately $(1,000).  74       8.     LONG-TERM DEBT           On October 19, 2000, the Maine Public Utilities Financing Bank ("MPUFB") issued $9 million of its tax-exempt bonds due October 1, 2025 ("2000 Series") on behalf of MPS. The proceeds were placed in trust to be drawn down for the reimbursement of issuance costs and for the construction of qualifying distribution property. On October 17, 2003, MPS received the final distribution from the trust. Pursuant to the long-term note issued under a loan agreement between MPS and the MPUFB, MPS has agreed to make payments to the MPUFB for the principal and interest on the bonds. Concurrently, pursuant to a letter of credit and reimbursement agreement, MPS caused a Direct Pay Letter of Credit for an initial term of nineteen months, subsequently extended until June, 2006, to be issued by The Bank of New York for the benefit of the holders of such bonds. On February 28, 2006, Bank of America issued its Direct Pay Letter of Credit to expire March 2009, to replace Bank of New York's Letter of Credit. To secure MPS's obligations under the letter of credit and reimbursement agreement, MPS issued first and second mortgage bonds, in the amounts of $5.0 million and $4.53 million, respectively. MPS has the option of selecting weekly, monthly, annual or term interest rate periods for the 2000 Series, and, at issuance, selected the weekly interest period, with an initial interest rate of 4.35%. On November 20, 2000, MPS purchased an interest rate cap of 6% at a cost of $36,000 that expired in November 2003, that applied to the 2000 and 1996 Series, as described below. At the end of 2005, the cumulative effective interest rate of the 2000 Series, including the effective fixed swap rate of 4.68%, issuance costs and credit enhancement fees since issuance were 7.14%.          A similarly structured series of Bonds was issued on behalf of MPS by the MPUFB in 1996 ("1996 Series"), with $13.6 million outstanding due in 2021. A Direct Pay Letter of Credit was issued by The Bank of New York, which had been extended to June 2006, and is secured by $14.4 million of second mortgage bonds. On February 28, 2006, Bank of America issued its Direct Pay Letter of Credit to expire March 2009, to replace Bank of New York's Letter of Credit. At the end of 2005, the cumulative effective interest rate of the 1996 series, including the effective fixed swap rate of 4.57%, issuance costs and credit enhancement fees were 6.13%.          On May 29, 1998, FAME issued $11,540,000 of its Taxable Electric Rate Stabilization Revenue Notes, Series 1998A ("Notes") on behalf of MPS. The Notes were issued pursuant to, and are secured under, a Trust Indenture by and between FAME and Peoples Heritage Bank (now TD BankNorth), Portland, Maine, as Trustee ("the Trustee"), for the purpose of: (i) financing the up-front payment to Wheelabrator-Sherman of approximately $8.7 million, as required under an amended purchase power agreement; (ii) for the Capital Reserve Fund, as required by FAME under their Electric Rate Stabilization Program; and (iii) for issuance costs. The Notes are limited obligations of FAME, payable solely out of the trust estate available under the Indenture, principally the Loan Note and Loan Agreement with MPS and the Capital Reserve Fund held by the Trustee, which was approximately $2.38 million at the end of 2005 and 2004. MPS has issued $4.0 million of its first mortgage bonds and $7.54 million of its second mortgage bonds as collateral for its performance under the Loan Note issue pursuant to the Loan Agreement. The Notes will bear interest at a Floating Interest Rate and are adjusted weekly. On June 1, 1998, MPS purchased an interest rate cap of 7% at a cost of $172,000, to expire June 2008, to limit its interest rate exposure to quarterly U.S. LIBOR rates. At the end of 2005, the cumulative effective interest rate, including the fixed swap rate of 2.79%, issuance costs and credit enhancement fees for the Notes were 3.81%.          The MPUFB tax-exempt issues are subject to the same restrictive covenants as those discussed for MPS's revolving credit arrangement in Note 6, "Short-Term Credit Arrangements."          The first and second mortgage bonds described above that secure MPS's long-term debt are supported by the bondable additions of substantially all of MPS's utility plant.          On November 22, 2004, MPS entered into a $6,000,000, unsecured, 7-year term loan with Fleet National Bank, now Bank of America. The proceeds of the loan were used to repay and refinance a  75       portion of the amounts outstanding under MPS's revolving credit arrangement associated with the Company's prior capital expenditures. The loan agreement contains certain covenants requiring the maintenance of a minimum Tangible Net Worth, maximum Ratio of Indebtedness for Borrowed Money to Total Capital and a minimum Ratio of Net Income to Fixed Charges. Interest is payable monthly at a variable interest rate of one-month LIBOR plus 1.5%. The loan is to be repaid in scheduled monthly principal payments as follows:     December 1, 2004 through November 1, 2007   $ 50,000   December 1, 2007 through November 1, 2009   $ 80,000   December 1, 2009 through November 1, 2011   $ 95,000            On October 7, 2005, in connection with the acquisition of Cornwallis Court Developments, Maricor Properties Ltd assumed a seven year, $4.4 million CDN mortgage loan from Standard Life Assurance Company. The balance remaining on this loan when the loan was assumed was approximately $3.6 million CDN. This loan is secured by a collateral mortgage on the J. MacDonald Building owned by Cornwallis Court Developments. This loan matures on September 1, 2010.          On November 29, 2005 The Maricor Group entered into a $2.2 million, secured, five-year term loan with Katahdin Trust Company. The proceeds of the loan were used to repay and refinance a $2.2 million term loan from BankNorth N.A. (now TD BankNorth). The loan requires interest-only payments at a variable interest rate of three-month LIBOR, plus 2.75% through November 29, 2007. Monthly, principal payments of approximately $18,300 commence December 29, 2007, with a final payment of $1.54 million at maturity on December 29, 2010. This loan is guaranteed by MAM and by The Maricor Group, Canada Ltd. The loan agreement contains certain financial covenants, measured quarterly beginning December 31, 2005, which require MAM to maintain a minimum tangible net worth, a minimum debt service coverage ratio and a maximum debt-to-total capital ratio and require The Maricor Group to maintain a minimum debt service coverage ratio.          On September 21, 2004, The Maricor Group entered into a $2.2 million secured, 10-year term loan with BankNorth N.A. (now TD BankNorth). The proceeds of the loan were used, in part, for the acquisition of the common stock of RES Engineering and Morris & Richard Consulting Engineers. The loan required interest-only payments at a variable interest rate of one-month LIBOR, plus 2.00% through September 1, 2007. Quarterly, principal payments of approximately $79,000 were to commence October 1, 2007, through maturity at September 1, 2014. This loan was guaranteed by Maricor, Ltd, RES Engineering and by MAM. This loan was refinanced through Katahdin Trust Company, described in the preceding paragraph.          On August 12, 2004, Maine & Maritimes Corporation entered into a $2.0 million, unsecured, two-year term loan with Katahdin Trust Company. The proceeds of the loan were used to acquire and renovate certain real estate assets in Moncton, New Brunswick, Canada. The loan requires interest-only payments from September 12, 2004 through maturity at a variable interest rate of Three-Month LIBOR plus 2.65%. This debt was repaid with the $2.3 million CDN short-term loan from Royal Bank of Canada, described in Note 6, "Short-Term Credit Arrangements" and other funds.  9.     STOCK COMPENSATION PLAN           Upon approval by MPS's shareholders in June 2002, MPS adopted the 2002 Stock Option Plan (the "Plan"). The Plan was subsequently adopted by MAM after its formation. The Plan provides designated employees of the Company and its Subsidiaries with stock ownership opportunities and additional incentives to contribute to the success of the Company, and to attract, reward and retain employees of outstanding ability. The Plan is administered by the members of the Performance and Compensation Committee of the Board of Directors, who are not employees of the Company or its subsidiaries. The Company may grant options to its employees for up to 150,000 shares of common  76       stock, provided that the maximum aggregate number of shares which may be issued under the Plan pursuant to incentive stock options shall be 120,000 shares. The exercise price for shares to be issued under any incentive stock option shall not be less than one-hundred percent (100%) of the fair market value of such shares on the date the option is granted. An option's maximum term is ten years. As of December 31, 2005, the CEO has been the only employee to receive stock options.          The Company accounts for the fair value of its grants under the Plan in accordance with the expense provisions of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation."          The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for the grants:     Year of Issuance    2005   2004   2003   2002   Number of Options Granted   5,250   5,250   5,250   5,250   Vesting Period   3 years   3 years   3 years   3 years   Number of Options Vested and Exercisable   —   —   —   5,250   Dividend Yield   4.08%   4.75%   4.60%   4.70%   Volatility   20.0%   20.0%   20.0%   20.0%   Risk-Free Interest Rate   3.80%   4.33%   3.00%   4.60%   Expected Life   7 years   7 years   7 years   7 years            A summary of the status of the Company's stock option plan as of December 31, 2005, and changes during the year then ended is presented below:     Options    Shares 2005   Average Exercise Price 2005       (In thousands of dollars)    Outstanding at December 31, 2004     15,750   $ 30.85   Granted     5,250     26.65   Exercised     —     —   Forfeited     —     —             Outstanding at December 31, 2005     21,000   $ 29.80             Options exercisable at December 31, 2005     5,250   $ 30.45   Weighted-average fair value of options granted   $ 4.31                  The following table summarizes information about fixed stock options outstanding at December 31, 2005:         Options Outstanding   Options Exercisable   Range of Exercise Prices    Number Outstanding at 12/31/05   Weighted- Average Remaining Contractual Life   Weighted- Average Exercise   Number Exercisable at 12/31/05   Weighted- Average Exercise   $26.65 - $32.00   21,000   8.17 yrs   $ 29.80   5,250   $ 30.45    77              Dilutive earnings per share impact of outstanding stock options:         Year Ended December 31,       2005   2004   2003   Net (Loss) Income (in thousands)   $ (220 ) $ 1,318   $ 2,806   Shares used in computation:                       Weighted-Average common shares outstanding in Computation of basic earnings per share     1,636,322     1,612,696     1,575,066   Dilutive effect of common stock options     —     13,125     7,875   Shares used in computation of earnings per common share assuming dilution*     1,636,322     1,625,821     1,582,941   Net (loss) income per share basic   $ (0.13 ) $ 0.82   $ 1.78   Net (loss) income per common share diluted   $ (0.13 ) $ 0.81   $ 1.77      *Note: The common stock options and preferred stock are anti-dilutive in 2005, and therefore omitted from the calculation of Diluted Earnings per Share.          An additional 20,000 shares were originally available for issuance to the Company's Board of Directors pursuant to the Stock Plan for Outside Directors. There are 7,046 of these shares remaining available for future issuance.  10.   BENEFIT PROGRAMS           The Company provides certain pension, post-retirement and welfare benefit programs to its employees. Benefit programs are an integral part of the Company's commitment to hiring and retaining top grade employees, providing market-based compensation that rewards individual and corporate performance. Competitive market-based total compensation benchmarks include funded benefit programs, salary, bonuses, incentives, and commissions. The Company offers welfare benefit plans to all employees, consisting of healthcare, life insurance, long-term disability, and accidental disability insurance. The Company also offers retirement savings programs to most employees in the form of 401(k) plans in the United States or Canadian Pension Plans in Canada. These plans allow voluntary contributions by the employee and may contain a contribution by the Company.  U. S. Defined Benefit Pension Plan           The Company has an insured non-contributory defined benefit pension plan covering Maine Public Service and certain MAM employees. Maine Public Service employees hired on or after January 1, 2006, are not eligible for this benefit plan. Non-regulated employees are not eligible for this benefit plan. Benefits under the plan are based on employees' years of service and compensation prior to retirement. The Company's policy has been to fund pension costs accrued. In accordance with that policy, the Company made tax-deductible contributions of $520,000 for the 2005 plan year throughout 2005, $441,000 for the 2004 plan year in 2005, prior to the filing of the 2004 corporate income tax return, and $409,000 for the 2003 plan year in December 2003. The Company also contributed $173,000 to the pension plan for 2005 in January 2006, and plans to contribute an additional $162,000 to the pension plan for 2005 in 2006 prior to the filing of its 2005 corporate income tax return.  Health Care Benefits           The Company provides certain health care benefits to eligible employees. Eligible employees share in the cost of their medical benefits, in addition to plan deductibles and coinsurance payments, totaling approximately 14.9% in 2005, 13.5% in 2004 and 12.2% in 2003. The plan also covers retiree medical coverage for employees of Maine Public Service Company, the regulated utility. In 2005, certain amendments were made to the plan, including the following: employees hired on or after October 1,  78       2005, are not eligible for post-retirement medical coverage. Effective January 1, 2006, certain retiree co-pays were increased, and spousal contributions commenced.          In 2002, certain amendments were made to the plan, including the following: effective with retirements after January 1, 1995, and employees hired before January 1, 2003, retirees will be eligible for retiree medical coverage after completing twenty years of service, subject to a contribution schedule. Employees hired after January 1, 2003, will be eligible for retiree medical coverage after completing twenty-five years of service; however, their spouse will not be eligible for coverage. For employees hired after December 31, 1999, and prior to January 1, 2003, spousal retiree medical coverage ceases upon the spouse's attainment of age 65. The amendments in 2005 and 2002, described above, have been incorporated into the calculation of the related actuarial benefit obligation.          Based on prior MPUC accounting orders, the Company established a regulatory asset of approximately $1.06 million, representing deferred post-retirement benefits. As an element of its four-year rate plan, the Company began recovering these deferred expenses over a ten-year period, along with the annual expenses in excess of pay-as-you-go expenses, starting in 1996. The Company made a payment of $354,000 to fund the 401(h) sub-account of the Pension Trust for non-union retiree medical payments on September 14, 2000, and $92,190 on June 19, 2003. On December 28, 1999, and December 27, 2001, the Company made payments of $2.1 million and $641,000, respectively, to a Voluntary Employee Benefit Association ("VEBA") trust fund, an independent external trust fund for union retiree medical payments. These payments provide funding for future post-retirement health care costs at such time as customers are paying for these costs in their rates. For purposes of determining the accrued post-retirement benefit cost as of December 31, 2005, the health care cost trend rate used was 7.5% in 2005 and graded down to 4% in 2012, remaining at that level thereafter. These rates have a significant effect on the amounts reported for the health care plan. A one-percentage-point change in the trend rates would have the following effects:         One-Percentage-Point         Increase   Decrease         (In thousands of dollars)      Effect on total cost of service and interest cost components   $ 124   $ (98 )   Effect on post-retirement benefit obligation   $ 1,382   $ (1,126 )    79                 The following table sets forth the pension and post-retirement medical plans' change in benefit obligation, change in plan assets, funded status and assumptions as of December 31, 2005, and 2004, (in thousands of dollars):         Pension   Health Care     Benefits        2005   2004   2005   2004     Changes in benefit obligation                             Benefit obligation at beginning of year   $ 19,863   $ 19,072   $ 9,328   $ 9,626     Service cost     488     479     182     194     Interest cost     1,133     1,138     504     535     Actuarial gain (loss)     (52 )   373     (572 )   (513 )   Employee's contributions     —     —     32     28     Benefits paid     (1,045 )   (1,061 )   (486 )   (542 )   Administrative expenses     (148 )   (138 )   —     —                       Benefit obligation at end of year     20,239     19,863     8,988     9,328                       Change in plan assets                             Fair value of plan assets at Beginning of year     13,623     14,896     2,607     2,634     Actual return on plan assets     413     935     90     160     Employee contributions     —     —     32     29     Employer contribution     961     —     321     326     Benefits paid     (1,045 )   (1,061 )   (486 )   (542 )   Removal of assets for guaranteed insurance contracts*     —     (1,009 )   —     —     Administrative expenses     (148 )   (138 )   —     —                       Fair value of plan assets at end of year     13,804     13,623     2,564     2,607                       Funded Status (Benefit Obligation—Fair Value at end of year)     (6,435 )   (6,240 )   (6,423 )   (6,721 )   Unrecognized transition Obligation     —     —     986     1,129     Unrecognized prior service costs     389     479     (347 )   (407 )   Unrecognized net actuarial loss     3,695     3,186     3,549     4,166                       Accrued benefit cost   $ (2,351 ) $ (2,575 ) $ (2,235 ) $ (1,833 )                     Weighted-average assumptions as of December 31 (measurement date)                             Discount rate     5.88 %   6.00 %   5.88 %   6.00 %   Expected return on plan assets     8.50 %   8.50 %   8.50 %   8.50 %   Rate of compensation increase     4.00 %   4.00 %   N/A     N/A        *During 2004, the Company identified guaranteed contracts for the settlement of pension obligations which were included in the plan assets and plan obligations in error. The effect of the correction of this error increased the FAS 87 recognized pension expense by $70,632 for 2004. The reduction in plan assets and plan obligations were $1.0 million and $0.65 million respectively.          The Company's investment objective is to achieve long-term growth of capital, with exposure to risk set at an appropriate level. This objective shall be accomplished through the utilization of a diversified asset mix consisting of equities (domestic and international) and taxable fixed income securities. The account is to be managed on a fully discretionary basis to obtain the highest total rate of return in keeping with a moderate level of risk. The target rate of return for the portfolio will be 8.5% with the goal of exceeding returns of the S&P 500 on the equity investments and the Lehman  80       Brothers Aggregate Bond Index on the fixed income investments. The following table sets forth the target allocation of the plan assets and actual allocation:             Percentage of Plan Asset at December 31,         Target Allocation         2005   2004     Plan Assets                   Pension Plan Asset Category                   Equity Securities   50-65 % 52 % 67 %     Debt Securities   30-45 % 34 % 33 %     Other   5-15 % 14 % 0 %                       Total       100 % 100 %     Health Care Benefits Asset Category                   Equity Securities   50-70 % 13 % 66 %     Debt Securities   30-45 % 33 % 34 %     Other   0-5 % 54 % 0 %                       Total       100 % 100 %            The Company transferred the pension and post-retirement health plans' assets from The Bank of New York to Bank of America on January 3, 2006. The health care benefits assets had been partially converted to cash as of December 31, 2005, resulting in a higher percentage of assets classified as "Other".  81               The following tables set forth the plans' net periodic benefit cost and cash flows for 2005, 2004 and 2003:         Pension Benefits   Health Care Benefits         2005   2004   2003   2005   2004   2003         (In thousands of dollars)      Service cost   $ 488   $ 478   $ 430   $ 182   $ 194   $ 193     Interest cost     1,133     1,138     1,144     504     535     539     Expected return on plan assets     (1,077 )   (1,123 )   (1,239 )   (215 )   (216 )   (195 )   Amortization of transition obligation     —     —     (16 )   143     143     142     Amortization of prior service cost     90     90     90     (60 )   (60 )   (60 )   Recognized net actuarial (gain)     104     35     —     170     184     192                             Net periodic benefit cost   $ 738   $ 618   $ 409   $ 724   $ 780   $ 811                                         Health Care Benefits       Pension Benefits Employer       Employer   Participants   Cash Flows                     Contributions                       2003   $ 658,570   $ 422,804   $ 30,707     2004     —     326,460     28,726     2005     960,518     321,841     31,565     Expected 2006     976,995     305,236     44,358    Benefit Payments                          2003   $ 1,219,266   $ 549,089           2004     1,061,009     542,828           2005     1,045,469     485,832          Estimated Future Benefit Payments                          2006     1,039,663     444,681           2007     1,034,034     450,868           2008     1,031,306     458,953           2009     1,048,222     466,889           2010     1,091,251     496,668           Years 2011 - 2014     6,147,448     2,842,130                  On December 8, 2003, President Bush signed into law the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the "Act"). The Act introduces a federal subsidy to sponsors of retiree health care benefit plans that provide a benefit that is at least actuarially equivalent to Medicare Part D.          Effective for interim and annual periods ending on or after June 15, 2004, the FASB staff issued FASB Statement of Position 106-2, "Account and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003" ("FSP 106-2"). Under the Act, the Company may be entitled to a subsidy for its prescription drug benefit costs and the effect can be reflected in post-retirement medical expense if the effect of the subsidy can be reasonably estimated. The actuary's calculation of the benefit obligation information assumes that the prescription drug benefits under the Retiree Medical Plan would be eligible for the subsidy.          The subsidy for a plan sponsor is 28% of a participant's annual drug costs between $250 and $5,000, which amounts to a maximum subsidy per participant of $1,330. For the employer to receive  82       this subsidy for any particular participant, that participant must decline coverage in Medicare's Part D drug program.          Prior to recognition of the new Medicare Prescription Drug Program, the 2004 net periodic post-retirement benefit cost would have been approximately $890,000. Therefore, recognition of the subsidy reduced the 2004 net periodic post-retirement benefit cost by approximately $110,000. The related reduction in the accumulated post-retirement benefit obligation was approximately $789,000, or about 8.2%. This reduction was based on an estimate by the Company's actuary and any actual reduction may differ from this amount in the future.  Retirement Savings Plan           The Company has adopted a defined contribution plan (under Section 401(k) of the Internal Revenue Code) covering substantially all of the Company's employees. Participants may elect to defer from 1% to 25% of current compensation, and the Company contributes such amounts to the plan. The Company also matches contributions, with a maximum matching contribution of 2% of current compensation. Effective January 1, 2006, new employees under the collective bargaining agreement receive a matching contribution of 4%, to compensate for their ineligibility in the pension plan. Participants are 100% vested at all times in contributions they make; employer match contributions are vested after three years. The Company's matching contributions to the plan were approximately $109,000, $104,000, and $112,000 in 2005, 2004, and 2003, respectively. Effective July 1, 2004, the Company also offered a Canadian Pension Plan similar to a 401(k) plan for eligible Canadian employees. The Company matches employee contributions of 1% of current compensation. The plan also provides for a discretionary match based on profitability. The matching contributions and profit-sharing payments were $76,000 and $25,000 in 2005 and 2004, respectively.  11.   FAIR VALUE OF FINANCIAL INSTRUMENTS           The Company's financial instruments consist primarily of cash in banks, receivables and debt. The carrying amounts for cash, receivables, and short-term debt approximate their fair value due to the short-term nature of these items. At December 31, 2005, the Company's long-term debt had a carrying value and a fair value of approximately $38.2 million.  12.   COMMITMENTS, CONTINGENCIES AND REGULATORY MATTERS   Federal Energy Regulatory Commission 2005 Open Access Transmission Tariff Formula Rate Filing           On May 31, 2005, pursuant to Section 205 of the Federal Power Act, 16 U.S.C. Section 824d, and Title 18 CFR Sections 35.11 and 35.13 of the regulations of the FERC, MPS submitted for filing its proposed revisions to its FERC Open Access Transmission Tariff in Docket No. ER 05 (the "2005 OATT") to modify its transmission rate formula. MPS filed its updated rates under the 2005 OATT formula on June 15, 2005, pursuant to Docket ER00-1053 with an effective date of June 1, 2005, for both wholesale and retail customers, subject to a customer refund that may occur as a result of the proceeding and potential settlement negotiations. The retail transmission revenue requirement was increased by $288,670 on June 1, 2005, under the 2005 OATT. This represented an increase of 8% to the transmission component of retail delivery rates or an overall impact on total retail delivery rates of 0.7%. The primary reasons for the increase were the increase to costs due to mandated Sarbanes-Oxley requirements, and the purchase of a new Oracle-based accounting system.          As part of the settlement data request process, the Company identified several adjustments to its FERC Form 1 filing for 2004, which flow through the Company's transmission rate formula. The approximate net impact of these corrections, once implemented, will be to reduce the overall increase to the projected retail transmission revenue and result in a revised projected net increase to the retail transmission revenue requirement of $238,422 instead of the previously projected increase of $388,923.  83       This adjustment will flow through Schedule 1.1.2 of the MPS OATT to be effective June 1, 2006, and will be passed through retail rates on July 1, 2006, when the retail rates are next adjusted. The Company has reported to FERC as scheduled that the parties are proceeding with the settlement process and will continue to provide progress reports as required. Because the Company is currently in the midst of a settlement process, it cannot predict the exact dollar outcome of this proceeding at this time.  MPUC Approves the Pass-Thru of Retail Transmission Rates to MPS Retail Jurisdictional Customers, and the Increase to DSM Mil Rate, MPUC Docket No. 2003-516           Per agreement with the Maine Public Utilities Commission ("MPUC"), the new transmission rates for retail customers (above) were put into retail rates on July 1, 2005, to coincide with MPS's related State jurisdictional compliance filing in MPUC Docket No. 2003-516 to increase the DSM Mil Rate. These rates were approved by the MPUC on June 20, 2005. Per this filing, total retail delivery rates increased by 1.1%.  Requests for Issuance of Certificates of Public Convenience and Necessity in Connection With the Construction of a Proposed Transmission Line and Various Transmission Service Reservations.           On October 4, 2004, MPS filed a Petition with the MPUC requesting the issuance of Certificate of Public Convenience and Necessity pursuant to 35-A M.R.S.A. Section 3132 to construct a 138 kV transmission line originating at an existing substation in Limestone, Maine and extending to the Canadian Border near Hamlin, Maine.          The project was proposed in order to ensure the reliability and integrity of the MPS transmission grid under scenarios of reduced on-system generator availability and peak load growth. MPS submitted that the available firm transfer capability of the transmission system when added to the remaining on-system hydro generation was not sufficient to meet peak load conditions, should existing on-system wood-fired generation become unavailable. The proposed line would address this by significantly increasing the load-serving capability of the northern Maine region and would serve to reinforce the vital transmission ties between northern Maine and the New Brunswick transmission grid. Additional benefits of the proposed line include the potential for increasing the number of competitive retail electric suppliers and increasing the attractiveness of the region for development of additional generation, such as wind farms, by providing increased transmission export capacity.          The MPUC Commissioners deliberated the Docket on August 29, 2005, and denied the petition, determining that there was no immediate reliability risk in northern Maine. The Commission concluded that the risk of losing on-system wood-fired generation was not sufficient to warrant the new transmission line. The Commission issued the Order on October 21, 2005, that described actions to be taken by MPS and the Northern Maine ISA to reduce certain risks identified by MPS. The Company filed for reconsideration of the Order on November 8, 2005 based on the likelihood that Linekin Bay Energy Company, LLC may elect to utilize the CPCN filed in this Docket in order to construct transmission facilities necessary to connect their proposed generation project to the MPS electrical system. The Commissioned approved the request for reconsideration and will revisit the issue on or before March 31, 2006. Additionally, on November 23, 2005, the Commission granted an MPS request for waiver of the specific requirements of the October 21, 2005 Order until the NMISA finalizes currently proposed market rule changes that are currently scheduled to be presented to the Commission on March 1, 2006. Through December 31, 2005, approximately $844,000 was spent on and included in construction work-in-progress related to this transmission project. MPS expects to seek recovery of these costs in its transmission rates and is currently pursuing other recovery options. MPS believes it is probable the amounts deferred can be recovered, either through future rate cases or through sale of the assets to a third party.  84               In September 2004, MPS entered into a Commitment Agreement with NB Power. Under this Agreement, which is subject to MPS obtaining all necessary regulatory approvals, MPS will reserve 35 MW of transmission capacity on the NB Power system in conjunction with the construction of a new 345 kV transmission line to be constructed from Point Lepreau near Saint John, NB to Orrington, Maine. NB Power will own and operate the portion of the line on its side of the border, while Bangor Hydro-Electric Company ("BHE") will own and operate the portion of the line on the U.S. side of the border known as the Northeast Reliability Interconnect ("NRI"). BHE filed for a Certificate of Public Convenience and Necessity for this line on November 5, 2004, in MPUC Docket No. 2004-771. MPS filed a petition with the MPUC seeking approval to make the reservation required under the Commitment Agreement on December 13, 2004, in MPUC Docket No. 2004-775 which was subsequently changed to MPUC Docket No. 2004-538 Phase II. On October 7, 2005, MPS proposed several changes to the Commitment Agreement, to include a reduction in the reservation quantity from 35 MW to 20 MW. Hearings on Phase II were conducted on December 6 and 7, 2005. A Commission Order is expected during March, 2006. As noted above, MPS's obligations under the Commitment Agreement are dependent upon securing regulatory approval. MPS cannot predict the outcome of Phase II of this case at this time.  Wheelabrator-Sherman           MPS was ordered into a Power Purchase Agreement ("PPA") with Wheelabrator-Sherman ("WS") in 1986, which required the purchase of the entire output (up to 126,582 MWH per year) of a 17.6 MW biomass plant through December 31, 2006. The PPA was subsequently amended in 1997, with WS agreeing to price reductions of $10.0 million through the end of the original term in exchange for an up-front payment of $8.7 million in May 1998. The MPUC's December 1997 approval of the amended PPA included a determination that the up-front payment would be treated as stranded cost and, therefore, recovered in rates of the transmission and distribution company. Total stranded cost included as a regulatory asset under the caption "deferred fuel and purchased energy cost and regulatory asset—Power Purchase Agreement Restructuring" in the accompanying balance sheet related to this contract is $31.4 million at December 31, 2005, and $28.5 million at December 31, 2004.          MPS and WS also agreed to renew the PPA for an additional six years at agreed-upon prices and an increase of output to 136,982 MW beginning in 2001. Energy supply purchases under this contract through February 29, 2000, were $2.6 million. Purchases from WS after March 1, 2000, are reflected as stranded costs. MPS estimates its remaining commitment to purchase power under this contract to be $12.1 million throughout 2006.          MPS currently sells 100% of WS's output to WPS-PDI and will continue to do so through the expiration of the contract between MPS and WS. From March 1, 2002, through February 29, 2004, Energy Atlantic, the Company's wholly-owned marketing subsidiary, took delivery of 40% of WS's output and WPS-PDI took the remainder.          Although MPS's earnings associated with stranded costs will be reduced during the period from 2004 through 2012, it should not impact the collection of "stranded cost freed-up cash flows" post-2006 that are a result of levelization of stranded costs and the deferring of total collections of stranded costs associated with its Wheelabrator-Sherman NUG Contract during the years 1999 through 2006. In the 1998-99 timeframe, in order to reduce the rate impact of stranded cost recovery, MPS chose to collect its stranded costs on a levelized recovery basis over a longer term versus collecting stranded costs equaling annualized payouts of its NUG generation contract with Wheelabrator-Sherman. In so doing, MPS has and will pay the full contract costs of the Wheelabrator-Sherman NUG Contract until it expires in 2006. However, during this term MPS has and will only collect a percentage of the total costs from its consumers. From 2007 until approximately 2012, MPS will collect the balance due from its ratepayers, but will no longer have the liability of the Wheelabrator-Sherman NUG Contract. Those monies that were deferred will be collected during the referenced period and are referred to as  85       "stranded cost freed-up cash flows." MPS has received and continues to receive varying rates of return on its stranded cost regulatory assets.  MPUC Approves Stranded Cost Revenue Requirements Effective March 1, 2004           In an Order dated February 27, 2004, MPS received final approval from the MPUC for the stranded cost revenue component of its electric delivery rates, effective March 1, 2004. Under Title 35-A of the Maine Revised Statutes Annotated, Section 3208, the MPUC is required to periodically investigate and adjust the stranded cost charges reflected in the rates of a transmission and distribution utility. In accordance with this provision, on September 16, 2003, in Docket No. 2003-666, the MPUC issued a notice of investigation in order to determine whether MPS's rates must be changed effective March 1, 2004 to reflect any changes in MPS's stranded costs. On February 27, 2004, the MPUC issued an order approving a stipulation under which MPS is allowed to recover $11,785,339 per year to satisfy its approved stranded cost revenue requirements for the "rate effective period" beginning March 1, 2004 and ending on December 31, 2006. The approved revenue requirement for the rate effective period ended February 29, 2004 was $11,540,000. Under the approved stipulation MPS's stranded cost rates approved in Docket No. 2003-85 will remain in effect during the rate effective period. The stipulation approved by the MPUC in Docket 2003-666 also approved and reaffirmed each of the elements and associated balances of MPS's recoverable stranded costs.          As explained more fully below, during the course of Docket 2003-666 the parties reviewed the manner in which MPS was recovering and accounting for its carrying charges associated with the deferred fuel element of its stranded cost. As a result of the stipulation approved in Docket No. 2003-666, MPS will record deferred income tax expense associated with deferred fuel carrying charges during the rate effective period from March 1, 2004 through December 31, 2006, as compared to past treatment where such expense was deferred for future recovery. Because the deferred fuel carrying charge component of MPS's stranded costs is not expected to fully amortize until 2012, the Company anticipates that deferred income tax expense will be incurred through 2012, subject to future stranded cost filings with the MPUC. In Dockets 98-577 and 2001-240, the parties stipulated that MPS would accrue carrying costs on its unrecovered fuel balance (the "deferred fuel account") during the respective rate effective period at its net-of-tax cost of capital rate. Consistent with the stipulation in Docket No. 2001-240, MPS accrued a carrying charge using the net of tax rate of 7.98% through October 31, 2003, applied against its unrecovered deferred fuel balance. From November 1, 2003, to December 31, 2003, MPS accrued its carrying charge using a net-of-tax rate of 7.06%, based on the cost of capital approved in Docket No. 2003-85 (described in Docket 2003-85 Partial Stipulation filed on September 2, 2003).          During the course of the Docket 2003-666 proceeding, MPS determined that it had not previously recognized accumulated deferred income taxes with respect to the carrying charges on the deferred fuel account and that the recording of a deferred tax liability to its balance sheet pursuant to FAS 109 in the amount of $2.896 million was required, of this, $2.739 million was recorded as of December 31, 2003. The deferred fuel balance as of March 1, 2004, prior to any adjustment was projected to be $18,838,000. Under the stipulation MPS was allowed to adjust its accumulated deferred income tax account and the deferred fuel balance by $2,896,000, as of March 1, 2004, resulting in a total projected deferred balance as of March 1, 2004 of $21,734,000. Under the approved stipulation the parties also agreed that the return component on the deferred fuel balance should be reduced in such a manner that ratepayers were held harmless on a net present value basis as a result of the March 1, 2004, adjustment to the deferred fuel balance. During the rate effective period ending on December 31, 2006, the overall pre-tax return component on the deferred fuel balance will be 8.28%, reflecting a 6.17% return on equity. The return on the deferred fuel balance will be reviewed in future stranded cost rate setting proceedings and will be adjusted as necessary in order that the present value of the revenue requirements of the deferred fuel account without the adjustments described above equals the present  86       value of the revenue requirements of the deferred fuel account with the adjustments. MPS concludes that as a result of this stipulation and the foregoing described adjustment to the deferred fuel balance and the accumulated deferred income tax liability that no further adjustment is necessary under FAS 109 in order to reflect prior unrecorded deferred income taxes.          The decreased cost of capital rate beginning on March 1, 2004, will have an impact on future stranded cost earnings and cash flow, but will not impact future distribution or transmission earnings. In the year 2004, the Company recorded deferred income tax expense of approximately $412,000 associated with the deferred fuel carrying charges. The amount of deferred income tax expense recorded in future years will vary depending upon the amount of the accrued carrying charge in any year, and the tax rates then in effect. Earnings from carrying charges on the Company's stranded costs in 2004 were approximately $267,000 lower than the amount that would have been recorded had the Company continued to use the original cost of capital on its deferred fuel balance, for a total earnings impact of $679,000 in 2004. The impact on future earnings resulting from the agreed upon lower cost of capital, when compared against the cost of capital used in prior stranded cost filings, will vary. Schedules filed by the Company as part of the stipulation in Docket No. 2003-666 reflect the deferred fuel balance as of March 1, 2003, certain additions to relating to the Wheelabrator-Sherman above-market contract through December, 2006 and the amortization of the deferred fuel balance though 2012. Applying these assumptions, current tax rates and the agreed upon cost of capital, the Company anticipates that the impact on future earnings resulting from recording deferred income taxes on accrued carrying charges and applying a lower cost of capital to the deferred fuel balance could range from $1.0 million in 2005, increasing to $1.2 million in 2007, then gradually decreasing to $17,000 in 2012. These amounts may vary with changes in the deferred fuel balance and other variables which the Company cannot predict with certainty at this time. Management is analyzing means to mitigate the impact of this stipulation on future net income and cash flows.          In addition to the return allowed on its deferred fuel account as set forth above, under the approved stipulation MPS shall be allowed to recover the following pre-tax returns on the applicable stranded cost rate base components during the rate effective period: (i) the pre-tax return on unrecovered balance of the Wheelabrator-Sherman Contract Buydown shall be 2.79% plus its FAME issuance costs; (ii) the pre-tax return on the unrecovered Seabrook Investment and approved special rate contract costs shall be 11.74%; and, (iii) the pre-tax return on the Maine Yankee decommissioning related costs shall be 8.56%.  Seabrook Nuclear Power Project           In 1986, MPS sold its 1.46% ownership interest in the Seabrook Nuclear Power Project with a cost of approximately $92.1 million for $21.4 million. Both the MPUC and the FERC allowed recovery of MPS's remaining investment in Seabrook Units 1 and 2, adjusted by disallowed costs and sale proceeds, with the costs being amortized over thirty years.  87                 Recoverable Seabrook costs at December 31, 2005, and 2004, are as follows (in thousands of dollars):         2005   2004     Recoverable Seabrook Costs   $ 43,136   $ 43,136     Accumulated Amortization     (31,467 )   (30,358 )               Recoverable Seabrook Costs, Net of Amortization   $ 11,669   $ 12,778                          In March 2000, MPS was allowed to offset $7.0 million of the recoverable Seabrook costs with the available value from its deferred asset sale gain, as detailed in "Capacity Arrangements-Generating Asset Sale," below. The decrease in recoverable Seabrook costs represents monthly amortization, recorded as amortization expense in January and February 2000, and then as stranded costs applied to the deferred asset sale gain beginning in March 2000, as described in "MPUC Approves Elements of Rates Effective March 1, 2000" above.  Nuclear Insurance           In 1988, Congress extended the Price-Anderson Act for fifteen years and increased the maximum liability for a nuclear-related accident. In the event of a nuclear accident, coverage for the higher liability now provided for by commercial insurance coverage will be provided by a retrospective premium of up to $88.1 million for each reactor owned, with a maximum assessment of $10 million per reactor for any year. Maine Yankee is not liable for "events" or "accidents" occurring after January 7, 1999, when exemption was received from the Nuclear Regulatory Commission. These limits are also subject to inflation indexing at five-year intervals as well as an additional 5% surcharge, should total claims exceed funds available to pay such claims. Based on MPS's 5% equity ownership in Maine Yankee (see Note 5, "Investments in Associated Companies"), MPS's share of any retrospective premium would not exceed approximately $1.8 million or $500,000 annually, without considering inflation indexing.  Generating Asset Sale           On July 7, 1998, MPS and WPS Power Development, Inc., ("WPS-PDI") signed a purchase and sale agreement for MPS's electric generating assets. WPS-PDI agreed to purchase 91.8 megawatts of generating capacity for $37.4 million, which was 3.2 times higher than the net book value of the assets. The gain from the asset sale reduced stranded cost revenue requirements, as discussed in "MPUC Approves Elements of Rates Effective March 1, 2000," above.          On June 8, 1999, after receiving all of the major regulatory approvals, MPS completed the sale to WPS-PDI for $37.4 million. MPS's 5% ownership in Maine Yankee was not part of the sale, since the plant is being decommissioned. After paying Canadian, Federal and State income taxes, the remaining proceeds, along with interest in the trust account, were used to reduce MPS's debt. The gain from the sale was deferred, and recognized according to the MPUC's decision on MPS's determination of  88       stranded costs, transmission and distribution costs, and rate design. The components of the deferred gain were as follows (in thousands of dollars):     Gross proceeds*   $ 38.6     Settlement adjustments     (0.1 )            Net proceeds     38.5     Net book value     (11.5 )   Excess taxes on sale of Canadian Assets     (3.4 )   Transition costs, net     (1.9 )   Other     0.7              Available deferred gain     22.4     Utilization of available value per MPUC orders     (22.4 )            Remaining deferred gain   $ —                 *Gross proceeds were increased by $1.05 million before tax in September 2001 due to an MPUC approved settlement between CMP and other former owners of Wyman Unit No. 4, including MPS. The proceeds increased the deferred gain and further reduced stranded costs.          With the sale of MPS's generating assets in June, 1999, MPS purchased energy from the new owners under an agreement that expired February 29, 2000, and these purchases are classified as purchased energy.          As part of the generating asset sale on June 8, 1999, MPS has entered into two indemnity obligations with the purchaser, WPS-PDI. First, MPS will be liable, with certain limitations, for certain Aroostook River flowage damage. This liability will continue for ten years after the sale and shall not exceed $2.0 million in the aggregate. Second, MPS has warranteed the condition of the sites sold to WPS-PDI, with an aggregate limit of $3.0 million for two years after the date of sale, and five years after the sale for environmental claims. The Company is unaware of any pending claims under either of these indemnity obligations.  Maine Yankee           MPS owns 5% of the common stock of Maine Yankee Atomic Power Company ("MY'), which operated an 860 MW nuclear power plant in Wiscasset, Maine that has ceased power operations and is now in the final stages of decommissioning.          Based on the decommissioning of the Yankee Atomic nuclear plant, MPS believes it is entitled to recover substantially all of its share of such costs from its customers and, as of December 31, 2005, is carrying on its consolidated balance sheet a regulatory asset and a corresponding liability in the amount of $10.8 million, which reflects MPS's 5% share of Maine Yankee's most recent estimate of the remaining decommissioning costs, less actual decommissioning payments made since then, and discounted by a risk-free interest rate.          In accordance with its 1999 FERC rate case settlement, on October 21, 2003, MY filed a revised formula rate schedule with the FERC, proposing an effective date of January 1, 2004, when major decommissioning activities were expected to be nearing completion. The filing contains a revised decommissioning cost estimate and collection schedule to assure that adequate funds are available to safely and promptly decommission the Plant and operate and manage the independent spent fuel storage installation ("ISFSI"). In the filing, MY also requests a change in its billing formula and an increase in the level of collection for certain post-retirement benefits. To meet these needs, MY proposes to collect an additional $3.77 million per year through October 2008, over current decommissioning collection levels, exclusive of any income-tax liability, for the decommissioning and  89       spent-fuel management expense, and to collect the amounts needed to replenish its Spent Fuel Trust for funds previously used for ISFSI construction from November 2008 through October 2010. MY believes it is entitled to recover the costs underlying the proposed new rates, but cannot predict the outcome of the rate proceeding. If approved by FERC, MPS's share of this increase, approximately $189,000, will be recovered as stranded costs.          In accordance with the process set forth in the legislation, in February 2002, the Secretary of Energy recommended the Yucca Mountain site to the President for the development of a nuclear waste repository, and the President then recommended development of the site to Congress. As provided in the statutory procedure, the State of Nevada formally objected to the site in April 2002, and in July 2002, Congress overrode the objection. Construction of the repository requires the approval of the Nuclear Regulatory Commission. Maine Yankee's License Termination Plan was approved without any unexpected conditions. In accordance with a plan approved by the Securities and Exchange Commission, Maine Yankee has started the redemption of its common stock periodically through 2008.  MEPCO           MPS also owns 7.49% of the common stock of Maine Electric Power Company, Inc., ("MEPCO"). MEPCO owns and operates a 345-KV ("kilovolt") transmission line approximately 180 miles long which connects the NB Power system with the New England Power Pool.  Poly Chlorinated Bi-Phenol Transformers           In response to a Maine environmental regulation to phase out Poly Chlorinated Bi-phenol ("PCB") transformers, MPS has implemented a program to eliminate transformers on its system that do not meet the new State environmental guidelines. The program is in the process of testing almost 13,000 distribution transformers over a ten-year period. MPS is currently in its fifth year of this ten-year program. In addition, transformers that pass the inspection criteria will be refurbished and refitted with lightning arrestors and animal guards. The current estimated budget for this project is $2.7 million. As of December 31, 2005, $1.4 million has been spent on this effort.  Off-Balance Sheet Arrangements           The Maricor Ashford Ltd joint venture is a variable interest entity, as defined by Financial Accounting Standards Board Interpretation No. 46, "Consolidation of Variable Interest Entities," ("FIN 46") promulgated on January 17, 2003. However, Management has determined that Maricor Ashford should not be consolidated with these financial statements, as Maricor Properties is not the primary beneficiary of the joint venture.          Except for operating leases used for office and field equipment, vehicles and computer hardware and software, accounted for in accordance with Financial Accounting Standards No. 13, "Accounting for Leases," ("FAS 13") the Company has no other form of off-balance sheet arrangements. The following  90       summarizes payments for leases for a period in excess of one year for the years ended December 31, 2005, and 2004 (in thousands of dollars):         2005   2004   Office Equipment   $ 15   $ 19   Building     174     66   Vehicles     7     10   Computer Hardware and Software     29     137   Rights of Way     32     32   Field Equipment     20     22             Total   $ 277   $ 286                      The future minimum lease payments for the items listed above for the next five years are as follows:  Future Minimum Lease Payments By Year For All Items      Years    Minimum Lease Payments       (In thousands of dollars)    2006   $ 249   2007   $ 214   2008   $ 221   2009   $ 185   2010   $ 71    Maricor Properties' Leases           Maricor Properties leases office space to the Moncton and Halifax operating divisions of The Maricor Group, Canada Ltd. Maricor Properties also has leases for office space to outside third parties. All of these leases are operating leases and any inter-company profit from rental revenue has been eliminated in consolidation. The minimum lease revenue expected from the third party lease arrangements does not include utilities and maintenance expenses that will be paid by the third parties.  5-Year Minimum Lease Payments for External Party Leases      2006   $ 474,000   2007   $ 467,000   2008   $ 467,000   2009   $ 440,000   2010   $ 377,000    Financial Information System Hosting Agreement           In December 2003, the Company entered into a ten-year agreement with Delinea Corporation to host and provide technical and functional support for the integrated Oracle Financial Information System. The base hosting fees were $450,000 for 2004, $510,000 for 2005, and will be $575,000 per year for years 2006-2013. The contract also includes an adjustment for inflation, as well as travel expenses for on-site support services. These amounts are not reflected in the base hosting fee amounts above. The total hosting fee for 2005 was $527,000.  91       13.   GUARANTOR ARRANGEMENTS           In November 2002, the FASB issued FIN No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others an interpretation of FASB Statements No. 5, 57, and 107 and rescission of FASB Interpretation No. 34," ("FIN 45"). FIN 45 requires that a guarantor recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken by issuing the guarantee. FIN 45 also requires additional disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees it has issued. The accounting requirements for the initial recognition of guarantees are applicable on a prospective basis for guarantees issued or modified after December 31, 2002. The disclosure requirements are effective for all guarantees outstanding, regardless of when they were issued or modified for financial statements for interim or annual periods ending after December 15, 2002. The adoption of the recognition provisions of FIN 45 did not have a material effect on the Company's consolidated financial statements.          The following is a summary of our agreements that Management has determined are within the scope of FIN 45: As permitted under Maine law, the Company has agreements that indemnify the Company's Officers and Directors for certain events or occurrences while the Officer or Director is, or was serving, at the Company's request in such capacity. The term of the indemnification period is for the Officer's or Director's lifetime. The maximum potential amount of future payments that could be required under these indemnification agreements is unlimited; however, the Company has a Director and Officer insurance policy that limits exposure and enables recovery of a portion of any future amounts paid. As a result of the insurance policy coverage, the Company believes the estimated fair value of these indemnification agreements is minimal. All of these indemnification agreements were grandfathered under the provisions of FIN 45 as they were in effect prior to December 31, 2002. Accordingly, no liability is recorded for these agreements as of December 31, 2005.  14.   ACQUISITIONS   Cornwallis Court Acquisition           On October 7, 2005, Maricor Properties completed the purchase of Cornwallis Court Developments Ltd. Maricor Properties acquired all of the outstanding shares of Cornwallis for $2.0 million CDN and the assumption of a $3.69 million CDN mortgage. The $2.0 million acquisition cost was financed through RBC and is secured by a $1.73 million USD letter of credit from Bank of America. The term of the new RBC note is one-year at an interest rate of Royal Bank prime plus 0.25%. The only asset of Cornwallis was the J. Angus MacDonald Building, a 60,000 square foot facility located in downtown Halifax, Nova Scotia, Canada. The building was fully leased at the time of acquisition. This purchase is the second building acquired in Halifax in the past eighteen months, and represents further execution of the Company's real estate investment strategy.          The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition for the Cornwallis Court Developments Ltd acquisition. The  92       Company is in the process of finalizing the purchase price allocation in accordance with Statement of Financial Accounting Standards No. 141, "Business Combinations" ("SFAS 141").     Current Assets   $ 215   Building, Land and Leases     4,968            Total Assets Acquired     5,183          Current Liabilities     413   Long-Term Debt     2,922            Total Liabilities Acquired     3,335          Net Assets Acquired   $ 1,848                   The following unaudited Pro Forma information represents the 2005 consolidated statements of income as if Cornwallis Court Developments Ltd had been acquired at the beginning of 2005.     Consolidated Pro Forma (unaudited)    Income Statement As Presented 2005   Income Statement Pro Forma Additions 2005   Income Statement Pro Forma 2005         (In thousands of dollars, except per share information)      Operating Revenues                         Regulated   $ 34,299   $ —   $ 34,299       Unregulated     5,383     —     5,383       Rental Income     292     517     809                        Total Operating Revenues   $ 39,974   $ 517   $ 40,491                    Net (Loss) Income from Continuing Operations   $ (224 ) $ 98   $ (126 )                  Income from Discontinued Operations     4     —     4                    Net (Loss) Income Available for Common Stockholders   $ (220 ) $ 98   $ (122 )                  Average Shares Outstanding—Basic     1,636,322     1,636,322     1,636,322     Average Shares Outstanding—Diluted     1,636,322     1,660,652     1,636,322     Basic (Loss) Earnings Per Share of Common Stock From Continuing Operations   $ (0.13 ) $ 0.06   $ (0.07 )   Basic Loss Per Share of Common Stock From Discontinued Operations     —     —     —                    Basic (Loss) Earnings Per Share of Common Stock From Net (Loss) Income   $ (0.13 ) $ 0.06   $ (0.07 )                  Diluted (Loss) Earnings Per Share of Common Stock From Continuing Operations   $ (0.13 ) $ 0.06   $ (0.07 )   Diluted Loss Per Share of Common Stock From Discontinued Operations     —     —     —                    Diluted (Loss) Earnings Per Share of Common Stock From Net (Loss) Income   $ (0.13 ) $ 0.06   $ (0.07 )                   Formation of Maricor Technologies and Asset Acquisition           On February 22, 2005, the Company announced the formation of Maricor Technologies, Inc. ("MTI"), a wholly-owned, technology-based subsidiary. Concurrently, MTI acquired lifecycle asset  93       management and capital budget planning software assets that will complement MAM's U.S. and Canadian engineering and facilities lifecycle asset management services companies. MTI is headquartered in Presque Isle, Maine, with offices in Portland, Maine. The total purchase price at closing was approximately $1.0 million, which was in the form of convertible preferred shares of approximately $950,000 and $50,000 in cash, paid in exchange for software and an immaterial amount of net assets. Additional cash or stock consideration between $200,000 and $600,000 will be paid to the seller depending on the exercise of options available to the buyer and seller during the four-year period following closing. Two new employees involved with the development of the software were added to MTI.  2004 Acquisitions           During 2004, the Company acquired three entities, none of which individually is deemed material. The total cost of the acquisitions was $6.0 million, consisting of 54,332 shares of MAM common stock, valued at $1.68 million, $3.62 million of cash and $700,000 of external costs for the acquisition. The per share value of the 54,332 common shares issued was determined based on the average market price of the Company's common shares over the ten business days ending on the fifth day prior to the acquisitions. The aggregate amount of goodwill and other intangible assets arising from the acquisitions was $5.21 million, and is reported in the unregulated engineering services and unregulated real estate operating segments.          Following is a brief description of each of the entities acquired:    •Morris & Richard Consulting Engineers Limited ("M&R"), a mechanical and electrical engineering services firm headquartered in Halifax, Nova Scotia, Canada, acquired on June 1, 2004, a division of The Maricor Group, Canada Ltd. •Mecel Properties Limited, a real estate holding company headquartered in Halifax, Nova Scotia, Canada, acquired on June 1, 2004, a wholly-owned subsidiary of Maricor Properties Ltd. •RES Engineering Inc. ("RES"), a mechanical and electrical engineering services firm headquartered in Hudson, Massachusetts, acquired on June 15, 2004, a wholly-owned subsidiary of The Maricor Group.           Under the terms of the agreements, the former shareholders of these companies are prohibited from selling their shares of stock for a certain period after the acquisition. For a period following that restricted period, if the former shareholders sell their stock for a price less than the value per share used to calculate the purchase price, additional cash consideration will be paid to the former shareholders for that difference. The exposure for such "true-up" provisions is $814,000 at December 31, 2005.          The former shareholders were also entitled to additional cash consideration of up to $1.7 million, payable at specific dates through 2007, if certain future targets are met. If these targets are met, the value of the consideration ultimately paid will be added to the cost of the acquisition, increasing the amount of goodwill.  94               The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition for the three acquisitions made during 2004. None of these acquisitions were deemed individually material.     Current Assets   $ 1,887   Property, Plant, & Equipment     574   Goodwill and Intangibles     5,210            Total Assets Acquired     7,671          Current Liabilities     1,670   Long-Term Debt     —            Total Liabilities Assumed     1,670            Net Assets Acquired   $ 6,001                   Goodwill is deductible for tax purposes in the United States for these acquisitions. Goodwill is not deductible in Canada for the acquisitions of M&R and Eastcan. The deductibility of goodwill is subject to the details of each individual transaction.  95                  The following unaudited consolidated MAM pro forma information includes the 2004 acquisitions of M&R and RES as if they had been owned from the beginning of the year ending 2004. Mecel Properties was acquired as a holding company and owns the building in which M&R resides. There is no revenue or profit in the pro forma numbers below related to Mecel as these intercompany revenues and profits are eliminated in consolidation.     Consolidated Pro Forma (unaudited)    Income Statement As Presented 2004   Income Statement Pro Forma Additions 2004   Income Statement Pro Forma 2004         (In thousands of dollars, except per share information)     Operating Revenues                         Regulated   $ 33,733   $ —   $ 33,733       Unregulated     3,405     3,485     6,890                        Total Operating Revenues   $ 37,138   $ 3,485   $ 40,623                    Net Income (Loss) from Continuing Operations   $ 1,726   $ (603 ) $ 1,123                    Discontinued Operations                         Loss from Discontinued Operations (including loss on disposal of $69 in 2004)     (678 )   —     (678 )     Income Tax Benefit     270     —     270                    Loss from Discontinued Operations     (408 )   —     (408 )                  Net Income (Loss) Available for Common Stockholders   $ 1,318   $ (603 ) $ 715                    Average Shares Outstanding—Basic     1,612,696     1,612,696     1,612,696     Average Shares Outstanding—Diluted     1,625,821     1,625,821     1,625,821      Basic Earnings (Loss) Per Share of Common Stock From Continuing Operations   $  1.07   $  (0.37 ) $  0.70     Basic Loss Per Share of Common Stock From Discontinued Operations     —     —     —                    Basic Earnings (Loss) Per Share of Common Stock From Net Income (Loss)   $ 0.82   $ (0.37 ) $ 0.45                    Diluted Earnings (Loss) Per Share of Common Stock From Continuing Operations   $ 1.06   $ (0.37 ) $ 0.69      Diluted Loss Per Share of Common Stock From Discontinued Operations      —      —      —                    Diluted Earnings (Loss) Per Share of Common Stock From Net Income (Loss)   $ 0.81   $ (0.37 ) $ 0.44                     2004 Property Addition           During the third quarter of 2004, the Company purchased real property which is reported in the unregulated real estate operating segment. On August 13, 2004, Maricor Properties Ltd completed the acquisition of a multi-tenant facility at 77 Vaughan Harvey Boulevard in the downtown area of Moncton, New Brunswick, Canada (the "Vaughan Harvey Property") from Sun Life Assurance Company of Canada ("Sun Life"), as well as an adjacent home. The home has been demolished and converted into parking space, allowing for ownership of a complete city block within Moncton, New Brunswick, consisting of the mid-rise office building and parking.  96               The vacant facility was in need of revitalization, which was undertaken using the expertise of TMGC to upgrade the facilities mechanical and electrical systems, with additional architectural, aesthetic and landscaping improvements. The facility was partially leased (approximately 40%) during 2005 to a third party tenant and TMGC's Moncton division. Lease revenues from TMGC's Moncton division are also eliminated in consolidation. In late 2005, Management was successful in leasing-up the facility with actual leases being signed during early 2006 and tenant improvements under construction in early 2006 as well. The leasing of the facility will have a positive impact on Maricor Properties in 2006.          As a part of the acquisition of the Vaughan Harvey Property, a participation in the project was granted to the Ashford Group, a group of real estate development and management companies located in Moncton, New Brunswick. Ashford Investments, Inc. controlled the rights to acquire the real estate and assigned their right to Maricor Properties Ltd for certain considerations. Ashford Properties, Inc., which will serve as the outsourced facilities management group for the building, could have earned up to thirty percent economic ownership in the building depending upon the pace of leasing of the facility. Maricor Properties negotiated to purchase this economic ownership interest from Ashford Investments, Inc., for $320,000, payable in equal installment payments in November 2005 and April 2006.          In addition to the real estate participation, for the grant of participation, which includes no control rights, MAM received a right-of-first refusal on all real estate holdings of the Ashford Group, as well as the company and its subsidiaries, and Maricor Properties received the right-of-first refusal on all future projects developed by the Ashford Group. Also, the Ashford Group released The Maricor Group, Canada from its lease of office space owned by the Ashford Group, allowing The Maricor Group, Canada to relocate to the Vaughan Harvey Property during the fourth quarter of 2004.  97       15.   QUARTERLY INFORMATION (UNAUDITED)           The following tables summarize the quarterly financial data for the two years ended December 31, 2005:         2005 by Quarter         1st   2nd   3rd   4th         (Dollars in thousands, except per share amounts)      Operating Revenues                               Regulated Electric Utility   $ 10,315   $ 7,073   $ 7,445   $ 9,466       Unregulated Engineering Services     1,403     1,366     1,267     1,238       Unregulated Real Estate Holdings     69     76     77     225       Unregulated Software Technology     3     35     29     48       Other     (54 )   (55 )   (51 )   (1 )                         Total Revenues     11,736     8,495     8,767     10,976     Operating Expenses     10,191     9,057     9,345     10,144                       Operating Income (Loss)     1,545     (562 )   (578 )   832     Other Income (Deductions)     29     80     (2 )   (47 )                     Income (Loss) Before Interest Charges     1,574     (482 )   (580 )   785     Interest Charges     305     313     346     557                       Income (Loss) From Continuing Operations     1,269     (795 )   (926 )   228     Income (Loss) from Discontinued Operations     8     (3 )   0     (1 )                     Net Income (Loss)   $ 1,277   $ (798 ) $ (926 ) $ 227                       Earnings Per Share   $ 0.78   $ (0.49 ) $ (0.57 ) $ 0.14                               2004 by Quarter         1st   2nd   3rd   4th         (Dollars in thousands, except per share amounts)      Operating Revenues                               Regulated Electric Utility   $ 10,209   $ 6,881   $ 7,215   $ 9,429       Unregulated Engineering Services     290     625     1,292     1,205       Unregulated Real Estate Holdings     —     —     17     37       Other     (1 )   1     (25 )   (37 )                         Total Revenues     10,498     7,507     8,499     10,634     Operating Expenses     8,302     7,554     8,583     9,844                       Operating Income (Loss)     2,196     (47 )   (84 )   790     Other Income (Deductions)     (54 )   27     (86 )   40                       Income (Loss) Before Interest Charges     2,142     (20 )   (170 )   830     Interest Charges     234     255     256     311                       Income (Loss) From Continuing Operations     1,908     (275 )   (426 )   519     Loss from Discontinued Operations     (358 )   (33 )   (6 )   (11 )                     Net Income (Loss)   $ 1,550   $ (308 ) $ (432 ) $ 508                       Earnings Per Share   $ 0.98   $ (0.19 ) $ (0.26 ) $ 0.31                        98          Item 9.    Changes In and Disagreements With Accountants On Accounting and Financial Disclosure              For information regarding change in accountants, see Form 8-K filed by the Company on August 23, 2004, which is incorporated in this section by reference. There were no disagreements with the accountants.      Item 9A.    Controls and Procedures       1.Evaluation of disclosure controls and procedures.          Based on reviews by the Company's President and Chief Executive Officer and Vice President and Acting Chief Financial Officer of the Company's disclosure controls and procedures, conducted within 90 days of the filing of this Form 10-K, as evidenced by the certifications appearing at the end of this Form 10-K, the aforementioned Officers have concluded that the controls are working effectively.   2.Changes in Internal Controls over Financial Reporting          There was no change in the Company's internal control over financial reporting that occurred during the most recent fiscal quarter.          As a non-accelerated filer, the Company is evaluating actions necessary to comply with Section 404 of The Sarbanes-Oxley Act with respect to its internal control over financial reporting.          The Company continues to assess the internal control environment, control designs and operating effectiveness, to ensure no significant deficiencies or material weaknesses exist. The Company also continues to monitor the potential changes to the requirements of the Act for non-accelerated filers.      Item 9B.    Other Information              None.  99             PART III          Item 10.    Directors and Executive Officers of the Registrant              Information with regard to the Directors of the registrant is set forth in the Proxy Statement of the registrant relating to its 2006 Annual Meeting of Stockholders, which information is incorporated herein by this reference. Certain information regarding Executive Officers is set forth below and also in the Proxy Statement of the registrant relating to the 2005 Annual Meeting of Stockholders, under "Compliance with Section 16(a) of the Securities and Exchange Act of 1934," which information is incorporated by this reference. We have adopted a Code of Ethics for Senior Officers and all other Principal Executive Officers and Managers that applies to our Chief Executive Officer, Chief Financial Officer and other Senior Financial Officers. The code of ethics is publicly available on our website at www.maineandmaritimes.com.    Executive Officers            The Executive Officers of the registrant are as follows:     Name    Title   Age   Office Continuously Held Since   J. Nicholas Bayne   President and Chief Executive Officer   52   9/1/2002    Michael I. Williams    Vice President, Acting Chief Financial Officer, Controller, Assistant Treasurer & Assistant Secretary    38    12/5/2005    John P. Havrilla    Vice President, Corporate Strategy and Chief Development Officer    48    6/3/2005    Annette N. Arribas    Vice President, Investor Relations & Treasurer    41    6/3/2005    Patrick C. Cannon    General Counsel, Secretary and Clerk    34    12/1/2004            James Nicholas (Nick) Bayne, age 52, has been a Director since 2002 and serves as MAM's President and Chief Executive Officer. He also holds the office of Chief Executive Officer and serves on the Board of Directors of Maine Public Service Company, and holds the office of President and Chief Executive Officer and serves on the Boards of Directors of Maine & New Brunswick Electrical Power Co., Ltd., The Maricor Group, The Maricor Group, Canada Ltd, The Maricor Group New England, Inc., Maricor Properties Ltd, Maricor Technologies, Inc., Mecel Properties Ltd, Cornwallis Court Developments Ltd. and Maricor Ashford, Ltd. Mr. Bayne has extensive executive management experience in the regulated and unregulated energy, electric utility and economic/real estate development industries. He has served as an executive consultant to the energy and information technologies industries; CEO of Aspect, LP, a Houston-based energy risk management and FASB 133 ASP software firm; Senior Vice President for Energy Sales and Operations for Duke Energy's unregulated retail energy services company; Vice President for MEAG Power; President of the Business and Industrial Development Corporation; and positions with Carolina Power & Light Company and Central Electric Power Cooperative, Inc. He holds degrees from Southwestern Community College and the University of South Carolina with concentrations in environmental science, business administration, and economic geography.          Michael I. Williams, CPA, CIA, age 38, Vice President, Acting Chief Financial Officer, Chief Accounting Officer, Controller, Assistant Treasurer, and Assistant Secretary. A Certified Public Accountant and Certified Internal Auditor, Mr. Williams has over fifteen years of experience, including positions in accounting, external auditing, internal auditing, project management, operations management, and information technology management. Mr. Williams also brings ten years of  100       experience in the utilities industry with Bangor Hydro-Electric Company, his employer prior to joining Maine & Maritimes Corporation. He is a graduate of the University of Maine.          John P. Havrilla, P.E., age 48, Vice President, Corporate Strategy and Chief Development Officer. Mr. Havrilla directs Maine & Maritimes Corporation's unregulated growth and diversification strategy. Mr. Havrilla has more than twenty years of electric and natural gas industry experience, as well as consulting engineering experience in both regulated and unregulated environments. Prior to joining the Company, he served as an executive energy and engineering consultant to the electric utilities and industrial sectors. He served as Vice President of Strategic and Financial Systems and Corporate Secretary for Duke Energy's unregulated retail energy services company serving the U.S. and Canada. He has also served in positions with Duke Power and New York State Electric & Gas. Mr. Havrilla holds a Bachelor of Science in Electrical Engineering Technology from the Pennsylvania State University and is a Licensed Professional Engineer in the states of Maine and New York.          Annette N. Arribas, CTP, age 41, Vice President, Investor Relations and Treasurer. Ms. Arribas is responsible for all investor relations activities, as well as the corporate treasury function. Her experience includes having worked in both the regulated and unregulated electric energy sectors, as well as managerial and investor relations positions in the banking and insurance/investment industries. She holds a Masters in Business Administration degree from the University of Maine, Graduate School of Business, a Bachelor of Arts degree in Management from the University of Maine, is a graduate of the Investor Relations Program of the National Investor Relations Institute at the University of Michigan Business School, and has earned the designation of Certified Treasury Professional.          Patrick C. Cannon, Esquire, 34, General Counsel, Secretary and Clerk. Mr. Cannon serves as General Counsel and Secretary. He is responsible for managing legal affairs for the Company and each of its subsidiaries. Prior to joining Maine & Maritimes Corporation, Mr. Cannon spent seven years in private practice with the law firms of Davis Wright Tremaine LLP in Seattle, Washington and Parsons Behle & Latimer in Salt Lake City, Utah, concentrating on corporate finance, mergers and acquisitions and corporate governance matters. He is a graduate of Brigham Young University and received his Juris Doctorate degree from Boston College Law School.          Each executive office is a full-time position and has been the principal occupation of each Officer since first elected. All Officers were elected to serve until the next annual election of Officers and until their successors shall have been duly chosen and qualified. The next annual election of Officers will be on May 9, 2006.          There are no family relationships among Executive Officers.      Item 11.    Executive Compensation              Information for this item is set forth in the Proxy Statement of the registrant relating to its 2006 Annual Meeting of Stockholders, which information is incorporated herein by this reference.      Item 12.    Security Ownership of Certain Beneficial Owners and Management              Information for this item is set forth in the Proxy Statement of the registrant relating to its 2006 Annual Meeting of Stockholders, which information is incorporated herein by this reference.      Item 13.    Certain Relationships and Related Transactions              Information for this item is set forth in the Proxy Statement of the registrant relating to its 2006 Annual Meeting of Stockholders, which information is incorporated herein by this reference.  101           Item 14.    Principal Accountant Services and Fees.              Information for this item is set forth in the Proxy Statement of the registrant relating to its 2006 Annual Meeting of Stockholders, which information is incorporated herein by this reference.      PART IV          Item 15.    Exhibits, Financial Statement Schedules       (a)The following documents are filed as part of this report:   (1)Consolidated Financial Statements are included in Part II—Item 8 of this report. (2)Schedule II—Valuation of Qualifying Accounts and Reserves.     All other schedules have been omitted for the reason that they are not required or are not applicable, or the required information is shown in the financial statements or notes thereto.    (3)Exhibits for Maine & Maritimes Corporation are listed in the Index to Exhibits.   102                 Signatures              Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized, on the 24th of March, 2006.         MAINE & MARITIMES CORPORATION         By:  /s/  MICHAEL I. WILLIAMS       Michael I. Williams Vice President, Acting Chief Financial Officer, Chief Accounting Officer and Controller            Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons in the capacities and on the date indicated.     Signature    Title   Date    /s/  RICHARD G. DAIGLE       Richard G. Daigle    Chairman of the Board and Director         /s/  J. NICHOLAS BAYNE       J. Nicholas Bayne    President & CEO and Director         /s/  ROBERT E. ANDERSON       Robert E. Anderson    Director         /s/  D. JAMES DAIGLE       D. James Daigle    Director         /s/  DAVID N. FELCH       David N. Felch    Director         /s/  MICHAEL W. CARON       Michael W. Caron    Director         /s/  DEBORAH L. GALLANT       Deborah L. Gallant    Director         /s/  NATHAN L. GRASS       Nathan L. Grass    Director         /s/  LANCE A. SMITH       Lance A. Smith    Director         103             Schedule II      Maine & Maritimes Corporation & Subsidiaries Valuation of Qualifying Accounts & Reserves For the Years Ended December 31, 2005, 2004 and 2003              Additions   Deductions       (In thousands of dollars)    Balance at Beginning of Period   Costs & Expenses   Accounts Previously Written Off   Reserve on Acquired Receivables   Accounts Written Off As Uncollectible   Balance at End of Period   Reserve Deducted From Asset To Which It Applies:                            Allowance for uncollectible accounts                                 2005   690   (90 ) 163   —   391   372   2004   236   466   135   305   452   690   2003   214   297   157   —   432   236    104             INDEX TO EXHIBITS              Certain of the following exhibits are filed herewith. Certain other of the following exhibits have heretofore been filed with the Securities and Exchange Commission and are incorporated herein by reference. (* indicates filed herewith)     3(a ) Articles of Incorporation (Exhibit 3(a) to 2004 MAM Form 10-K)    3(b )  By-laws of the Company (Exhibit 3(b) to 2004 MAM Form 10-K)    4(a )  Indenture of Mortgage and Deed of Trust defining the rights of the holders of MPS's First Mortgage Bonds. (Exhibit 4(a) to 1980 MPS Form 10-K)    4(b )  Nineteenth Supplemental Indenture, Dated May 1, 1998. (Exhibit 4(v) to 1998 MPS Form 10-K)    4(c )  Twentieth Supplemental Indenture, Dated October 1, 2000. (Exhibit 4(w) to 2000 MPS Form 10-K)    *4(d )  Twenty-first Supplemental Indenture, Dated March 1, 2005.    4(e )  Indenture of Second Mortgage and Deed of Trust, dated as of October 1, 1985, made by MPS to J. Henry Schroder Bank and Trust Company, as Trustee. (Exhibit 10(i) to MPS Form 8-K dated November 1, 1985)    4(f )  Fourth Supplemental Indenture of the Second Mortgage and Deed of Trust Dated May 1, 1998. (Exhibit 10(v) to 1998 MPS Form 10-K).    4(g )  Fifth Supplemental Indenture of the Second Mortgage and Deed of Trust dated October 1, 2000. (Exhibit 10(y) to 1998 MPS Form 10-K).    4(h )  Sixth Supplemental Indenture of the Second Mortgage and Deed of Trust dated June 1, 2002. (Exhibit 10.1 to MPS's Form 10-Q for the quarter ended June 30, 2002).    10(a )  Agreement of Purchase and Sale between Maine Public Service and Eastern Utilities Associates, dated April 7, 1986. (Exhibit 28(a) to MPS Form 10-Q for the quarter ended June 30, 1986)    10(b )  Addendum to Agreement of Purchase and Sale, dated June 26, 1986. (Exhibit 28(b) to MPS Form 10-Q for the Quarter ended June 30, 1986)    10(c )  Capital Funds Agreement, dated as of May 20, 1968 between Maine Yankee Atomic Power Company and MPS. (Exhibit 10(b)(1) to MPS Form 10-Q for the quarter ended March 31, 1983)    10(d )  Power Contract, dated as of May 20, 1968 between Maine Yankee Atomic Power Company and MPS. (Exhibit 10(b)(2) to MPS Form 10-Q for the quarter ended March 31, 1983)    10(e )  Stipulation between Maine Public Service Company, the Staff of the Commission and the Maine Public Utilities Commission and the Maine Public Advocate, dated July 14, 1986. (Exhibit 28(c) to MPS Form 10-Q for the quarter ended June 30, 1986)     10(f )  Participation Agreement, as of June 20, 1969, with Maine Electric Power Company, Inc. (Exhibit 10(c)(1) to MPS Form 10-Q for the quarter ended March 31, 1983)    10(g )  Agreement, as of June 20, 1969, among MPS and the other Maine Participants. (Exhibit 10(c)(2) to MPS Form 10-Q for quarter ended March 31, 1983)             105          10(h )  Power Purchase and Transmission Agreement Supplement to Participation Agreement, dated as of August 1, 1969, with Maine Electric Power Company, Inc. (Exhibit 10(c)(3) to MPS Form 10-Q for quarter ended March 31, 1983)    10(i )  Supplement Amending Participation Agreement, as of June 24, 1970, with Maine Electric Power Company, Inc. (Exhibit 10(c)(4) to MPS Form 10-Q for quarter ended March 31, 1983)    10(j )  Second Supplement to Participation Agreement, dated as of December 1, 1971, including as Exhibit A the Unit Participation Agreement dated November 15, 1971, as amended, between Maine Electric Power Company, Inc. and the New Brunswick Electric Power Commission. (Exhibit 10(c)(5) to MPS Form 10-Q for quarter ended March 31, 1983)    10(k )  Assignment Agreement as of January 1, 1981, between Central Maine Power Company and MPS. (Exhibit 10(c)(8) to MPS Form 10-Q for the quarter ended March 31, 1983)    10(l )  Amendment to July 14, 1986 Stipulation, dated July 18, 1986. (Exhibit 28(d) to MPS Form 10-Q for the quarter ended June 30, 1986)    10(m )  Order of the Maine Public Utilities Commission dated July 21, 1986, Docket Nos. 84-80, 84-113 and 86-3. (Exhibit 28(g) to 1986 MPS Form 10-K)    10(n )  Order of the Maine Public Utilities Commission, dated May 9, 1986, Docket Nos. 84-113 and 86-3 (with attached Stipulations). (Exhibit 28(r) to 1986 MPS Form 10-K)    10(o )  Order of the Maine Public Utilities Commission, dated July 31, 1987, Docket Nos. 84-80, 84-113, 87-96 and 87-167 (with attached Stipulation). (Exhibit 28(i) to 1988 MPS Form 10-K)    10(p )  Agreement between Maine Public Service Company and various current Seabrook Nuclear Project Joint Owners, dated January 13, 1989. (Exhibit 28(o) to 1988 MPS Form 10-K)    10(q )  Maine Public Service Company, Prior Service Executive Retirement Plan, dated May 12, 1992. (Exhibit 10(s) to 1992 MPS Form 10-K)    10(r )  Further Settlement Agreement between the Maine Public Utilities Commission, the Public Advocate and MPS dated January 24, 2002 regarding Maine Yankee Power costs. (Exhibit 99(ak) to 2001 MPS Form 10-K)    10(s )  Order dated March 26, 2003 of Maine Public Utilities Commission in Docket No. 2002-676 approving reorganization. (Exhibit 99(ao) to 2003 MAM Form 10-K.)    10(t )  Order dated October 29, 2003 of Maine Public Utilities Commission in Docket No. 2003-85 giving final approval to increase in MPS electric delivery rates. (Exhibit 99(ap) to 2003 MAM Form 10-K.)    10(u )  Agreement between WPS Power Development, Inc. and Maine Public Service Company, dated July 7, 1998. (Exhibit 10(w) to 1998 MPS Form 10-K)    10(v )  Settlement Agreement dated February 11, 2004, among, MPS, other parties, FERC Trial Staff, and the MPUC regarding changes to the MPS Formula Rate under the FERC Open Access Transmission Tariff. (Exhibit 99(aq) to 2003 MAM Form 10-K.)    10(w )  Agreement between Wheelabrator-Sherman Energy Company and Maine Public Service Company, dated October 15, 1997, with amendments dated January 30, 1998 and April 28, 1998. (Exhibit 10(x) to 1998 MPS Form 10-K)            106          10(x )  Stipulation dated February 19, 2004, approved by order dated February 27, 2004 of Maine Public Utilities Commission dated April 29, 2002 in Docket No. 2003-666 approving stranded cost revenue requirements effective March 1, 2004. (Exhibit 99 to MAM Form 8-K, dated March 2, 2004.)    *10(y )  Maine & Maritimes Corporation 2002 Stock Option Plan    *10(z )  Form of Stock Option Agreement between Maine & Maritimes Corporation and the person listed at the end of such Agreement.    *10(aa )  Maine Public Service Company, Deferred Compensation Plan for Outside Directors    *10(ab )  Form of Deferred Compensation Agreement between Maine Public Service Company and the persons listed at the end of such Agreement.    10(ac )  Maine & Maritimes Corporation Stock Plan for Outside Directors (Exhibit 4 to Post-Effective Amendment No. 1 to Form S-8, dated July 30, 2003)    10(ad )  Interest Rate Swap Confirmation for 1996 Tax-Exempt Bonds, dated September 9, 2003. (Exhibit 10(aj) to 2003 MAM Form 10-K.)    10(ae )  Interest Rate Swap Confirmation for 1998 FAME Note, dated September 9, 2003. (Exhibit 10(ak) to 2003 MAM Form 10-K.)    10(af )  Interest Rate Swap Confirmation for 2000 Tax-Exempt Bonds, dated September 9, 2003. (Exhibit 10(al) to 2003 MAM Form 10-K.)    10(ag )  Assignment and Amendment Agreement to Employee Retention Agreement between J. Nicholas Bayne and Maine & Maritimes Corporation and Maine Public Service Company, dated October 3, 2003. (Exhibit 10(an) to 2003 MAM Form 10-K.)    *10(ah )  Form of Employee Retention Agreement between Maine & Maritimes Corporation and the persons listed at the end of such Agreement.    *10(ai )  Master Loan Agreement between MPS and Fleet Bank, dated November 22, 2004.    *10(aj )  Credit Agreement between MPS and Bank of America, dated October 7, 2005.    *10(ak )  Credit Agreement between MAM and Bank of America, dated October 21, 2005.    *10(al )  Letter of Credit and Reimbursement Agreements between MPS and Bank of America, dated February 28, 2006.    *21    Subsidiaries of the Company    *23    Consent of Independent Registered Public Accounting Firm    *31    Rule 13a-14(a)/15d-14(a) Certifications    *32    Certification of Financial Reports Pursuant to 18 USC Section 1350    107            EX-4.D 2 a2168719zex-4_d.txt EXHIBIT 4.D                                                                         Exhibit 4.d                     THIS INSTRUMENT GRANTS A SECURITY INTEREST                             BY A TRANSMITTING UTILITY             THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS                            MAINE PUBLIC SERVICE COMPANY                                         TO                           U.S. BANK NATIONAL ASSOCIATION                                                          Trustee                         TWENTY-FIRST SUPPLEMENTAL INDENTURE                              Dated as of March 1, 2005                Supplementing and Modifying Indenture of Mortgage and                     Deed of Trust dated as of October 1, 1945                                        and                       Relating to an Issue of Mortgage and                      Collateral Trust Bonds, Series due 2015              This is a Security Agreement granting a Security Interest           in Personal Property, Including Personal Property affixed to                           Realty as well as a Mortgage                       upon Real Estate and other Property.         THIS TWENTY-FIRST SUPPLEMENTAL INDENTURE (hereinafter called the "Twenty-First Supplemental Indenture"), dated as of March 1, 2005, made by MAINE PUBLIC SERVICE COMPANY, a Maine corporation (hereinafter called the "Company"), party of the first part, and U.S. BANK NATIONAL ASSOCIATION (formerly known as U.S. Bank Trust National Association and First Trust National Association, as successor to Continental Bank, National Association (formerly, Continental Illinois National Bank and Trust Company of Chicago)), a national banking association duly organized and existing under the laws of the United States of America, and having its principal place of business in the City of Chicago, State of Illinois (hereinafter called the "Trustee"), party of the second part.       WHEREAS, the Company has heretofore executed and delivered to the Trustee an Indenture of Mortgage and Deed of Trust, dated as of October 1, 1945 (hereinafter called the "Original Indenture"), to secure the payment of principal and interest on, as provided therein, its bonds (in the Original Indenture and herein called the "Bonds") to be designated generally as its "First Mortgage and Collateral Trust Bonds", and to be issued in one or more series as provided in the Original Indenture, pursuant to which the Company provided for the creation of an initial series of Bonds designated as "First Mortgage and Collateral Trust Bonds, 2 7/8% Series due 1975" (herein sometimes called "Bonds of the 1975 Series"); and       WHEREAS, the Company has heretofore executed and delivered to the Trustee a First Supplemental Indenture, dated as of September 1, 1950, pursuant to which the Company provided for the creation of a second series of Bonds designated as "First Mortgage and Collateral Trust Bonds, 3% Series due 1980" (herein sometimes called "Bonds of the 1980 Series"), a Second Supplemental Indenture, dated as of February 1, 1955, pursuant to which the Company provided for the creation of a third series of Bonds designated as "First Mortgage and Collateral Trust Bonds, 3.35% Series due 1985" (herein sometimes called "Bonds of the 1985 Series"), a Third Supplemental Indenture, dated as of September 1, 1960, pursuant to which the Company provided for the creation of a fourth series of Bonds designated as "First Mortgage and Collateral Trust Bonds, 5 1/2% Series due 1990" (herein sometimes called "Bonds of the 1990 Series"), a Fourth Supplemental Indenture, dated as of January 1, 1965, pursuant to which the Company provided for the creation of a fifth series of Bonds designated as "First Mortgage and Collateral Trust Bonds, 4 3/4% Series due 1995" (herein sometimes called "Bonds of the 1995 Series"), a Fifth Supplemental Indenture, dated as of May 1, 1968, pursuant to which the Company provided for the creation of a sixth series of Bonds designated as "First Mortgage and Collateral Trust Bonds, 7 1/8% Series due 1998" (herein sometimes called "Bonds of the 1998 Series"), a Sixth Supplemental Indenture, dated as of March 1, 1973, pursuant to which the Company supplemented and modified the Original Indenture and provided for the creation of a seventh series of Bonds designated as "First Mortgage and Collateral Trust Bonds, 7.95% Series due 2003" (herein sometimes called "Bonds of the 2003 Series"), a Seventh Supplemental Indenture, dated as of September 1, 1975, pursuant to which the Company supplemented and modified the Original Indenture and provided for the creation of an eighth series of Bonds designated as "First Mortgage and Collateral Trust Bonds, 10 5/8% Series due 1995" (herein sometimes called "Bonds of the Second 1995 Series"), an Eighth Supplemental Indenture, dated as of January 1,    1977, pursuant to which the Company supplemented the Original Indenture, a Ninth Supplemental Indenture, dated as of March 1, 1978, pursuant to which the Company supplemented and modified the Original Indenture, a Tenth Supplemental Indenture, dated as of October 1, 1979, pursuant to which the Company supplemented the Original Indenture and provided for the creation of a ninth series of Bonds designated as "First Mortgage and Collateral Trust Bonds, 10 1/4% Series due 2004" (herein sometimes called "Bonds of the 2004 Series"), an Eleventh Supplemental Indenture, dated as of January 15, 1983, pursuant to which the Company supplemented the Original Indenture and provided for the creation of a tenth series of Bonds designated as "First Mortgage and Collateral Trust Bonds, 13 7/8% Series due 1992" (herein sometimes called "Bonds of the 1992 Series"), a Twelfth Supplemental Indenture, dated as of July 1, 1984, pursuant to which the Company supplemented the Original Indenture and provided for the creation of an eleventh series of Bonds designated as "First Mortgage and Collateral Trust Bonds, 16.30% Series due 1989" (herein sometimes called "Bonds of the 1989 Series"), a Thirteenth Supplemental Indenture, dated as of July 1, 1984, pursuant to which the Company supplemented the Original Indenture and provided for the creation of a twelfth series of Bonds designated as "First Mortgage and Collateral Trust Bonds, Floating Rate Series A due 1985" (herein sometimes called "Bonds of the Series A due 1985"), a Fourteenth Supplemental Indenture, dated as of July 1, 1985, pursuant to which the Company supplemented the Original Indenture and provided for the creation of a thirteenth series of Bonds designated as "First Mortgage and Collateral Trust Bonds, Floating Rate Series B due 1986" (herein sometimes called "Bonds of the Series B due 1986"), a Fifteenth Supplemental Indenture, dated as of March 1, 1986, pursuant to which the Company supplemented the Original Indenture and provided for the creation of a fourteenth series of Bonds designated as "First Mortgage and Collateral Trust Bonds, 11% Series due 1996" (herein sometimes called "Bonds of the 1996 Series"), a Sixteenth Supplemental Indenture, dated as of September 1, 1991, pursuant to which the Company supplemented the Original Indenture and provided for the creation of a fifteenth series of Bonds designated as "First Mortgage and Collateral Trust Bonds, 9.775% Series due 2011" (herein sometimes called "Bonds of the 2011 Series"), a Seventeenth Supplemental Indenture, dated as of April 1, 1997, pursuant to which the Company supplemented the Original Indenture and provided for the creation of a sixteenth series of Bonds designated as "First Mortgage and Collateral Trust Bonds, Series due 2005" (herein sometimes called "Bonds of the 2005 Series"), an Eighteenth Supplemental Indenture, dated as of April 1, 1998, pursuant to which the Company supplemented the Original Indenture and provided for the creation of a seventeenth series of Bonds designated as "First Mortgage and Collateral Trust Bonds, Series due 1999" (herein sometimes called "Bonds of the 1999 Series"), a Nineteenth Supplemental Indenture, dated as of May 1, 1998, pursuant to which the Company supplemented and modified the Original Indenture and provided for the creation of an eighteenth series of Bonds designated as "First Mortgage and Collateral Trust Bonds, Series due 2008" (herein sometimes called "Bonds of the 2008 Series"), a Twentieth Supplemental Indenture, dated as of October 1, 2000, pursuant to which the Company supplemented and modified the Original Indenture and provided for the creation of a nineteenth series of Bonds designated as "First Mortgage and Collateral Trust Bonds, Series 2025 (herein sometimes called "Bonds of the 2025 Series"); and                                          2        WHEREAS, pursuant to the Original Indenture, as so supplemented and modified, there have been executed, authenticated and delivered and there are now outstanding First Mortgage and Collateral Trust Bonds of series and in principal amounts as follows:                                                                 Issued      Outstanding                                                              ------      -----------                  Bonds of the 2005 Series                          $  11,000,000  $   6,000,000        Bonds of the 2008 Series                          $   4,000,000  $   4,000,000        Bonds of the 2025 Series                          $   5,000,000  $   5,000,000   which constitute the only Bonds outstanding under the Original Indenture, as so supplemented and modified; and       WHEREAS, the Company now desires to create a new series of Bonds to be designated First Mortgage and Collateral Trust Bonds, Series due 2015 (herein sometimes called the "Bonds of the 2015 Series"), and the Original Indenture provides that each series of Bonds (except the Bonds of the 1975 Series) shall be created by an indenture supplemental to the Original Indenture; and       WHEREAS, the Original Indenture further provides that all property of the character specifically described in the Original Indenture, and all improvements, extensions, betterments or additions to the property specifically described in the Original Indenture, constructed or acquired after the date of the execution and delivery of the Original Indenture, shall be and become subject to the lien of the Original Indenture, and that the Company shall from time to time execute, acknowledge and deliver any and all such further assurances, conveyances, mortgages or assignments of such property as may be required by the terms and provisions of the Original Indenture, or as the Trustee under the Original Indenture may require, and the Company now desires to subject to the lien of the Original Indenture certain additional properties which it has constructed or acquired since the date of execution and delivery of the Twentieth Supplemental Indenture; and       WHEREAS, all acts and proceedings required by law and by the charter and by-laws of the Company necessary to make the Bonds of the 2015 Series to be initially issued when executed by the Company, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal obligations of the Company, and to constitute the Original Indenture, as heretofore supplemented and modified and as supplemented and modified by this Twenty-First Supplemental Indenture, a valid and binding mortgage and deed of trust for the security of the Bonds, in accordance with the terms of the Original Indenture, as so supplemented and modified, and the terms of the Bonds, have been done and taken; and the execution and delivery of this Twenty-First Supplemental Indenture and the issue of the Bonds of the 2015 Series to be initially issued have been in all respects duly authorized;       NOW, THEREFORE, for the purposes aforesaid and in pursuance of the terms and provisions of the Original Indenture, the Company has executed and delivered this Twenty-First Supplemental Indenture (the Original Indenture, as supplemented by the First, Second, Third, Fourth, Fifth, Eighth, Tenth, Eleventh, Twelfth, Thirteenth,                                          3   Fourteenth, Fifteenth and Sixteenth Supplemental Indentures, as supplemented and modified by the Sixth, Seventh, Ninth, Seventeenth, Eighteenth, Nineteenth and Twentieth Supplemental Indentures and as supplemented and modified by this Twenty-First Supplemental Indenture and any and all supplemental indentures hereafter entered into between the Company and the Trustee in accordance with the provisions of the Original Indenture, as supplemented and modified, being herein sometimes called the "Indenture"), and in consideration of the sum of One Dollar ($1.00) to the Company duly paid by the Trustee at or before the ensealing and delivery hereof, and for other good and valuable considerations, the receipt whereof is hereby acknowledged, the Company hereby covenants to and with the Trustee and its successors in the trust under the Original Indenture, as supplemented and modified, as follows:                                      ARTICLE 1                           SCHEDULE OF MORTGAGED PROPERTY.       SECTION 1.01. In order to further secure the payment of the principal of, premium, if any, and interest on, all Bonds at any time issued and outstanding under the Indenture, according to their tenor, purport and effect, and further to secure the performance and observance of all the covenants and conditions in said Bonds and in the Original Indenture, as supplemented and modified, and in this Twenty-First Supplemental Indenture contained, for the considerations above expressed, and for and in consideration of the mutual covenants herein contained and of the purchase and acceptance of the Bonds by holders thereof, the Company has executed and delivered this Twenty-First Supplemental Indenture and by these presents does grant, bargain, sell, alien, remise, release, convey, assign, transfer, mortgage, pledge, set over and confirm unto U.S. Bank National Association, as Trustee under the Indenture, and to its assigns forever, all property, real, personal or mixed, acquired since the execution and delivery of the Twentieth Supplemental Indenture which by the terms of the Original Indenture, as supplemented and modified, is subject or is intended to be subject to the lien of the Indenture, including, without limiting the generality of the foregoing, the following described property:                                      CLAUSE I                                       PART I                               AROOSTOOK COUNTY, MAINE       SHERMAN SUBSTATION LAND       (1)  A certain piece or parcel of real estate situated in the town of Sherman, County of Aroostook and State of Maine, being a part of Lot numbered Ten (10) in said Sherman, bounded and described as follows, to wit:       Commencing at 1/2" rebar found marking the intersection of the south line of said Lot numbered Ten (10) with the westerly right-of-way line of route 11, so-called; thence                                          4   westerly on the south line of said Lot numbered Ten (10) on a course bearing north sixty-nine degrees twenty-five minutes eighteen seconds west (N69 DEG. 25' 18" W) for a distance of five hundred seventy-seven and thirteen hundredths (577.13) feet to a 1/2" rebar found driven into the ground at the southwest corner of said Lot numbered Ten (10); thence northerly on the west line of said Lot numbered Ten (10) on a course bearing north twenty degrees five minutes thirty-five seconds east (N20 DEG. 05' 35"E) for a distance of three hundred thirty-nine and eight-one hundredths (339.81) feet to a 5/8" rebar driven into the ground; thence easterly on the south line of the parcel conveyed to Fenton W. McAvoy, Jill McDonald and Nora L. Gardiner by Stephen E. McAvoy and Jessie E. McAvoy by deed dated October 12, 1999 and recorded in the Southern District of the Aroostook Registry of Deeds in Vol. 3333, Page 141 on a course bearing south eighty-eight degrees seven minutes twenty-two seconds east(S88 DEG. 07' 22"E) for a distance of two hundred seventy-one and fifty-nine hundredths (271.59) feet, more or less, to the northwest corner of the parcel conveyed to the Roman Catholic Bishop by Cecil Farmer by Deed dated May 7, 1949 and recorded in said Registry in Vol. 604, Page 563; thence southerly on a course bearing south fifteen degrees twelve minutes twenty-seven seconds east (S15 DEG. 12' 27"E) for a distance of seventy-five and zero hundredths (75.00) feet to the southwest corner of said parcel recorded in said Registry in Vol. 604, Page 563; thence easterly on the south line of said parcel to its intersection with the west line of another parcel conveyed to The Roman Catholic Bishop by Catherine B. Farmer by Deed dated April 26, 1919 and recorded in said Registry in Vol. 312, Page 265; thence southerly on the west line of said parcel recorded in said Registry in Vol. 312, Page 265 to the southwest corner of said parcel; thence easterly on the south line of said parcel recorded in said Registry in Vol. 312, Page 265 to the westerly right-of-way line of Route 11; thence southerly on the westerly right-of-way line of Route 11 to the point of beginning, containing 4 acres, more or less.       Recorded in Southern District of Aroostook Registry of Deeds in Volume 3450, Page 213 on December 19, 2001.       (2)  A certain parcel of land in Lot 10, town of Sherman, County of Aroostook, State of Maine, being more particularly described as follows:       That portion of lands described as being conveyed to the Roman Catholic Bishop of Portland in the deeds from Cecil Farmer dated may 7, 1949 and recorded in Book 604, page 563 of the Southern Aroostook Registry of Deeds and from Catherine B. Farmer dated April 26, 1919 and recorded in said registry at Book 312, Page 265, which portion is also southerly of the following described Line One and of the extensions northeasterly and southwesterly from that line:  Line One: Commencing at a 5/8" rebar driven into the ground on the westerly right of way line of Route 11 at a point being 328.58 feet northerly as measured along the westerly right of way line from the point of intersection of the westerly right of way line of Route 11 with the south line of Lot 10; then westerly on a course bearing S 74-47' 33" w for a distance of 145.56 feet to a 5/8 rebar driven into the ground.                                          5   ALSO a certain parcel of land in Lot 10, Town of Sherman, County of Aroostook, State of Main, being more particularly described as follows:  That portion of the lands described as being conveyed to the Roman Catholic Bishop of Portland in the deeds from Cecil Farmer dated May 7, 1949 and recorded in Book 604, Page 563 of the Southern Aroostook Registry of Deeds and from Catherine B. Farmer dated April 26, 1919 and recorded in said registry at Book 312, Page 265, which portion is also westerly of the following described Line Two and of the extensions northwesterly and southwesterly from that line:  Line Two: Commencing at a 5/8" rebar driven into the ground at the westerly terminus of Line One described above; thence northerly on a course bearing N 15-12' 27W for a distance of 233.32 feet to a 5/8" rebar driven into the ground on the north line of the land described as the parcel of land conveyed to Maine Public Service Company by John M. Qualey and Thomas H. Qualey by deed dated December 19, 2001 and recorded in said registry at Book 3605, Page 60.       Basis for bearings for Line One and Two in from a compass observation of November 21, 2001.       For reference, see survey by Swallow Associates, Land Surveying, 12 Mechanic Street, Houlton, Maine, performed on June 3, 2002, described as Survey Plan of Proposed Conveyances To establish Boundaries Between Maine Public Service Company and lane of the Roman Catholic bishop, lane Being in Lot 10 Sherman, Maine and to be recorded in the Southern Aroostook Registry of Deeds.       The purpose of this deed and a deed from grantee herein to the grantor herein, which deeds are to be recorded together, is to establish a common boundary line between the grantor and grantee.       Recorded in Southern District of Aroostook Registry of Deeds in Volume 3819, page 32.                                       PART II                                 TRANSMISSION LINES             ADDITIONAL RIGHT-OF-WAY, THE HOULTON TO ISLAND FALLS LINE,                                     SO CALLED       A 44,000 volt transmission line in Aroostook County, Maine owned and operated by Maine Public Service Company from Houlton to Island Falls, a distance of approximately 27.85 miles, said Maine Public Service Company line being constructed for the most part on rights-of-way conveyed to Maine Public Service Company by deeds including the following:                                          6                                                                 Recorded                Grantor                      Date      Vol.     Page     Registry At:                -------                     --------   ----   --------   ------------      Gerald Miller                              08/18/00   3426      214          Houlton Thomas Anderson                            09/15/00   3436      049          Houlton Frank Lima                                 09/29/00   3441      209          Houlton Wayne & Marilyn Hannigan                   05/07/01   3502      193          Houlton Randolph Reeves                            05/07/01   3502      059          Houlton Daniel Prosser                             05/14/01   3504      294          Houlton Brian Germaine                             05/22/01   3508      220          Houlton Roger & Karen Folsom                       05/29/01   3512      003          Houlton John & Marion Wright                       06/11/01   3520      110          Houlton Stephen & Lisa Tracy                       06/11/01   3520      114          Houlton Joseph & Karen Beaulieu                    06/14/01   3521      336          Houlton Joseph & Karen Beaulieu                    06/14/01   3521      334          Houlton Beatrice Toland                            06/15/01   3522      136          Houlton Paul Fillion                               06/19/01   3523      329          Houlton Dana & Donna Austin                        06/20/01   3524      162          Houlton Cary Currier                               06/27/01   3527      197          Houlton Irvin & Rhonda Stevens                     06/28/01   3527      332          Houlton James & Andrea Newman                      07/09/01   3531      109          Houlton Paul Fillion                               07/10/01   3532      037          Houlton Timothy & Joyce Folsom                     07/10/01   3532      028          Houlton Charlotte Reeves                           07/17/01   3534      227          Houlton Joseph & Marguerite Lawler                 08/08/01   3544      061          Houlton John Camilleri                             09/20/01   3561      002          Houlton John Britton                               10/01/01   3565      342          Houlton Roger Scott                                10/03/01   3567      041          Houlton Roger Scott                                10/03/01   3567      043          Houlton Richard Warman                             12/10/01   3595      203          Houlton Richard Warman                             12/10/01   3595      201          Houlton Michael Ivey                               02/08/02   3620      211          Houlton Roger Scott                                02/08/02   3618      192          Houlton Donald Russell                             02/12/02   3621      061          Houlton John & Beatrice Fleming                    02/12/02   3621      059          Houlton Dorothy McCains                            02/15/02   3622      266          Houlton Tony Bowers                                02/15/02   3623      091          Houlton Gary & Karen Stairs                        02/19/02   3623      304          Houlton Blanche Michaud                            02/20/02   3624      296          Houlton Blanche Michaud                            02/20/02   3624      294          Houlton Blanche Michaud                            02/20/02   3624      298          Houlton Terry Paradis                              02/28/02   3627      313          Houlton Maureen Hicking                            03/04/02   3628      242          Houlton Gary & Christine Brewer                    04/09/02   3643      061          Houlton Jay Burpee                                 04/09/02   3643      170          Houlton Jay Moore                                  12/04/02   3739      132          Houlton                                           7                  ADDITIONAL RIGHT-OF-WAYS, EASEMENTS ASSOCIATED WITH                            RESIDENTIAL LINE EXTENSIONS       Various residential line extensions in Aroostook County, Maine owned and operated by Maine Public Service Company from Monticello to Fort Kent, a distance of approximately 85.33 miles, said Maine Public Service Company line extensions being constructed for the most part on rights-of-way conveyed to Maine Public Service Company by deeds including the following:                                                                 Recorded                Grantor                      Date      Vol.     Page     Registry At:                -------                     --------   ----   --------   ------------      Thomas & Anita Clavette                    08/22/01   1263      319        Fort Kent Mary Ann Daigle                            08/22/01   1263      321        Fort Kent John Guimond                               06/27/02   1312      246        Fort Kent Kenneth Gessay                             08/01/02   1318      111        Fort Kent Valmond Thibodeau                          08/01/02   1318      113        Fort Kent Guido Haggenmiller                         08/01/02   1318      115        Fort Kent Peter Robichaud                            08/01/02   1318      117        Fort Kent Maine Community Supporting Foundation      08/01/02   1318      119        Fort Kent Roger Collin                               09/19/02   1325      064        Fort Kent Mildred Bishop                             09/19/02   1325      066        Fort Kent Richard Cayer                              09/19/02   1325      062        Fort Kent Robert Deschene                            09/19/02   1325      068        Fort Kent James Pelletier                            09/19/02   1325      070        Fort Kent Town of Grand Isle                         12/23/02   1335      241        Fort Kent SAD #33                                    12/23/02   1335      238        Fort Kent SAD #33                                    12/23/02   1335      235        Fort Kent James Desjardins                           01/09/03   1337      093        Fort Kent Jeanette Hafford                           03/10/03   8624      001        Fort Kent David Sweet                                08/22/02   3699      026          Houlton SAD #29                                    12/04/02   3739      123          Houlton Dexter & Janet Kelley                      12/04/02   3739      143          Houlton SAD #1                                     12/04/02   3739      129          Houlton SAD #1                                     12/04/02   3739      126          Houlton SAD #1                                     12/04/02   3739      120          Houlton SAD #45                                    12/16/02   3743      308          Houlton SAD #1                                     12/16/02   3743      311          Houlton        The foregoing rights-of-way are conveyed subject to reservations, conditions, restrictions, limitations and exceptions referred to or mentioned in the deeds above listed.                                      CLAUSE II       All and singular the lands, real estate, chattels real, interests in land, leaseholds, ways, rights-of-way, easements, servitudes, permits and licenses, lands under water,                                          8   riparian rights, franchises, privileges, rights and interests, electric generating plants, power houses, dams, stations, electric transmission and distribution systems, substations, conduits, poles, wires, cables, office buildings, warehouses, garages, machine shops, and other buildings and structures, implements, meters, tools, and other apparatuses, appurtenances and facilities materials and supplies and all other property of any nature appertaining to any of the plants, systems, business or operations of the Company, whether or not affixed to the realty, used in the operation of any of the premises or plants or systems or otherwise, which are now owned, or which may hereafter be owned or acquired by the Company, other than excepted property as hereinafter defined.                                     CLAUSE III       All corporate, Federal, State, municipal and other permits, consents, licenses, bridge licenses, bridge rights, river permits, franchises, grants, privileges and immunities of every kind and description, now belonging to or which may hereafter be owned, held, possessed or enjoyed by the Company (other than excepted property as hereinafter defined) and all renewals, extensions, enlargements and modifications of any of them.                                      CLAUSE IV       Also all other property, real, personal or mixed, tangible or intangible (other than excepted property as hereinafter defined) of every kind, character and description and wheresoever situated, whether or not useful in the generation, manufacture, production, transportation, distribution, sale or supplying electricity now owned or which may hereafter be acquired by the Company, it being the intention hereof that all property, rights and franchises acquired by the Company after the date of the execution and delivery hereof (other than excepted property as hereinafter defined) shall be as fully embraced within and subjected to the lien of the Indenture as if such property were now owned by the Company and were specifically described herein and conveyed hereby.                                      CLAUSE V       Together with (other than excepted property as hereinafter defined) all and singular the plants, buildings, improvements, additions, tenements, hereditaments, easements, rights, privileges, licenses and franchises and all other appurtenances whatsoever belonging or in any wise appertaining to any of the property hereby mortgaged or pledged, or intended so to be, or any part thereof, and the reversion and reversions, remainder and remainders, and the rents, revenues, issues, earnings, income, products and profits thereof, and every part and parcel thereof, and all the estate, rights, title, interest, property, claim and demand of every nature whatsoever of the Company at law, in equity or otherwise howsoever, in, of and to such property and every part and parcel thereof.                                      CLAUSE VI       Also any and all property, real, personal or mixed, including excepted property, that may, from time to time hereafter, by delivery or by writing of any kind, for the purposes of the Indenture be in any wise subjected to the lien of the Indenture or be                                          9   expressly conveyed, mortgaged, assigned, transferred, deposited and/or pledged by the Company, or by anyone in its behalf or with its consent, to and with the Trustee, which is hereby authorized to receive the same at any and all times as and for additional security and also, when and as provided in the Indenture, to the extent permitted by law. Such conveyance, mortgage, assignment, transfer, deposit and/or pledge or other creation of lien by the Company, or by anyone in its behalf, or with its consent, of or upon any property as and for additional security may be made subject to any reservations, limitations, conditions and provisions which shall be set forth in an instrument or agreement in writing executed by the Company or the person or corporation conveying, assigning, mortgaging, transferring, depositing and/or pledging the same and/or by the Trustee, respecting the use, management and disposition of the property so conveyed, assigned, mortgaged, transferred, deposited and/or pledged, or the proceeds thereof.                                     CLAUSE VII       There is however, expressly excepted and excluded from the lien and operation of the Indenture the following described property of the Company, herein sometimes referred to as "excepted property":            (a)  Any and all property expressly excepted and excluded from the      Original Indenture and from the lien and operation thereof by Paragraph A      of Clause VII of the Granting Clauses thereof and all property of the      character expressly excepted or intended to be excepted and excluded by      Paragraphs B through I of said Clause VII; and            (b)  All property which prior to the execution and delivery of this      Twenty-First Supplemental Indenture has been released by the Trustee or      otherwise disposed of by the Company free from the lien of the Indenture,      in accordance with the provisions thereof.       The Company may, however, pursuant to the provisions of Granting Clause VI above, subject to the lien and operation of the Indenture all or any part of the excepted property.       TO HAVE AND TO HOLD the trust estate and all and singular the lands, properties, estates, rights, franchises, privileges and appurtenances hereby mortgaged, conveyed, pledged or assigned, or intended so to be, together with all the appurtenances thereto appertaining and the rents, issues and profits thereof, unto the Trustee and its successors in trust and to its assigns, forever:       SUBJECT, HOWEVER, to the exceptions, reservations, restrictions, conditions, limitations, covenants and matters recited in Schedule A to the Original Indenture or otherwise recited in the Original Indenture, as modified and supplemented, and contained in all deeds and other instruments whereunder the Company has acquired any of the property now owned by it, and to permitted encumbrances as defined in Subsection B of Section 1.11 of the Original Indenture, as modified by the provisions of the Sixth Supplemental Indenture, the Seventh Supplemental Indenture, the Ninth Supplemental                                         10   Indenture, the Seventeenth Supplemental Indenture, the Eighteenth Supplemental Indenture, the Nineteenth Supplemental Indenture and the Twentieth Supplemental Indenture and, with respect to any property which the Company may hereafter acquire, to all terms, conditions, agreements, covenants, exceptions and reservations expressed or provided in the deeds or other instruments, respectively, under any by virtue of which the Company shall hereafter acquire the same and to any liens thereon existing, and to any liens for unpaid portions of the purchase money placed thereon, at the time of acquisition;       BUT IN TRUST, NEVERTHELESS, for the equal and proportionate use, benefit, security and protection of those who from time to time shall hold the Bonds authenticated and delivered under the Indenture and duly issued by the Company, without any discrimination, preference or priority of any one Bond over any other by reason of priority in the time of issue, sale or negotiation thereof or otherwise, except as provided in Section 12.28 of the Original Indenture, so that, subject to said Section 12.28, each and all of said Bonds shall have the same right, lien and privilege under the Indenture, and shall be equally secured hereby (except in so far as any sinking fund, replacement fund or other fund established in accordance with the provisions of the Indenture may afford additional security for the Bonds of any specific series) and shall have the same proportionate interest and share in the trust estate, with the same effect as if all of the Bonds had been issued, sold and negotiated simultaneously on the date of the delivery hereof,       AND UPON THE TRUSTS, USES AND PURPOSES and subject to the covenants, agreements and conditions in the Indenture set forth and declared.                                      ARTICLE 2                        BONDS OF THE 2015 SERIES AND CERTAIN                            PROVISIONS RELATING THERETO       SECTION 2.01. TERMS OF THE BONDS OF THE 2015 SERIES. There shall be a series of Bonds, known as and entitled "First Mortgage and Collateral Trust Bonds, Series due 2015" (herein referred to as the "Bonds of the 2015 Series"), and the form thereof shall be substantially as hereinafter set forth in Section 2.02.       The Bonds of the 2015 Series are issued to secure the obligations of the Company under the Revolving Credit Agreement, dated as of October 8, 1987, by and among the Company, the signatory Banks thereto and The Bank of New York, as agent (in such capacity, together with its successors in such capacity, the "Agent"), as amended by Amendment No. 1, dated as of October 8, 1989, Amendment No. 2, dated as of May 11, 1992, Amendment No. 3, dated as of October 8, 1995, Amendment No. 4, dated as of March 28, 1997, Amendment No. 5, dated as of March 31, 1998, Amendment No. 6, dated as of September 24, 1999, Amendment No. 7, dated as of November 24, 1999, Amendment No. 8, dated as of May 24, 2000, Amendment No. 9, dated as of May 23, 2002, and Amendment No. 10, dated as of March 29, 2004, together with any amendments, modifications or supplements thereto, extensions, renewals, deferrals, refunding or refinancing thereof or replacements or successors therefor which may                                         11   hereafter exist (the "Revolving Credit Agreement"), pursuant to which the signatory Banks thereto have each, severally, agreed, subject to the terms and conditions thereof, to make Loans (as defined therein) evidenced by a series of promissory notes, collectively the Notes (as defined therein), with the obligations and liabilities (including, but not limited to, obligations with respect to any fees, disbursements, or other expenses and indemnification) of the Company due and to become due under the Notes or otherwise in respect of the Revolving Credit Agreement, in each case, whether direct or indirect, joint or several, absolute or contingent, liquidated or unliquidated, now or hereafter existing, extended, renewed, deferred, refunded, refinanced or restructured, and whether or not from time to time decreased or extinguished and later increased, created or incurred, and including all indebtedness of the Company under any instrument now or hereafter evidencing any of the foregoing, all being hereinafter called the "Revolving Credit Obligations".       The aggregate principal amount of the Bonds of the 2015 Series which may be authenticated and delivered and outstanding under this Twenty-First Supplemental Indenture shall be limited to $6,000,000 except for duplicate Bonds, authenticated and delivered pursuant to Section 2.12 of the Original Indenture. The definitive Bonds of the 2015 Series shall be issued only as registered Bonds without coupons of the denomination of $1.00 and of any multiple thereof and shall be registered in the name of the Agent.       The date of authentication on the original issuance of the Bonds of the 2015 Series shall be the date of commencement of the first interest period for such Bonds. All Bonds of the 2015 Series shall mature April 1, 2015, and shall bear interest at the applicable rate of interest as set forth in, and in accordance with, the Revolving Credit Agreement until the payment of the principal thereof. Both principal of and interest on the Bonds of the 2015 Series will be paid in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts, at the principal office in the City of Chicago, Illinois, of the Trustee or, at the office of its successor as Trustee, except that, in case of the redemption as a whole at any time of Bonds of the 2015 Series then outstanding, the Company may designate in the redemption notice other offices or agencies at which, at the option of the registered holders, Bonds of the 2015 Series may be surrendered for redemption and payment; and in the case of interest on Bonds of the 2015 Series, at the option of the registered holder, at the agency of the Company in the Borough of Manhattan, City and State of New York, in each case to the holder of record on the record date as hereinbelow defined. Interest on the Bonds of the 2015 Series shall, unless otherwise directed by the respective registered holders thereof, be paid by checks payable to the order of the respective holders entitled thereto, and mailed by the Trustee by first class mail, postage prepaid, to such holders at their respective registered addresses as shown on the Bond register for the Bonds of the 2015 Series.       The definitive Bonds of the 2015 Series may be issued in the form of Bonds engraved, printed or lithographed on steel engraved borders and the signature of the President, or a Vice President and of the Secretary or an Assistant Secretary of the Company may be facsimile. Bonds of the 2015 Series may also be issued as temporary                                         12   printed, lithographed or typewritten Bonds, and, so long as the registered holder of such Bonds does not request their exchange for Bonds in definitive form, the Company shall not be deemed to have unreasonably delayed the preparation, execution and delivery of definitive Bonds as called for by Section 2.08 of the Original Indenture.       Notwithstanding any provision in the Original Indenture to the contrary, the person in whose name any Bond of the 2015 Series is registered at the close of business on any record date (as hereinbelow defined) with respect to any interest payment date shall be entitled to receive the interest payable on such interest payment date notwithstanding the cancellation of such Bond of the 2015 Series upon any transfer or exchange thereof (including any exchange effected as an incident to a partial redemption thereof) subsequent to the record date and prior to such interest payment date, except that, if and to the extent that the Company shall default in the payment of the interest due on such interest payment date, then the registered holders of Bonds of the 2015 Series on such record date shall have no further right to or claim in respect of such defaulted interest as such registered holders on such record date, and the persons entitled to receive payment of any defaulted interest thereafter payable or paid on any Bonds of the 2015 Series shall be the registered holders of such Bonds of the 2015 Series on the record date for payment of such defaulted interest. The term "record date" as used in this Section 2.01, and in the form of the Bonds of the 2015 Series, with respect to any interest payment date applicable to the Bonds of the 2015 Series, shall mean the August 15 next preceding a September 1 interest payment date or the February 15 next preceding a March 1 interest payment date, as the case may be, or a special record date established for defaulted interest as hereinafter provided.       In the case of failure by the Company to pay any interest when due, the claim for such interest shall be deemed to have been transferred by transfer of any Bond of the 2015 Series registered on the Bond register, and the Company by not less than 10 days written notice to bondholders may fix a subsequent record date, not more than 15 days prior to the date fixed for the payment of such interest, for determination of holders entitled to payment of such interest. Such provision for establishment of a subsequent record date, however, shall in no way affect the rights of bondholders or of the Trustee consequent on any default.       Except as provided in this Section 2.01, every Bond of the 2015 Series shall be dated as provided in Section 2.05 of the Original Indenture except that upon original issuance of the Bonds of the 2015 Series, the Bonds of the 2015 Series shall be dated the date of authentication. Notwithstanding any provision in the Original Indenture to the contrary, so long as there is no existing default in the payment of interest on the Bonds of the 2015 Series, all Bonds of the 2015 Series authenticated by the Trustee between the record date for any interest payment date and such interest payment date shall be dated such interest payment date and shall bear interest from such interest payment date.       As permitted by the provisions of Section 2.10 of the Original Indenture and upon payment at the option of the Company of a sum sufficient to reimburse it for any stamp tax or other governmental charge as provided in Section 2.11 of the Original Indenture, Bonds of the 2015 Series may be exchanged for other Bonds of the 2015 Series of                                         13   different authorized denominations of like aggregate principal amount. Notwithstanding the provisions of Section 2.11 or the last sentence of the first paragraph of Section 2.12 of the Original Indenture, no further sum, other than the sum sufficient to reimburse the Company for any stamp taxes or other governmental charges, shall be required to be paid upon any exchange or replacement of Bonds of the 2015 Series or upon any transfer thereof.       The Bonds of the 2015 Series shall be nontransferable prior to maturity except upon the prior written consent of the Company or to effect transfer to any successor or assignee of the Agent if and to the extent that the Agent shall have assigned its rights under the Revolving Credit Agreement, any such transfer to be made at the principal corporate trust office of the Trustee in the City of Chicago, Illinois, upon surrender and cancellation of such Bonds of the 2015 Series, accompanied by a written instrument of transfer in a form approved by the Company, duly executed by the registered owner of such Bonds of the 2015 Series or by his duly authorized attorney, and thereupon a new Bond of the 2015 Series, for a like principal amount, will be issued to the successor of the Agent, in exchange therefor.       The Trustee hereunder shall, by virtue of its office as such Trustee, be the registrar and transfer agent of the Company for the purpose of registering and transferring Bonds of the 2015 Series. Notwithstanding any provision in the Original Indenture to the contrary, neither the Company nor the Trustee shall be required to make transfers or exchanges of Bonds of the 2015 Series for a period often days next preceding any designation of the Bonds of the 2015 Series to be redeemed and neither the Company nor the Trustee shall be required to make transfers or exchanges of any bonds designated in whole for redemption or that part of any bond designated in part for redemption.       The Bonds of the 2015 Series, limited as provided in Section 2.01 hereof to $6,000,000 in aggregate principal amount, shall be issued to the Agent to secure the Revolving Credit Obligations, including, without limitation, any future advances or protective advances made under the Revolving Credit Agreement (with the terms "future advances" and protective advances" having the meanings ascribed to such terms in 33 Maine Revised Statutes Section 505.1), to the same extent as if such future advances were made on the date hereof and with the understanding that the Revolving Credit Obligations may decrease or increase from time to time. The Bonds of the 2015 Series securing said Revolving Credit Obligations (including such future advances and such protective advances) shall have the same right, lien and privilege under the Indenture and shall be equally secured by said Indenture and shall have the proportionate interests and share in the trust estate under the Indenture as is available to and with all Bonds issued under the Indenture.       SECTION 2.02. FORM OF BONDS OF THE 2015 SERIES. The text of the Bonds of the 2015 Series and the Trustee's authentication certificate to be executed on the Bonds of said series, shall be in substantially the following forms, respectively.                                         14                       [FORM OF FACE OF BOND OF THE 2015 SERIES]  No.[  ]                                                              $__________                            MAINE PUBLIC SERVICE COMPANY                     First Mortgage and Collateral Trust Bond,                                  Series due 2015                                  Due April 1, 2015       MAINE PUBLIC SERVICE COMPANY, a Maine corporation (hereinafter sometimes called the "Company"), for value received, hereby promises to pay to____________ or registered assigns, on April 1, 2015, the sum of ______________ Dollars (the "Stated Principal Amount") or, if less, the Effective Principal Amount (as hereinafter defined) on such date, and to pay to the registered owner hereof interest on the Stated Principal Amount or, if less, on the Effective Principal Amount from the date hereof at the applicable rate of interest as set forth in, and in accordance with, the Revolving Credit Agreement (as hereinafter defined) until the payment of the principal thereof.       The Bonds of the 2015 Series, including this bond, are issued to secure the obligations of the Company under the Revolving Credit Agreement, dated as of October 8, 1987, by and among the Company, the signatory Banks thereto and The Bank of New York, as agent (in such capacity, together with its successors in such capacity, the "Agent"), as amended by Amendment No. 1, dated as of October 8, 1989, Amendment No. 2, dated as of May 11, 1992, Amendment No. 3, dated as of October 8, 1995, Amendment No. 4, dated as of March 28, 1997, Amendment No. 5, dated as of March 31, 1998, Amendment No. 6, dated as of September 24, 1999, Amendment No. 7, dated as of November 24, 1999, Amendment No. 8, dated as of May 24, 2000, Amendment No. 9, dated as of May 23, 2002, and Amendment No. 10, dated as of March 29, 2004, together with any amendments, modifications or supplements thereto, extensions, renewals, deferrals, refunding or refinancing thereof or replacements or successors therefor which may hereafter exist (the "Revolving Credit Agreement"), pursuant to which the signatory Banks thereto have each, severally, agreed, subject to the terms and conditions thereof, to make Loans (as defined therein) evidenced by a series of promissory notes, collectively the Notes (as defined therein), with the obligations and liabilities (including, but not limited to, obligations with respect to any fees, disbursements, or other expenses and indemnification) of the Company due and to become due under the Notes or otherwise in respect of the Revolving Credit Agreement, in each case, whether direct or indirect, joint or several, absolute or contingent, liquidated or unliquidated, now or hereafter existing, extended, renewed, deferred, refunded, refinanced or restructured, and whether or not from time to time decreased or extinguished and later increased, created or incurred, and including all indebtedness of the Company under any instrument now or hereafter evidencing any of the foregoing, all being hereinafter called the "Revolving Credit Obligations". The "Effective Principal Amount" of this bond as of the time of any determination, when the amount of the Revolving Credit Obligations outstanding and unpaid at such time is equal to or less then $6,000,000, is an amount equal to the                                         15   Revolving Credit Obligations outstanding and unpaid at such time multiplied by a fraction, the numerator of which is the Stated Principal Amount and the denominator of which is $6,000,000. The "Effective Principal Amount" of this bond as of the time of any determination, when the amount of the Revolving Credit Obligations outstanding and unpaid at such time is greater than $6,000,000, is an amount equal to $6,000,000 multiplied by a fraction, the numerator of which is the Stated Principal Amount and the denominator of which is $6,000,000.       The obligation of the Company to make any payment of interest on the Bonds of the 2015 Series, when such interest shall be due and payable (including, but not limited to, April 1, 2015), shall be deemed to be, and shall be, satisfied and discharged if the Company shall have paid all interest under the Revolving Credit Agreement then due and payable. The obligation of the Company to make payments with respect to the principal of the Bonds of the 2015 Series at any time shall be deemed to be, and shall be, satisfied and discharged if, at any time that such payment of principal shall be due (including, but not limited to, April 1, 2015), the Company shall have paid all amounts then due with respect to Revolving Credit Obligations.       The principal of and interest on this bond will be paid in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts at the principal office in the City of Chicago, Illinois, of the Trustee under the Indenture mentioned on the reverse hereof except that in case of the redemption as a whole at any time of the bonds of this series then outstanding, the Company may designate in the redemption notice other offices or agencies at which, at the option of the registered holder, this bond may be surrendered for redemption and payment. Interest on this bond will be payable at the Corporate Trust Division office in the City of Chicago, Illinois, of the Trustee, or, at the option of the holder hereof, at the agency of the Company in the Borough of Manhattan, City and State of New York; provided, however, that interest on this bond shall, unless otherwise directed by the registered holder hereof, be paid by check payable to the order of the registered holder entitled thereto and mailed by the Trustee by first class mail, postage prepaid, to such holder at his address as shown on the bond register for the bonds in this series.       This bond shall not become or be valid or obligatory for any purpose until the authentication certificate hereon shall have been signed by the Trustee.       The provisions of this bond are continued on the reverse hereof and such continued provisions shall for all purposes have the same effect as though fully set forth at this place.                                         16        IN WITNESS WHEREOF, MAINE PUBLIC SERVICE COMPANY has caused these presents to be executed in its name and behalf by its President or one of its Vice Presidents and its corporate seal or a facsimile thereof to be affixed hereto and attested by its Secretary or one of its Assistant Secretaries, all as of __________, 20___.                                                MAINE PUBLIC SERVICE COMPANY                                                By:                                                 --------------------------                                                        Vice President   Attest:    - ----------------------- Secretary                                         17                     [FORM OF REVERSE OF BOND OF THE 2015 SERIES]       This bond constitutes the entire series designated as Bonds of the 2015 Series, of an authorized issue of bonds of the Company, known as First Mortgage and Collateral Trust Bonds, issued under and equally secured (except in so far as any sinking fund, replacement fund or other fund established in accordance with the provisions of the Indenture hereinafter mentioned may afford additional security for the bonds of any specific series) by an Indenture of Mortgage and Deed of Trust dated as of October 1, 1945, duly executed and delivered by the Company to U.S. Bank National Association (formerly known as U.S. Bank Trust National Association and First Trust National Association, as successor to Continental Bank, National Association (formerly, Continental Illinois National Bank and Trust Company of Chicago)), as Trustee, to which Indenture of Mortgage and Deed of Trust as supplemented and modified by indentures supplemental thereto, including a Twenty-First Supplemental Indenture dated as of March 1, 2005, duly executed by the Company to said Trustee and all further indentures supplemental thereto (herein sometimes collectively called the "Indenture"). Reference is hereby made for a description of the property mortgaged and pledged as security for said bonds, the nature and extent of the security, and the rights, duties and immunities thereunder of the Trustee, the rights of the holders of said bonds and of the Trustee and of the Company in respect of such security, and the terms upon which said bonds may be issued thereunder.       This bond shall be subject to redemption as a whole, but not in part, at any time, at the option of the Company prior to maturity upon payment of the Stated Principal Amount hereof or, if less, the Effective Principal Amount thereof on the date fixed for redemption in the manner provided for the Indenture. In the event that the Loans outstanding under the Revolving Credit Agreement shall become immediately due and payable pursuant to paragraph 9 of the Revolving Credit Agreement, this bond shall be redeemed by the Company, on the date such Loans shall have become immediately due and payable, at the Stated Principal Amount hereof or, if less, the Effective Principal Amount hereof on the date fixed for redemption.       If this bond (or any portion thereof (One Dollar or a multiple thereof)) is duly called for redemption and payment duly provided for as specified in the Indenture, this bond shall cease to be entitled to the lien of the Indenture from and after the date payment is so provided for and shall cease to bear interest from and after the redemption date.       Except as may be otherwise provided in any agreement entered into pursuant to the provisions of said Twenty-First Supplemental Indenture, in the event of the selection for redemption of a portion only of the principal of this bond, payment of the redemption price will be made only (a) upon presentation of this bond for notation hereon of such payment of the portion of the principal of this bond so called for redemption, or (b) upon surrender of this bond in exchange for a bond or bonds of authorized denominations of the same series, for the unredeemed balance of the principal amount of this bond.       The Indenture contains provisions permitting the Company and the Trustee, with the consent of the holders of the not less than seventy-five percent in principal amount of                                         18   the bonds (exclusive of bonds disqualified by reason of the Company's interest therein) at the time outstanding, including, if more than one series of bonds shall be at the time outstanding, not less than sixty percent in principal amount of each series affected, to effect, by an indenture supplemental to the Indenture, modifications or alterations of the Indenture and of the rights and obligations of the Company and of the holders of the bonds; provided, however, that no such modification or alteration shall be made without the written approval or consent of the registered holder hereof which will (a) extend the maturity of this bond or reduce the rate or extend the time of payment of interest hereon or reduce the amount of the principal hereof or (b) permit the creation of any lien, not otherwise permitted, prior to or on a parity with the lien of the Indenture, or (c) reduce the aforesaid percentage of the principal amount of the bonds, the holders of which are required to approve or consent to such modification or alteration.       The Company and the Trustee and any paying agent may deem and treat the person in whose name this bond shall be registered upon the bond register for the bonds of this series as the absolute owner of such bond for the purpose of receiving payment of or on account of the principal of and interest on this bond and for all other purposes, whether or not this bond be overdue; and all such payments so made to such registered holder or upon his order shall be valid and effectual to satisfy and discharge the liability upon this bond to the extent of the sum or sums so paid and neither the Company nor the Trustee nor any paying agent shall be affected by any notice to the contrary.       This bond is nontransferable prior to its maturity except upon the prior written consent of the Company or to effect transfer to any successor or assignee of the Agent if and to the extent that the Agent shall have assigned its rights under the Revolving Credit Agreement, any such transfer to be made at the principal corporate trust office of the Trustee in the City of Chicago, Illinois, or, at the option of such registered holder hereof, at the agency of the Company in the Borough of Manhattan, City and State of New York, upon surrender of this bond for cancellation and upon payment, if the Company shall so require, of the stamp taxes and other governmental charges provided for in said Twenty-First Supplemental Indenture, accompanied by a written instrument of transfer in a form approved by the Company, duly executed by the registered owner of this bond or by his duly authorized attorney, and thereupon a new bond of this series, for a like principal amount, will be issued to the successor or assignee of the Agent in exchange therefor, as provided in the Indenture.       The registered holder of this bond at his option may surrender the same for cancellation at said office of the Trustee and receive in exchange therefor the same aggregate principal amount of registered bonds of the same series but of other authorized denominations upon payment, if the Company shall so require, of the stamp taxes and other governmental charges provided for in said Twenty-First Supplemental Indenture and subject to the terms and conditions therein set forth.       Neither the Company nor the Trustee shall be required to make transfers or exchanges of bonds of this series for a period often days next preceding any designation of bonds of said series to be redeemed, and neither the Company nor the Trustee shall be required to make transfers or exchanges of any bonds designated in whole for redemption                                         19   or that part of any bond designated in part for redemption. Subject to the provisions of said Twenty-First Supplemental Indenture, if this bond is surrendered for any transfer or exchange between the record date for any interest payment date and such interest payment date, the new bond will be dated such interest payment date.       The Indenture provides that in the event of any default in payment of the interest due on any interest payment date, such interest shall not be payable to the holder of the bond on the original record date but shall be paid to the registered holder of such bond on the subsequent record date established for payment of such defaulted interest.       If a default as defined in the Indenture shall occur, the principal of this bond may become or be declared due and payable before maturity in the manner and with the effect provided in the Indenture. The holders, however, of certain specified percentages of the bonds at the time outstanding, including in certain cases specific percentages of bonds of particular series, may in these cases, to the extent and under the conditions provided in the Indenture, waive past defaults thereunder and the consequences of such defaults.       No recourse shall be had for the payment of the principal of or the interest on this bond, or for any claim based hereon, or otherwise in respect hereof or of the Indenture, against any incorporator, stockholder, director or officer, past, present or future, as such, of the Company or of any predecessor or successor corporation, either directly or through the Company or such predecessor or successor corporation, under any constitution or statute or rule of law, or by the enforcement of any assessment or penalty, or otherwise, all such liability of incorporators, stockholders, directors and officers, as such, being waived and released by the holder and owner hereof by the acceptance of this bond and as provided in the Indenture.       This bond shall not become or be valid or obligatory for any purpose until the authentication certificate hereon shall have been manually signed by the Trustee.                                         20                   [FORM OF TRUSTEE'S AUTHENTICATION CERTIFICATE FOR                             BONDS OF THE 2015 SERIES]       This is one of the bonds, of the series designated therein, described in the within mentioned Indenture.                                                U.S. BANK NATIONAL ASSOCIATION,                                              As Trustee,                                                By:                                                  ---------------------------                                                      Authorized Officer       SECTION 2.03. DISCHARGE OF COMPANY'S OBLIGATION FOR PAYMENT. The obligation of the Company to make any payment of interest on Bonds of the 2015 Series, when such interest shall be due and payable (including, but not limited to, April 1, 2015), shall be deemed to be, and shall be, satisfied and discharged if the Company shall have paid all interest under the Revolving Credit Agreement then due and payable. The obligation of the Company to make payments with respect to the principal of Bonds of the 2015 Series at any time shall be deemed to be, and shall be, satisfied and discharged if, at any time that any such payment of principal shall be due (including, but not limited to, April 1, 2015), the Company shall have paid the Agent all amounts then due with respect to the Revolving Credit Obligations. The Trustee may conclusively presume that at any particular time, the obligations of the Company to make payments with respect to the principal of and interest on the Bonds of the 2015 Series shall have been satisfied and discharged up until such time unless and until the Trustee shall have received a notice as described in Section 12.0 1(m) of the Indenture. Upon the later of (a) the satisfaction of all of the Revolving Credit Obligations of the Company to the Agent pursuant to the Revolving Credit Agreement or (b) the termination of the Commitments under the Revolving Credit Agreement (as defined therein), all of the Bonds of the 2005 Series shall be surrendered by the Agent to the Trustee for cancellation, and upon such surrender shall be deemed fully paid.       SECTION 2.04. REDEMPTION PROVISIONS FOR THE BONDS OF THE 2015 SERIES. The Bonds of the 2015 Series shall be subject to redemption as a whole, but not in part, at any time, at the option of the Company prior to maturity upon payment of an amount equal to the aggregate outstanding principal amount of the Bonds of the 2015 Series, plus interest accrued thereon to the redemption date or, if less, the Revolving Credit Obligations outstanding and unpaid on the date fixed for redemption.       In the event that the Loans outstanding under the Revolving Credit Agreement shall become immediately due and payable pursuant to paragraph 9 thereof, all Bonds of the 2015 Series then outstanding shall be redeemed by the Company, on the date such Loans shall have become immediately due and payable, at a redemption price equal to the                                         21   aggregate outstanding principal amount of the Bonds of the 2015 Series, plus interest accrued thereon to the redemption date or, if less, the Revolving Credit Obligations outstanding and unpaid on the date fixed for redemption.       The Trustee may conclusively presume that no redemption of Bonds of the 2015 Series is required pursuant to this Section 2.04 unless and until the Trustee shall have received a written notice from the Agent as described in Section 12.01(m) of the Indenture. Said notice shall also contain a waiver of notice of such redemption by the Agent as holder of all of the Bonds of the 2015 Series then outstanding.       No notice of redemption pursuant to Section 10.02 of the Indenture need be given if the holders of all Bonds of the 2015 Series called for redemption waive notice thereof in writing and such waiver is filed with the Trustee.       SECTION 2.05. BONDHOLDERS' LIST. Notwithstanding the provisions of Section 11.02(B) of the Original Indenture, any one of the holders of the Bonds of the 2015 Series shall be entitled to make application to the Trustee for a Bondholders' list as provided for in Section 11.02.       SECTION 2.06. MUTILATED, LOST OR DESTROYED BONDS. Notwithstanding the provisions of Section 2.12 of the Original Indenture, for so long as any holder of Bonds of the 2015 Series shall be an institutional holder, an unsecured indemnity provided by such holder shall be deemed acceptable for purposes of requesting a replacement bond for a mutilated, lost or destroyed Bond of the 2015 Series.       SECTION 2.07. DURATION OF EFFECTIVENESS OF ARTICLE TWO. This Article shall be of force and effect only so long as any Bonds of the 2015 Series are outstanding.                                      ARTICLE 3                            MODIFICATION OF THE INDENTURE       SECTION 3.01. Section 15.09 of the Indenture is hereby amended by adding a new paragraph at the end of said Section which reads as follows:           "The Trustee shall, as promptly as practicable but in no event later      than the third (3rd) business day following delivery to the Trustee of a      notice described in clause A. or B. of 33 Maine Revised Statutes ("M.R.S.")      Section 505 5. (i.e. from (a) the Company to the effect that the Company is      limiting the amount of future advances to be secured by the Bonds of the      2015 Series to not less than the amount actually advanced as of the end of      the third (3rd) business day following delivery of such notice to the      Trustee or (b) a person described in clause B of said Section of M.R.S.      stating that future advances made after the end of the third (3rd) business      day following receipt of such notice by the Trustee are junior to such      person's rights in or liens upon the trust estate under the Indenture),      give to the holder of the Bonds of the 2015 Series, in the manner and to      the extent provided in Subsection C of Section 11.04 of the Indenture                                         22        (except that if the holder of the Bonds of the 2015 Series shall have      provided the Trustee with information to provide such notice by facsimile,      such notice shall be sent by facsimile), notice of the receipt of such      notice."       SECTION 3.02. Section 12.01 of the Indenture is hereby amended by adding new clause (m) thereto which reads as follows:       "(m) so long as any of the Bonds of the 2015 Series are outstanding, upon      receipt by the Trustees of a notice from the holder of the Bonds of the      2015 Series that an event of default under the Revolving Credit Agreement      has occurred and is continuing;"       SECTION 3.03. DURATION OF EFFECTIVENESS OF ARTICLE THREE. This Article shall be of force and effect only so long as any Bonds of the 2015 Series are outstanding.                                      ARTICLE 4               AUTHENTICATION AND DELIVERY OF BONDS OF THE 2015 SERIES       SECTION 4.01. Upon the execution and delivery of this Twenty-First Supplemental Indenture, Bonds of the 2015 Series in the aggregate amount of Six Million Dollars ($6,000,000) may forthwith, or from time to time thereafter, and upon compliance by the Company with the provisions of Article Five of the Indenture, be executed by the Company and delivered to the Trustee and shall thereupon be authenticated and delivered by the Trustee to or upon the written order of the Company. Additional Bonds of the 2015 Series may be executed, authenticated and delivered from time to time as permitted by the provisions of Article Five of the Original Indenture.                                      ARTICLE 5       SECTION 5.01. The Company may enter into an agreement with the holder of any registered Bond without coupons of any series providing for the payment to such holder of the principal of and the premium, if any, and interest on such Bond or any part thereof at a place other than the offices or agencies therein specified, and for the making of notation, if any, as to the principal payments on such Bond by such holder or by an agent of the Company or of the Trustee. The Trustee is authorized to approve any such agreement, and shall not be liable for any act or omission to act on the part of the Company, any such holder or any agent of the Company in connection with any such agreement.       SECTION 5.02. This Twenty-First Supplemental Indenture is executed and shall be construed as an indenture supplemental to the Original Indenture, as amended and supplemented, and shall form a part thereof, and, except as hereby supplemented, the Original Indenture, as amended and supplemented, is hereby ratified, approved and confirmed.                                         23        SECTION 5.03. The recitals contained in this Twenty-First Supplemental Indenture are made by the Company and not by the Trustee and all of the provisions contained in the Original Indenture, as amended and supplemented, in respect of the rights, privileges, immunities, powers and duties of the Trustee shall, except as hereinabove modified, be applicable in respect hereof as fully and with like effect as if set forth herein in full.       SECTION 5.04. Nothing in this Twenty-First Supplemental Indenture contained shall be deemed to abrogate, modify or contravene any provisions of the Original Indenture, as amended and supplemented, required to be included therein by any of the provisions of Section 310 to 318, inclusive, of the Trust Indenture Act of 1939, it being the intention hereof that said provisions of the Original Indenture, as amended and supplemented, shall continue in full force and effect. Unless otherwise indicated, the terms used in this Twenty-First Supplemental Indenture are intended to have the meanings given to such terms in the Original Indenture, as amended and supplemented.       SECTION 5.05. Nothing in this Twenty-First Supplemental Indenture expressed or implied is intended or shall be construed to give to any person other than the Company, the Trustee, and the holders of the Bonds issued and to be issued under the Indenture, any legal or equitable right, remedy or claim under or in respect of the Original Indenture, as amended and supplemented, or this Twenty-First Supplemental Indenture, or under any covenant, condition or provisions therein or herein or in the Bonds contained; and all such covenants, conditions and provisions are and shall be held to be for the sole and exclusive benefit of the Company, the Trustee and the holders of the Bonds issued and to be issued under the Indenture.       SECTION 5.06. The titles of Articles and any wording on the cover of this Twenty-First Supplemental Indenture are inserted for convenience only.       SECTION 5.07. All the covenants, stipulations, promises and agreements in this Twenty-First Supplemental Indenture contained made by or on behalf of the Company or of the Trustee shall inure to and bind their respective successors and assigns.       SECTION 5.08. Although this Twenty-First Supplemental Indenture is dated for convenience and for the purpose of reference as of March 1, 2005, the actual date or dates of execution by the Company and by the Trustee are as indicated by their respective acknowledgments hereto annexed.       SECTION 5.09. In order to facilitate the recording or filing of this Twenty-First Supplemental Indenture, the same may be simultaneously executed in several counterparts, each of which shall be deemed to be an original, and such counterparts shall together constitute but one and the same instrument.                                         24        IN WITNESS WHEREOF, MAINE PUBLIC SERVICE COMPANY has caused this Twenty-First Supplemental Indenture to be signed in its corporate name and behalf by its President or one of its Vice Presidents and its corporate seal to be hereunto affixed and attested by its Secretary, or one of its Assistant Secretaries; and U.S. BANK NATIONAL ASSOCIATION in token of its acceptance of the trust hereby created has caused this Twenty-First Supplemental Indenture to be signed in its corporate name and behalf by its President or one of its Vice Presidents or one of its Second Vice Presidents, all as of the day and year first above written.                                           MAINE PUBLIC SERVICE COMPANY                                           ------------------------------------                                         Name:  Kurt A. Tornquist                                         Title: Senior Vice President, Chief                                                Financial Officer and Treasurer  CORPORATE SEAL   Attest:   - -------------------------- Name:  Patrick C. Cannon Title: Secretary   Signed, sealed and delivered by MAINE PUBLIC SERVICE COMPANY in the presence of:   - ------------------------------- Susan A. Brown   - ------------------------------- Tammy L. Nadeau                                         25                                           U.S. BANK NATIONAL ASSOCIATION                                           ------------------------------                                         Name: Richard Prokosch                                         Title: Vice President   Signed and delivered by U.S. BANK NATIONAL ASSOCIATION in the presence of:   - -------------------------------------------- Lori-Anne Rosenberg, Vice President   - --------------------------------------------- Benjamin J. Krueger, Assistant Vice President                                         26   STATE OF MAINE       )                      ss.: COUNTY OF AROOSTOOK  )                                                                    March 28, 2005       Then personally appeared the above-named Kurt A. Tornquist, Senior Vice President, Chief Financial Officer and Treasurer of Maine Public Service Company, and acknowledged the foregoing instrument to be his free act and deed in his said capacity and the free act and deed of said corporation.       Before me,                                             --------------------------------------                                           Notary Public    STATE OF MINNESOTA   )                      ss.: COUNTY OF RAMSEY     )                                                                    March 28, 2005       Then personally appeared the above-named Richard Prokosch, a Vice President of U.S. Bank National Association and acknowledged the foregoing instrument to be his free act and deed in his said capacity and the free act and deed of said corporation.       Before me,                                             --------------------------------------                                           Notary Public    EX-10.Y 3 a2168719zex-10_y.txt EXHIBIT 10.Y                                                                        Exhibit 10.y                            MAINE & MARITIMES CORPORATION                              2002 STOCK OPTION PLAN       1.   PURPOSE. The purpose of the Plan is to provide designated Employees of Maine & Maritimes Corporation and its Subsidiaries with stock ownership opportunities and additional incentives to contribute to the success of the Company, and to attract, reward and retain Employees of outstanding ability.       2.   DEFINITIONS. As used in this Plan, the following words and phrases wherever capitalized shall have the following meanings unless the context clearly indicates that a different meaning is intended:          (a)    "Board" shall mean the Board of Directors of the Company.          (b)    "Code" shall mean the Internal Revenue Code of 1986, as from time      to time amended.          (c)    "Committee" shall mean the committee described in Section 3,      which shall have the authority to control and manage the administration of      the Plan.          (d)    "Common Stock" shall mean common stock, par value, $7.00 per      share, of the Company.          (e)    "Company" shall mean Maine & Maritimes Corporation.          (f)    "Disability" shall mean an Employee's inability to engage in any      substantial gainful activity by reason of any medically determinable      physical or mental impairment which can be expected to result in death or      which has lasted or can be expected to last for a continuous period of not      less than twelve (12) months. An Employee shall not be considered disabled      unless he or she furnishes proof of the existence of such Disability in      such form and manner, and at such times, as the Committee may require.          (g)    "Employee" shall mean any person who is employed by the Company      or any Parent or Subsidiary.          (h)    "Fair Market Value" shall mean, with respect to Shares, the      closing price of Shares as reported on the American Stock Exchange or such      other principal exchange or quotation network on which the Shares are      traded; provided, however, that the Fair Market Value of the Shares to be      issued under any Incentive Stock Option shall be determined by the      Committee in accordance with the applicable requirements of subsections      422(b)(4) and         (c)(7) of the Code and the regulations issued thereunder.          (i)    "Incentive Stock Option" shall mean an option granted to an      individual for any reason connected with his or her employment by a      corporation, if granted by the employer corporation or its Parent or      Subsidiary corporation, to purchase stock of any of such corporations, but      only if such option meets the requirements of Section 422 of the Code.          (j)    "Nonqualified Stock Option" shall mean an Option granted under      the Plan that is not an Incentive Stock Option.          (k)    "Option" shall mean a right granted under the Plan to purchase      Shares.          (l)    "Option Agreement" shall mean a written instrument that specifies      the terms, conditions and restrictions of an Option and incorporates the      applicable provisions of the Plan and such additional provisions not      inconsistent therewith as the Committee shall determine.          (m)    "Optionee" shall mean an Employee who is granted an Option.          (n)    "Parent" shall mean, for purposes of the Incentive Stock Option      provisions of the Plan, a parent company within the meaning of subsections      424(e) and (g) of the Code.          (o)    "Plan" shall mean the Maine & Maritimes Corporation 2002 Stock      Option Plan.          (p)    "Share" shall mean a share of Common Stock of the Company, as      adjusted in accordance with subsection 4(b).          (q)    "Subsidiary" shall mean, for purposes of the Incentive Stock      Option provisions of the Plan, a subsidiary Company within the meaning of      subsections 424(f) and (g) of the Code, and for all other purposes of the      Plan, a Company of which Maine & Maritimes Corporation owns directly or      indirectly at least fifty percent (50%) of the total combined voting power      of all classes of stock entitled to vote.          (r)    "Treasury Shares" shall mean Shares that have been issued and      sub-sequently acquired by the Company, but have not been canceled or      retired.       3.   ADMINISTRATION.            (a) COMMITTEE MEMBERS. The Plan shall be administered by the members      of the Performance & Compensation Committee of the Board who are not                                          2        employees of the Company or any Parent or Subsidiary and who otherwise      qualify as "non-employee directors" within the meaning of Rule 16b-3 under      the Securities Exchange Act of 1934, as amended, and as "outside directors"      within the meaning of Code Section 162(m), as amended, and the regulations      thereunder. A majority of the members of the Committee shall constitute a      quorum, and the action of a majority of the members present at any meeting      at which a quorum is present shall be deemed the action of the Committee.      Any member may participate in a meeting of the Committee by means of a      conference telephone or similar communications equipment by means of which      all persons participating in the meeting can hear each other. Further, any      action of the Committee may be taken without a meeting if all of the      members of the Committee sign written consents, setting forth the action      taken or to be taken, at any time before or after the intended effective      date of such action.            (b) POWERS. The Committee shall have the complete authority and      discretion to administer the Plan, including the following powers which      shall be exercised in accordance with the terms of the Plan:                 (i)    to determine the Employees to whom Options shall be           granted;                 (ii)   to determine the time or times at which Options shall be           granted,                 (iii)  to determine the type or types of Options to be granted;                 (iv)   to determine the terms, conditions and restrictions of           each Option;                 (v)    to make adjustments in accordance with subsection 4(b);                 (vi)   to prescribe, amend and rescind rules and regulations           relating to the Plan;                 (vii)  to interpret the Plan and make all other determinations           deemed necessary or advisable for the administration of the Plan; and                 (viii) to delegate to any officer of the Company the authority           to act for the Committee in such matters as the Committee may specify.            Each determination, interpretation or other action taken pursuant to      the Plan by the Committee (or an officer of the Company acting under a      delegation of authority by the Committee) shall be final and conclusive for      all purposes and binding upon all persons, including the Company, its      Subsidiaries, the Board, the Committee, the Employees and their respective      successors in interest.                                          3             (c) SIGNATURES. The Committee may authorize any member thereof to      execute all instruments required in the administration of the Plan, and      such instruments may be executed by electronic or facsimile signature.       4.   STOCK SUBJECT TO THE PLAN.            (a) LIMITATIONS. Subject to the provisions of subsection (b), the      maximum number of Shares available for grant under the Plan shall be      150,000 Shares, provided that the maximum aggregate number of Shares which      may be issued under the Plan pursuant to Incentive Stock Options shall be      120,000 Shares. Any Shares issued hereunder may consist, in whole or in      part, of authorized and unissued Shares or Treasury Shares.            In the event that any Shares subject to an Option are forfeited, such      Shares shall, unless the Plan has been terminated, become available again      for grant and shall not be counted again for purposes of the foregoing      share limitation. In the event that any Option granted under the Plan      expires or terminates without the issuance of Shares or payment of other      consideration in lieu of such Shares, the unissued Shares subject to such      Option shall, unless the Plan has been terminated, become available for      other Options.            In the event that an Employee transfers stock issued by the Company in      full or partial payment of the option price of an Option granted under the      Plan, only the difference between (i) the number of Shares issued upon      exercise of the Option and (ii) the number of Shares transferred in payment      of the option price shall be counted for purposes of the foregoing      limitation on the maximum number of Shares available for grant under the      Plan. Notwithstanding the foregoing, the total number of Shares issued      pursuant to the exercise of an Incentive Stock Option shall be counted for      purposes of the foregoing special limitation on Shares issued pursuant to      Incentive Stock Options.            (b) ADJUSTMENTS. If the number of Shares outstanding changes as a      result of a stock split or stock dividend, the Committee shall      proportionately adjust: (i) the maximum number of Shares available for      grant and the maximum aggregate number of Shares which may be issued under      Incentive Stock Options; (ii) the number of Shares to be issued under      Options; and (iii) the option price.            In the event of a merger or consolidation in which the Company is the      surviving company, or the acquisition by the Company of property or stock      of another company, or any reorganization, the Committee shall      appropriately adjust: (i) the number and class of Shares to be issued under      Options; and (ii) the option price. Any adjustments under this subsection      (b) affecting Incentive Stock Options shall be made so as to comply with      the applicable provisions of Sections 422 and 424 of the Code.       5.   ELIGIBILITY.                                          4        The Committee may, from time to time, designate Employees to whom Options may be granted in accordance with the terms of the Plan.       6.   GRANTING OF OPTIONS.       The Committee may grant more than one Option and more than one type of Option to any Employee; provided that no Incentive Stock Option shall be granted to any Employee who, at the time the Option is granted, owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary. For purposes of applying the percentage limitation of the preceding sentence, the ownership principles of subsection 424(d) of the Code shall apply. The terms and conditions of Options need not be the same with respect to each Employee. An Employee who has been granted an Option may, if he or she is otherwise eligible, be granted additional Options before the exercising of such prior Option.       In no event may an Employee during any five (5) year period be granted Options with respect to more than one hundred thousand (100,000) Shares, subject to adjustment as provided in Section 4. The Committee may condition the grant of an Option and the exercise of an Option on the attainment of performance goals. Performance goals may be expressed in terms of earnings per Share, stock price, total shareholder return, return on equity, or any similar quantifiable measures.       7.   OPTIONS.            (a)     OPTION AGREEMENT. Each Option granted by the Committee shall      be evidenced by an Option Agreement, specifying the Option price, the      number of Shares subject to the Option and such other terms, conditions and      restrictions as the Committee shall determine. In addition, each Option      shall be clearly identified as either an Incentive Stock Option or a      Nonqualified Stock Option.            (b)     TERM OF OPTION. The term of each Option shall be set forth in      the Option Agreement, but in no event shall an Option be exercisable after      the expiration of ten (10) years from the date such Option is granted.            (c)     OPTION PRICE. The option price for Shares to be issued under      any Incentive Stock Option shall not be less than one hundred percent      (100%) of the Fair Market Value of such Shares on the date the Option is      granted.            (d)     NONTRANSFERABILITY OF OPTIONS. Options may not be sold,      pledged, assigned, hypothecated, transferred or disposed of in any manner,      other than by will or by the laws of descent and distribution, and may be      exercised during the lifetime of the Optionee only by such Optionee.      Notwithstanding the preceding sentence to the contrary, the Committee may      permit the transfer of Nonqualified Stock Options to family members or      family trusts (and exercise by the transferee) to the extent Rule 16b-3      under the Securities Exchange Act of 1934 permits such                                          5        transfers.            (e)     MANNER OF EXERCISE:, An Option granted under the Plan shall be      exercisable at such times and under such conditions as shall be permissible      under the terms of the Plan and of the Option Agreement. An Option shall be      deemed to be exercised when the Optionee gives written or electronic notice      of such exercise to the Company in accordance with the terms of the Option      Agreement and the Company receives full payment for the Shares with respect      to which the Option is exercised. Payment shall be made by check payable to      the Company, delivery of stock issued by the Company or a combination      thereof, subject to the terms of the Option Agreement.            Stock transferred to the Company in full or partial payment for Shares      shall be valued at Fair Market Value on the date that such transfer is      recorded upon the books of the Company, following actual or constructive      delivery of such stock to the Company in a form suitable for transfer.            (f)     TERMINATION OF EMPLOYMENT. In the event an Optionee ceases to      be employed by the Company or any Parent or Subsidiary, and is no longer      employed by any of them, for any reason other than death or Disability,      such Optionee may, subject to the terms of the Option Agreement, exercise      an Option at any time prior to the expiration date of such Option (or, in      the case of an Incentive Stock Option, within three (3) months after the      date the Optionee's employment ceases, whichever is earlier), but only to      the extent the Optionee had the right to exercise such Option at the date      his or her employment ceased. An Optionee's employment shall be deemed      terminated on the date such Optionee's employer ceases to be a Parent or      Subsidiary.            (g)     DISABLED OPTIONEE. In the event an Optionee who is disabled      ceases to be employed by the Company or any Parent or Subsidiary by reason      of such Disability, and is no longer employed by any of them, such Optionee      may, subject to the terms of the Option Agreement, exercise an Option at      any time prior to the expiration date of such Option (or, in the case of an      Incentive Stock Option, within one (1) year after the date such Optionee's      employment ceases, whichever is earlier), but only to the extent the      Optionee had the right to exercise such Option at the date his or her      employment ceased.            (h)     DEATH OF OPTIONEE. In the event an Optionee dies while in the      employ of the Company or any Parent or Subsidiary, then to the extent that      the Optionee would have been entitled to exercise an Option immediately      prior to his or her death, such Option may be exercised by the estate of      such Optionee or by such person or persons to whom such Optionee's rights      pass by will or by the laws of descent and distribution at any time prior      to the expiration date of such Option or within one (1) year after the      death of the Optionee, whichever is earlier.       8.   CANCELLATION OF OPTIONS. Notwithstanding any provision of the Plan to the contrary, the Committee may cancel any Option, whether vested or not, if at any time an                                          6   Employee is not in compliance with the applicable terms of the Option Agreement or in the event of a serious breach of conduct, including but not limited to failure to comply with the terms of an agreement not to compete with the Company or disclose confidential information.       9.   CHANGE IN CONTROL. Upon the occurrence of a Change in Control Event, all then outstanding Options not previously exercisable shall immediately become fully exercisable. For purposes of this Section, each of the following events-shall constitute a Change in Control Event:            (a)     Any person acquires beneficial ownership of Company securities      and is or thereby becomes a beneficial owner of securities entitling such      person to exercise twenty-five percent (25%) or more of the combined voting      power of the Company's then outstanding stock.            For purposes of this Plan, "beneficial ownership" shall be determined      in accordance with Regulation 13D under the Securities Exchange Act of      1934, or any similar successor regulation or rule; and the term "person"      shall include any natural person, corporation, partnership, trust or      association, or any group or combination thereof, whose ownership of      Company securities would be required to be reported under such Regulation      13D, or any similar successor regulation or rule.            (b)     The Company ceases to be a reporting company pursuant to      Section 13(a) of the Securities Exchange Act of 1934 or any similar      successor provision.            (c)     The number of the Company's Outside Directors, as defined      herein, is decreased by more than fifty percent (50%) in any twenty-five      (25) month period or the number of the Company's directors is increased      such that. the Outside Directors constitute less than a majority of the      Board.            For purposes of this Plan, an "Outside Director" as of a given date      shall mean a member of the Company's board of directors who has been a      director of the Company throughout the six (6) months prior to such date      and who has not been an employee of the Company at any time during such six      (6) month period.            (d)     Within any twenty-five (25) month period, individuals who were      Outside Directors at the beginning of such period, together with any other      Outside Directors first elected as directors of the Company pursuant to      nominations approved or ratified by at least two-thirds (2/3) of the      Outside Directors in office immediately prior to such respective elections,      cease to constitute a majority of the board of directors of the Company.            (e)     The Company is subject to a change in control which would      require reporting in response to Item 1 of Form 8-K under Regulation 13a-11      promulgated under the Securities Exchange Act of 1934, as, amended, or any                                          7        similar successor statute or rule, whether or not the Company is a      reporting company under such Act.            (f)     The Company's stockholders approve:                    (i)    any consolidation or merger of the Company in which the           Company is not the continuing or surviving corporation or pursuant to           which shares of Company common stock would be converted into cash,           securities or other property, other than a merger or consolidation of           the Company in which the holders of the Company's common stock           immediately prior to the merger or consolidation have substantially           the same proportionate ownership and voting control of the surviving           corporation immediately after the merger or consolidation; or                    (ii)   any sale, lease, exchange, liquidation or other           transfer (in one transaction or a series of transactions) of all or           substantially all of the assets of the Company.       Notwithstanding subparagraphs (i) and (ii) above, the term "Change in      Control Event" shall not include a consolidation, merger, or other      reorganization if upon consummation of such transaction all of the      outstanding voting stock of the Company is owned, directly or indirectly,      by a holding company, and the holders of the Company's common stock      immediately prior to the transaction have substantially the same      proportionate ownership and voting control of the holding company.       10.  AMENDMENT AND TERMINATION.            (a)     AMENDMENT. The Committee, without further approval of the      shareholders of the Company, may amend the Plan from time to time in such      respects as the Committee may deem advisable, provided that no amendment      shall become effective prior to ratification by the Board and approval by      shareholders if such amendment:                    (i)    increases the maximum aggregate number of shares which           may be issued under the Plan or issued pursuant to Incentive Stock           Options;                    (ii)   increases the maximum number of Shares that may be           granted to an Employee;                    (iii)  increases the maximum term for which an Option may be           granted;                    (iv)   reduces the minimum exercise price at which an Option           may be granted; or                                          8                     (v)    provides for the grant of an Option to persons who are           not employees.            (b) TERMINATION. The Board, without further approval of the      shareholders of the Company, may at any time terminate the Plan.            (c) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or      termination of the Plan shall not adversely affect Options already granted      without the written consent of the affected individual, and such Options      shall remain in full force and effect as if the Plan had not been amended      or terminated.       11.  EFFECTIVE DATE OF PLAN., The Plan shall be effective upon its adoption by the Board or its approval by the shareholders of the Company, whichever is later.       12.  TERM OF PLAN. No Option shall be granted pursuant to the Plan after ten (10) years from the earlier of the date the Plan is adopted or the date the Plan is approved by shareholders. Options granted prior to the end of such period may extend beyond such period, except as otherwise provided herein or in the Option Agreement.       13.  ARBITRATION. Arbitration as hereinafter provided shall be the exclusive remedy for resolving any claim or dispute arising under the Plan.            (a)  Any arbitration under the Plan, and any related judicial      proceeding, shall be initiated and shall proceed pursuant to the provisions      of the Maine Uniform Arbitration Act (the "Act") and, to the extent      consistent with the Act, the then prevailing rules of the American      Arbitration Association (the "Association") for labor and employment      contracts. To initiate arbitration, demand shall be given in writing to the      Association and the other party no later than one year after the claim      arises. Any claim for which such demand is not made within one year after      the claim arises shall be barred and discharged absolutely.            (b)  Any arbitration under the Plan shall be before a single      arbitrator, and an award in such arbitration may include only damages which      the arbitrator determines to be due under express provisions of the Plan      and applicable Option Agreement. The arbitrator shall have no authority to      award any other damages, including without limitation, consequential and      exemplary damages. Any award in arbitration shall be subject to enforcement      and appeal pursuant to the Act.            (c)  The Company and the Employee shall share equally all costs and      fees charged by the Association or the arbitrator.       14.  MISCELLANEOUS.            (a)  OPTION AGREEMENT. Upon executing an Option Agreement, an                                         9        Employee shall be bound by such Agreement and by the applicable provisions      of the Plan.            (b)  EMPLOYMENT. The granting of an Option to an Employee shall not      give the Employee any right to be retained in the employ of the Company or      any Parent or Subsidiary, nor shall the existence of the Plan impair the      right of the Company or any Parent or Subsidiary to discharge or otherwise      deal with an Employee.            (c)  TAX WITHHOLDING. The Company shall be authorized to withhold from      any Option granted, or payment due, under the Plan the amount of any taxes      required by law to be withheld because of such Option or payment and to      take such other action as may be necessary in the opinion of the Company to      satisfy all obligations for the payment of such taxes.            (d)  GOVERNING LAW. The Plan is established under and shall be      construed according to the laws of the State of Maine.            (e)  HEADINGS. Paragraph headings are included solely for convenience      and shall in no event affect, or be used in connection with, the      interpretation of the Plan.                                         10    EX-10.Z 4 a2168719zex-10_z.txt EXHIBIT 10.Z                                                                        Exhibit 10.z                MAINE & MARITIMES CORPORATION 2002 STOCK OPTION PLAN                              STOCK OPTION AGREEMENT       AGREEMENT, made this 1st day of June, 2002, between MAINE & MARITIMES CORPORATION, ("Company") and ("Employee"),       1.   GRANT OF OPTIONS. The company hereby grants Employee (a) an incentive stock option (ISO") to purchase shares of its common stock ("Shares") under its 2002 Stock Option Plan ("Plan"), a copy of which is attached hereto as Appendix A, and (b) a nonqualified stock option ("NSO") to purchase Sales under the Plan.       2.   OPTION PRICE. THE OPTION PRICE IS $       per share.       3.   NONTRANSFERABILITY. These options are subject to the transfer restrictions set forth in Section 7(d) of the Plan.       4.   EXERCISE OF OPTION. Employee may exercise these options only by completing and delivering to the Company a written notice, in such manner and on such form as the Company may prescribe, and by tendering to the Company full payment for the Shares to be acquired. Payment by transfer of stock shall be permitted only if transferring previously acquired Shares will not, in the judgment of the Company's accountants, result in an expense being reflected in the financial statements of the Company. The value of stock transferred to the Company in payment of the option price shall be 100% of the fair market value of such stock at the close of business on the date such transfer is recorded on the books of the Company, following actual or constructive delivery of the stock to the Company in a form suitable for transfer.       5.   EXERCISE RESTRICTIONS/ACCELERATION.            (a)  HOLDING PERIODS. Except as hereinafter provided, these options      shall become exercisable over a seven-year period beginning June 1, 2005,      as set forth in the following table:                                   Total Number of       Year Beginning    Shares that May be Purchased    ISO Shares    NSO Shares                       6/1/2005                  7,500                                                          --------      --------          6/1/2006                  7,500*                        *             *                                                          --------      --------          6/1/2007                  7,500*                        *             *                                                          --------      --------          6/1/2008                  7,500*                        *             *                                                          --------      --------          6/1/2009                  7,500*                        *             *                                                          --------      --------          6/1/2010                  7,500*                        *             *                                                          --------      --------          6/1/2011                  7,500*                        *             *                                                          --------      --------        *This number shall be increased by carrying forward the aggregate number of      shares not purchased from the prior year.              (b)  ANNUAL DOLLAR LIMIT ON EXERCISE. To the extent that the aggregate      fair market value of stock with respect to which incentive stock options      are exercisable for the first time by Employee during any calendar year      (under all plans of the corporation employing Employee and its parent and      subsidiaries) exceeds $100,000, such options shall not be treated as      incentive stock options.            (c)  MINIMUM EXERCISE/WHOLE SHARES. Employee may not exercise an      option to purchase fewer than 50 Shares, unless by such exercise the      Employee acquires all Shares that may be purchased under the option on the      exercise date, or to purchase fractional Shares.            (d)  ACCELERATION OF EXERCISE. These options shall immediately become      exercisable in full in the event of a "change in control," as defined in      Section 9 of the Plan.       6.   SHAREHOLDER RIGHTS/STOCK CERTIFICATES. Neither the Employee nor his or her personal representative, heir or legatee shall be a shareholder of the Company or have any rights or privileges of a shareholder by reason of this Agreement until the date that Shares purchased under an option are issued, as recorded on the books of the Company. In the event a stock certificate evidencing such Shares is to be issued, the Company shall personally deliver or mail such certificate to the Employee as soon as practicable after the exercise date.       7.   TERM OF OPTIONS. This Agreement shall terminate and these options, to the extent they have not been exercised, shall expire May 30, 2012. In the event of Employee's earlier termination of employment, disability or death, the term of the option will be determined in accordance with Section 7(f), (g) or (h) of the Plan, whichever is applicable, and this Section 7. In the event of Employee's termination of employment for any reason other than death or disability, these options shall expire on the earlier of (i) May 30, 2012, (ii) 3 months after employment ceases. In the event of Employee's termination of employment by reason of death or disability, these options shall expire on the earlier of (i) May 30, 2012, (ii) or one year after employment ceases.       8.   ADJUSTMENTS TO AWARD. The number of Shares subject to these options and the option price are subject to adjustment pursuant to Section 4(b) of the Plan.       9.   ADMINISTRATION. The members of the Executive Compensation Committee of the Company's Board of Directors who are not employees of the Company or any of its subsidiaries ("Committee") shall have the responsibility of construing and interpreting this Agreement and the Plan. The determinations and conclusions of the Committee shall be binding on the parties hereto.       10.  CHANGES IN LAW. Employee shall be subject to any rules adopted by the Committee to comply with changes in the laws and regulations relating to the Plan.         11.  MISCELLANEOUS.            (a)  EMPLOYMENT. This Agreement does not give the Employee any right      to be retained in the employ of the Company or any of its subsidiaries.            (b)  PLAN PROVISIONS INCORPORATED BY REFERENCE. All of the applicable      terms and restrictions of the Plan are hereby incorporated by reference and      shall have the same force and effect as if they were separately restated      herein.            (c)  AMENDMENT. This Agreement may be amended only in writing by      mutual agreement of the parties.            (d)  GOVERNING LAW. This Agreement shall be construed and enforced in      accordance with Maine law.            (e)  SEVERABILITY. In the event that any provision of this Agreement      shall be held invalid, it shall not affect the validity of the remainder of      the Agreement.            (f)  ENTIRE AGREEMENT. This Agreement contains the entire      understanding of the parties and all prior representations, promises or      statements are merged herein.                                                     MAINE & MARITIMES CORPORATION                                                      By                                                       --------------------------                                                       Its Executive Compensation                                                       committee Chairperson                                                         --------------------------                                                       Employee             Persons who have received the above Stock Option Agreement:              Individual           Shares      Date           ----------           ------      ----                        J. Nicholas Bayne     5,250    6/1/2002           J. Nicholas Bayne     5,250    6/1/2003           J. Nicholas Bayne     5,250    6/1/2004           J. Nicholas Bayne     5,250    6/1/2005     EX-10.AA 5 a2168719zex-10_aa.txt EXHIBIT 10.AA                                                                       Exhibit 10.aa                            MAINE PUBLIC SERVICE COMPANY                            DEFERRED COMPENSATION PLAN                               FOR OUTSIDE DIRECTOR                                    TABLE OF CONTENTS    1.   Purpose...................................................................1  2.   Definitions...............................................................1  3.   Deferred Fees.............................................................2       (a)     Election..........................................................2      (b)     Deferral Account .................................................2      (c)     Distribution to Director..........................................3      (d)     Distribution to Beneficiary.......................................3  4.   Administration............................................................3  5.   Miscellaneous.............................................................4       (a) Continued Service as a Director.......................................4      (b) Unsecured Creditor Status.............................................4      (c) Assignment............................................................4      (d) Designation of Beneficiary............................................4      (e) Acceleration by Committee.............................................4      (f) Amendment and Termination.............................................5      (g) Governing Law.........................................................5      (h) Effective Date of Plan................................................5                              MAINE PUBLIC SERVICE COMPANY                 DEFERRED COMPENSATION PLAN FOR OUTSIDE DIRECTORS       1.   PURPOSE. The purpose of this Plan is to provide each non-employee director ("Outside Director") of Maine Public Service Company ("Company") with an opportunity to defer the Director's retainer (and other fees) and have the deferred amounts treated as invested in Maine Public Service Company common stock or five-year U.S. Treasury notes.       2.   DEFINITIONS. As used in this Plan, the following words and phrases wherever capitalized shall have the following meanings unless the context clearly indicates that a different meaning is intended:            (a)  "Annual Retainer" shall mean the cash retainer for any calendar      year payable to an Outside Director for service on the Board and shall not      include meeting fees, committee chairperson retainers or consulting fees.            (b)  "Board" shall mean the Board of Directors of the Company.            (c)  "Committee" shall mean the committee appointed pursuant to      Section 7 to administer the Plan.            (d)  "Common Stock" shall mean common stock of the Company.            (e)  "Company" shall mean Maine Public Service Company.            (f)  "Deferral Account" shall mean the account established pursuant to      Section 3(b).            (g)  "Director" or "Outside Director" shall mean a non-employee      director of the Company.            (h)  "Fair Market Value" shall mean, with respect to Common Stock, the      closing price as reported on the American Stock Exchange.            (i)  "Fees" shall mean the cash retainer, meeting fees, and committee      chairperson retainer payable to an Outside Director for service on the      Board.            (j)  "Plan" shall mean the Maine Public Service Company Deferred      Compensation Plan for Outside Directors.            (k)  "Share" shall mean a share of Common Stock.         3.   DEFERRED FEES. Each Outside Director may elect to defer all or any portion of his or her Fees in accordance with the terms of this Section 3.            (a)  ELECTION. An election to defer Fees may be made at any time, but      not more frequently than once each calendar year, and shall be effective      only with respect to Fees payable for services to be performed after the      date of the election. Such election shall be made by executing and      delivering to the Committee a deferred compensation agreement. The Director      shall designate in the deferred compensation agreement whether the Fees      deferred are to be treated, solely for purposes of valuing the amounts      deferred, as invested in five-year U.S. Treasury notes or Common Stock.            A deferral election may not be modified. A Director may terminate a      deferral election at any time by delivering a written notice of termination      to the Committee. Such notice shall specify the effective date, and      deferrals shall cease as soon as practicable thereafter. A termination      shall not be effective with regard to amounts previously deferred.            (b)  DEFERRAL ACCOUNT. The Company shall establish an account for each      Director who defers Fees under the Plan and, if the Director has designated      U.S. Treasury notes as the deemed investment for the amounts deferred,      shall adjust the account as follows:                 (i)    At the end of each calendar month in which Fees deferred           would otherwise be payable, credit the account with the amount           deferred for such month; and                 (ii)   As of the first day of each such month:                      (A)    Debit the account by the amount, if any, paid to the                Director or his or her beneficiary during the preceding calendar                month in accordance with the terms hereof; and                      (B)    Credit the account with interest on the balance as of                the first day of the preceding month, at the rate paid on                five-year U.S. Treasury notes on the first day of the calendar                year in which the interest is to credited, or at such other rate                as is prescribed in the deferred compensation agreement.            If a Director has designated Common Stock as the deemed investment for      the Fees deferred, at the end of each calendar month for which such Fees      would otherwise be payable, the Company shall credit the account with the      number of Shares that could have been purchased with the amounts deferred,      at the Fair Market Value of a Share on the day (or days) the Fees would      have been paid in the absence of a deferral election. Further, at the end      of each calendar month during which a dividend is paid, the Company shall      credit the account with the number of Shares that could have been purchased      with the dividend, at the Fair Market Value of a Share on the dividend      payment date, based on the number of Shares credited to such account on the      dividend record date. Thereafter the Company shall appropriately adjust the      number of Shares to reflect any stock split or stock dividend. As of                                          2        the first day of each calendar month, the Company shall debit an account      deemed invested in Common Stock as provided in subsection (ii)(A) above.            The Committee shall provide each Director with an account statement at      least annually.            (c)  DISTRIBUTION TO DIRECTOR. The amount credited to the Deferral      Account of a Director shall be paid to him or her in a lump sum,      substantially equal consecutive monthly installments over a period not to      exceed ten (10) years, or in such other form as the Committee may permit.      Each such Director shall elect the manner and time of payment in the first      deferred compensation agreement he or she executes, and such election shall      apply to any subsequent deferred compensation agreement the Director      executes.            Except as provided in Section 5(e), payment shall not be made or      commence before the first day of the calendar month following the date the      Director ceases to serve on the Board, unless otherwise provided in the      deferred compensation agreement.            (d)  DISTRIBUTION TO BENEFICIARY. The amount credited to the Deferral      Account of a Director, at the time of his or her death, shall be paid to      his or her designated beneficiary in a lump sum, substantially equal      consecutive monthly installments over a period not to exceed ten (10)      years, or in such other form as is permitted by the Committee. If payment      commenced in accordance with Section 3(c) prior to the Director's death,      payment shall continue in accordance with the form of payment then in-      effect. If payment had not commenced in accordance with Section 3(c),      except as provided in Section 5(e), payment shall be made or commence as      soon as practicable following the date of death. Each such Director shall      elect the manner in which payment shall be made to his or her designated      beneficiary in the first deferred compensation agreement he or she      executes. Such election shall apply to all subsequent deferred compensation      agreements executed by the Director unless modified in a subsequent      agreement.       4.   ADMINISTRATION. The Plan shall be administered by a Committee, appointed by the Executive Compensation Committee of the Board, of at least three (3) persons who are not current or former members of the Board. A majority of the Committee shall constitute a quorum, and an action of the majority present at any meeting shall be deemed the action of the Committee. Further, any action of the Committee may be taken without a meeting if all members of the Committee sign written consents setting forth the action taken or to be taken, at any time before or after the intended effective date of such action. Any member of the Committee may participate in a meeting of the Committee by means of a conference telephone or similar communications equipment enabling all persons participating in the meeting to hear each other. The Committee may authorize any member thereof to execute all instruments required in the administration of the Plan, and such instruments may be executed by facsimile signature.       The Committee may delegate to any member or members of the Committee or to any employee or employees of the Company the authority to perform any ministerial act in connection with the administration of the Plan.                                          3        The Committee shall have the complete authority to control and manage the operation and administration of the Plan and the discretion to construe Plan provisions. Subject to the provisions of the Plan, the Committee may from time to time establish rules for the administration and interpretation of the Plan. The final determination of the Committee as to any disputed questions shall be conclusive. All decisions and interpretations of the Committee in administering the Plan shall be made in a uniform and nondiscriminatory manner.       The Company shall indemnify and hold harmless each member of the Committee against all expenses and liabilities arising out of his or her acts or omissions with respect to the Plan, provided such member would be entitled to indemnification pursuant to the bylaws of the Company.       5.   MISCELLANEOUS.            (a)  CONTINUED SERVICE AS A DIRECTOR. The Plan shall not limit or      otherwise affect the right of the Board or the Company's shareholders to      terminate the service of a Director.            (b)  UNSECURED CREDITOR STATUS. The Plan shall not be construed to      create or require the Company to create a trust of any kind to fund the      amounts payable hereunder. To the extent a Director or other person      acquires a right to receive payments from the Company in accordance with      the Plan, such right shall be no greater than the right of any unsecured      general creditor of the Company.            (c)  ASSIGNMENT. The right of any Director or any beneficiary to      payments under the Plan shall not be subject to alienation, assignment,      garnishment, attachment, execution or levy of any kind, and any attempt to      cause such amounts to be so subjected shall not be recognized by the      Company.            (d)  DESIGNATION OF BENEFICIARY. Each Director may from time to time,      by completing and signing a form furnished by the Committee, designate any      person or persons (who may be designated concurrently, contingently or      successively), the Director's estate or any trust or trusts created by the      Director to receive amounts which are payable under this Plan to the      Director's designated beneficiary or beneficiaries. Each beneficiary      designation shall revoke all prior designations and shall be effective only      when filed in writing with the Committee. If a Director fails to designate      a beneficiary or if a beneficiary dies before the date of such Director's      death and no contingent beneficiary has been designated, then the amounts      payable hereunder shall be paid to his or her estate or other successor in      interest. If payment of benefits to a beneficiary commences and such      beneficiary dies before all amounts to which such beneficiary is entitled      have been paid, the remaining benefits shall be paid to the successive      beneficiary or beneficiaries, if any, designated by the Director, otherwise      to the beneficiary's estate or other successor in interest.            (e)  ACCELERATION BY COMMITTEE. In the event a Director suffers a      financial hard-ship caused by accident, illness or other event beyond his      or her control, the Committee may, in its discretion, accelerate payment of      the amounts credited to the Director's Deferral Account, if any, to the      extent reasonably necessary to eliminate such hardship. In addition,                                          4        if following the death of a Director, his or her beneficiary or      beneficiaries suffers a financial hardship caused by accident, illness or      other event beyond the control of such beneficiary or beneficiaries, the      Committee may, in its discretion, accelerate payment of the amounts      credited to the Director's Deferral Account, if any, to which such      beneficiary or beneficiaries are entitled to the extent reasonably      necessary to eliminate such hardship.            (f)  AMENDMENT AND TERMINATION. The Board reserves the right to amend      the Plan or terminate the Plan at any time. No amendment or termination      shall adversely affect the rights of any Director or beneficiary, without      such person's prior written consent, with respect to Fees deferred prior to      such amendment or termination. Fees deferred shall remain deferred, as if      the Plan had not been amended or terminated.            (g)  GOVERNING LAW. The Plan shall be governed by and construed in      accordance with the laws of the State of Maine.            (h)  EFFECTIVE DATE OF PLAN. The Plan shall be effective January 1,      2000.                                          5    EX-10.AB 6 a2168719zex-10_ab.txt EXHIBIT 10.AB                                                                       Exhibit 10.ab                            MAINE PUBLIC SERVICE COMPANY                            DEFERRED COMPENSATION PLAN                               FOR OUTSIDE DIRECTORS                           DEFERRED COMPENSATION AGREEMENT       AGREEMENT made this     day of              , between Maine Public Service Company, a Maine corporation ("Company") and                , a member of the Company's Board of Directors ("Director").       WHEREAS, the Company maintains the Maine Public Service Company Deferred Compensation Plan for Outside Directors ("Plan") to provide directors of the Company with an opportunity to defer their compensation; and       WHEREAS, the Director and the Company desire to enter into an agreement under which the Director shall, pursuant to the terms of the Plan, defer compensation, subject to the terms, conditions and restrictions set forth herein;       NOW, THEREFORE, in consideration of the premises and mutual promises contained herein, IT IS AGREED:       1.   Deferral Election. Director hereby elects to defer receipt of the following amounts which otherwise are payable for services rendered subsequent to the date of this Agreement in calendar year 2000 and in each calendar year thereafter.       [ELECT (i) OR (ii).]            / /    (i)    all fees (annual retainer, meeting fees and, if                         applicable, committee chairperson retainer)            / /    (ii)   % of the annual retainer and % of meeting fees (and, if                         applicable, committee chairperson retainer)       Solely for purposes of valuing the amounts deferred, such amounts shall be deemed invested as follows:       [ELECT (i), (ii) OR (iii).]            / /    (i)    entirely in Maine Public Service Company common stock                         ("Shares")            / /    (ii)   entirely in five-year U.S. Treasury notes ("Treasuries")            / /    (iii)         % in Shares and      % in Treasuries         2.   Deferral Account. The Company shall establish an account which shall be identified as the Director's "Deferral Account" (hereinafter "Account") and shall adjust the Account as follows:            (a)    At the end of each calendar month for which fees are otherwise                  payable, credit such Account:                   (i)    to the extent it is deemed invested in Treasuries, with                         the amount, if any, deferred during such period;                   (ii)   to the extent it is deemed invested in Shares, with the                         number of Shares that could have been purchased with the                         amounts, if any, deferred during such period, at the                         fair market value of a Share on the day (or days) the                         fees would have been paid in the absence of a deferral                         election; and            (b)    As of the first day of each calendar month:                   (i)    debit such Account by the amount or by the number of                         Shares, if any, paid to the Director or the Director's                         designated beneficiary during the preceding calendar                         month;                   (ii)   credit such Account after making the debit adjustment                         described in subsection (i):                          (A)  to the extent it is deemed invested in Treasuries,                              with interest on the balance as of the first day of                              the preceding month at the rate paid on Treasuries                              on the first day of the calendar year in which the                              interest is to be credited;                          (B)  to the extent it is deemed invested in Shares, with                              any dividends paid during such period on the Shares                              credited to the Account as of the first day of the                              preceding month; and                          to the extent such Account is deemed invested in Shares,                         adjust the number of Shares to reflect any stock split                         or stock dividend.       3.   PAYMENT TO DIRECTOR. The amount credited to the Director's Account shall be paid to the Director in the following manner:       [ELECT (i) OR (ii) ONLY IF THIS IS THE FIRST DEFERRED COMPENSATION      AGREEMENT THAT YOU HAVE EXECUTED UNDER THE PLAN.]         / /  (i)    a lump sum       / /  (ii)   substantially equal consecutive monthly installments over a                  period of (    ) years (DESIGNATE NUMBER OF YEARS NOT EXCEEDING                  TEN).       Payment shall be made on or shall commence with the first day of the month following the date on which the Director ceases to serve on the Company's Board of Directors.       4.   PAYMENT TO BENEFICIARY. The amount credited. to the Director's Account at the time of the Director's death under this Agreement and all prior deferred compensation agreements executed by the Director under the Plan shall be paid to the Director's designated beneficiary in the following manner:       [ELECT (i) OR (ii) ONLY IF THIS IS THE FIRST DEFERRED Compensation      Agreement that you have executed under the Plan or you wish to change a      prior election.]       / /  (i)    a-lump sum       / /  (ii)   substantially equal consecutive monthly installments over a                  period of ------------------(-----------) years (DESIGNATE                  NUMBER OF YEARS NOT EXCEEDING TEN) unless payment previously                  commenced in accordance with Section 3 of this Agreement, in                  which event payment shall continue to be made in substantially                  equal consecutive monthly installments over the remaining term                  that installments were to be paid in accordance with such                  section.       Payment shall be made or commence as soon as practicable following the date of death, unless payment is continuing pursuant to Section 3 of this Agreement.       5.   DESIGNATION OF BENEFICIARY. The Director may from time to time, by completing and signing a form furnished by the Company, designate any person or persons, who may be designated concurrently, contingently or successively, the Director's estate, or any trust or trusts created by the Director, to receive amounts which are payable under this Agreement to the Director's designated beneficiary or beneficiaries. Each beneficiary designation shall revoke all prior designations and will be effective only when filed in writing with the Committee appointed to administer the Plan. If the Director fails to designate a beneficiary or if a beneficiary dies before the date of the Director's death and no contingent beneficiary has been designated, then the amounts which are payable as aforesaid shall be paid to the Director's estate or other successor in interest.       6.   ADMINISTRATION. The members of the Committee appointed pursuant to Section 7 of the Plan (the "Committee") shall have the responsibility of construing and interpreting this    Agreement and the Plan. The determinations and conclusions of the Committee shall be binding on the parties hereto.       7.   AMENDMENT. This Agreement, excluding Section 1, may be amended by written agreement of the Company and the Director. Section 1 may not be amended.       8.   TERMINATION. This Agreement shall terminate upon the earlier of (i) the Director's delivery to the Committee of a written notice of termination, or (ii) termination of the Plan. In the event of termination of the Agreement, the Company shall continue to hold the amounts deferred hereunder until said amounts become payable as provided herein.       9.   MISCELLANEOUS.            (a)    UNSECURED PROMISE. This Agreement shall not be construed to      create or require the Company to create a trust of any kind to fund the      amounts payable hereunder. To the extent the Director or any other person      acquires a right to receive payments from the Company, such right shall be      no greater than the right of any unsecured general creditor of the Company.            (b)    ASSIGNMENT. The right of the Director or any other person to      payments under this Agreement shall not be subject to alienation,      assignment, garnishment, attachment, execution or levy of any kind, and any      attempt to cause such payments to be so subject shall not be recognized by      the Company.            (c)    CONTINUED SERVICE AS A DIRECTOR. This Agreement does not give      the Director any right to be retained in the service of the Company or any      of its subsidiaries.            (d)    PLAN PROVISIONS INCORPORATED BY REFERENCE. All of the      applicable terms and restrictions of the Plan are hereby incorporated by      reference, and shall have the same force and effect as if they were      separately restated herein.            (e)    HEADINGS. All captions or headings contained herein are for      convenience only and shall not be deemed part of the Agreement.            (f)    GOVERNING LAW. This Agreement shall be construed and enforced      in accordance with Maine law.            (f)    SEVERABILITY. In the event that any provision of this Agreement      shall be held invalid, it shall not affect the validity of the remainder of      the Agreement.            (g)    ENTIRE AGREEMENT. This Agreement contains the entire      understanding of the parties and all prior representations, promises or      statements are merged herein.            (h)    BINDING AGREEMENT. This Agreement shall be binding upon and      inure to         the benefit of the Company, its successors and assigns, and the Director      and the Director's heirs, executors, administrators and legal      representatives.       IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and the Director has executed this Agreement as of the date first above written.                                          MAINE PUBLIC SERVICE COMPANY ("Company")                                           By                                            -------------------------------------                                              Its                                           Director                                                  -------------------------------        Persons who have Executed the above Deferred Compensation Agreement:         Individual                                           Date executed      ----------                                           -------------             David N. Felch                                         01/24/2003      Lance Smith                                            12/06/2002      Robert E. Anderson                                     01/07/2000      Richard G. Daigle                                      01/07/2000     EX-10.AH 7 a2168719zex-10_ah.txt EXHIBIT 10.AH                                                                       Exhibit 10.ah                            MAINE & MARITIMES CORPORATION                            EMPLOYEE RETENTION AGREEMENT       THIS EMPLOYEE RETENTION AGREEMENT dated as of _________, _____ (this "Agreement") is entered into between Maine & Maritimes Corporation, a Maine corporation (the "Company"), and [INSERT NAME OF EXECUTIVE] (the "Executive") (the Company and Executive are sometimes referred to as "Party" or collectively "Parties").                                      RECITALS       WHEREAS, the Executive, has been employed by the Company in a management capacity for approximately __ years and is now its [TITLE]; and       WHEREAS, the Board of Directors of the Company has determined this Agreement to be in the best interests of the stockholders of the Company, in order to encourage the attention and dedication of the Executive to his assigned duties with the Company without distraction in connection with potentially disruptive circumstances arising from the possibility of a Change in Control (as defined herein) or certain other events specified in this Agreement;       NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the Parties, the Company and the Executive agree as follows:  Section 1.     CERTAIN DEFINITIONS       As used herein, the following terms have the indicated meanings:         (1)     "CAUSE" for termination by the Company of the Executive's employment shall mean (i) the willful and continued failure by the Executive to substantially perform his duties with the Company after a written notice is delivered to the Executive by the Company, which notice specifically identifies the manner in which the Company believes that the Executive has not substantially performed the Executive's duties; or (ii) the willful engaging by the Executive in gross misconduct that is injurious to the Company, monetarily or otherwise (including, without limitation, the Executive's conviction, by a court of competent jurisdiction, of a crime adversely reflecting on the Executive's honesty, trustworthiness or fitness to carry out the responsibilities of his position with the Company). An act, or failure to act, on the Executive's part shall be deemed "willful" where such act is done, or not done, by the Executive: (i) in the absence of good faith; or (ii) without a reasonable belief that the Executive's act, or failure to act, was in the best interest of the Company.         (2)     For the purpose of this definition ("CHANGE IN CONTROL") only, the term "Company," first defined above, shall also be defined to include Maine Public Service Company in addition to its parent, Maine & Maritime Corporation. A "CHANGE IN CONTROL" shall be deemed to have occurred if the conditions set forth in any one of the following paragraphs shall have been satisfied:                 (a)  any "person" (as such term is used in Sections 13(d) and      14(d) of the Securities Exchange Act of 1934, as amended) (other than the      Company, any trustee or other fiduciary holding securities under any      employee benefit plan of the Company, or any corporation owned directly or      indirectly by the stockholders of the Company in substantially the same      proportion as their         ownership of stock of the Company) is or becomes the "beneficial owner" (as      defined in Rule 13d-3 under the Securities Exchange Act of 1934, as      amended), directly or indirectly, of securities of the Company representing      fifty percent or more of the combined voting power of the Company's      then-outstanding voting securities;                 (b)  a change in the composition of the Board of Directors of the      Company, as a result of which fewer than a majority of the directors are      persons who either (A) are directors of the Company as of the date hereof      or (B) were elected after nomination by a majority of the directors of the      Company on the date hereof and directors so elected previously;                 (c)  any merger or consolidation of the Company, approved by the      stockholders of the Company, with any other corporation; OTHER THAN:                      (A)  any such merger or consolidation that would result in      the voting securities of the Company outstanding immediately prior to the      merger or consolidation, continuing to represent (either by remaining      outstanding or by being converted into voting securities of the surviving      or parent entity) more than fifty percent of the combined voting power of      the voting securities (entitled to vote generally for the election of      directors) of the Company or such surviving or parent entity outstanding      immediately after such merger or consolidation, or subsequently at any time      as contemplated by or as a result of, such merger or consolidation; or                      (B)  any such merger or consolidation where such merger or      consolidation is effected to implement a recapitalization or      reincorporation of the Company (or similar transaction) in which no      "person" (as such term is used in Sections 13(d) and 14(d) of the      Securities Exchange Act of 1934, as amended) acquires fifty percent or more      of the combined voting power of the Company's then-outstanding voting      securities;                 (d)  any merger or consolidation of the Company in which the      Company is not the continuing or surviving corporation or pursuant to which      shares of the Company's stock, would be converted into cash, securities or      other property; OTHER THAN a merger or consolidation of the Company in      which the stockholders of the Company immediately prior to the merger or      consolidation have substantially the same proportionate ownership and      voting control of the surviving corporation or parent entity immediately      after the merger or consolidation;                 (e)  except as described in paragraph __, below, the Company      ceases to be a reporting company pursuant to Section 13 (a) of the      Securities Exchange Act of 1934 as amended, or any similar successor      provision;                 (f)  the number of the Company's Outside Directors, as defined      below, is decreased by more than fifty percent in any twenty-five month      period or the number of the Company's directors increased in such a manner      that the Outside Directors constitute less than a majority of the Board;                 (g)  the stockholders of the Company approve a plan of complete      liquidation of the Company or an agreement for the sale, lease, exchange,      liquidation, disposition or other transfer (in one transaction or a series      of transactions) by the Company of all or substantially all of the      Company's assets (or any transaction having a similar effect).                 (h)  further, a "CHANGE IN CONTROL" shall NOT be deemed to occur      if the conditions set forth in any one of the following sub-paragraphs      shall have been satisfied:                        (A)  a merger, consolidation or reorganization of the      Company if, upon consummation of such transaction all of the outstanding      voting stock of the Company is owned, directly or indirectly, by a holding      company, and the holders of the Company's common stock immediately prior to      the transaction have substantially the same proportionate ownership and      voting control of the holding company.         (3)     "GOOD REASON" for termination by the Executive of the Executive's employment shall mean the occurrence of any one of the following acts unless such act is corrected prior to the Termination Date specified in the Termination Notice given in respect thereof or, in the case of paragraph (d) below, such act is not objected to in writing by the Executive within four months after notification by the Company to the Executive of the Company's intention to take the action contemplated by such paragraph (d):                 (a)  the assignment of duties to the Executive which:                      (i)  are materially different from his duties immediately                          prior to the Change in Control, or                      (ii) result in his having significantly less authority or                          responsibility than he had prior to the Change in                          Control;                 (b)  the Executive's removal from, or any failure to re-elect him      to, any position he held immediately prior to the Change in Control;                 (c)  a reduction of the Executive's annual base salary in effect      on the date of the Change in Control or as the same may be increased from      time to time thereafter;                 (d)  the Company's transferring or assigning the Executive to a      place of employment more than one hundred miles from Presque Isle, Maine,      except where: (1) such transfer or assignment is to a subsidiary or      affiliate entity location, consistent with the Executive's duties; and (2)      in connection with required business travel to an extent substantially      consistent with the Executive's business travel obligations immediately      prior to the Change in Control;                 (e)  the Company's failure to provide the Executive with      substantially the same health, life and other employee benefit plans,      programs and arrangements (specifically including the Company's      compensation and incentive plans, as the same may be amended in the      future), and substantially the same perquisites of employment, as provided      to him immediately prior to the Change in Control or as the same may be      increased thereafter;                 (f)  the Company's failure to provide the Executive with      substantially the same support staff as provided to him immediately prior      to the Change in Control; or                 (g)  the Company's failure to increase the Executive's salary,      employee benefits or perquisites of employment in a manner or amount      commensurate with increases provided to the Company's other executive      officers.         (4)     "OUTSIDE DIRECTORS" an "OUTSIDE DIRECTOR" as of a given date, shall mean a member of the Company's board of directors who has been a director of the Company throughout the six month period prior to such date and who has not been an employee of the Company at any time during such six month period.           (5)     "TERMINATION DATE" shall have the meaning stated in Section 2(2).         (6)     "TERMINATION NOTICE" shall have the meaning stated in Section 2(1).  Section 2.     TERMINATION PROCEDURES         (1)     TERMINATION NOTICE. Any purported termination of the Executive's employment (other than by reason of death or at will termination) shall be communicated by a written notice of the terminating party (a "Termination Notice") in accordance with Section 6(2).         (2)     TERMINATION DATE. "Termination Date" shall mean the date as of which the Executive's employment is to terminate as specified in the Termination Notice, which, in the case of a termination by the Company otherwise than for Cause, may be the same date of the Termination Notice and, in the case of a termination by the Executive, shall not be less than fourteen days nor more than sixty days, respectively, from the date the Termination Notice is given, unless otherwise agreed to by the parties.  Section 3.     BENEFITS UPON CERTAIN TERMINATIONS         (1)     GENERAL. If a Change of Control occurs and, within one year following the occurrence of such Change of Control (i) the Company terminates the Executive's employment for any reason other than for Cause, or (ii) the Executive terminates his employment for Good Reason, then in lieu of any further salary payments to the Executive for periods subsequent to the Termination Date, the Company shall provide the Executive with the following:                 (a)  Within thirty business days after the Termination Date, a      lump sum cash payment equal to the sum of: (i) one hundred percent (X00%)      of the Executive's annual base salary in effect upon the Change in Control      or the date of the Termination Notice, whichever is higher, and (ii) __      hundred percent (X00%) of the bonus award the Executive would have received      for the year in which such termination occurs pursuant to the Company's      Incentive Compensation Plan, assuming that his employment had not      terminated and that for such year all applicable performance goals will be      met. In the event any portion of this award depends on goals that cannot be      determined until the close of the plan year, then payment of that amount      shall be made within thirty days after the goal has been determined.                 (b)  The continuation of the Executive's participation and the      participation of his dependants (to the extent they were participating on      the date of the Termination Notice) in the Company's health, life,      disability and other employee benefit plans, programs and arrangements      (excluding the Pension Plan and the Non-Union Retirement Savings Plan) for      a period of twenty-four (24) months after such termination as if he were      still employed during such period; provided, however, if such participation      in any such plan, program or arrangement is specifically prohibited by the      terms thereof, the Company shall provide the Executive (and his dependants)      with benefits substantially similar to those which he was entitled to      receive under such plan, program or arrangement immediately prior to his      termination of employment. Additionally, at the end of any period of such      coverage, the Executive shall have the right to have assigned to him, for      the cash surrender value thereof, any assignable insurance owned by the      Company on the life of the Executive. For purposes of this paragraph 3(b),      any employee benefit determined with reference to the Executive's      compensation or earnings shall be based on his annual base salary unless      otherwise provided under the terms of the applicable employee benefit plan,      program or arrangement.         (2)     DEATH, AT WILL TERMINATION. Notwithstanding any provision of this Agreement to the contrary, no benefits are payable hereunder upon the Executive's death prior to: (1) the involuntary    termination of his employment with the Company for Cause or otherwise, or (2) the voluntary termination by the Executive of the Executive's employment with the Company for Good Reason. No benefits are payable hereunder upon the Company's at will termination of employment for reasons other than those set forth in this Agreement.  Section 4.     TERM OF AGREEMENT         This Agreement initially shall continue in effect until the third anniversary of the date hereof.  Section 5.     SUCCESSORS         In addition to any obligations imposed by law upon any successor to the Company, the Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to compensation from the Company in the same amount and on the same terms as the Executive would be entitled to hereunder if the Executive were to terminate the Executive's employment for Good Reason, except that, for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Termination Date.  Section 6.     MISCELLANEOUS         (1)     AMENDMENTS. This Agreement may not be amended, modified or supplemented by the parties hereto in any manner, except by an instrument in writing signed on behalf of each of the parties hereto.         (2)     NOTICES. Any notice, request, instruction or other document to be given hereunder by any party to the other shall be in writing and delivered personally or sent by certified mail, postage prepaid, by facsimile (with receipt confirmed), or by courier service and shall be effective upon receipt if addressed or sent as follows:                 To the Company:    Maine & Maritimes Corporation                                   Fax:                                        ------------------------                                   Attention:                                              ------------------                 To the Executive:  [INSERT NAME AND MAILING ADDRESS OF EXECUTIVE]                                   Fax:                                        ------------------------  or to such other address or person as may be designated in writing by a party, by a notice given to the others as aforesaid.         (3)     NO ADDITIONAL EFFECT. Except as expressly provided herein, nothing contained herein shall be construed to provide the Executive with any specific period of employment, right to be retained in the service of the Company or other rights, nor shall this Agreement be construed to otherwise limit the rights of the Company to discharge or take other action with respect to the Executive. The Executive hereby acknowledges that he or she remains an employee at will of the Company and that any rights of the Executive arising under this Agreement arise only upon the circumstances specifically set forth in this Agreement.           (4)     CONSTRUCTION. The headings in this Agreement are included only for convenience and shall not affect the meaning or interpretation of this Agreement. The words "herein" and "hereof" and other words of similar import refer to this Agreement as a whole and not to any particular part of this Agreement. The word "including" as used herein shall not be construed so as to exclude any other thing not referred to or described. The Outside Directors shall have the authority to construe and interpret this Agreement on behalf of the Company, and any such determination by the Outside Directors shall be the conclusive construction on behalf of the Company.         (5)     ENTIRE AGREEMENT, ASSIGNABILITY, ETC. This Agreement (i) constitutes the entire agreement, and supersedes all other prior agreements, including without limitation prior employee continuity agreements, and understandings, both written and oral, between the parties with respect to the subject matter hereof, (ii) is not intended to confer upon any person other than the parties hereto any rights or remedies hereunder, except as otherwise expressly provided herein, and (iii) shall not be assignable by operation of law or otherwise. No provisions of this Agreement are intended, nor will be interpreted, to provide or create any third party beneficiary rights or any other rights of any kind in any person unless specifically provided otherwise herein, and, except as so provided, all provisions hereof will be personal solely among the parties to this Agreement.         (6)     VALIDITY. The invalidity or unenforceability of any provisions of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement, each of which shall remain in full force and effect.         (7)     GOVERNING LAW. This Agreement shall be governed by the laws of the State of Maine, regardless of the laws that otherwise might govern under applicable principles of conflicts of laws thereof.         (8)     COUNTERPARTS. This Agreement may be executed in counterparts, each of which shall be deemed to be an original but both of which together shall constitute one and the same instrument.         (9)     FUNDING. This Agreement shall not be construed to create or require the Company to create a trust or to otherwise act to fund the amounts payable hereunder.         (10)    LIMITATION ON AMOUNT TO BE PAID. If payment of any amount under this Agreement would cause the Executive to be subject to an excise tax pursuant to Section 4999 of the Internal Revenue Code (as amended from time to time) or the regulations thereunder, then such amount shall not be paid to the extent necessary to avoid the imposition of such tax. The preceding sentence shall apply only if the aggregate amount payable to the Executive or for his or her benefit under this Agreement, after payment of such excise tax, would be less than the aggregate amount payable in accordance with the preceding sentence.         (11)    ARBITRATION. The Parties agree to resolve all disputes arising under this Agreement in arbitration as follows:         (a)     Any arbitration under this Agreement, and any related judicial proceeding, shall be initiated and shall proceed pursuant to the provisions of the Maine Uniform Arbitration Act (the "Act") and, to the extent consistent with the Act, the then prevailing rules of the American Arbitration Association (the "Association") for labor and employment contracts. To initiate arbitration hereunder, demand shall be given in writing to the Association and the other Party no later than one year after the claim arises. Any claim for which such demand is not made within one year after the claim arises shall be barred and discharged.           (b)     Any arbitration under this Agreement shall be before a single arbitrator mutually acceptable to the Parties, and an award in such arbitration may include only damages which the arbitrator determines to be due under express provisions of this Agreement. The arbitrator shall have no authority to award any other damages including without limitation, consequential and exemplary damages. Any award in arbitration shall be subject to enforcement and appeal pursuant to the Act.         (c)     The Parties shall share equally all costs and fees charged by the Association or the arbitrator.         (12)    EXECUTION OF FURTHER DOCUMENTS. In the event the Executive receives payments or benefits pursuant to this Agreement and the Company's legal counsel deems it necessary for the Company to receive a release or other acknowledgement the Executive agrees to execute any such document as may be reasonably required as a condition of his/her receipt of such payment or benefits.         IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first above written.                                                MAINE & MARITIMES CORPORATION                                                 -----------------------------                                               By:                                               Title:                                                 EXECUTIVE                                                 -----------------------------                                               Name:   Employees Who Have Executed Above Employee Retention Agreement with either MAM or MPS*:    Executive                                                                       Effective Date - ---------                                                                       --------------   Annette N. Arribas, VP Investor Relations and Treasurer                         12/15/04 John P. Havrilla, VP of Corporate Strategy and Chief Development Officer        09/05/03 Brent M. Boyles, President of MPS*                                              09/05/03 Patrick C. Cannon, General Counsel*                                             12/15/04 Michael A. Eaton, VP of Information and Technology Management*                  12/17/04 Mark H. Hovey, VP of Human Resources and Organizational Development*            12/14/04 Kurt A. Tornquist, Senior VP and Chief Financial Officer of MPS*                09/05/03 Michael I. Williams, Acting Chief Financial Officer*                            12/15/04 Thomas N. Yoder, VP and Chief Operating Officer of Maricor Technologies         08/12/05 Richard F. Landry, Principal Financial Officer of The Maricor Group             08/03/05     EX-10.AI 8 a2168719zex-10_ai.txt EXHIBIT 10.AI                                                                       Exhibit 10.ai                                MASTER LOAN AGREEMENT                                   by and between                                 FLEET NATIONAL BANK                                       "Bank"                                         and                            MAINE PUBLIC SERVICE COMPANY                                     "Borrower"                            Dated as of November 22, 2004                                    TABLE OF CONTENTS     1.  INTRODUCTION.............................................................3 2.  OBLIGATIONS..............................................................3 3.  BORROWER'S PLACES OF BUSINESS............................................3 4.  BORROWER'S REPRESENTATIONS AND WARRANTIES................................4 5.  LOAN FACILITIES..........................................................6 6.  BANK'S REPORTS..........................................................11 7.  SET OFF; EXPENSES.......................................................11 8.  BORROWER'S REPORTS......................................................12 9.  GENERAL AGREEMENTS OF BORROWER..........................................13 10. BORROWER'S NEGATIVE COVENANTS...........................................17 11. BORROWER'S FINANCIAL COVENANTS..........................................17 12. DEFAULT.................................................................20 13. JURY TRIAL WAIVER.......................................................23 14. CONSENT TO JURISDICTION.................................................24 15. TERMINATION AND EXPIRATION NOT TO AFFECT BANK'S RIGHTS..................24 16. MISCELLANEOUS...........................................................24       SCHEDULES      EXHIBIT                                   FLEET NATIONAL BANK                                MASTER LOAN AGREEMENT                                                                   Portland, Maine                                                    Dated as of November 22, 2004       1.  INTRODUCTION. MAINE PUBLIC SERVICE COMPANY, a Maine corporation with its principal place of business in Presque Isle, Maine, (hereinafter called "BORROWER") for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, hereby enters into this Master Loan Agreement with FLEET NATIONAL BANK, a Bank of America company with a place of business at Two Portland Square, Portland, Maine 04101 (hereinafter, together with its successors and assigns hereunder, called the "BANK").       2.  OBLIGATIONS. This Agreement applies to payment and performance of all debts, liabilities and obligations of the Borrower to the Bank hereunder and also any and all other debts, liabilities and obligations of the Borrower to the Bank of every kind and description, direct or indirect, absolute or contingent, primary or secondary, due or to become due, now existing or hereafter arising, that are related to the transactions described in this Agreement, including all obligations to perform acts and refrain from taking action as well as all obligations to pay money, specifically including all obligations to pay interest, fees, charges, expenses and overdrafts, and also including, without limitation, all obligations and liabilities which the Bank may incur or become liable for, on account of, as a result of, or in connection with the transactions between the Bank and the Borrower for which the Borrower is responsible under this Agreement, including, without limitation, any which may arise out of any letter of credit, banker's acceptance or similar instrument or obligation issued or incurred by the Bank for the account of the Borrower, and further including any obligations arising under any credit card receivables, currency swap, electronic fund transfers (whether through automated clearing houses or otherwise) provisional credit, check cashing, foreign exchange contracts, interest rate swap, cap, floor or hedging agreements, or similar agreements and all obligations of the Borrower to the Bank arising out of or in connection with any Automated Clearing House ("ACH") agreements relating to the processing of ACH transactions, together with all fees, expenses, charges and other amounts owing by or chargeable to the Borrower under any ACH agreements (all of the foregoing are hereinafter collectively called "OBLIGATIONS").       3.  BORROWER'S PLACES OF BUSINESS. Borrower represents and warrants that it has no places of business outside the State of Maine, except as otherwise disclosed herein. Borrower represents and warrants that its only place of business (or, if it has more than one, its chief executive office) and the office where it keeps its records, is the place indicated at the end of                                          3   this Agreement. Borrower will promptly notify Bank in writing of any change in the location of its chief executive office, or of any place of business or office where its records are kept.       4.  BORROWER'S REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants that:       (a)    It is a regulated utility and a corporation duly organized, validly existing and in good standing under the laws of the State of Maine and shall hereafter remain in good standing as a corporation in that state, and is duly qualified and in good standing in every other jurisdiction in which the nature or location of its assets or operations may require such qualification, other than any jurisdiction where the failure to so qualify will not have a material adverse effect on its financial condition, business or prospects, which other jurisdictions are listed on SCHEDULE A, annexed hereto, and shall hereafter remain duly qualified and in good standing in every such other jurisdiction. Borrower has identified on SCHEDULE B, annexed hereto, all of its subsidiaries and their respective jurisdictions of organization, addresses and the percentage of ownership. Each of Borrower's subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and shall hereafter remain in good standing as a corporation in that jurisdiction, and is duly qualified and in good standing in every other jurisdiction in which, by reason of the nature or location of such subsidiary's assets or operations, such qualification may be necessary, which other jurisdictions are listed on SCHEDULE B, annexed hereto, and shall hereafter remain duly qualified and in good standing in such other jurisdictions. None of Borrower's subsidiaries has any subsidiaries.       (b)    Borrower's exact legal name is as set forth in this Agreement and Borrower will not change its legal name, without giving Bank at least thirty (30) days' prior written notice of the same. Borrower represents that it does not conduct business under any other name, and will not do so without giving Bank at least thirty (30) days' prior written notice of the same. THE BORROWER'S CORPORATE CHARTER NUMBER IN THE STATE OF MAINE IS 19170013D.       (c)    The execution, delivery and performance of this Agreement, and of any other documents executed in connection herewith, are within Borrower's corporate powers, have been duly authorized, are not in contravention of law or the terms of its articles of incorporation, bylaws or other governance documents, or of any indenture, agreement or undertaking to which it is a party or by which it or any of its properties may be bound.       (d)    The Articles of Incorporation of Borrower, and all amendments thereto, have been duly filed and are in proper order. All of Borrower's books and records including but not limited to its minute books, stock register and books of account, are all materially accurate and up to date and will be so maintained. All of Borrower's issued and outstanding stock interests were duly issued and are fully paid and non-assessable; the Borrower is a wholly-owned subsidiary of Maine & Maritimes Corporation, a Maine corporation.                                          4        (e)    Borrower owns all of the assets reflected in its most recent financial statements provided to Bank, except leased assets or assets sold, transferred or otherwise disposed of, in the ordinary course of business since the date thereof, and such assets together with any assets acquired since such date, are free and clear of any lien, pledge, security interest, charge, mortgage or encumbrance of any nature whatsoever, except only the following (collectively, the "PERMITTED LIENS"): (i) the liens, security interests and other encumbrances listed on SCHEDULE C annexed hereto, (ii) those leases (if any) set forth on SCHEDULE D annexed hereto in which Borrower is lessor, (iii) landlords', carriers', warehousemen's and other similar liens arising by operation of law in the ordinary course of its business, but only if the bills to which they relate are paid in the ordinary course or are the subject of good faith dispute; (iv) liens arising out of pledge or deposits under worker's compensation, unemployment insurance, old age pension, social security, retirement benefits or other similar legislation; and (v) liens and security interests in favor of Bank or consented to in writing by Bank . Borrower leases no material amount of real or personal property as lessee, except for the leases described on SCHEDULE D; in each case such lease is in full force and effect and Borrower is not in material default thereunder.       (f)    Borrower has made or filed all tax returns, reports and declarations relating to any material tax liability required by any jurisdiction to which it is subject; has paid all taxes shown or determined to be due thereon except those being diligently contested in good faith and which it has, prior to the date of such contest, identified in writing to Bank as being contested; and has made adequate provision for the payment of all taxes so contested, and has also made adequate provision for taxes due in respect of subsequent periods.       (g)    Except for the restrictions, judgments, awards, decrees, orders, rules and regulations of the Maine Public Utilities Commission that are applicable to the Borrower, the Borrower (i) is currently subject to no charter or other legal restriction, or any judgment, award, decree, order, governmental rule or regulation or contractual restriction which could have a material adverse effect on its financial condition, business or prospects, and (ii) is in compliance with its articles of incorporation, bylaws, all contractual requirements by which it or any of its properties may be bound and all applicable laws, rules and regulations (including without limitation those relating to environmental protection) other than laws, rules or regulations (i) the validity or applicability of which it is diligently contesting in good faith and which it has, prior to the date of such contest, identified in writing to Bank as being contested, or (ii) the failure to comply with which cannot reasonably be expected to materially adversely affect its financial condition, business or prospects.       (h)    There is no action, suit, proceeding or investigation pending or, to its knowledge, threatened against or affecting Borrower or any of its assets which, if determined adversely to it, would or could have a material adverse effect on its financial condition, business or prospects, except as set forth on SCHEDULE E.       (i)    Borrower is in material compliance with ERISA with respect to any Plan; no Reportable Event has occurred and is continuing with respect to any Plan; and it has no unfunded                                          5   vested liability under any Plan. The word "PLAN" as used in this Agreement means any employee plan subject to Title IV of the Employee Retirement Income Security Act of 1974, as amended, ("ERISA") maintained for employees of Borrower, any subsidiary of Borrower or any other trade or business under common control with Borrower within the meaning of Section 414(c) of the Internal Revenue Code of 1986, as amended, or any regulations thereunder.       (j)    Borrower is in material compliance with all other applicable federal, state and local laws and ordinances. Borrower shall maintain at all times all necessary licenses, permits and approvals to own and operate its business. If required by Bank, Borrower's counsel shall provide written opinions regarding these issues.       5.  LOAN FACILITIES.       (a)    TERM LOAN: On the date hereof, Bank shall advance to Borrower Six Million Dollars ($6,000,000) (the "TERM LOAN"); the Term Loan will be due on November 22, 2011, if not due sooner in accordance with the terms hereof (the "MATURITY DATE"). The Term Loan shall bear interest computed at a fluctuating interest rate equal to the rate from time to time announced by Bank as its prime lending rate (the "PRIME RATE"), SUBJECT TO CHANGE OF RATE in accordance with changes in the Prime Rate, such adjustments in rate to be made automatically and to be effective immediately with all changes in the Prime Rate without notice or demand of any kind. Bank's prime rate is a reference rate and does not necessarily represent the lowest or best rate being charged to any customer. In the event Bank shall cease to designate a prime rate and shall fail to designate a replacement therefor, then the term "Prime Rate" shall mean the rate of interest published in THE WALL STREET JOURNAL as the Prime Rate or the base rate on corporate loans posted by at least 75% of the nation's 30 largest banks, as it may vary. The Term Loan shall be repaid in equal monthly installments of Scheduled Principal (as defined below), plus accrued interest, commencing on December 1, 2004 and continuing on the same day of each month thereafter until the Maturity Date when all amounts remaining unpaid with respect to the Term Loan shall be paid in full. The term "Scheduled Principal" shall mean $50,000 for the monthly principal payments due December 1, 2004, through November 1, 2007, inclusive; $80,000 for the monthly principal payments due December 1, 2007 through November 1, 2009, inclusive; and $95,000 for the monthly principal payments due December1, 2009 through November 1, 2011, inclusive. Borrower shall execute and deliver to Bank at the Closing a promissory note with respect to the Term Loan.       (b)    USE OF PROCEEDS: Borrower shall use loan proceeds of the Term Loan to refinance existing indebtedness and for no other purposes.                                          6        (c)    INTEREST RATE OPTION:              (i)    At the option of the Borrower and subject to the terms and      conditions hereinafter set forth, the Borrower may elect from time to time      to have the interest rate applicable to one or more advances under the Term      Loan to be the LIBOR Rate, or to convert any outstanding Loan to a Loan of      another Type, PROVIDED that (i) with respect to any such election, or      conversion of a Loan to a LIBOR Loan, the Borrower shall give the Bank      prior notice of such election (which notice must be received by Bank prior      to 3:00 p.m. Portland, Maine time two Business Days before the date of the      advance or conversion); and (ii) no such election of a LIBOR Loan or      conversion to a LIBOR Loan may be made when any Event of Default has      occurred and is continuing. All or any part of an outstanding Loan of any      Type may be converted as provided herein, PROVIDED that partial conversions      shall be in an aggregate principal amount of at least $100,000. There shall      be no more than five LIBOR Loans outstanding at any one time. Each request      relating to a LIBOR Loan shall be irrevocable by the Borrower.              (ii)   Any Loans of any Type may be continued as such upon the      expiration of an Interest Period with respect thereto by compliance by the      Borrower with the notice provisions contained herein; PROVIDED that no      LIBOR Loan may be continued as such when any Event of Default has occurred      and is continuing, but shall be automatically converted to a Prime Rate      Loan on the last day of the Interest Period relating thereto.              (iii)  In the event that the Borrower does not notify the Bank of      its election hereunder with respect to any Loan at the expiration of an      Interest Period, such Loan shall be automatically renewed as a Loan of the      same Type and for the same Interest Period (unless the Loan is a LIBOR Loan      and such a renewal would cause the expiration of the Interest Period to      extend beyond the Maturity Date, in which case such LIBOR Loan shall be      converted to a Prime Rate Loan).              (iv)   Unless sooner demanded after an Event of Default, all      interest on LIBOR Loans shall be paid monthly.              (v)    Borrower may provide notice of its election hereunder in      writing or by telephone, provided, however, that any telephonic notice      shall follow such procedures as Bank may require and Bank shall have no      duty to confirm the authority of a person making a telephonic request.       (d)    PREPAYMENT OF LOANS: The Borrower shall have the right at any time to prepay any Prime Rate Loan without premium or penalty, PROVIDED that any amount prepaid shall be accompanied by accrued interest on the principal repaid to the date of payment. To the extent that a Loan is a LIBOR Loan, and unless the Bank reasonably determines that current market conditions can not accommodate a prepayment request, then the Borrower shall have the right to prepay such Loan on or before the expiration of the applicable Interest Period, as a whole or in                                          7   part, upon prior notice to the Bank, PROVIDED that such prepayment shall be accompanied by (a) accrued interest through the date of prepayment, and (b) an amount calculated in accordance with the Yield Maintenance Formula. Such optional prepayment privilege is in addition to, and not in substitution of, any repayment of principal required or otherwise contemplated under this Agreement. Any payment of a LIBOR Loan that occurs prior to the expiration of the applicable Interest Period shall be accompanied by an amount calculated in accordance with the Yield Maintenance Formula whether such payment is payable because of demand, default or otherwise. Borrower may provide notice of its election hereunder in writing or by telephone, provided, however, that any telephonic notice shall follow such procedures as Bank may require and Bank shall have no duty to confirm the authority of a person making a telephonic request.       (e)    LOAN REQUEST PROCEDURE: Each request to convert some or all of the Term Loan balance from one Type of Loan to another, shall constitute a request for a Loan pursuant to which these procedures shall apply. Amounts repaid with respect to the Term Loan may not be reborrowed. The Borrower may request Loans hereunder on any Business Day, provided there is then no Event of Default hereunder; and further provided that Borrower shall give Bank prior notice (which notice must be received by Bank prior to 3:00 p.m. Portland, Maine time) on the day (or, in the case of a LIBOR Loan, on the day that is two Business Days before the day) of the requested advance date specifying: (i) the amount to be borrowed, (ii) the requested borrowing date, (iii) whether the borrowing is to be a Prime Rate Loan or a LIBOR Loan or a combination thereof (and if so, in what proportions), and (iv) if the advance is to be entirely or partly a LIBOR Loan, the length of the Interest Period. Borrower may provide notice of its election hereunder in writing or by telephone, provided, however, that any telephonic notice shall follow such procedures as Bank may require and Bank shall have no duty to confirm the authority of a person making a telephonic request. If Borrower's request fails to specify whether a request is for a LIBOR Loan or a Prime Rate Loan, it shall be deemed a request for a Prime Rate Loan. If Borrower fails to request the maintenance of an existing LIBOR Loan prior to the end of the Interest Period for such LIBOR Loan in accordance with the procedure set forth herein, then such Loan shall be automatically renewed as a Loan of the same Type and for the same Interest Period (unless such a renewal would cause the expiration of the Interest Period to extend beyond the Maturity Date, in which case such LIBOR Loan shall be converted to a Prime Rate Loan).       (f)    CERTAIN DEFINITIONS: The following terms used herein, and in any notes or other documents relating hereto, shall have the following meanings:       "BUSINESS DAY" means any day, other than a Saturday, Sunday or day which shall be in the State of Maine a legal holiday, on which banks in Portland, Maine, are open for the conduct of a substantial part of their commercial banking business.       "INTEREST PERIOD" means, in the event that interest is calculated at the Prime Rate, the Interest Period shall be one (1) day, and in the event that interest is calculated at the LIBOR Rate, the Interest Period shall be a period commencing on the date so designated by the Borrower in its                                          8   irrevocable written notice to Bank and ending 30, 60, or 90 days thereafter, as the Borrower may elect in such notice pursuant to Section 5(e); provided that:            (i)      any Interest Period that would otherwise end on a day which      is not a Business Day shall be extended to the next succeeding Business Day      unless such Business Day falls in another calendar month, in which case      such Interest Period shall end on the immediately preceding Business Day;            (ii)     any Interest Period that begins on the last Business Day of a      calendar month (or on a day for which there is no numerically corresponding      day in the calendar month at the end of such Interest Period) shall end on      the last Business Day of the calendar month at the end of such Interest      Period; and            (iii)    no Interest Period may extend beyond the Maturity Date.       "LIBOR" means, as applicable to any LIBOR Loan, the rate per annum as determined on the basis of the offered rates for deposits in U.S. Dollars, for a period of time comparable to such LIBOR Loan which appears on the Telerate page 3750 as of 11:00 a.m. London time on the day that is two London Banking Days preceding the first day of such LIBOR Advance; provided, however, if the rate described above does not appear on the Telerate System on any applicable interest determination date, the LIBOR rate shall be the rate (rounded upward, if necessary, to the nearest one hundred-thousandth of a percentage point), determined on the basis of the offered rates for deposits in U.S. dollars for a period of time comparable to such LIBOR Advance which are offered by four major banks in the London interbank market at approximately 11:00 a.m. London time, on the day that is two (2) London Banking Days preceding the first day of such LIBOR Loan as selected by Bank. The principal London office of each of the four major London banks will be requested to provide a quotation of its U.S. Dollar deposit offered rate. If at least two such quotations are provided, the rate for that date will be the arithmetic mean of the quotations. If fewer than two quotations are provided as requested, the rate for that date will be determined on the basis of the rates quoted for loans in U.S. dollars to leading European banks for a period of time comparable to such LIBOR Loan offered by major banks in New York City at approximately 11:00 a.m. New York City time, on the day that is two London Banking Days preceding the first day of such LIBOR Loan. In the event that Bank is unable to obtain any such quotation as provided above, it will be deemed that LIBOR pursuant to a LIBOR Loan cannot be determined and only Prime Rate Loans will be available hereunder until LIBOR quotations again become available to Bank. In the event that the Board of Governors of the Federal Reserve System shall impose a Reserve Percentage with respect to LIBOR deposits of Bank, then for any period during which such Reserve Percentage shall apply, LIBOR shall be equal to the amount determined above divided by an amount equal to 1 minus the Reserve Percentage. "Reserve Percentage" shall mean the minimum aggregate reserve requirement (including all basic, supplemental, marginal and other reserves) which is imposed on member banks of the Federal Reserve System against "Euro-currency Liabilities" as defined in Regulation D. "Banking Day"                                          9   shall mean, in respect of any city, any day on which commercial banks are open for business in that city.       "LIBOR LOANS" means any Loans for which the interest rate is the LIBOR Rate.       "LIBOR RATE" means a fixed annual rate of interest equal to LIBOR plus One and One Half Percent (1.5%).       "LOAN" means a loan, sometimes referred to herein as an advance, made to the Borrower by the Bank pursuant to Section 4 of this Agreement, and "Loans" means all of such loans, collectively.       "PRIME RATE LOANS" means any Loans for which the interest rate is based on the Prime Rate.       "SUBSIDIARY" means, with respect to any person (the "parent"), any corporation, association or other business entity of which securities or other ownership interests representing more than 50% of the ordinary voting power are, at the time as of which any determination is being made, owned or controlled by the parent or one or more subsidiaries of the parent, and shall include any entities designated as subsidiaries on the Borrower's audited financial statements.       "TYPE" means, with respect to any Loan, its nature as a Prime Rate Loan or a LIBOR Loan.       "YIELD MAINTENANCE FORMULA" shall be calculated as follows: the published rate of United States Treasury Notes or Bills (Bills on a discounted basis shall be converted to a bond equivalent) (as published weekly in the Federal Reserve Statistical Release in the issue of such publication most recently preceding the date of prepayment) with a maturity date that is the same as, or is the nearest date subsequent to, the last day of the Interest Period for the Loan being prepaid, shall be subtracted from the annual rate of interest applicable to such Loan. If the result is zero or a negative number, there shall be no additional amount due. If the result is a positive number, then the resulting percentage shall be multiplied by the amount of the principal balance being prepaid. The resulting amount will be divided by 360 and multiplied by the number of days remaining until the end of the applicable Interest Period. Said amount shall be reduced to present value, calculated by using the above referenced applicable United States Treasury Note or Bill rate and the number of days remaining between the date of the prepayment and the end of the applicable Interest Period.       (g)    INTEREST RATE CALCULATIONS; LATE FEE. All computations of interest shall be made on the basis of a three hundred sixty (360) day year and the actual number of days elapsed. If the entire amount of any required principal and/or interest is not paid in full within fifteen (15) days after the same is due, Borrower shall pay to Bank a late fee equal to five percent (5%) of the required payment.                                         10        6.  BANK'S REPORTS. After the end of each month, Bank will render to Borrower a statement of Borrower's loan account with Bank hereunder, showing all applicable credits and debits. Each statement shall be considered correct and to have been accepted by Borrower and shall be conclusively binding upon Borrower in respect of all charges, debits and credits of whatsoever nature contained therein, and the closing balance shown therein, unless Borrower notifies Bank in writing of any discrepancy within sixty (60) days from the mailing by Bank to Borrower of any such monthly statement.       7.  SET OFF; EXPENSES.       (a)    Borrower hereby acknowledges Bank's right of setoff as security for all liabilities and obligations to Bank, whether now existing or hereafter arising, upon and against all deposits, credits, collateral and property, now or hereafter in the possession, custody, safekeeping or control of Bank or any entity under the control of Bank of America Corporation and its successors and assigns or in transit to any of them. At any time, without demand or notice (any such notice being expressly waived by Borrower), Bank may setoff the same or any part thereof and apply the same to any liability or obligation of Borrower even though unmatured and regardless of the adequacy of any other collateral securing the Loan. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE LOAN, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.       (b)    The Borrower shall pay to Bank on demand any and all reasonable counsel fees and other reasonable expenses incurred by Bank in connection with the preparation, interpretation, enforcement, administration or amendment of this Agreement or of any documents relating hereto, and any and all expenses, including, but not limited to all reasonable attorneys' fees and expenses, which may be expended by Bank to obtain or enforce payment in the prosecution or defense of any action or concerning any matter growing out of or connected with the subject matter of this Agreement, the Obligations or any of Bank's rights or interests therein or thereto, including, without limiting the generality of the foregoing, any reasonable counsel fees or expenses incurred in any bankruptcy or insolvency proceedings and all costs and expenses incurred or paid by Bank in connection with the administration, supervision, protection or realization on any security held by Bank for the debt secured hereby, whether such security was granted by Borrower or by any other person primarily or secondarily liable (with or without recourse) with respect to such debt, and all reasonable costs and expenses incurred by Bank in connection with the defense, settlement or satisfaction of any action, claim or demand asserted against Bank in connection with the debt secured hereby, all of which amounts shall be considered advances to protect Bank's security, and shall be secured hereby. After an Event of Default, and without limiting any other rights or remedies, Bank may, upon written notice, at any time pay or discharge any taxes, liens, security interests or other encumbrances at any time levied                                         11   against or placed on any of the Borrower's facilities, and may procure and pay any premiums on any insurance required to be carried by Borrower, and provide for the maintenance and preservation of any of the Borrower's facilities, and otherwise take any action reasonably deemed necessary by Bank to protect its interests, and all amounts expended by Bank in connection with any of the foregoing matters, including reasonable attorneys' fees, shall be considered obligations of Borrower.       8.  BORROWER'S REPORTS.       (a)    Borrower shall deliver, or cause to be delivered, to Bank, all documents listed below, as frequently as indicated below, or at such other times as Bank may reasonably request, and all other documents and information requested by Bank, whether or not the same are listed below, with such frequency as Bank may request:    Document                                     Frequency Due - --------                                     -------------   Financial statements for Borrower            Quarterly, within 60 days and Maine & Maritimes Corporation            after fiscal quarter-end  Annual audited financial reports             Annually, within 90 days for Borrower and for                         after fiscal year-end Maine &Maritimes Corporation  An Officer's Certificate showing compliance  Quarterly, within 60 days with financial covenants, in form            after fiscal quarter-end satisfactory to Bank  Annual projected income statement,           Annually, within 90 days Based on budget, in form reasonably          after the beginning of satisfactory to Bank and with                the fiscal year in question monthly detail, for Borrower        (b)    Quarterly financials shall be prepared in accordance with generally accepted accounting principles consistently applied ("GAAP") and certified by Borrower's chief financial officer.       (c)    Annual audited financial reports shall be prepared in accordance with generally accepted accounting principles consistently applied, accompanied by an opinion thereon, with no exceptions other than those that are acceptable to Bank, by a firm of independent public accountants selected by the Borrower and reasonably acceptable to Bank and with such independent public accountant's statement that they have reviewed the provisions of this Agreement in accordance with generally accepted accounting principles and that they have no knowledge of any event or condition which constitutes an Event of Default or which, after notice                                         12   or expiration of any applicable grace period or both, would constitute such an Event of Default or, if they have such knowledge, specifying the nature and period of existence thereof, provided, however, that in issuing such statement, such accountants shall not be required to go beyond normal procedures conducted in connection with their audit.       (d)    In addition to the foregoing, Borrower shall provide Bank promptly with such other and additional information concerning Borrower, the operation of Borrower's business, and Borrower's financial condition, including financial reports and statements, as Bank may from time to time reasonably request. All financial information provided to Bank in connection with or pursuant to this Agreement shall be prepared in accordance with generally accepted accounting or auditing principles (as applicable) applied consistently in the preparation thereof and consistently with prior periods to fairly reflect the financial condition of Borrower at the close of, and its results of operations for, the periods in question.       9.  GENERAL AGREEMENTS OF BORROWER.       (a)    Borrower agrees to keep its facilities insured with coverage and in amounts not less than that usually carried by one engaged in a like business and in any event not less than that reasonably required by Bank. In addition, Borrower shall maintain appropriate liability insurance and all insurance required by law, including any necessary workers' compensation insurance. All insurance required hereunder shall be provided by insurance companies qualified to do business in Maine, satisfactory to Bank, shall be in such form and in such amounts as Bank may reasonably require and, without limiting the foregoing, shall provide that such insurance shall not be canceled or modified without at least thirty (30) days prior notice to the Bank.       (b)    Borrower shall, and shall cause each of its subsidiaries to, to the extent applicable to the Borrower's or such subsidiary's property or its business, materially comply with all laws, ordinances and regulations of the United States, each state, each political subdivision thereof, and of each governmental authority.       (c)    Borrower will pay all real and personal property taxes, assessments and charges and all franchise, income, unemployment, old age benefits, withholding, sales and other taxes assessed against it, or payable by it at such times and in such manner as will prevent any interest or penalties from accruing and as will prevent any lien or charge from attaching to its property (except for such taxes, assessments and charges being contested by Borrower in good faith, prior written notice of such contest having been given to Bank).       (d)    Borrower will promptly pay when due all governmental and other taxes, charges and assessments upon its facilities or for their use or operation or upon this Agreement, or upon any note or notes evidencing the Obligations (except for such taxes, assessments and charges being contested by it in good faith, prior written notice of such contest having been given to Bank, and will, at the request of Bank, promptly furnish Bank the receipted bills therefor. After an Event of Default , Bank may discharge taxes, liens, security interests or other encumbrances at                                         13   any time levied or placed on such facilities, may pay for insurance on such facilities and may pay for the maintenance and preservation of such facilities. Borrower agrees to reimburse Bank on demand for any payments made, or any expenses incurred by Bank pursuant to the foregoing authorization, and until it so reimburses Bank, any such sums paid or advanced by Bank shall constitute part of the Obligations.       (e)    Borrower will immediately notify Bank in writing (a) if it has reason to believe that, or receives any notice that, any Hazardous Materials (as hereinafter defined) may exist, may have been (or are threatened to be) released, or have been or may be generated, handled, stored, used, treated, transported, disposed of, released or maintained, on, under, over, from, or within, any site owned, leased or operated, in whole or in part, by it (each called a "SITE" herein), except in each case in material compliance with all applicable laws, ordinances, rules and regulations, or (b) if it has reason to know of, or receives any notice of, any loss, cost or expense in excess of $25,000 incurred by any person or entity in connection with any Hazardous Materials (i) on, under, over, from or within any Site or (ii) generated, stored, transported, handled, released or disposed of by or on behalf of Borrower, or (c) if it has reason to know of, or receives any notice of, any investigation, action or the incurring of any loss by any governmental authority in connection with the assessment, containment, removal, remediation or disposal of any Hazardous Materials for which expense or loss it may be liable or as a result of which its property may be subject to a lien, in each case unless listed on Schedule F. As used herein, the term "HAZARDOUS MATERIALS" shall mean and include any hazardous, toxic, dangerous, radioactive, noxious materials, substances, objects, gases, and/or wastes, including without limitation all of the following: (a) asbestos in any form; (b) urea formaldehyde foam insulation; (c) polychlorinated biphenyls ("PCBS") or transformers or other equipment which contain dielectric fluid containing any level of PCBs; (d) oil, gasoline and other petroleum products, and underground or above ground storage tanks for Hazardous Materials; (e) any other chemical, material, gas, object, waste or substance which is prohibited, limited, or regulated or subject to regulation by any federal, state, county, regional, local, or other governmental authority; and (f) all chemicals, materials, substances, objects, gases, and/or wastes which are now or may hereafter be regulated by any of the following, including any of the foregoing that are characterized within any of the terms "hazardous waste", "hazardous or toxic substance", "hazardous material", or "oil" as each of those terms is defined in any of the following, as the same have been or may be amended (the "ACTS"): the Uncontrolled Hazardous Substance Sites Act, 38 M.R.S.A. Section 1361 ET SEQ. (1989); the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. Section 9601 ET SEQ. (1983)("CERCLA"); the Superfund Amendments and Reauthorization Act of 1986 ("SARA"); the Federal Water Pollution Control Act (the "CLEAN WATER ACT"), 33 U.S.C. Section 1251 ET SEQ. and 33 U.S.C. Section 1342 ET SEQ.; the Resource Conservation and Recovery Act, as amended by the Hazardous and Solid Waste Amendments of 1984 ("RCRA"), 42 U.S.C. 6901 ET SEQ.; the Safe Drinking Water Act, 14 U.S.C. Sections 1401-1450; the Toxic Substances Control Act, 15 U.S.C. Sections 2601-2629; the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801 ET SEQ.; the Clean Air Act, 42 U.S.C. Section 7401 ET SEQ.; the State of Maine statutory provisions relating to Underground Storage Facilities and Ground Water Protection, 38 M.R.S.A. Section 561 ET SEQ.; and also including within the Acts any regulation promulgated under any of the foregoing, or any other local, state or                                         14   federal regulation, law or ordinance relating in any way to any Hazardous Materials, or any successor provision to any of the foregoing. Borrower hereby agrees to defend, indemnify and hold harmless Bank from and against any and all liabilities, executions, awards, judgments, claims, damages, demands, penalties, actions, debts, suits, expenditures, indemnities, losses, charges or other amounts that are or may become due from Bank in connection with, or arising directly or indirectly out of any Hazardous Materials on, under, over, within or released or originating from, any Site or otherwise relating to it, meaning and intending hereby to assume the obligation to pay, and to indemnify and hold harmless Bank for, without limitation, (1) all costs reasonably incurred or expended by Bank in connection with the removal, neutralization or other remediation of all Hazardous Materials from any Site after an Event of Default, including without limitation all costs of investigation, monitoring, remedial response, removal, restoration, feasibility studies, remedial work, cleanup, engineering reports, and permit acquisitions incurred in connection therewith; (2) all costs reasonably incurred and sums expended by Bank in determining the compliance of such removal with all applicable regulations and standards; (3) all liability of, or expense to, Bank reasonably incurred as a result of the improper removal, storage, handling, transport or disposal of Hazardous Materials from any Site, by whomever performed, or arising out of exposure to Hazardous Materials of any individual while in or on any Site, or otherwise in connection with the existence or removal of, or failure to remove, any and all Hazardous Materials, on or from any Site, together with (4) all of Bank's reasonable costs of defending against any proceedings brought by or on behalf of any individual or entity allegedly injured as a result of the presence of Hazardous Materials on any Site, or emanating from a site in any manner, whether such claim is decided adversely to or in favor of Bank, and (5) any reasonable attorney's fees incurred in connection with any of the foregoing matters; and Borrower does hereby further unconditionally assume and agree to indemnify and make Bank whole if Bank should incur any liability whatsoever under any of the Acts because of this Agreement or any acts or omissions connected herewith or otherwise because of Bank's relationship to Borrower, except to the extent resulting from Bank's gross negligence or willful misconduct. The indemnity set forth herein shall survive the repayment of all Obligations and the termination of Bank's agreement to make loans available to Borrower and the termination of this Agreement.       (f)    Except for any gross negligence or willful misconduct of Bank, Borrower will indemnify and save Bank harmless from all losses, costs, damages, liabilities or expenses (including, without limitation, court costs and reasonable attorneys' fees) that Bank may sustain or incur by reason of enforcing the Obligations, or in the prosecution or defense of any action or proceeding concerning any matter growing out of or in connection with this Agreement and/or any other documents now or hereafter executed in connection with this Agreement and/or the Obligations. This indemnity shall survive the repayment of the Obligations and the termination of Bank's agreement to make loans available to Borrower and the termination of this Agreement.       (g)    At the reasonable request of Bank, Borrower will furnish to Bank, from time to time, within ten (10) days after the accrual in accordance with applicable law of its obligation to make deposits for F.I.C.A. and withholding taxes, and/or sales taxes, proof satisfactory to Bank that such deposits have been made as required. Should Borrower fail to make any of such                                         15   deposits or furnish such proof then Bank may, in its sole and absolute discretion, (a) make any of such deposits or any part thereof, (b) pay such taxes, or any part thereof, or (c) set up such reserves as Bank, in its judgment, may deem necessary to satisfy the liability for such taxes. Each amount so deposited, paid or reserved shall constitute an advance under the terms hereof, and shall be repayable on demand with interest. Nothing herein shall be deemed to obligate Bank to make any such deposit or payment or to set up such reserve, and the making of any one or more of such deposits or payments or the setting-up of any such reserve shall not constitute (i) an agreement on Bank's part to take any further or similar action on that or any other occasion, or (ii) a waiver of any default by Borrower under the terms hereof.       (h)    All indebtedness of Borrower to Bank under this and under any other agreement constitute one general obligation. It is distinctly understood and agreed that all of the rights of Bank contained in this Agreement shall likewise apply, insofar as applicable, to any modification of or supplement to this Agreement and to any other agreements between Bank and Borrower. Any default under this Agreement by Borrower shall constitute, likewise, a default by Borrower under any and all other agreements of Borrower with Bank then existing, and any default by Borrower under any other agreement with Bank, including without limitation the promissory notes executed and delivered to Bank by Borrower in connection with this Agreement, shall constitute a default by Borrower under this Agreement.       (i)    Borrower will, at its expense, upon the request of Bank promptly and duly execute and deliver such documents and assurances and take such actions as may be necessary or desirable in Bank's sole discretion in order to correct any material defect, error or omission which may at any time be discovered in this Agreement or the documents related hereto, or to carry out more effectively the intent and purpose of this Agreement or to reasonably establish, perfect and protect Bank's rights and remedies created or intended to be created hereunder.       (j)    If Borrower shall fail to maintain its primary depositary accounts and one or more cash management accounts with Bank at all times during the term hereof then the applicable interest rate hereunder shall increase by fifty (50) basis points (0.5%). The extension of credit evidenced by this Agreement is made in express reliance on Borrower's agreement to maintain such accounts.       (k)    Borrower will promptly notify Bank of any material adverse change in Borrower's financial condition or any condition or event which constitutes, or over the passage of time or upon notice or both would constitute an Event of Default under this Agreement or any other agreement with Bank, or of any obligation of Borrower to others, or of any threat or pending claim, litigation, arbitration or governmental proceeding material to Borrower or its business or operations.                                         16        10. BORROWER'S NEGATIVE COVENANTS.       (a)    LIENS: Borrower shall not create, permit to be created or suffer to exist any lien, encumbrance or security interest of any kind upon the Borrower's facilities, except for the Permitted Liens.       (b)    TRANSACTIONS WITH AFFILIATES: Except for agreements approved by the Maine Public Utilities Commission, Borrower shall not enter into any lease or other transaction with any shareholder, officer or affiliate on terms any less favorable than those which might be obtained at the time from persons who (or entities which) are not such a shareholder, officer or affiliate.       (c)    SUBSIDIARIES: Without the prior written consent of Bank, which shall not be unreasonably withheld, Borrower shall not create any new subsidiaries or sell, transfer or otherwise dispose of any stock or other equity interest of any subsidiary or permit any subsidiary to sell, assign, exchange or otherwise dispose of any of its assets except in the ordinary course of business.       (d)    MERGERS, CONSOLIDATIONS, CONVERSIONS OR SALES: Without the prior written consent of the Bank, which shall not be unreasonably withheld or delayed, the Borrower shall not (i) merge or consolidate with or into any corporation or other entity, or convert into another entity or participate in a share exchange; (ii) enter into any joint venture or partnership with any person, firm, corporation or other entity; (iii) convey, lease or sell all or any material portion of its property or assets or business to any other person, firm, corporation or other entity; (iv) convey, lease or sell any of its assets to any person, firm, corporation or other entity for less than the fair market value thereof. Any sale, transfer, encumbrance or pledge of equity interests in Borrower will require written approval of the Bank, which approval will not be unreasonably withheld.       (e)    JURISDICTION OF ORGANIZATION. Borrower shall not change its jurisdiction of organization without the prior written consent of Bank.       11. BORROWER'S FINANCIAL COVENANTS.       (a)    RATIO OF INDEBTEDNESS FOR BORROWED MONEY TO TOTAL CAPITAL. The Borrower will not permit Consolidated Indebtedness for Borrowed Money to exceed 65% of Consolidated Total Capital at any time.       (b)    RATIO OF NET INCOME TO FIXED CHARGES. The Borrower will not permit the ratio of (i) Consolidated Net Income Available for Fixed Charges for the period of 12 consecutive months ended at the end of any fiscal quarter to (ii) Consolidated Interest Expense for such twelve-month period to be less than 1.75 to 1.00.       (c)    MINIMUM TANGIBLE NET WORTH: The Borrower will not permit its Tangible Net Worth to be less than $30,000,000 at any time.                                         17        (d)    DEFINITIONS: As used herein, the following terms have the following meanings:       "CAPITAL LEASE" means a lease which has been or should be capitalized on the books of the lessee in accordance with GAAP.       "CODE" means the Internal Revenue Code of 1986.       "COMMON SHAREHOLDERS' EQUITY" means, at any particular date, the total of the following amounts that, in conformity with GAAP, would be shown on the consolidated balance sheet of the Borrower and its Subsidiaries as of such date: (i) capital stock taken at par or stated value, plus (ii) paid-in capital, plus (iii) retained earnings, minus (iv) treasury stock, at cost.       "CONSOLIDATED INDEBTEDNESS FOR BORROWED MONEY" means, at any particular date, the total amount of (i) Debt of the Borrower and its Subsidiaries, excluding intercompany items, that, in conformity with GAAP, would be included on a consolidated balance sheet of the Borrower and its Subsidiaries (a) in respect of money borrowed, (b) in respect of obligations evidenced by a note, bond, debenture or other like written obligation to pay money, (c) in respect of obligations under Capital Leases, and (d) in respect of obligations under conditional sales or other title retention agreements, and (ii) Debt of other Persons of the nature described in clauses (a) through (d) above which is guaranteed by the Borrower or a Subsidiary or with respect to which the Borrower or a Subsidiary is contingently liable.       "CONSOLIDATED INTEREST EXPENSE" means, for any specified period, the total consolidated interest charges of the Borrower and its Subsidiaries for such period, determined in accordance with GAAP, plus (i) the allowance for borrowed funds used during construction for such period, minus (ii) interest on customer deposits for such period.       "CONSOLIDATED NET INCOME AVAILABLE FOR FIXED CHARGES" means, for any specified period, the consolidated income or loss before extraordinary items of the Borrower and its Subsidiaries for such period, determined in accordance with GAAP, plus (i) Consolidated Interest Expense for such period, plus (ii) the provision for income taxes for such period, minus (iii) the allowance for equity funds used during construction for such period.       "CONSOLIDATED TOTAL CAPITAL" means, at a particular date, the total of the amounts that, in conformity with GAAP, would be included on a consolidated balance sheet of the Borrower and its Subsidiaries as of such date in respect of (i) Consolidated Indebtedness for Borrowed Money (excluding Debt of other Persons guaranteed by the Borrower or a Subsidiary), (ii) preferred and preference stock, and (iii) Common Shareholders' Equity.       "DEBT" means, as to any Person at any date, all items that, in conformity with GAAP, would be classified as liabilities on a balance sheet of such Person as of such date and in any event shall without limitation include (i) indebtedness for borrowed money or constituting the                                         18   deferred purchase price of assets or other property or services in respect of which the Person is liable, (ii) obligations with respect to any conditional sales agreement or title retention agreement, (iii) indebtedness arising under acceptance facilities and the face amount of all letters of credit issued for the account of such Person and, without duplication, all drafts drawn thereunder, (iv) all liabilities secured by any Lien on any property owned by such Person even though it has not assumed or otherwise become liable for the payment thereof, (v) obligations under Capital Leases, (vi) obligations, contingent or otherwise, with respect to any performance bonds, (vii) unfunded vested benefits under Plans and potential withdrawal liabilities under Multiemployer Plans, and (viii) all guarantees by such Person for the payment of indebtedness of others of the character described in (i) through (vii) above.       "ERISA" means the Employee Retirement Income Security Act of 1974.       "ERISA AFFILIATE" means, as applied to any Person, any Person who is a member of a group that is under common control with such Person and who, together with such first Person is treated as a single employer within the meaning of Section 414(b), (c), (m) or (o) of the Code, or Section 4001 (b) of ERISA.       "LIEN" means any mortgage, deed to secure debt, deed of trust, pledge, charge, encumbrance, security interest, collateral assignment or other lien or restriction of any kind, whether based on common law, constitutional provision, statute or contract, and shall include reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases and other title exceptions.       "MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate of the Borrower is making, or is obligated to make, contributions or with respect to which the Borrower or any ERISA Affiliate of the Borrower has any liability.       "PERSON" means an individual or a corporation, business trust, limited liability company, partnership, trust, incorporated or unincorporated association, joint venture, government (or an agency or political subdivision thereof) or any other entity.       "PLAN" means any "PENSION PLAN" (as defined in Section 3(2) of ERISA) that is subject to the provisions of Title IV of ERISA or Section 412 of the Code (other than a Multiemployer Plan) and that (a) is maintained for employees of the Borrower or any of its ERISA Affiliates or (b) with respect to which the Borrower or any of its current or former ERISA Affiliates has liability.       "SUBSIDIARY" of any Person means any corporation or other entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by such specified Person, by such specified Person and any one or more other Subsidiaries of such Person, or by any one or more other Subsidiaries of such specified Person.                                         19        "TANGIBLE NET WORTH" means, at a particular date, the total of all amounts that, in conformity with GAAP, would be included on a consolidated balance sheet of the Borrower and its Subsidiaries as of such date in respect of Common Shareholders' Equity, plus (i) the amount of preferred and preference stock not subject to mandatory redemption, minus (ii) goodwill.       12. DEFAULT.  Upon the occurrence of any one or more of the following Events of Default:       (a)    The execution of an assignment for the benefit of the creditors of Borrower, or the occurrence of any other voluntary or involuntary liquidation or (other than in the ordinary course of business) extension of debt agreement for Borrower; the failure by Borrower to generally pay its debts as they mature; adjudication of bankruptcy or insolvency relative to Borrower; the entry of an order for relief or similar order with respect to Borrower in any proceeding pursuant to Title 11 of the United States Code entitled "Bankruptcy" (commonly referred to as the Bankruptcy Code) or any other federal bankruptcy law; the filing of any complaint, application, or petition by or against Borrower initiating any matter in which it is or may be granted any relief from debts pursuant to any other insolvency statute or procedure, but if such filing is against Borrower by one or more third parties, only if Borrower shall fail to contest such filing actively or shall fail to cause it to be removed within sixty (60) days; the calling by Borrower of a meeting of creditors of Borrower; the formation with respect to Borrower of a formal or informal creditor's committee; the offering by or entering into by Borrower of any composition, extension or any other arrangement seeking relief or extension for its debts generally, or the initiation of any other judicial or non-judicial proceeding or agreement by, against or including Borrower which seeks or intends to accomplish a reorganization or arrangement with creditors; or       (b)    The termination of existence, dissolution, or liquidation of Borrower or any guarantor; or       (c)    The ceasing or failure of this Agreement, at any time after its execution and delivery and for any reason, to be in full force and effect; or any determination or declaration that this Agreement is null and void; or the commencement or prosecution of any contest challenging the validity or enforceability hereof by Borrower or any guarantor; or any denial by Borrower that it has any further liability or obligation hereunder; or       (d)    The service of any process upon Bank seeking to attach by trustee process any funds of Borrower on deposit with Bank, if the aggregate of such attachments equals or exceeds $500,000 at any given time and such attachment is not dissolved or bonded over to Bank's satisfaction within thirty (30) days; or       (e)    The failure by Borrower promptly, punctually and faithfully to perform or to observe any term, covenant or agreement on its part to be performed or observed pursuant to the following provisions of this Agreement, or the material inaccuracy of the representations and                                         20   warranties included in the following provisions, as of the time given: Sections 9(a), 9(k), 10(d), 10(e), 11;  then the principal of and all interest on the loans then outstanding, and all other amounts due hereunder, shall become forthwith due and payable without presentment, demand, protest or notice of any kind, all of which Borrower hereby expressly waives.       Upon the occurrence of any one or more of the following Events of Default (together with the Events of Default listed above, the "EVENTS OF DEFAULT" and individually an "EVENT OF DEFAULT"):       (f)    The failure by Borrower to pay any amount due under this Agreement or any of the promissory notes relating hereto within fifteen (15) days of the due date; or       (g)    The failure by Borrower to pay upon demand (or within fifteen (15) days of when due, if not payable on demand) any other of the Obligations, or any portion thereof; or       (h)    The failure by Borrower promptly, punctually and faithfully to perform or to observe any term covenant or agreement on its part to be performed or observed pursuant to any provisions of this Agreement (other than as expressly set forth in this Section 10), and the continuance thereof for thirty (30) days after notice of such default has been given; or       (i)    The occurrence of any event of default such that any indebtedness of Borrower in excess of $1,500,000 from any lender other than Bank could be accelerated, regardless of whether such acceleration has taken place; or       (j)    Any filing against or relating to Borrower of (i) a federal tax lien in favor of the United States of America or any political subdivision of the United States of America, or (ii) a state tax lien in favor of any state of the United States of America or any political subdivision of any such state, other than a lien for taxes not yet due and payable, unless such lien is removed or bonded over to the Bank's satisfaction within thirty (30) days; or       (k)    The occurrence of any event of default under any other agreement between Bank and Borrower or under any instrument or document given to Bank by Borrower , whether such agreement, instrument, or document now exists or hereafter arises (regardless of whether Bank has exercised any of its rights upon default under any such other agreement, instrument or document) and the failure to cure such default within any applicable grace period; or       (l)    Any act by, against, or relating to Borrower, or its property or assets, which act constitutes the application for, consent to, acquiescence in, or sufferance of the appointment of a receiver, trustee or other person, pursuant to court action or otherwise, over all or any material part of its property; or                                         21        (m)    The entry of any judgment against Borrower in an amount in the aggregate greater than $500,000, which judgment is not satisfied, bonded over or appealed from (with execution or similar process stayed) within thirty (30) days of entry; or       (n)    The entry of any court order which enjoins, restrains or in any way prevents Borrower from conducting all or any substantial part of its business affairs in the ordinary course of business; or       (o)    The occurrence of any uninsured or materially underinsured loss, theft, damage or destruction to any material asset(s) of Borrower; or       (p)    Any act by, against, or relating to Borrower or its assets pursuant to which any creditor of Borrower seeks to reclaim or repossess, or reclaims or repossesses, all or a substantial portion of its assets; or       (q)    The existence or occurrence of any of the following events with respect to Borrower or any ERISA affiliate: (i) any "prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of the Internal Revenue Code) involving any Plan; (ii) any "reportable event" (as defined in Section 4043 of ERISA and the regulations issued under such Section) with respect to any Plan; (iii) the filing under Section 4041 of ERISA of a notice of intent to terminate any Plan or the termination of any Plan; (iv) any event or circumstance which might constitute grounds entitling the Pension Benefit Guaranty Corporation ("PBGC") to institute proceedings under Section 4042 of ERISA for the termination of, or for the appointment of a trustee to administer, any Plan, or the institution by the PBGC of any such proceedings; or (v) any partial withdrawal under Section 4201 or 4204 of ERISA from a Multiemployer Plan; or any reorganization, insolvency, or termination of any Multiemployer Plan; and in each case above, such event or condition, together with all other events or conditions, if any, could in the opinion of Bank subject Borrower to any material tax, penalty, or other liability to a Plan, a Multiemployer Plan, the PBGC, or otherwise; or       (r)    The attachment of any security interest, lien or mortgage not in favor of Bank, other than Permitted Liens, upon the Borrower's facilities, without Bank's prior written consent and the continuation thereof for thirty (30) days after Borrower gains actual knowledge thereof; or       (s)    The determination by Bank that any material representation or warranty heretofore, now or hereafter made by Borrower to Bank, in any document, instrument or agreement was not materially true or accurate when given;  then or at any time thereafter while such Event of Default described in Sections 12(f) through 12 (s) is continuing, Bank may declare all indebtedness of Borrower hereunder due and payable, whereupon it shall become forthwith due and payable, without further presentment, demand, protest or notice of any kind, all of which Borrower hereby expressly waives.                                         22        The occurrence of any such Event of Default shall also constitute, without notice or demand, a default under all other agreements between Bank and Borrower and under all instruments and documents given to Bank by Borrower, but only to the extent included within Obligations, whether such agreements, instruments, or documents now exist or hereafter arise.       Upon the occurrence and during the continuance of any Event of Default, Bank may declare any and all obligations Bank may have hereunder to be canceled, may declare any or all Obligations to be due and payable, and may proceed to enforce payment of the Obligations and to exercise any and all of the rights and remedies afforded to Bank by the Uniform Commercial Code, under the terms of this Agreement, or otherwise. In addition, upon the occurrence and during the continuance of any Event of Default, all Obligations (including, without limitation, principal, interest accrued to the time of demand on the Obligations, or upon the entry of any judgment) shall bear interest payable on demand at a rate per annum of four (4%) percent in excess of the Prime Rate, for so long as the Event of Default remains uncured.       13. JURY TRIAL WAIVER. IT IS MUTUALLY AGREED BY BANK AND BORROWER THAT THE RESPECTIVE PARTIES HERETO SHALL AND HEREBY DO WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING, COUNTERCLAIM, OBJECTION TO CLAIM IN A BANKRUPTCY CASE, OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES HERETO AGAINST ANY OF THE OTHERS ON ANY MATTER WHATSOEVER ARISING OUT OF, RELATED TO, OR IN ANY WAY CONNECTED WITH THIS AGREEMENT AND/OR THE TRANSACTIONS OR DOCUMENTS CONTEMPLATED HEREBY. WITHOUT IN ANY WAY LIMITING THE SCOPE OR EFFECT OF THE FOREGOING WAIVER OF THE JURY TRIAL RIGHT, THE PARTIES HERETO SPECIFICALLY AGREE THAT SUCH WAIVER SHALL BE EFFECTIVE IN ANY ACTION ARISING OUT OF OR RELATED TO: (A) ANY ALLEGED ORAL PROMISE OR COMMITMENT BY BANK, (B) ANY ALLEGED MODIFICATION OR AMENDMENT OF THIS AGREEMENT AND/OR THE TRANSACTIONS OR DOCUMENTS CONTEMPLATED HEREBY, WHETHER IN WRITING, ORAL, OR BY ALLEGED CONDUCT; (C) ANY ENFORCEMENT OF THIS AGREEMENT AND/OR THE TRANSACTIONS OR DOCUMENTS CONTEMPLATED HEREBY, AND (D) ANY REPOSSESSION, TAKING OF POSSESSION, OR DISPOSITION OF COLLATERAL SECURING THE INDEBTEDNESS EVIDENCED BY THIS AGREEMENT AND/OR THE TRANSACTIONS OR DOCUMENTS CONTEMPLATED HEREBY. WITHOUT IN ANY WAY LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY ARE WAIVED BY OPERATION OF THIS PARAGRAPH AS TO ANY ACTION, COUNTERCLAIM, OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT AND/OR THE TRANSACTIONS OR DOCUMENTS CONTEMPLATED HEREBY OR ANY PROVISION THEREOF.                                         23        14. CONSENT TO JURISDICTION. Borrower and Bank agree that any judicial action or proceeding to enforce or arising out of this Agreement may, subject to the provisions of Section 12 hereof, be commenced in any court of the State of Maine or in the District Court of the United States for the District of Maine.       15. TERMINATION AND EXPIRATION NOT TO AFFECT BANK'S RIGHTS. Unless and until all loans made by Bank to Borrower hereunder and all other Obligations and commitments of Bank under which an Obligation could arise, outstanding as of the time of the termination or expiration of this Agreement, have been paid in full (and, in the case of such commitments, have been terminated), such termination or expiration shall in no way affect the rights and powers herein granted to Bank, and until such payment in full (and termination) all rights and powers herein granted to Bank in respect thereof and otherwise, and all liabilities, obligations and agreements of Borrower hereunder, shall remain in full force and effect. Until all of the Obligations have been fully paid and satisfied and all commitments of Bank under which an Obligation could arise have expired, Borrower shall continue to fully comply with the terms and conditions of this Agreement as herein provided. Prior to such payment in full of all of the Obligations and the simultaneous termination of all of such commitments by Bank, Borrower's obligations under this Agreement shall constitute a continuing agreement in every respect.       16. MISCELLANEOUS.       (a)    No delay or omission on the part of Bank in exercising any rights shall operate as a waiver of such right or any other right. Waiver on any one occasion shall not be construed as a bar to or waiver of any right or remedy on any future or other occasion. All of Bank's rights and remedies, whether evidenced hereby or by any other agreement, instrument or paper, shall be cumulative and may be exercised singularly or concurrently.       (b)    Bank is authorized to make loans under the terms of this Agreement upon the request, either written or oral, in the name of Borrower or any authorized person whose name appears at the end of this Agreement or of any persons from time to time holding the office of President of Borrower or of such other officers and authorized signatories as may from time to time be set forth in any banking and borrowing resolutions, or of any other agents or officers with apparent authority to act for Borrower in requesting loans hereunder.       (c)    The Bank may at any time pledge all or any portion of its rights under the loan documents including any portion of the promissory note to any of the twelve (12) Federal Reserve Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or enforcement thereof shall release Bank from its obligations under any of the loan documents.       (d)    Subject to Maine Public Utilities Commission Approval, if required, and notice to Borrower, the Bank shall have the right at any time or from time to time, and without Borrower's consent, to assign all or any portion of its rights and obligations hereunder to one or more banks                                         24   or other financial institutions (each, an "Assignee"), and Borrower and each guarantor agrees that it shall execute, or cause to be executed, such documents, including without limitation, amendments to this Agreement and to any other documents, instruments and agreements executed in connection herewith as the Bank shall deem necessary to effect the foregoing. In addition, at the request of the Bank and any such Assignee, the Borrower shall issue one or more new promissory notes, as applicable, to any such Assignee and if the Bank has retained any of its rights and obligations hereunder following such assignment, to the Bank, which new promissory notes shall be issued in replacement of, but not in discharge of, the liability evidenced by the promissory note held by the Bank prior to such assignment and shall reflect the amount of the respective commitments and loans held by such Assignee and the Bank after giving effect to such assignment. Upon the execution and delivery of appropriate assignment documentation, amendments and any other documentation required by the Bank in connection with such assignment, and the payment by Assignee of the purchase price agreed to by the Bank, and such Assignee, such Assignee shall be a party to this Agreement and shall have all of the rights and obligations of the Bank hereunder (and under any and all other guaranties, documents, instruments and agreements executed in connection herewith) to the extent that such rights and obligations have been assigned by the Bank pursuant to the assignment documentation between the Bank and such Assignee, and the Bank shall be released from its obligations hereunder and thereunder to a corresponding extent.       (e)    Subject to Maine Public Utilities Commission Approval, if required, Bank shall have the right at any time and from time to time, and without the consent of or notice to Borrower , to grant to one or more banks or other financial institutions (each, a "PARTICIPANT") participating interests in Bank's obligation to lend hereunder and/or any or all of the loans held by Bank hereunder. In the event of any such grant by Bank of a participating interest to a Participant, whether or not upon notice to Borrower, Bank shall remain responsible for the performance of its obligations hereunder and Borrower shall continue to deal solely and directly with Bank in connection with the Bank's rights and obligations hereunder. Bank may furnish any information concerning Borrower in its possession from time to time to prospective Participants, provided that Bank shall require any such prospective Participant to agree in writing to maintain the confidentiality of such information.       (f)    Upon receipt of an affidavit of an officer of Bank as to the loss, theft, destruction or mutilation of the Note relating to this Agreement or any other security document which is not of public record, and, in the case of any such loss, theft, destruction or mutilation, upon cancellation of such Note or other security document, Borrower will issue, in lieu thereof, a replacement note or other security document in the same principal amount thereof and otherwise of like tenor. Borrower may condition its agreement to provide the foregoing upon Bank's written agreement to indemnify Borrower from and against any and all claims, liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs and expenses of any kind whatsoever which may be imposed upon the Borrower in connection with the presentation or attempted collection of the lost, stolen, destroyed or mutilated document that is being replaced.                                         25        (g)    All agreements between Borrower and Bank are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration of maturity of the indebtedness evidenced hereby or otherwise, shall the amount paid or agreed to be paid to Bank for the use or the forbearance of the indebtedness evidenced hereby exceed the maximum permissible under applicable law. As used herein, the term "applicable law" shall mean the law in effect as of the date hereof provided, however, that in the event there is a change in the law which results in a higher permissible rate of interest, then this Agreement shall be governed by such new law as of its effective date. In this regard, it is expressly agreed that it is the intent of Borrower and Bank in the execution, delivery and acceptance of this Agreement to contract in strict compliance with the laws of the State of Maine from time to time in effect. If, under or from any circumstances whatsoever, fulfillment of any provision hereof or of any promissory note evidencing the Loans at the time of performance of such provision shall be due, shall involve transcending the limit of such validity prescribed by applicable law, then the obligation to be fulfilled shall automatically be reduced to the limits of such validity, and if under or from circumstances whatsoever Bank should ever receive as interest an amount which would exceed the highest lawful rate, such amount which would be excessive interest shall be applied to the reduction of the principal balance hereunder and not to the payment of interest. This provision shall control every other provision of all agreements between Borrower and Bank.       (h)    This Agreement, together with the Note related hereto, are intended by the parties as the final, complete and exclusive statement of the transactions evidenced by this Agreement. All prior or contemporaneous promises, agreements and understandings, whether oral or written, are deemed to be superseded by this Agreement, and no party is relying on any promise, agreement or understanding not set forth in this Agreement. This Agreement may not be amended or modified except by a written instrument describing such amendment or modification executed by Borrower and Bank.       (i)    Borrower agrees that any and all loans made by Bank to Borrower or for its account under this Agreement shall be conclusively deemed to have been authorized by Borrower and to have been made pursuant to duly authorized requests therefor on its behalf.       (j)    Unless otherwise defined in this Agreement, capitalized words shall have the meanings set forth in the Uniform Commercial Code as in effect in the State of Maine as of the date of this Agreement.       (k)    Any paragraph and section headings used in this Agreement are for convenience only, and shall not affect the meaning or construction of this Agreement. If one or more provisions of this Agreement (or the application thereof) shall be invalid, illegal or unenforceable in any respect in any jurisdiction, such invalidity, illegality or unenforceability shall not affect in any way the validity, legality or enforceability of such provision (or its application) in any other jurisdiction or of any other provision of this Agreement (or its application) in any jurisdiction. This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes any prior written or verbal communications or instruments relating thereto.                                         26        (l)    All notices and other communications hereunder shall be made by hand delivery, overnight courier, or certified or registered mail, return receipt requested, and shall be deemed to be received by the party to whom sent upon delivery, if delivered by hand ; one business day after sending, if sent by overnight courier; and three business days after mailing, if sent by certified or registered mail. All such notices shall be deemed given upon such deemed receipt. All such notices and other communications to a party hereto shall be addressed to such party at the address set forth at the end of this Agreement (or to such other address as such party may designate for itself in a notice to the other party given in accordance with this section) and shall be sent postage and other charges prepaid.       (m)    By signing below, Borrower agrees and acknowledges that, under Maine law, no promise, contract, or agreement to lend money, extend credit, forbear from collection of debt or make any other accommodation for the repayment of a debt for more than $250,000 may be enforced against Bank unless the promise, contract, or agreement (or some memorandum or note thereof) is in writing and signed by Bank.       (n)    This Agreement, and the documents related thereto, are being executed and delivered by Borrower in Presque Isle, Maine, and the laws of the State of Maine shall govern the interpretation, enforcement and construction of this Agreement and the of rights and duties of the parties hereto. This Agreement shall take effect as a sealed instrument and shall be effective as of the date first set forth above, regardless of the actual date of execution and delivery.                                         27   Witnessed By:             MAINE PUBLIC SERVICE COMPANY                             By: - -----------------------      ------------------------------                           Name:                           Title:                                  Address:                                  209 State Street                                  Presque Isle, ME 04769                                    Copies of notices to the Borrower shall also                                  be sent to the following address, but a failure                                  to do so shall not affect the validity of any                                  such notice:                                   James L. Costello, Esquire                                  Curtis Thaxter Stevens Broder Micoleau LLC                                  One Canal Plaza                                  Portland, ME  04112   Witnessed by:             FLEET NATIONAL BANK                             By: - -----------------------      ------------------------------                                  Title:                                    Address:                                  Two Portland Square                                  P.O. Box 1280                                  Portland, ME 04104                                         28                                       SCHEDULES       The following Schedules to the Master Loan Agreement to which they are attached are respectively described in the section indicated. Those Schedules in which no information has been inserted shall be deemed to read "None".                                         29                                      SCHEDULE A  1. Other Jurisdictions In Which Borrower Is Organized or Qualified to do Business (Section 4(a))  None.                                         30                                      SCHEDULE B                             Subsidiaries (Section 4(a))                  Jurisdiction of Name          Incorporation     Address            Affiliation to Borrower - ----          ---------------   -------            ------------------------     Maine & New   New Brunswick     209 State Street   100% wholly owned Brunswick     Canada            Presque Isle, ME   subsidiary Electrical                      04769 Power Co.                                          31                                      SCHEDULE C                   Other Encumbrances and Liens (Section 4(e)(i))    Secured Party                    Description of                   Payment Terms and Or Mortgagee                     of Collateral                    Dates of Maturity - -------------                    --------------                   -----------------    A.  U.S. Bank Trust National     Blanket  Indenture     Association, Trustee  B.  Bank of New York , Trustee   Blanket Indenture   C.  The following:       (i)    Liens for taxes, assessments, or governmental charges for the then current year and taxes, assessments or governmental charges not then delinquent, and liens for taxes, assessments or governmental charges already delinquent, but whose validity is at the time being contested in good faith by the Company in compliance with the provisions of Section 4(f);       (ii)   Liens and charges incidental to construction or current operation which have not at such time been filed or asserted or the payment of which has been adequately secured or which are immaterial in amount;       (iii)  Liens, securing obligations neither assumed by the Borrower or a subsidiary nor on account of which they customarily pay interest directly or indirectly, existing, either at the date hereof, or, as to property hereafter acquired, at the time of acquisition by the Borrower or a subsidiary, upon real estate or rights in or relating to real estate acquired by the Borrower or a subsidiary for substation or transmission, distribution or other right-of-way purposes;       (iv)   Any right which any municipal or governmental body or agency may have by virtue of any franchise, license, contract or statute to purchase, or designate a purchaser of or order the sale of, any property of the Borrower or a subsidiary upon payment of reasonable compensation therefore or to terminate any franchise, license or other rights or to regulate the property and business of the Borrower or a subsidiary, PROVIDED that any such compensation is applied in accordance with the requirements of the First Mortgage Indenture and the Second Mortgage Indenture;       (v)    Liens of judgments covered by insurance or if not so covered not exceeding at any one time $500,000 in aggregate amount and liens in respect of judgments or awards in respect of which an appeal or proceeding for review shall be pending or a stay of execution shall have been obtained, Borrower shall have notified Bank in writing of such appeal, proceeding or stay prior to the commencement thereof, and in respect of which adequate reserves shall have been established on the books of the Borrower or a subsidiary;                                         32        (vi)   Easements or reservations in respect of any property of the Borrower for the purpose of rights-of-way and similar purposes, reservations, restrictions, covenants, party wall agreements, conditions of record and other encumbrances (other than to secure the payment of money), which do not materially interfere with the proper operation and development of the property affected thereby;       (vii)  Any lien or encumbrance, moneys sufficient for the discharge of which have been deposited in trust with the trustee or mortgagee under the instrument evidencing such lien or encumbrance, with irrevocable authority to such trustee or mortgagee to apply such moneys to the discharge of such lien or encumbrance to the extent required for such purpose;       (viii) Any lien reserved as security for rent or for compliance with other provisions of the lease in the case of any leasehold estate;       (ix)   Liens in respect of attachments which were discharged with 60 days after entry, or which have been bonded and are being contested in good faith and by appropriate proceedings diligently conducted, PROVIDED that Borrower has so notified Bank in writing prior to the commencement of such contest and FURTHER PROVIDED that no such lien exceeds $500,000 or secures an amount in excess of such amount;       (x)    Deposits or pledges to secure bids, tenders, contracts (other than contracts for the payment of borrowed money), leases, statutory obligations, surety and appeal bonds and other obligations of like nature arising in the ordinary course of business;       (xi)   Extensions or renewals of any liens permitted by this definition in respect of all or a part of the property theretofore subject thereto; and       (xii)  The undivided interest of other owners, and liens on such undivided interests, in property owned jointly with the Borrower, whether or not the Borrower is presently entitled to require partition of such property.                                         33                                      SCHEDULE D                                Leases (Section 4(e))  BORROWER AS LESSOR:                              Description             Date of Lease      Lessee               of Property               and Term      ------               -----------             -------------           BORROWER AS LESSEE:                              Description             Date of Lease      Lessor               of Property               and Term      ------               -----------             -------------                                                  34                                      SCHEDULE E                   Litigation and Other Proceedings (Section 4(h))  No litigation; reference is made to the latest 10-Q filing with the Securities and Exchange Commission for information on regulatory matters.                                         35                                      SCHEDULE F                        Environmental Matters (Section 9(e))                                         36    EX-10.AJ 9 a2168719zex-10_aj.txt EXHIBIT 10.AJ                                                                       Exhibit 10.aj                                  CREDIT AGREEMENT                             Dated as of October 7, 2005                                       among                           MAINE PUBLIC SERVICE COMPANY,                                   as Borrower,                              BANK OF AMERICA, N.A.,                              as Administrative Agent                                        and                                    L/C Issuer,                                        and                          The Other Lenders Party Hereto                                    TABLE OF CONTENTS    Section                                                                                                             Page - -------                                                                                                             ----   ARTICLE I.            DEFINITIONS AND ACCOUNTING TERMS................................................................ 1         1.01          Defined Terms................................................................................... 1         1.02          Other Interpretive Provisions...................................................................13         1.03          Accounting Terms................................................................................13         1.04          Rounding........................................................................................13         1.05          Times of Day....................................................................................14         1.06          Letter of Credit Amounts........................................................................14  ARTICLE II.           THE COMMITMENTS AND CREDIT EXTENSIONS...........................................................14         2.01          Committed Loans.................................................................................14         2.02          Borrowings, Conversions and Continuations of Committed Loans....................................14         2.03          Letters of Credit...............................................................................15         2.04          [Intentionally Omitted].........................................................................20         2.05          Prepayments.....................................................................................20         2.06          Termination or Reduction of Commitments.........................................................20         2.07          Repayment of Loans..............................................................................21         2.08          Interest........................................................................................21         2.09          Fees............................................................................................21         2.10          Computation of Interest and Fees................................................................21         2.11          Evidence of Debt................................................................................22         2.12          Payments Generally; Agent's Clawback............................................................22         2.13          Sharing of Payments.............................................................................23  ARTICLE III.          TAXES, YIELD PROTECTION AND ILLEGALITY..........................................................24         3.01          Taxes...........................................................................................24         3.02          Illegality......................................................................................24         3.03          Inability to Determine Rates....................................................................25         3.04          Increased Costs.................................................................................25         3.05          Compensation for Losses.........................................................................26         3.06          Mitigation Obligations..........................................................................26         3.07          Survival........................................................................................26  ARTICLE IV.           CONDITIONS PRECEDENT TO CREDIT EXTENSIONS.......................................................26         4.01          Conditions of Initial Credit Extension..........................................................26         4.02          Conditions to all Credit Extensions.............................................................28  ARTICLE V.            REPRESENTATIONS AND WARRANTIES..................................................................28         5.01          Existence, Qualification and Power; Compliance with Laws........................................28         5.02          Authorization; No Contravention.................................................................28         5.03          Governmental Authorization; Other Consents......................................................28         5.04          Binding Effect..................................................................................28         5.05          Financial Statements; No Material Adverse Effect; No Internal Control Event.....................29         5.06          Litigation......................................................................................29         5.07          No Default......................................................................................29         5.08          Ownership of Property; Liens....................................................................29         5.09          Environmental Compliance........................................................................29         5.10          Insurance.......................................................................................30         5.11          Taxes...........................................................................................30         5.12          ERISA Compliance................................................................................30         5.13          Subsidiaries....................................................................................30         5.14          Margin Regulations; Investment Company Act; Public Utility Holding Company Act..................30         5.15          Disclosure......................................................................................31         5.16          Compliance with Laws............................................................................31                                           i             5.17          Intellectual Property; Licenses, Etc............................................................31         5.18          Rights in Collateral; Priority of Liens.........................................................31  ARTICLE VI.           AFFIRMATIVE COVENANTS...........................................................................31         6.01          Financial Statements............................................................................31         6.02          Certificates; Other Information.................................................................32         6.03          Notices.........................................................................................33         6.04          Payment of Obligations..........................................................................34         6.05          Preservation of Existence, Etc..................................................................34         6.06          Maintenance of Properties.......................................................................34         6.07          Maintenance of Insurance........................................................................34         6.08          Compliance with Laws............................................................................34         6.09          Books and Records...............................................................................34         6.10          Inspection Rights...............................................................................34         6.11          Use of Proceeds.................................................................................34         6.12          Financial Covenants.............................................................................34         6.13          Collateral Records..............................................................................35         6.14          Security Interests..............................................................................35  ARTICLE VII.          NEGATIVE COVENANTS..............................................................................35         7.01          Liens...........................................................................................35         7.02          Investments.....................................................................................36         7.03          Indebtedness....................................................................................36         7.04          Fundamental Changes.............................................................................36         7.05          Dispositions....................................................................................37         7.06          Restricted Payments.............................................................................37         7.07          Change in Nature of Business....................................................................37         7.08          Transactions with Affiliates....................................................................37         7.09          Burdensome Agreements...........................................................................37         7.10          Use of Proceeds.................................................................................38  ARTICLE VIII.         EVENTS OF DEFAULT AND REMEDIES..................................................................38         8.01          Events of Default...............................................................................38         8.02          Remedies Upon Event of Default..................................................................39         8.03          Application of Funds............................................................................40  ARTICLE IX.           ADMINISTRATIVE AGENT............................................................................40         9.01          Appointment and Authorization of Administrative Agent...........................................40         9.02          Rights as a Lender..............................................................................40         9.03          Exculpatory Provisions..........................................................................41         9.04          Reliance by Administrative Agent................................................................41         9.05          Delegation of Duties............................................................................41         9.06          Resignation of Agent............................................................................41         9.07          Non-Reliance on Agent and Other Lenders.........................................................42         9.08          No Other Duties, Etc............................................................................42         9.09          Administrative Agent May File Proofs of Claim...................................................42         9.10          Collateral Matters..............................................................................43  ARTICLE X.            MISCELLANEOUS...................................................................................44         10.01         Amendments, Etc.................................................................................44         10.02         Notices; Effectiveness; Electronic Communications...............................................44         10.03         No Waiver; Cumulative Remedies..................................................................45         10.04         Expenses; Indemnity: Damage Waiver..............................................................46         10.05         Payments Set Aside..............................................................................47         10.06         Successors and Assigns..........................................................................47         10.07         Treatment of Certain Information; Confidentiality...............................................49         10.08         Right of Setoff.................................................................................49         10.09         Interest Rate Limitation........................................................................49                                          ii             10.10         Counterparts; Integration; Effectiveness........................................................50         10.11         Survival of Representations and Warranties......................................................50         10.12         Severability....................................................................................50         10.13         Governing Law; Jurisdiction; Etc................................................................50         10.14         Waiver of Right to Trial by Jury................................................................51         10.15         USA Patriot Act Notice..........................................................................51         10.16         Time of the Essence.............................................................................51         10.17         Maine Notice....................................................................................51   SCHEDULES          2.01   Commitments and Applicable Percentages         5.06   Litigation         5.09   Environmental Matters         5.13   Subsidiaries and Other Equity Investments         7.01   Existing Liens         7.03   Existing Indebtedness         10.02  Administrative Agent's Office, Certain Addresses for Notices  EXHIBITS        FORM OF        A       Committed Loan Notice        B       [Intentionally Omitted]        C       Note        D       Compliance Certificate        E       Assignment and Assumption                                         iii                                   CREDIT AGREEMENT  CREDIT AGREEMENT (this "AGREEMENT") is entered into as of October 7, 2005, among MAINE PUBLIC SERVICE COMPANY, a Maine corporation ("BORROWER"), each lender from time to time party hereto (collectively, "LENDERS" and individually, a "LENDER"), and BANK OF AMERICA, N.A., as Administrative Agent and L/C Issuer. This Agreement memorializes the refinancing of Borrower's Revolving Credit Agreement dated as of October 8,1987, with The Bank of New York as Agent, as the same has been amended to date, which is being terminated in connection with Borrower's execution and delivery of this Agreement, and as such this Agreement is the "Revolving Credit Agreement" referred to in the Twenty-First Supplemental Indenture dated as of March 1, 2005 (the "Twenty-First Supplemental Indenture") by and between Borrower and U.S. Bank National Association, Trustee (the "Indenture Trustee"), supplementing and modifying the Indenture of Mortgage and Deed of Trust dated as of October 1, 1945, relating to the issuance of First Mortgage and Collateral Trust Bonds, Series Due 2015, in the original principal amount of $6,000,000 (the "First Mortgage Bonds").  Borrower has requested that Lenders provide a revolving credit facility, and Lenders are willing to do so on the terms and conditions set forth herein. In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:  ARTICLE I.  DEFINITIONS AND ACCOUNTING TERMS          1.01 DEFINED TERMS. As used in this Agreement, the following terms shall have the meanings set forth below:  "ADMINISTRATIVE AGENT" or "AGENT" means Bank of America in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.  "ADMINISTRATIVE AGENT'S OFFICE" means Agent's address and, as appropriate, account as set forth on SCHEDULE 10.02, or such other address or account as Agent may from time to time notify Borrower and Lenders.  "ADMINISTRATIVE QUESTIONNAIRE" means an Administrative Questionnaire in a form supplied by Agent.  "AFFILIATE" means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.  "AGENT FEE LETTER" has the meaning specified in SECTION 2.09(b).  "AGGREGATE COMMITMENTS" means the Commitments of all Lenders.  "AGREEMENT" means this Credit Agreement.  "APPLICABLE PERCENTAGE" means with respect to any Lender at any time, the percentage (carried out to the ninth decimal place) of the Aggregate Commitments represented by such Lender's Commitment at such time. If the commitment of each Lender to make Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have been terminated pursuant to SECTION 8.02 or if the Aggregate Commitments have expired, then the Applicable Percentage of each Lender shall be determined based on the Applicable Percentage of such Lender most recently in effect, giving effect to any subsequent assignments. The initial Applicable Percentage of each Lender is set forth opposite the name of such Lender on SCHEDULE 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.  "APPLICABLE RATE" means a per annum rate equal to:  (a)     with respect to Base Rate Loans, 0%;  (b)     with respect to Eurodollar Rate Loans and Letters of Credit, 1.375%; and  (c)     with respect to the commitment fee, 0.25%.                                          1   "ASSIGNMENT AND ASSUMPTION" means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by SECTION 10.06(b), and accepted by Agent, in substantially the form of EXHIBIT E or any other form approved by Agent.  "ATTRIBUTABLE INDEBTEDNESS" means, on any date, (a) in respect of any capital lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a capital lease.  "AUDITED FINANCIAL STATEMENTS" means the audited consolidated balance sheet of Parent and its subsidiaries for the fiscal year ended December 31, 2004, and the related consolidated statements of income or operations, shareholders' equity and cash flows for such fiscal year of Parent and its subsidiaries, including the notes thereto.  "AVAILABILITY PERIOD" means the period from and including the Closing Date to the earliest of (a) the Maturity Date, (b) the date of termination of the Aggregate Commitments pursuant to SECTION 2.06, and (c) the date of termination of the commitment of each Lender to make Loans and of the obligation of the L/C Issuer to make L/C Credit Extensions pursuant to SECTION 8.02.  "BANK OF AMERICA" means Bank of America, N.A. and its successors.  "BASE RATE" means for any day a fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its "prime rate." The "prime rate" is a rate set by Bank of America based upon various factors including Bank of America's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.  "BASE RATE COMMITTED LOAN" means a Committed Loan that is a Base Rate Loan.  "BASE RATE LOAN" means a Loan that bears interest based on the Base Rate.  "BORROWER" has the meaning specified in the introductory paragraph hereto.  "BORROWER FINANCIAL STATEMENTS" has the meaning specified in Section 6.01(a)(ii)  "BORROWER MATERIALS" has the meaning specified in Section 6.02.  "BORROWING" means a Committed Borrowing.  "BUSINESS DAY" means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where Administrative Agent's Office is located and, if such day relates to any Eurodollar Rate Loan, means any such day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.  "CASH COLLATERALIZE" has the meaning specified in SECTION 2.03(g).  CHANGE IN LAW" means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority.  "CHANGE OF CONTROL" means, with respect to any Person, an event or series of events by which:  (a)  any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee,                                          2   agent or other fiduciary or administrator of any such plan) becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have "beneficial ownership" of all securities that such person or group has the right to acquire (such right, an "OPTION RIGHT"), whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 25% or more of the equity securities of such Person entitled to vote for members of the board of directors or equivalent governing body of such Person on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right);  (b)  during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of such Person cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body (excluding, in the case of both clause (ii) and clause (iii), any individual whose initial nomination for, or assumption of office as, a member of that board or equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the board of directors); or  (c)  any individual(s) or entity(s) acting in concert shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation thereof, will result in its or their acquisition of the power to exercise, directly or indirectly, a controlling influence over the management or policies of such Person, or control over the equity securities of such Person entitled to vote for members of the board of directors or equivalent governing body of such Person on a fully-diluted basis (and taking into account all such securities that such individual(s) or entity(s) or group has the right to acquire pursuant to any option right) representing 25% or more of the combined voting power of such securities.  "CLOSING DATE" means the first date all the conditions precedent in SECTION 4.01 are satisfied or waived in accordance with SECTION 10.01.  "CODE" means the Internal Revenue Code of 1986.  "COLLATERAL" shall mean the First Mortgage Bonds.  "COLLATERAL DOCUMENTS" means the First Mortgage Bonds and all agreements, instruments and documents now or hereafter executed and delivered in connection with this Agreement pursuant to which Liens are granted or purported to be granted to Agent in Collateral securing all or part of the Obligations each in form and substance satisfactory to Agent.  "COMMITMENT" means, as to each Lender, its obligation to (a) make Committed Loans to Borrower pursuant to SECTION 2.01, and (b) purchase participations in L/C Obligations, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender's name on SCHEDULE 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.  "COMMITTED BORROWING" means a borrowing consisting of simultaneous Committed Loans of the same Type and, in the case of Eurodollar Rate Loans, having the same Interest Period made by each of the Lenders pursuant to SECTION 2.01.  "COMMITTED LOAN" has the meaning specified in SECTION 2.01.  "COMMITTED LOAN NOTICE" means a notice of (a) a Committed Borrowing, (b) a conversion of Committed Loans from one Type to the other, or (c) a continuation of Eurodollar Rate Loans, pursuant to SECTION 2.02(a), which, if in writing, shall be substantially in the form of EXHIBIT A.  "COMPLIANCE CERTIFICATE" means a certificate substantially in the form of EXHIBIT D.  "CONSOLIDATED INTEREST EXPENSE" means, for any specified period, the total consolidated interest charges of the Borrower and its Subsidiaries for such period, determined in accordance with GAAP, plus (i) the allowance for borrowed funds used during construction for such period, minus (ii) interest on customer deposits for such period.                                          3   "CONSOLIDATED NET INCOME AVAILABLE FOR FIXED CHARGES" means, for any specified period, the consolidated income or loss before extraordinary items of the Borrower and its Subsidiaries for such period, determined in accordance with GAAP, plus (i) Consolidated Interest Expense for such period, plus (ii) the provision for income taxes for such period, minus (iii) the allowance for equity funds used during construction for such period.  "CONSOLIDATED TOTAL CAPITAL" means, at a particular date, the total of the amounts that, in conformity with GAAP, would be included on a consolidated balance sheet of the Borrower and its Subsidiaries as of such date in respect of (i) Consolidated Indebtedness for Borrowed Money (excluding Indebtedness of other Persons guaranteed by the Borrower or a Subsidiary), (ii) preferred and preference stock, and (iii) Common Shareholders' Equity.  "CONSOLIDATED TOTAL INDEBTEDNESS FOR BORROWED MONEy" means at any particular date, the total amount of (i) Indebtedness of the Borrower and its Subsidiaries, excluding intercompany items, that, in conformity with GAAP, would be included on a consolidated balance sheet of the Borrower and its Subsidiaries (a) in respect of money borrowed, (b) in respect of obligations evidenced by a note, bond, debenture or other like written obligation to pay money, (c) in respect of obligations under Capital Leases, and (d) in respect of obligations under conditional sales or other title retention agreements, and (ii) Indebtedness of other Persons of the nature described in clauses (a) through (d) above which is guaranteed by the Borrower or a Subsidiary or with respect to which the Borrower or a Subsidiary is contingently liable.  "CONTRACTUAL OBLIGATION" means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.  "CONTROL" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. "CONTROLLING" and "CONTROLLED" have meanings correlative thereto.  "CREDIT EXTENSION" means each of the following: (a) a Borrowing and (b) an L/C Credit Extension.  "DEBTOR RELIEF LAWS" means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.  "DEBT SERVICE COVERAGE RATIO" means the ratio computed in accordance with Section 6.12 (c).  "DEFAULT" means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.  "DEFAULT RATE" means (a) when used with respect to Obligations other than L/C Fees an interest rate equal to (i) the Base Rate PLUS (ii) the Applicable Rate, if any, applicable to Base Rate Loans PLUS (iii) 4% per annum; PROVIDED, HOWEVER, that with respect to a Eurodollar Rate Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Rate) otherwise applicable to such Loan plus 4% per annum, and (b) when used with respect to L/C Fees, a rate equal to the Applicable Rate plus 4% per annum.  "DEFAULTING LENDER" means any Lender that (a) has failed to fund any portion of the Committed Loans, participations in L/C Obligations required to be funded by it hereunder within one Business Day of the date required to be funded by it hereunder, (b) has otherwise failed to pay over to Agent or any other Lender any other amount required to be paid by it hereunder within one Business Day of the date when due, unless the subject of a good faith dispute, or (c) has been deemed insolvent or become the subject of a bankruptcy or insolvency proceeding.  "DISPOSITION" or "DISPOSE" means the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.  "DOLLAR" and "$" mean lawful money of the United States.                                          4   "ELIGIBLE ASSIGNEE" means (a) a Lender; (b) an Affiliate of a Lender; and (c) any other Person (other than a natural person) approved by (i) Agent and the L/C Issuer, and (ii) unless an Event of Default has occurred and is continuing, Borrower (each such approval not to be unreasonably withheld or delayed); PROVIDED that notwithstanding the foregoing, "Eligible Assignee" shall not include Borrower or any of Borrower's Affiliates or Subsidiaries.  "ENVIRONMENTAL LAWS" means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.  "ENVIRONMENTAL LIABILITY" means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of Borrower, any other Loan Party or any of their respective Subsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.  "EQUITY INTERESTS" means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.  "ERISA" means the Employee Retirement Income Security Act of 1974.  "ERISA AFFILIATE" means any trade or business (whether or not incorporated) under common control with Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).  "ERISA EVENT" means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon Borrower or any ERISA Affiliate.  "EURODOLLAR BASE RATE" has the meaning specified in the definition of Eurodollar Rate.                                          5   "EURODOLLAR RATE" means for any Interest Period with respect to a Eurodollar Rate Loan, a rate per annum determined by Agent pursuant to the following formula:                                                   Eurodollar Base Rate                     Eurodollar Rate  =  ----------------------------------------                                         1.00 - Eurodollar Reserve Percentage       Where,       "EURODOLLAR BASE RATE" means, for such Interest Period (rounded upwards, as      necessary, to the nearest 1/100 of 1%) the rate per annum equal to the      British Bankers Association LIBOR Rate ("BBA LIBOR"), as published by      Reuters (or other commercially available source providing quotations of BBA      LIBOR as designated by Agent from time to time) at approximately 11:00      a.m., London time, two Business Days prior to the commencement of such      Interest Period, for Dollar deposits (for delivery on the first day of such      Interest Period) with a term equivalent to such Interest Period. If such      rate is not available at such time for any reason, then the "EURODOLLAR      BASE RATE" for such Interest Period (rounded upwards, as necessary, to the      nearest 1/100 of 1%) shall be the rate per annum determined by Agent to be      the rate at which deposits in Dollars for delivery on the first day of such      Interest Period in same day funds in the approximate amount of the      Eurodollar Rate Loan being made, continued or converted by Bank of America      and with a term equivalent to such Interest Period would be offered by Bank      of America's London Branch to major banks in the London interbank      eurodollar market at their request at approximately 11:00 a.m. (London      time) two Business Days prior to the commencement of such Interest Period.       "EURODOLLAR RESERVE PERCENTAGE" means, for any day during any Interest      Period, the reserve percentage (expressed as a decimal, carried out to five      decimal places) in effect on such day, whether or not applicable to any      Lender, under regulations issued from time to time by the Board of      Governors of the Federal Reserve System of the United States for      determining the maximum reserve requirement (including any emergency,      supplemental or other marginal reserve requirement) with respect to      Eurocurrency funding (currently referred to as "Eurocurrency liabilities").      The Eurodollar Rate for each outstanding Eurodollar Rate Loan shall be      adjusted automatically as of the effective date of any change in the      Eurodollar Reserve Percentage.  "EURODOLLAR RATE LOAN" means a Committed Loan that bears interest at a rate based on the Eurodollar Rate.  "EVENT OF DEFAULT" has the meaning specified in SECTION 8.01.  "EXCLUDED TAXES" means, with respect to Agent, any Lender, the L/C Issuer or any other recipient of any payment to be made by or on account of any obligation of Borrower hereunder, (a) taxes imposed on or measured by its overall net income (however denominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable Lending Office is located, and (b) any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction in which Borrower is located.  "FEDERAL FUNDS RATE" means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; PROVIDED that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by Agent.  "FIRST MORTGAGE BONDS" has the meaning set forth in the first paragraph of this Agreement.  "FRB" means the Board of Governors of the Federal Reserve System of the United States.  "GAAP" means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the                                          6   accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.  "GOVERNMENTAL AUTHORITY" means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).  "GUARANTEE" means, as to any Person, any (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the "primary obligor") in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term "Guarantee" as a verb has a corresponding meaning.  "HAZARDOUS MATERIALS" means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.  "INDEBTEDNESS" means, as to any Person at a particular time, without duplication (for example, Borrower's letters of credit securing other Indebtedness shall not count as Indebtedness independent of the Indebtedness being secured), all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:          (a) all obligations of such Person for borrowed money and all         obligations of such Person evidenced by bonds, debentures, notes, loan         agreements or other similar instruments;          (b) all direct or contingent obligations of such Person arising under         letters of credit (including standby and commercial), bankers'         acceptances, bank guaranties, surety bonds and similar instruments;          (c) net obligations of such Person under any Swap Contract;          (d) all obligations of such Person to pay the deferred purchase price of         property or services (other than trade accounts payable in the ordinary         course of business and, in each case, not past due for more than 60 days         after the date on which such trade account payable was created);          (e) indebtedness (excluding prepaid interest thereon) secured by a Lien         on property owned or being purchased by such Person (including         indebtedness arising under conditional sales or other title retention         agreements), whether or not such indebtedness shall have been assumed by         such Person or is limited in recourse;          (f) capital leases and Synthetic Lease Obligations;          (g) all obligations of such Person to purchase, redeem, retire, defease         or otherwise make any payment in respect of any Equity Interest in such         Person or any other Person, valued, in the case of a redeemable         preferred interest, at the greater of its voluntary or involuntary         liquidation preference PLUS accrued and unpaid dividends; and                                          7           (h) all Guarantees of such Person in respect of any of the foregoing.  For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person. The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date. The amount of any capital lease or Synthetic Lease Obligation as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date.  "INDEMNIFIED TAXES" means Taxes other than Excluded Taxes.  "INDEMNITEES" has the meaning specified in SECTION 10.04(b).  "INDENTURE TRUSTEE" has the meaning set forth in the first paragraph of this Agreement.  "INFORMATION" has the meaning specified in SECTION 10.07.  "INTEREST PAYMENT DATE" means, (a) as to any Loan other than a Base Rate Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date; PROVIDED, HOWEVER, that if any Interest Period for a Eurodollar Rate Loan exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates; and (b) as to any Base Rate Loan, the last Business Day of each March, June, September and December and the Maturity Date.  "INTEREST PERIOD" means, as to each Eurodollar Rate Loan, the period commencing on the date such Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar Rate Loan and ending on the date one, two, three or six months thereafter, as selected by Borrower in its Committed Loan Notice; PROVIDED that:          (i)    any Interest Period that would otherwise end on a day that is not         a Business Day shall be extended to the next succeeding Business Day         unless such Business Day falls in another calendar month, in which case         such Interest Period shall end on the next preceding Business Day;          (ii)   any Interest Period that begins on the last Business Day of a         calendar month (or on a day for which there is no numerically         corresponding day in the calendar month at the end of such Interest         Period) shall end on the last Business Day of the calendar month at the         end of such Interest Period; and          (iii)  no Interest Period shall extend beyond the Maturity Date.  "INTERNAL CONTROL EVENT" means a material weakness in, or fraud that involves management or other employees who have a significant role in, Borrower's internal controls over financial reporting, in each case as described in the Securities Laws and when relevant requirements become effective as to Borrower under regulations promulgated under the Securities Laws..  "INVESTMENT" means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of capital stock or other securities of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person and any arrangement pursuant to which the investor Guarantees Indebtedness of such other Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.  "IRS" means the United States Internal Revenue Service.  "ISP" means, with respect to any Letter of Credit, the "International Standby Practices 1998" published by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance).                                          8   "ISSUER DOCUMENTS" means with respect to any Letter of Credit, the L/C Application, and any other document, agreement and instrument entered into by the L/C Issuer and Borrower (or any Subsidiary) or in favor of the L/C Issuer and relating to any such Letter of Credit.  "LAWS" means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.  "L/C ADVANCE" means, with respect to each Lender, such Lender's funding of its participation in any L/C Borrowing in accordance with its Applicable Percentage.  "L/C APPLICATION" means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by the L/C Issuer.  "L/C BORROWING" means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made or refinanced as a Committed Borrowing.  "L/C CREDIT EXTENSION" means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.  "L/C EXPIRATION DATE" means the day that is thirty days prior to the Maturity Date then in effect (or, if such day is not a Business Day, the next preceding Business Day).  "L/C FEE" has the meaning specified in Section 2.03(i).  "L/C ISSUER" means Bank of America in its capacity as issuer of Letters of Credit hereunder, or any successor issuer of Letters of Credit hereunder.  "L/C OBLIGATIONS" means, as at any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit PLUS the aggregate of all Unreimbursed Amounts, including all L/C Borrowings. For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with SECTION 1.06. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be "outstanding" in the amount so remaining available to be drawn.  "L/C SUBLIMIT" means an amount equal to $5,000,000. The L/C Sublimit is part of, and not in addition to, the Aggregate Commitments.  "LENDER" has the meaning specified in the introductory paragraph hereto.  "LENDING OFFICE" means, as to any Lender, the office or offices of such Lender described as such in such Lender's Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify Borrower and Agent.  "LETTER OF CREDIT" means any letter of credit issued hereunder. A Letter of Credit may be a commercial letter of credit or a standby letter of credit.  "LIEN" means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).  "LOAN" means an extension of credit by a Lender to Borrower under ARTICLE II in the form of a Committed Loan.                                          9   "LOAN DOCUMENTS" means this Agreement, each Note, each Issuer Document, the Agent Fee Letter and each Collateral Document.  "LOAN PARTIES" means, collectively, Borrower and each Person (other than Agent, the L/C Issuer, or any Lender and other than the Indenture Trustee) executing a Loan Document including, without limitation, each Person executing a Collateral Document.  "MATERIAL ADVERSE EFFECT" means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, liabilities (actual or contingent), condition (financial or otherwise) or prospects of Borrower or Borrower and its Subsidiaries taken as a whole; (b) a material impairment of the ability of any Loan Party to perform its obligations under any Loan Document to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party.  "MATURITY DATE" means October 7, 2008.  "MULTIEMPLOYER PLAN" means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.  "NOTE" means a promissory note made by Borrower in favor of a Lender evidencing Loans made by such Lender, substantially in the form of EXHIBIT C.  "OBLIGATIONS" means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document, Swap Contract or otherwise with respect to any Loan or Letter of Credit, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.  "ORGANIZATION DOCUMENTS" means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.  "OTHER TAXES" means all present or future stamp, intangible or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.  "OUTSTANDING AMOUNT" means (i) with respect to Committed Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Committed Loans occurring on such date; and (ii) with respect to any L/C Obligations on any date, the amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements by Borrower of Unreimbursed Amounts.  "PARENT" means Maine & Maritimes Corporation, a Maine corporation which owns 100% of the issued and outstanding capital stock of the Borrower.  "PARTICIPANT" has the meaning specified in SECTION 10.06(d).  "PBGC" means the Pension Benefit Guaranty Corporation.  "PENSION PLAN" means any "employee pension benefit plan" (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by Borrower or any ERISA Affiliate or to                                         10   which Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years.  "PERSON" means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.  "PLAN" means any "employee benefit plan" (as such term is defined in Section 3(3) of ERISA) established by Borrower or, with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.  "PLATFORM" has the meaning specified in SECTION 6.02.  "PUC" means the Maine Public Utilities Commission.  "REGISTER" has the meaning specified in SECTION 10.06(c).  "REGISTERED PUBLIC ACCOUNTING FIRM" has the meaning specified in the Securities Laws and shall be independent of Borrower as prescribed by the Securities Laws.  "RELATED PARTIES" means, with respect to any Person, such Person's Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person's Affiliates.  "REPORTABLE EVENT" means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived.  "REQUEST FOR CREDIT EXTENSION" means (a) with respect to a Borrowing, conversion or continuation of Committed Loans, a Committed Loan Notice, and (b) with respect to an L/C Credit Extension, a L/C Application.  "REQUIRED LENDERS" means, as of any date of determination, Lenders having more than 50% of the Aggregate Commitments or, if the commitment of each Lender to make Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have been terminated pursuant to SECTION 8.02, Lenders holding in the aggregate more than 50% of the Total Outstandings (with the aggregate amount of each Lender's risk participation and funded participation in L/C Obligations being deemed "held" by such Lender for purposes of this definition); PROVIDED that the Commitment of, and the portion of the Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.  "RESPONSIBLE OFFICER" means the chief executive officer, president, chief financial officer, chief accounting officer, treasurer or assistant treasurer of a Loan Party. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.  "RESTRICTED PAYMENT" means any dividend or other distribution (whether in cash, securities or other property) with respect to any capital stock or other Equity Interest of Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such capital stock or other Equity Interest or on account of any return of capital to Borrower's stockholders, partners or members (or the equivalent Person thereof).  "SARBANES-OXLEY" means the Sarbanes-Oxley Act of 2002.  "SEC" means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.  "SECURITIES LAWS" means the Securities Act of 1933, the Securities Exchange Act of 1934, Sarbanes-Oxley and the applicable accounting and auditing principles, rules, standards and practices promulgated, approved or incorporated by the SEC or the Public Company Accounting Oversight Board, as each of the foregoing may be amended and in effect on any applicable date hereunder.                                         11   "SUBORDINATED LIABILITIES" means liabilities subordinated to the Obligations in a manner acceptable to Agent in its sole discretion.  "SUBSIDIARY" of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a "Subsidiary" or to "Subsidiaries" shall refer to a Subsidiary or Subsidiaries of Borrower.  "SWAP CONTRACT" means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a "MASTER AGREEMENT"), including any such obligations or liabilities under any Master Agreement.  "SWAP TERMINATION VALUE" means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).  "SYNTHETIC LEASE OBLIGATION" means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).  "TANGIBLE NET WORTH" means the value of total assets (including leaseholds and leasehold improvements and reserves against assets but excluding goodwill, patents, trademarks, trade names, organization expense, unamortized debt discount and expense, capitalized or deferred research and development costs, deferred marketing expenses, and other like intangibles, and monies due from Affiliates, officers, directors, employees, shareholders, members or managers) less Total Liabilities, including but not limited to accrued and deferred income taxes, but excluding the non-current portion of Subordinated Liabilities.  "TAXES" means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.  "THRESHOLD AMOUNT" means $1,000,000.  "TOTAL LIABILITIES" means the sum of current liabilities plus long term liabilities.  "TOTAL OUTSTANDINGS" means the aggregate Outstanding Amount of all Loans and all L/C Obligations.  "TWENTY-FIRST SUPPLEMENTAL INDENTURE" has the meaning set forth in the first paragraph of this Agreement.  "TYPE" means, with respect to a Committed Loan, its character as a Base Rate Loan or a Eurodollar Rate Loan.  "UNFUNDED PENSION LIABILITY" means the excess of a Pension Plan's benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan's assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year.                                         12   "UNITED STATES" and "U.S." mean the United States of America.  "UNREIMBURSED AMOUNT" has the meaning specified in SECTION 2.03(c)(i).            1.02 OTHER INTERPRETIVE PROVISIONS. With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:       (a)  The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "INCLUDE," "INCLUDES" and "INCLUDING" shall be deemed to be followed by the phrase "without limitation." The word "WILL" shall be construed to have the same meaning and effect as the word "SHALL." Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person's successors and assigns, (iii) the words "HEREIN," "HEREOF" and "HEREUNDER," and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (vi) the words "ASSET" and "PROPERTY" shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.  (b)  In the computation of periods of time from a specified date to a later specified date, the word "FROM" means "FROM AND INCLUDING;" the words "TO" and "UNTIL" each mean "TO BUT EXCLUDING;" and the word "THROUGH" means "TO AND INCLUDING."  (c)  Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.            1.03 ACCOUNTING TERMS. (a) GENERALLY. All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, EXCEPT as otherwise specifically prescribed herein.  (b)  CHANGES IN GAAP. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either Borrower or the Required Lenders shall so request, Agent, Lenders and Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); PROVIDED THAT, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) Borrower shall provide to Agent and Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.  (c)  CONSOLIDATION OF VARIABLE INTEREST ENTITIES. All references herein to consolidated financial statements of Borrower and its Subsidiaries or to the determination of any amount for Borrower and its Subsidiaries on a consolidated basis or any similar reference shall, in each case, be deemed to include each variable interest entity that the Borrower is required to consolidate pursuant to FASB Interpretation No. 46 - Consolidation of Variable Interest Entities: an interpretation of ARB No. 51 (January 2003) as if such variable interest entity were a Subsidiary as defined herein.            1.04 ROUNDING. Any financial ratios required to be maintained by Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).                                         13             1.05 TIMES OF DAY. Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).            1.06 LETTER OF CREDIT AMOUNTS. Unless otherwise specified herein the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; PROVIDED, HOWEVER, that with respect to any Letter of Credit that, by its terms or the terms of any Issuer Document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.  ARTICLE II.    THE COMMITMENTS AND CREDIT EXTENSIONS            2.01 COMMITTED LOANS. Subject to the terms and conditions set forth herein, each Lender severally agrees to make loans (each such loan, a "COMMITTED LOAN") to Borrower from time to time, on any Business Day during the Availability Period, in an aggregate amount not to exceed at any time outstanding the amount of such Lender's Commitment; PROVIDED, HOWEVER, that after giving effect to any Committed Borrowing, (i) the Total Outstandings shall not exceed the Aggregate Commitments, and (ii) the aggregate Outstanding Amount of the Committed Loans of any Lender, PLUS such Lender's Applicable Percentage of the Outstanding Amount of all L/C Obligations shall not exceed such Lender's Commitment. Within the limits of each Lender's Commitment, and subject to the other terms and conditions hereof, Borrower may borrow under this SECTION 2.01, prepay under SECTION 2.05, and reborrow under this SECTION 2.01. Committed Loans may be Base Rate Loans or Eurodollar Rate Loans, as further provided herein.            2.02 BORROWINGS, CONVERSIONS AND CONTINUATIONS OF COMMITTED LOANS. (a) Each Committed Borrowing, each conversion of Committed Loans from one Type to the other, and each continuation of Eurodollar Rate Loans shall be made upon Borrower's irrevocable notice to Agent, which may be given by telephone. Each such notice must be received by Agent not later than 11:00 a.m. (i) three Business Days prior to the requested date of any Borrowing of, conversion to or continuation of Eurodollar Rate Loans or of any conversion of Eurodollar Rate Loans to Base Rate Committed Loans, and (ii) on the requested date of any Borrowing of Base Rate Committed Loans. Each telephonic notice by Borrower pursuant to this SECTION 2.02(a) must be confirmed promptly by delivery to Agent of a written Committed Loan Notice, appropriately completed and signed by a Responsible Officer of Borrower. Each Borrowing of, conversion to or continuation of Eurodollar Rate Loans shall be in a principal amount of $300,000 or a whole multiple of $100,000 in excess thereof. Except as provided in SECTIONS 2.03(c), each Borrowing of or conversion to Base Rate Committed Loans shall be in a principal amount of $300,000 or a whole multiple of $100,000 in excess thereof. Each Committed Loan Notice (whether telephonic or written) shall specify (i) whether Borrower is requesting a Committed Borrowing, a conversion of Committed Loans from one Type to the other, or a continuation of Eurodollar Rate Loans, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Committed Loans to be borrowed, converted or continued, (iv) the Type of Committed Loans to be borrowed or to which existing Committed Loans are to be converted, and (v) if applicable, the duration of the Interest Period with respect thereto. If Borrower fails to specify a Type of Committed Loan in a Committed Loan Notice or if Borrower fails to give a timely notice requesting a conversion or continuation, then the applicable Committed Loans shall be made as, or converted to, Base Rate Loans. Any such automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurodollar Rate Loans. If Borrower requests a Borrowing of, conversion to, or continuation of Eurodollar Rate Loans in any such Committed Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month.  (b)       Following receipt of a Committed Loan Notice, Agent shall promptly notify each Lender of the amount of its Applicable Percentage of the applicable Committed Loans, and if no timely notice of a conversion or continuation is provided by Borrower, Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans described in the preceding subsection. In the case of a Committed Borrowing, each Lender shall make the amount of its Committed Loan available to Agent in immediately available funds at Administrative Agent's Office not later than 1:00 p.m. on the Business Day specified in the applicable Committed Loan Notice. Upon satisfaction of the applicable conditions set forth in SECTION 4.02 (and, if such Borrowing is the initial Credit Extension, SECTION 4.01), Agent shall make all funds so received available to Borrower in like funds as received by Agent either by (i) crediting the account of Borrower on the books of Bank of America with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) Agent by Borrower; PROVIDED, HOWEVER, that if, on the date the Committed Loan Notice with respect to such Borrowing is given by Borrower, there are L/C Borrowings outstanding, then the proceeds of such Borrowing FIRST, shall be applied, to the payment in full of any such L/C Borrowings, and SECOND, shall be made available to Borrower as provided above.                                         14   (c)       Except as otherwise provided herein, a Eurodollar Rate Loan may be continued or converted only on the last day of an Interest Period for such Eurodollar Rate Loan. During the existence of a Default, no Loans may be requested as, converted to or continued as Eurodollar Rate Loans without the consent of the Required Lenders, and the Required Lenders may demand that any or all of the then outstanding Eurodollar Rate Loans be converted immediately to Base Rate Committed Loans and Borrower agrees to pay all amounts due under SECTION 3.05 in accordance with the terms thereof due to any such conversion..  (d)       Agent shall promptly notify Borrower and Lenders of the interest rate applicable to any Interest Period for Eurodollar Rate Loans upon determination of such interest rate.  (e)       After giving effect to all Committed Borrowings, all conversions of Committed Loans from one Type to the other, and all continuations of Committed Loans as the same Type, there shall not be more than five Interest Periods in effect with respect to Committed Loans.            2.03 LETTERS OF CREDIT. (a) THE LETTER OF CREDIT COMMITMENT.            (i)    Subject to the terms and conditions set forth herein, (A) the L/C Issuer agrees, in reliance upon the agreements of the other Lenders set forth in this SECTION 2.03, (1) from time to time on any Business Day during the period from the Closing Date until the L/C Expiration Date, to issue Letters of Credit for the account of Borrower, and to amend or extend Letters of Credit previously issued by it, in accordance with subsection (b) below, and (2) to honor drawings under the Letters of Credit; and (B) the Lenders severally agree to participate in Letters of Credit issued for the account of Borrower and any drawings thereunder; PROVIDED that after giving effect to any L/C Credit Extension with respect to any Letter of Credit, (x) the Total Outstandings shall not exceed the Aggregate Commitments, (y) the aggregate Outstanding Amount of the Committed Loans of any Lender, PLUS such Lender's Applicable Percentage of the Outstanding Amount of all L/C Obligations shall not exceed such Lender's Commitment, or (z) the Outstanding Amount of the L/C Obligations shall not exceed the L/C Sublimit. Each request by Borrower for the issuance or amendment of a Letter of Credit shall be deemed to be a representation by Borrower that the L/C Credit Extension so requested complies with the conditions set forth in the proviso to the preceding sentence. Within the foregoing limits, and subject to the terms and conditions hereof, Borrower's ability to obtain Letters of Credit shall be fully revolving, and accordingly Borrower may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed. All Existing Letters of Credit shall be deemed to have been issued pursuant hereto, and from and after the Closing Date shall be subject to and governed by the terms and conditions hereof.            (ii)   The L/C Issuer shall not issue any Letter of Credit, if:  (A)       subject to Section 2.03(b)(iv), the expiry date of such requested Letter of Credit would occur more than twelve months after the date of issuance or last extension, unless the Required Lenders have approved such expiry date; or  (B)       the expiry date of such requested Letter of Credit would occur after the L/C Expiration Date, unless all the Lenders have approved such expiry date.            (iii)  The L/C Issuer shall be under no obligation to issue any Letter of Credit if:  (A)  any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the L/C Issuer from issuing such Letter of Credit, or any Law applicable to the L/C Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the L/C Issuer shall prohibit, or request that the L/C Issuer refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the L/C Issuer with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which the L/C Issuer in good faith deems material to it;  (B)  the issuance of such Letter of Credit would violate one or more policies of the L/C Issuer;  (C)  except as otherwise agreed by Agent and the L/C Issuer, such Letter of Credit is in an initial stated amount less than $100,000, in the case of a commercial Letter of Credit, or $500,000, in the case of a standby Letter of Credit;  (D)  such Letter of Credit is to be denominated in a currency other than Dollars;                                         15   (E)  a default of any Lender's obligations to fund under Section 2.03(c) exists or any Lender is at such time a Defaulting Lender hereunder, unless the L/C Issuer has entered into satisfactory arrangements with Borrower or such Lender to eliminate the L/C Issuer's risk with respect to such Lender; or  (F)  unless specifically provided for in this Agreement, such Letter of Credit contains any provisions for automatic reinstatement of the stated amount after any drawing thereunder.            (iv)   The L/C Issuer shall not amend any Letter of Credit if the L/C Issuer would not be permitted at such time to issue such Letter of Credit in its amended form under the terms hereof.            (v)    The L/C Issuer shall be under no obligation to amend any Letter of Credit if (A) the L/C Issuer would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.            (vi)   The L/C Issuer shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and the L/C Issuer shall have all of the benefits and immunities (A) provided to Agent in ARTICLE IX with respect to any acts taken or omissions suffered by the L/C Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and Issuer Documents pertaining to such Letters of Credit as fully as if the term "Administrative Agent" or "Agent" as used in ARTICLE IX included the L/C Issuer with respect to such acts or omissions, and (B) as additionally provided herein with respect to the L/C Issuer.  (b)       PROCEDURES FOR ISSUANCE AND AMENDMENT OF LETTERS OF CREDIT; AUTO-EXTENSION LETTERS OF CREDIT.            (i)    Each Letter of Credit shall be issued or amended, as the case may be, upon the request of Borrower delivered to the L/C Issuer (with a copy to Agent) in the form of a L/C Application, appropriately completed and signed by a Responsible Officer of Borrower. Such L/C Application must be received by the L/C Issuer and Agent not later than 11:00 a.m. at least two Business Days (or such later date and time as Agent and the L/C Issuer may agree in a particular instance in their sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request for an initial issuance of a Letter of Credit, such L/C Application shall specify in form and detail satisfactory to the L/C Issuer: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; and (G) such other matters as the L/C Issuer may require. In the case of a request for an amendment of any outstanding Letter of Credit, such L/C Application shall specify in form and detail satisfactory to the L/C Issuer (A) the Letter of Credit to be amended; (B) the proposed date of amendment thereof (which shall be a Business Day); (C) the nature of the proposed amendment; and (D) such other matters as the L/C Issuer may require. Additionally, Borrower shall furnish to the L/C Issuer and Agent such other documents and information pertaining to such requested Letter of Credit issuance or amendment, including any Issuer Documents, as the L/C Issuer or Agent may require.            (ii)   Promptly after receipt of any L/C Application at the address set forth in SECTION 10.02 for receiving L/C Applications and related correspondence, the L/C Issuer will confirm with Agent (by telephone or in writing) that Agent has received a copy of such L/C Application from Borrower and, if not, the L/C Issuer will provide Agent with a copy thereof. Unless the L/C Issuer has received written notice from any Lender, Agent or any Loan Party, at least one Business Day prior to the requested date of issuance or amendment of the applicable Letter of Credit, that one or more applicable conditions in ARTICLE IV shall not then be satisfied, then, subject to the terms and conditions hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of Borrower or enter into the applicable amendment, as the case may be, in each case in accordance with the L/C Issuer's usual and customary business practices. Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the L/C Issuer a risk participation in such Letter of Credit in an amount equal to the product of such Lender's Applicable Percentage TIMES the amount of such Letter of Credit.            (iii)  Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the L/C Issuer will also deliver to Borrower and Agent a true and complete copy of such Letter of Credit or amendment.            (iv)   If Borrower so requests in any applicable L/C Application, the L/C Issuer may, in its sole and absolute discretion, agree to issue a Letter of Credit that has automatic extension provisions (each, an "AUTO-EXTENSION LETTER OF CREDIT"); provided                                         16   that any such Auto-Extension Letter of Credit must permit the L/C Issuer to prevent any such extension at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the "NON-EXTENSION NOTICE DATE") in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the L/C Issuer, Borrower shall not be required to make a specific request to the L/C Issuer for any such extension. Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the L/C Issuer to permit the extension of such Letter of Credit at any time to an expiry date not later than the L/C Expiration Date; provided, however, that the L/C Issuer shall not permit any such extension if (A) the L/C Issuer has determined that it would not be permitted, or would have no obligation, at such time to issue such Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of clause (ii) or (iii) of SECTION 2.03(a) or otherwise), or (B) it has received notice (which may be by telephone or in writing) on or before the day that is five Business Days before the Non-Extension Notice Date (1) from Agent that the Required Lenders have elected not to permit such extension or (2) from Agent, any Lender or Borrower that one or more of the applicable conditions specified in Section 4.02 is not then satisfied, and in each such case directing the L/C Issuer not to permit such extension.            (v)    If Borrower so requests in any applicable Letter of Credit Application, the L/C Issuer may, in its sole and absolute discretion, agree to issue a Letter of Credit that permits the automatic reinstatement of all or a portion of the stated amount thereof after any drawing thereunder (each, an "AUTO-REINSTATEMENT LETTER OF CREDIT"). Unless otherwise directed by the L/C Issuer, Borrower shall not be required to make a specific request to the L/C Issuer to permit such reinstatement. Once an Auto-Reinstatement Letter of Credit has been issued, except as provided in the following sentence, the Lenders shall be deemed to have authorized (but may not require) the L/C Issuer to reinstate all or a portion of the stated amount thereof in accordance with the provisions of such Letter of Credit. Notwithstanding the foregoing, if such Auto-Reinstatement Letter of Credit permits the L/C Issuer to decline to reinstate all or any portion of the stated amount thereof after a drawing thereunder by giving notice of such non-reinstatement within a specified number of days after such drawing (the "NON-REINSTATEMENT DEADLINE"), the L/C Issuer shall not permit such reinstatement if it has received a notice (which may be by telephone or in writing) on or before the day that is five Business Days before the Non-Reinstatement Deadline (A) from Agent that the Required Lenders have elected not to permit such reinstatement or (B) from Agent, any Lender or Borrower that one or more of the applicable conditions specified in SECTION 4.02 is not then satisfied (treating such reinstatement as an L/C Credit Extension for purposes of this clause) and, in each case, directing the L/C Issuer not to permit such reinstatement.  (c)       DRAWINGS AND REIMBURSEMENTS; FUNDING OF PARTICIPATIONS.            (i)    Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the L/C Issuer shall notify Borrower and Agent thereof. Not later than 11:00 a.m. on the date of any payment by the L/C Issuer under a Letter of Credit (each such date, an "HONOR DATE"), Borrower shall reimburse the L/C Issuer through Agent in an amount equal to the amount of such drawing. If Borrower fails to so reimburse the L/C Issuer by such time, Agent shall promptly notify each Lender of the Honor Date, the amount of the unreimbursed drawing (the "UNREIMBURSED AMOUNT"), and the amount of such Lender's Applicable Percentage thereof. In such event, Borrower shall be deemed to have requested a Committed Borrowing of Base Rate Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed Amount, without regard to the minimum and multiples specified in SECTION 2.02 for the principal amount of Base Rate Loans, but subject to the amount of the unutilized portion of the Aggregate Commitments and the conditions set forth in SECTION 4.02 (other than the delivery of a Committed Loan Notice). Any notice given by the L/C Issuer or Agent pursuant to this SECTION 2.03(c)(i) may be given by telephone if immediately confirmed in writing; PROVIDED that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.            (ii)   Each Lender shall upon any notice pursuant to SECTION 2.03(c)(i) make funds available to Agent for the account of the L/C Issuer at the Administrative Agent's Office in an amount equal to its Applicable Percentage of the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in such notice by Agent, whereupon, subject to the provisions of SECTION 2.03(c)(iii), each Lender that so makes funds available shall be deemed to have made a Base Rate Committed Loan to Borrower in such amount. Agent shall remit the funds so received to the L/C Issuer.            (iii)  With respect to any Unreimbursed Amount that is not fully refinanced by a Committed Borrowing of Base Rate Loans because the conditions set forth in SECTION 4.02 cannot be satisfied or for any other reason, Borrower shall be deemed to have incurred from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate. In such event, each Lender's payment to Agent for the account of the L/C Issuer pursuant to SECTION 2.03(c)(ii) shall be deemed payment                                         17   in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its participation obligation under this SECTION 2.03.            (iv)   Until each Lender funds its Committed Loan or L/C Advance pursuant to this SECTION 2.03(c) to reimburse the L/C Issuer for any amount drawn under any Letter of Credit, interest in respect of such Lender's Applicable Percentage of such amount shall be solely for the account of the L/C Issuer.            (v)    Each Lender's obligation to make Committed Loans or L/C Advances to reimburse the L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this SECTION 2.03(c), shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the L/C Issuer, Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; PROVIDED, HOWEVER, that each Lender's obligation to make Committed Loans pursuant to this SECTION 2.03(c) is subject to the conditions set forth in SECTION 4.02 (other than delivery by Borrower of a Committed Loan Notice). No such making of an L/C Advance shall relieve or otherwise impair the obligation of Borrower to reimburse the L/C Issuer for the amount of any payment made by the L/C Issuer under any Letter of Credit, together with interest as provided herein.            (vi)   If any Lender fails to make available to Agent for the account of the L/C Issuer any amount required to be paid by such Lender pursuant to the foregoing provisions of this SECTION 2.03(c) by the time specified in SECTION 2.03(c)(ii), the L/C Issuer shall be entitled to recover from such Lender (acting through Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the L/C Issuer at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by the L/C issuer in accordance with banking industry rules on interbank compensation, PLUS any administrative, processing or similar fees customarily charged by the LC/ Issuer in connection with the foregoing. A certificate of the L/C Issuer submitted to any Lender (through Agent) with respect to any amounts owing under this clause (vi) shall be conclusive absent manifest error.  (d)       REPAYMENT OF PARTICIPATIONS.            (i)    At any time after the L/C Issuer has made a payment under any Letter of Credit and has received from any Lender such Lender's L/C Advance in respect of such payment in accordance with SECTION 2.03(c), if Agent receives for the account of the L/C Issuer any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from Borrower or otherwise, including proceeds of Cash Collateral applied thereto by Agent), Agent will distribute to such Lender its Applicable Percentage thereof (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender's L/C Advance was outstanding) in the same funds as those received by Agent.            (ii)   If any payment received by Agent for the account of the L/C Issuer pursuant to SECTION 2.03(c)(i) is required to be returned under any of the circumstances described in SECTION 10.05 (including pursuant to any settlement entered into by the L/C Issuer in its discretion), each Lender shall pay to Agent for the account of the L/C Issuer its Applicable Percentage thereof on demand of Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Lender, at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.  (e)       OBLIGATIONS ABSOLUTE. The obligation of Borrower to reimburse the L/C Issuer for each drawing under each Letter of Credit and to repay each L/C Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:            (i)    any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other Loan Document;            (ii)   the existence of any claim, counterclaim, setoff, defense or other right that Borrower or any Subsidiary may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the L/C Issuer or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;            (iii)  any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;                                         18             (iv)   any payment by the L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by the L/C Issuer under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law; or            (v)    any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, Borrower or any Subsidiary.  Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with Borrower's instructions or other irregularity, Borrower will immediately notify the L/C Issuer. Borrower shall be conclusively deemed to have waived any such claim against the L/C Issuer and its correspondents unless such notice is given as aforesaid.  (f)       ROLE OF L/C ISSUER. Each Lender and Borrower agree that, in paying any drawing under a Letter of Credit, the L/C Issuer shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of the L/C Issuer, Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of Lenders or the Required Lenders, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Issuer Document. Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; PROVIDED, HOWEVER, that this assumption is not intended to, and shall not, preclude Borrower's pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of the L/C Issuer, Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer, shall be liable or responsible for any of the matters described in clauses (i) through (v) of SECTION 2.03(e); PROVIDED, HOWEVER, that anything in such clauses to the contrary notwithstanding, Borrower may have a claim against the L/C Issuer, and the L/C Issuer may be liable to Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by Borrower which Borrower proves were caused by the L/C Issuer's willful misconduct or gross negligence or the L/C Issuer's willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, the L/C Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and the L/C Issuer shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.  (g)       CASH COLLATERAL. Upon the request of Agent, (i) if the L/C Issuer has honored any full or partial drawing request under any Letter of Credit and such drawing has resulted in an L/C Borrowing, or (ii) if, as of the L/C Expiration Date, any L/C Obligation for any reason remains outstanding, Borrower shall, in each case, immediately Cash Collateralize the then Outstanding Amount of all L/C Obligations. Sections 2.05 and 8.02(c) set forth certain additional requirements to deliver Cash Collateral hereunder. For purposes hereof, "CASH COLLATERALIZE" means to pledge and deposit with or deliver to Agent, for the benefit of the L/C Issuer and the Lenders, as collateral for the L/C Obligations, cash or deposit account balances pursuant to documentation in form and substance satisfactory to Agent and the L/C Issuer (which documents are hereby consented to by Lenders). Derivatives of such term have corresponding meanings. Borrower hereby grants to Agent, for the benefit of the L/C Issuer and Lenders, a security interest in all such cash, deposit accounts and all balances therein and all proceeds of the foregoing. Cash collateral shall be maintained in blocked, non-interest bearing deposit accounts at Bank of America.  (h)       APPLICABILITY OF ISP AND UCP. Unless otherwise expressly agreed by the L/C Issuer and Borrower when a Letter of Credit is issued (including any such agreement applicable to an Existing Letter of Credit), (i) the rules of the ISP shall apply to each standby Letter of Credit, and (ii) the rules of the Uniform Customs and Practice for Documentary Credits, as most recently published by the International Chamber of Commerce (the "ICC") at the time of issuance shall apply to each commercial Letter of Credit.  (i)       L/C FEES. Borrower shall pay to Agent for the account of each Lender in accordance with its Applicable Percentage a L/C fee (the "L/C FEE") for each Letter of Credit equal to the Applicable Rate TIMES the daily amount available to be drawn                                         19   under such Letter of Credit. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with SECTION 1.06. L/C Fees shall be (i) computed on a quarterly basis in arrears and (ii) due and payable on the first Business Day after the end of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of Credit, on the L/C Expiration Date and thereafter on demand. If there is any change in the Applicable Rate during any quarter, the daily amount available to be drawn under each Letter of Credit shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect. Notwithstanding anything to the contrary contained herein, upon the request of the Required Lenders, while any Event of Default exists, all L/C Fees shall accrue at the Default Rate.  (j)       FRONTING FEE AND DOCUMENTARY AND PROCESSING CHARGES PAYABLE TO L/C ISSUER. Borrower shall pay directly to the L/C Issuer for its own account a fronting fee with respect to each Letter of Credit, at the rate per annum specified in the Agent Fee Letter, computed on the daily amount available to be drawn under such Letter of Credit and on a quarterly basis in arrears. Such fronting fee shall be due and payable on the tenth Business Day after the end of each March, June, September and December, in respect of the most recently-ended quarterly period (or portion thereof, in the case of the first payment), commencing with the first such date to occur after the issuance of such Letter of Credit, on the L/C Expiration Date and thereafter on demand. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with SECTION 1.06. In addition, Borrower shall pay directly to the L/C Issuer for its own account the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of the L/C Issuer relating to letters of credit as from time to time in effect. Such individual customary fees and standard costs and charges are due and payable on demand and are nonrefundable.  (k)       CONFLICT WITH ISSUER DOCUMENTS. In the event of any conflict between the terms hereof and the terms of any Issuer Documents, the terms hereof shall control.            2.04 [INTENTIONALLY OMITTED.]            2.05 PREPAYMENTS. (a) Borrower may, upon notice to Agent, at any time or from time to time voluntarily prepay Committed Loans in whole or in part without premium or penalty; PROVIDED that (i) such notice must be received by Agent not later than 11:00 a.m. (A) three Business Days prior to any date of prepayment of Eurodollar Rate Loans and (B) on the date of prepayment of Base Rate Committed Loans; (ii) any prepayment of Eurodollar Rate Loans shall be in a principal amount of $300,000 or a whole multiple of $100,000 in excess thereof; and (iii) any prepayment of Base Rate Committed Loans shall be in a principal amount of $300,000 or a whole multiple of $100,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding. Each such notice shall specify the date and amount of such prepayment and the Type(s) of Committed Loans to be prepaid. Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender's Applicable Percentage of such prepayment. If such notice is given by Borrower, Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to SECTION 3.05. Each such prepayment shall be applied to the Committed Loans of Lenders in accordance with their respective Applicable Percentages.  (b)  If for any reason the Total Outstandings at any time exceed the Aggregate Commitments then in effect, Borrower shall immediately prepay Loans and/or Cash Collateralize the L/C Obligations in an aggregate amount equal to such excess; PROVIDED, HOWEVER, that Borrower shall not be required to Cash Collateralize the L/C Obligations pursuant to this SECTION 2.05(c) unless after the prepayment in full of the Loans the Total Outstandings exceed the Aggregate Commitments then in effect.            2.06 TERMINATION OR REDUCTION OF COMMITMENTS. Borrower may, upon notice to Agent, terminate the Aggregate Commitments, or from time to time permanently reduce the Aggregate Commitments; PROVIDED that (i) any such notice shall be received by Agent not later than 11:00 a.m. five Business Days prior to the date of termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of $1,000,000 or any whole multiple of $1,000,000 in excess thereof, (iii) Borrower shall not terminate or reduce the Aggregate Commitments if, after giving effect thereto and to any concurrent prepayments hereunder, the Total Outstandings would exceed the Aggregate Commitments, and (iv) if, after giving effect to any reduction of the Aggregate Commitments, the L/C Sublimit exceeds the amount of the Aggregate Commitments, such Sublimit shall be automatically reduced by the amount of such excess. Agent will promptly notify the Lenders of any such notice of termination or reduction of the Aggregate Commitments. Any reduction of the Aggregate Commitments shall be applied to the Commitment of each Lender according to its Applicable Percentage. All fees accrued until the effective date of any termination of the Aggregate Commitments shall be paid on the effective date of such termination.                                         20             2.07 REPAYMENT OF LOANS. (a) Borrower shall repay to Lenders on the Maturity Date the aggregate principal amount of Committed Loans outstanding on such date.            2.08 INTEREST. (a) Subject to the provisions of subsection (b) below, (i) each Eurodollar Rate Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Eurodollar Rate for such Interest Period PLUS the Applicable Rate; and (ii) each Base Rate Committed Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate PLUS the Applicable Rate.  (b)  (i)    If any amount of principal of any Loan is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.       (ii)   If any amount (other than principal of any Loan) payable by Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then upon the request of the Required Lenders, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.       (iii)  Upon the request of the Required Lenders, while any Event of Default exists, Borrower shall pay interest on the principal amount of all outstanding Obligations hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.       (iv)   Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.  (c)  Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.            2.09 FEES. In addition to certain fees described in subsections (i) and (j) of SECTION 2.03:  (a)       COMMITMENT FEE. Borrower shall pay to Agent for the account of each Lender in accordance with its Applicable Percentage, a commitment fee equal to the Applicable Rate TIMES the actual daily amount by which the Aggregate Commitments exceed the sum of (i) the Outstanding Amount of Committed Loans and (ii) the Outstanding Amount of L/C Obligations. The commitment fee shall accrue at all times during the Availability Period, including at any time during which one or more of the conditions in ARTICLE IV is not met, and shall be due and payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing with the first such date to occur after the Closing Date, and on the Maturity Date. The commitment fee shall be calculated quarterly in arrears, and if there is any change in the Applicable Rate during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect.  (b)       AGENT'S FEES. Borrower shall pay to Agent for Agent's own account, fees in the amounts and at the times specified in the letter agreement, dated October 3, 2005 (the "AGENT FEE LETTER"), between Borrower and Agent. Such fees shall be fully earned when paid and shall be nonrefundable for any reason whatsoever.  (c)       LENDERS' UPFRONT FEE. On the Closing Date, Borrower shall pay to Agent, for the account of each Lender in accordance with their respective Applicable Percentages, an upfront fee in an amount of 1/4 of 1% of the Commitment of such Lender. Such upfront fees are for the credit facilities committed by Lenders under this Agreement and are fully earned on the date paid. The upfront fee paid to each Lender is solely for its own account and is nonrefundable for any reason whatsoever.            2.10 COMPUTATION OF INTEREST AND FEES. All computations of interest for Base Rate Loans when the Base Rate is determined by Bank of America's "prime rate" shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year). Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, PROVIDED that any Loan that is repaid on the same day on which it is made                                         21   shall, subject to SECTION 2.12(a), bear interest for one day. Each determination by Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.            2.11 EVIDENCE OF DEBT. (a) The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by Agent in the ordinary course of business. The accounts or records maintained by Agent and each Lender shall be conclusive absent manifest error of the amount of the Credit Extensions made by Lenders to Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of Agent in respect of such matters, the accounts and records of Agent shall control in the absence of manifest error. Upon the request of any Lender made through Agent, Borrower shall execute and deliver to such Lender (through Agent) a Note, which shall evidence such Lender's Loans in addition to such accounts or records. Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto.  (b)  In addition to the accounts and records referred to in subsection (a), each Lender and Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit. In the event of any conflict between the accounts and records maintained by Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of Agent shall control in the absence of manifest error.            2.12 PAYMENTS GENERALLY; AGENT'S CLAWBACK. (a)(i) GENERAL. All payments to be made by Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by Borrower hereunder shall be made to Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent's Office in Dollars and in immediately available funds not later than 12:00 noon on the date specified herein. Agent will promptly distribute to each Lender its Applicable Percentage(or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender's Lending Office. All payments received by Agent after 12:00 noon shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. If any payment to be made by Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.  (ii) On each date when the payment of any principal, interest or fees are due hereunder or under any Note with respect to a Letter of Credit, Borrower agrees to maintain on deposit in an ordinary checking account maintained by Borrower with Agent (as such account shall be designated by Borrower in a written notice to Agent from time to time, the "BORROWER ACCOUNT") an amount sufficient to pay such principal, interest or fees in full on such date. Borrower hereby authorizes Agent (A) to deduct automatically all principal, interest or fees when due hereunder or under any Note with respect to a Letter of Credit from the Borrower Account, and (B) if and to the extent any payment of principal, interest or fees under this Agreement or any Note is not made when due to deduct any such amount from any or all of the accounts of Borrower maintained at Agent. Agent agrees to provide written notice to Borrower of any automatic deduction made pursuant to this SECTION 2.12(a)(ii) showing in reasonable detail the amounts of such deduction. Lenders agree to reimburse Borrower based on their Applicable Percentage for any amounts deducted from such accounts in excess of amount due hereunder and under any other Loan Documents.  (b)  (i)  FUNDING BY LENDERS; PRESUMPTION BY AGENT. Unless Agent shall have received notice from a Lender prior to the proposed date of any Committed Borrowing of Eurodollar Rate Loans (or, in the case of any Committed Borrowing of Base Rate Loans, prior to 12:00 noon on the date of such Committed Borrowing) that such Lender will not make available to Agent such Lender's share of such Committed Borrowing, Agent may assume that such Lender has made such share available on such date in accordance with Section 2.02 (or, in the case of a Committed Borrowing of Base Rate Loans, that such Lender has made such share available in accordance with and at the time required by Section 2.02) and may, in reliance upon such assumption, make available to Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Committed Borrowing available to Agent, then the applicable Lender and Borrower severally agree to pay to Agent forthwith on demand such corresponding amount in immediately available funds with interest thereon, for each day from and including the date such amount is made available to Borrower to but excluding the date of payment to Agent, at (A) in the case of a payment to be made by such Lender, the greater of the Federal Funds Rate and a rate determined by Agent in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by Agent in connection with the foregoing and (B) in the case of a payment to be made by Borrower, the interest rate applicable to Base Rate Loans. If Borrower and such Lender shall pay such interest to Agent for the same or an overlapping period, Agent shall promptly remit to Borrower the amount of such interest paid by Borrower for such period. If such Lender pays its share of the applicable                                         22   Committed Borrowing to Agent, then the amount so paid shall constitute such Lender's Committed Loan included in such Committed Borrowing. Any payment by Borrower shall be without prejudice to any claim Borrower may have against a Lender that shall have failed to make such payment to Agent.  (ii)      PAYMENTS BY BORROWER; PRESUMPTIONS BY AGENT. Unless Agent shall have received notice from Borrower prior to the date on which any payment is due to Agent for the account of the Lenders or the L/C Issuer hereunder that Borrower will not make such payment, Agent may assume that Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to Lenders or the L/C Issuer, as the case may be, the amount due. In such event, if Borrower has not in fact made such payment, then each of Lenders or the L/C Issuer, as the case may be, severally agrees to repay to Agent forthwith on demand the amount so distributed to such Lender or the L/C Issuer, in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to Agent, at the greater of the Federal Funds Rate and a rate determined by Agent in accordance with banking industry rules on interbank compensation. A notice of Agent to any Lender or Borrower with respect to any amount owing under this subsection (b) shall be conclusive, absent manifest error.  (c)       FAILURE TO SATISFY CONDITIONS PRECEDENT. If any Lender makes available to Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this ARTICLE II, and such funds are not made available to Borrower by Agent because the conditions to the applicable Credit Extension set forth in ARTICLE IV are not satisfied or waived in accordance with the terms hereof, Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.  (d)       OBLIGATIONS OF LENDERS SEVERAL. The obligations of Lenders hereunder to make Committed Loans, to fund participations in Letters of Credit and to make payments under SECTION 10.04(c) are several and not joint. The failure of any Lender to make any Committed Loan, to fund any such participation or to make any payment under SECTION 10.04(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Committed Loan, purchase its participation or to make its payment under SECTION 10.04(c):  (e)       FUNDING SOURCE. Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.            2.13 SHARING OF PAYMENTS. If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of the Committed Loans made by it, or the participations in L/C Obligations held by it resulting in such Lender's receiving payment of a proportion of the aggregate amount of such Committed Loans or participations and accrued interest thereon greater than its PRO RATA share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify Agent of such fact, and (b) purchase (for cash at face value) participations in the Committed Loans and subparticipations in L/C Obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Committed Loans and other amounts owing them, PROVIDED that:            (i)    if any such participations or subparticipations are purchased           and all or any portion of the payment giving rise thereto is           recovered, such participations or subparticipations shall be rescinded           and the purchase price restored to the extent of such recovery,           without interest; and            (ii)   the provisions of this Section shall not be construed to apply           to (x) any payment made by Borrower pursuant to and in accordance with           the express terms of this Agreement or (y) any payment obtained by a           Lender as consideration for the assignment of or sale of a           participation in any of its Committed Loans or subparticipations in           L/C Obligations to any assignee or participant, other than to Borrower           or any Subsidiary thereof (as to which the provisions of this Section           shall apply).  Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Loan Party in the amount of such participation.                                         23   ARTICLE III.   TAXES, YIELD PROTECTION AND ILLEGALITY            3.01 TAXES. (a) PAYMENTS FREE OF TAXES. Any and all payments by Borrower to or on account of any obligation of Borrower hereunder or under any other Loan Document shall be made free and clear of and without reduction or withholding for any Indemnified Taxes or Other Taxes, provided that if Borrower shall be required by any applicable law to deduct any Indemnified Taxes (including any Other Taxes) from such payments, then, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section), Agent, Lender or L/C Issuer, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) Borrower shall make such deductions, and (iii) Borrower shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.  (b)  PAYMENT OF OTHER TAXES BY BORROWER. Without limiting the provisions of subsection (a) above, Borrower shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.  (c)  INDEMNIFICATION BY BORROWER. Borrower shall indemnify Agent, each Lender and the L/C Issuer, within 10 days after demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by Agent, such Lender or the L/C Issuer, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to Borrower by a Lender or the L/C Issuer (with a copy to Agent), or by Agent on its own behalf or on behalf of a Lender or the L/C Issuer, shall be conclusive absent manifest error.  (d)  EVIDENCE OF PAYMENTS. As soon as practicable after any payment of Indemnified Taxes or Other Taxes by Borrower to a Governmental Authority, Borrower shall deliver to Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to Agent.  (e)  STATUS OF LENDERS. Any Lender, if requested by Borrower or Agent, shall deliver such documentation prescribed by applicable law or reasonably requested by Borrower or Agent as will enable the Borrower or Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.  (f)  TREATMENT OF CERTAIN REFUNDS. If Agent, any Lender or the L/C Issuer determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by Borrower or with respect to which Borrower has paid additional amounts pursuant to this Section, it shall pay to Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by Borrower under this Section with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of Agent, such Lender or the L/C Issuer, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), PROVIDED that Borrower, upon the request of Agent, such Lender or the L/C Issuer, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to Agent, such Lender or the L/C Issuer in the event Agent, such Lender or the L/C Issuer is required to repay such refund to such Governmental Authority. This subsection shall not be construed to require Agent, any Lender or the L/C Issuer to make available its tax returns (or any other information relating to its taxes that it deems confidential) to the Borrower or any other Person.            3.02 ILLEGALITY. If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Eurodollar Rate Loans, or to determine or charge interest rates based upon the Eurodollar Rate, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank market, then, on notice thereof by such Lender to Borrower through Agent, any obligation of such Lender to make or continue Eurodollar Rate Loans or to convert Base Rate Committed Loans to Eurodollar Rate Loans shall be suspended until such Lender notifies Agent and Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, Borrower shall, upon demand from such Lender (with a copy to Agent), prepay or, if applicable, convert all Eurodollar Rate Loans of such Lender to Base Rate Loans, either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurodollar Rate Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurodollar Rate Loans. Upon any such prepayment or conversion, Borrower shall also pay accrued interest on the amount so                                         24   prepaid or converted and all amounts due under SECTION 3.05 in accordance with the terms thereof due to such prepayment or conversion.            3.03 INABILITY TO DETERMINE RATES. If Agent determines in connection with any request for a Eurodollar Rate Loan or a conversion to or continuation thereof that (a) Dollar deposits are not being offered to banks in the London interbank eurodollar market for the applicable amount and Interest Period of such Eurodollar Rate Loan, (b) adequate and reasonable means do not exist for determining the Eurodollar Base Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan, or (c) the Eurodollar Base Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding such Loan, Agent will promptly so notify Borrower and each Lender. Thereafter, the obligation of Lenders to make or maintain Eurodollar Rate Loans shall be suspended until Agent (upon the instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, Borrower may revoke any pending request for a Borrowing of, conversion to or continuation of Eurodollar Rate Loans or, failing that, will be deemed to have converted such request into a request for a Committed Borrowing of Base Rate Loans in the amount specified therein.            3.04 INCREASED COSTS (a) INCREASED COSTS GENERALLY. If any Change in Law shall:            (i)    impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in the Eurodollar Rate) or the L/C Issuer;            (ii)   subject any Lender or the L/C Issuer to any tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, any participation in a Letter of Credit or any Eurodollar Rate Loan made by it, or change the basis of taxation of payments to such Lender or the L/C Issuer in respect thereof (except for Indemnified Taxes or Other Taxes covered by SECTION 3.01 and the imposition of, or any change in the rate of, any Excluded Tax payable by such Lender or the L/C Issuer); or            (iii)  impose on any Lender or the L/C Issuer or the London interbank market any other condition, cost or expense affecting this Agreement or Eurodollar Rate Loans made by such Lender or any Letter of Credit or participation therein;  and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Rate Loan (or of maintaining its obligation to make any such Loan), or to increase the cost to such Lender or the L/C Issuer of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender or the L/C Issuer hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or the L/C Issuer, Borrower will pay to such Lender or the L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or the L/C Issuer, as the case may be, for such additional costs incurred or reduction suffered.  (b)       CAPITAL REQUIREMENTS. If any Lender or the L/C Issuer determines that any Change in Law affecting such Lender or the L/C Issuer or any Lending Office of such Lender or such Lender's or the L/C Issuer's holding company, if any, regarding capital requirements has or would have the effect of reducing the rate of return on such Lender's or the L/C Issuer's capital or on the capital of such Lender's or the L/C Issuer's holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the L/C Issuer, to a level below that which such Lender or the L/C Issuer or such Lender's or the L/C Issuer's holding company could have achieved but for such Change in Law (taking into consideration such Lender's or the L/C Issuer's policies and the policies of such Lender's or the L/C Issuer's holding company with respect to capital adequacy), then from time to time Borrower will pay to such Lender or the L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or the L/C Issuer or such Lender's or the L/C Issuer's holding company for any such reduction suffered.  (c)       CERTIFICATES FOR REIMBURSEMENT. A certificate of a Lender or the L/C Issuer setting forth the amount or amounts necessary to compensate such Lender or the L/C Issuer or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to Borrower shall be conclusive absent manifest error. Borrower shall pay such Lender or the L/C Issuer, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.  (d)       DELAY IN REQUESTS. Failure or delay on the part of any Lender or the L/C Issuer to demand compensation pursuant to the foregoing provisions of this Section shall not constitute a waiver of such Lender's or the L/C Issuer's right to demand such                                         25   compensation, PROVIDED that Borrower shall not be required to compensate a Lender or the L/C Issuer pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than nine months prior to the date that such Lender or the L/C Issuer, as the case may be, notifies Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender's or the L/C Issuer's intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).            3.05 COMPENSATION FOR LOSSES. Upon demand of any Lender (with a copy to Agent) from time to time, Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:  (a)  any continuation, conversion, payment or prepayment of any Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise); or  (b)  any failure by Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the date or in the amount notified by Borrower;  including any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained. Borrower shall also pay any customary administrative fees charged by such Lender in connection with the foregoing. For purposes of calculating amounts payable by Borrower to Lenders under this SECTION 3.05, each Lender shall be deemed to have funded each Eurodollar Rate Loan made by it at the Eurodollar Base Rate used in determining the Eurodollar Rate for such Loan by a matching deposit or other borrowing in the London interbank eurodollar market for a comparable amount and for a comparable period, whether or not such Eurodollar Rate Loan was in fact so funded.            3.06 MITIGATION OBLIGATIONS. If any Lender requests compensation under SECTION 3.04, or Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to SECTION 3.01, or if any Lender gives a notice pursuant to SECTION 3.02, then such Lender shall use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to SECTION 3.01 or 3.04, as the case may be, in the future, or eliminate the need for the notice pursuant to SECTION 3.02, as applicable, and (ii) in each case, would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment to the extent reasonably attributable to the Loans hereunder.            3.07 SURVIVAL. All of Borrower's obligations under this ARTICLE III shall survive termination of the Aggregate Commitments and repayment of all other Obligations hereunder.  ARTICLE IV. CONDITIONS PRECEDENT TO CREDIT EXTENSIONS            4.01 CONDITIONS OF INITIAL CREDIT EXTENSION. The obligation of the L/C Issuer and each Lender to make its initial Credit Extension hereunder is subject to satisfaction of the following conditions precedent:  (a)  Agent's receipt of the following, each of which shall be originals or telecopies (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing Loan Party, each dated the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance satisfactory to Agent and each of the Lenders:            (i)    executed counterparts of this Agreement and all Collateral           Documents, sufficient in number for distribution to Agent, each Lender           and Borrower;            (ii)   a Note executed by Borrower in favor of each Lender requesting           a Note;                                         26             (iii)  such certificates of resolutions or other action, incumbency           certificates and/or other certificates of Responsible Officers of each           Loan Party as Agent may require evidencing the identity, authority and           capacity of each Responsible Officer thereof authorized to act as a           Responsible Officer in connection with this Agreement and the other           Loan Documents to which such Loan Party is a party;            (iv)   such documents and certifications as Agent may reasonably           require to evidence that each Loan Party is duly organized or formed,           and that each Loan Party is validly existing, in good standing and           qualified to engage in business in each jurisdiction where its           ownership, lease or operation of properties or the conduct of its           business requires such qualification, except to the extent that           failure to do so could not reasonably be expected to have a Material           Adverse Effect;            (v)    a favorable opinion of counsel to the Loan Parties acceptable           to Agent addressed to Agent and each Lender, as to the matters set           forth concerning the Loan Parties and the Loan Documents in form and           substance satisfactory to Agent;            (vi)   a certificate of a Responsible Officer of each Loan Party           either (A) attaching copies of all consents, licenses and approvals           required in connection with the execution, delivery and performance by           such Loan Party and the validity against such Loan Party of the Loan           Documents to which it is a party, and stating that such consents,           licenses and approvals shall be in full force and effect, or (B)           stating that no such consents, licenses or approvals are so required;            (vii)  a certificate signed by a Responsible Officer of Borrower           certifying (A) that the conditions specified in SECTIONS 4.02(a) and           (b) have been satisfied, and (B) that there has been no event or           circumstance since the date of the Borrower Financial Statements that           has had or could be reasonably expected to have, either individually           or in the aggregate, a Material Adverse Effect;            (viii) evidence that all insurance required to be maintained pursuant           to the Loan Documents has been obtained and is in effect;            (ix)   a duly completed Compliance Certificate as of the last day of           the fiscal quarter of Borrower most recently ended prior to the           Closing Date, signed by a Responsible Officer of Borrower;            (x)    evidence that all commitments under the Revolving Credit           Agreement dated October 8, 1987, as amended to date, among Borrower,           The Bank of New York, as agent and a syndicate of lenders (the           "Existing Credit Agreement") have been or concurrently with the           Closing Date are being terminated, and all outstanding amounts           thereunder paid in full and all Liens securing obligations under the           Existing Credit Agreement have been or concurrently with the Closing           Date are being released; and            (xi)   such other assurances, certificates, documents, consents or           opinions as Agent, the L/C Issuer or the Required Lenders reasonably           may require.  (b)       Any fees required to be paid on or before the Closing Date shall have been paid.  (c)       Unless waived by Agent, Borrower shall have paid all fees, charges and disbursements of counsel to Agent to the extent invoiced prior to or on the Closing Date, plus such additional amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final settling of accounts between Borrower and Agent).  (d)       The Closing Date shall have occurred on or before October 31, 2005.  Without limiting the generality of the provisions of SECTION 9.04, for purposes of determining compliance with the conditions specified in this SECTION 4.01, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.                                         27             4.02 CONDITIONS TO ALL CREDIT EXTENSIONS. The obligation of each Lender to honor any Request for Credit Extension is subject to the following conditions precedent:  (a)  The representations and warranties of Borrower and each other Loan Party contained in ARTICLE V or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct on and as of the date of such Credit Extension, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date, and except that for purposes of this SECTION 4.02, the representations and warranties contained in subsections (a) and (b) of SECTION 5.05 shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of SECTION 6.01.  (b)  No Default shall exist, or would result from such proposed Credit Extension or from the application of the proceeds thereof.  (c)  Agent and, if applicable, the L/C Issuer shall have received a Request for Credit Extension in accordance with the requirements hereof.  (d)  Agent shall have received, in form and substance satisfactory to it, such other assurances, certificates, documents or consents related to the foregoing as Agent or the Required Lenders reasonably may require.  Each Request for Credit Extension submitted by Borrower shall be deemed to be a representation and warranty that the conditions specified in SECTIONS 4.02(a) and (b) have been satisfied on and as of the date of the applicable Credit Extension.  ARTICLE V. REPRESENTATIONS AND WARRANTIES  Borrower represents and warrants to Agent and the Lenders that:            5.01 EXISTENCE, QUALIFICATION AND POWER; COMPLIANCE WITH LAWS. Each Loan Party and each Subsidiary thereof (a) is duly organized or formed, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party, (c) is duly qualified and is licensed and in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license, and (d) is in compliance with all Laws; except in each case referred to in clause (b)(i), (c) or (d), to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.            5.02 AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is party, have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of any of such Person's Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, or require any payment to be made under (i) any Contractual Obligation to which such Person is a party or affecting such Person or the properties of such Person or any of its Subsidiaries or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (c) violate any Law. Each Loan Party and each Subsidiary thereof is in compliance with all Contractual Obligations referred to in clause (b)(i), except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.            5.03 GOVERNMENTAL AUTHORIZATION; OTHER CONSENTS. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document.            5.04 BINDING EFFECT. This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto. This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms.                                         28             5.05 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE EFFECT; NO INTERNAL CONTROL EVENT. (a) The Borrower Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present the financial condition of Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show all material indebtedness and other liabilities, direct or contingent, of Borrower and its Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Indebtedness.  (b)  The unaudited consolidated and consolidating balance sheets of Borrower and its Subsidiaries dated June 30, 2005, and the related consolidated and consolidating statements of income or operations, shareholders' equity and cash flows for the fiscal quarter ended on that date (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present the financial condition of Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby, subject, in the case of clauses (i) and (ii), to the absence of footnotes and to normal year-end audit adjustments.  (c)  Since the date of the Borrower Financial Statements, there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect.  (d)  Since the date of the Borrower Financial Statements, no Internal Control Event has occurred.  (e)  Subject to the second sentence of this subsection, the consolidated pro forma balance sheets of Borrower and its Subsidiaries as at December 31, 2005, and the related consolidated pro forma statements of income and cash flows of Borrower and its Subsidiaries for the twelve months then ended, certified by the chief financial officer of Borrower, copies of which have been furnished to each Lender, fairly present the consolidated pro forma financial condition of Borrower and its Subsidiaries as at such date and the consolidated pro forma results of operations of Borrower and its Subsidiaries for the period ended on such date, all in accordance with GAAP. The consolidated forecasted balance sheet and statements of income and cash flows of the Borrower and its Subsidiaries were prepared in good faith on the basis of the assumptions stated therein, which assumptions were fair in light of the conditions existing at the time of delivery of such forecasts, and represented, at the time of delivery, the Borrower's best estimate of its future financial performance.            5.06 LITIGATION. There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of Borrower after due and diligent investigation, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against Borrower or any of its Subsidiaries or against any of their properties or revenues that (a) purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby, or (b) except as specifically disclosed in SCHEDULE 5.06, either individually or in the aggregate, if determined adversely, could reasonably be expected to have a Material Adverse Effect, and there has been no adverse change in the status, or financial effect on any Loan Party or any Subsidiary thereof, of the matters described on SCHEDULE 5.06.            5.07 NO DEFAULT. Neither Borrower nor any Subsidiary is in default under or with respect to any Contractual Obligation that could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. No Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.            5.08 OWNERSHIP OF PROPERTY; LIENS. Each of Borrower and each Subsidiary has good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business, except for such defects in title as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The property of Borrower and its Subsidiaries is subject to no Liens, other than Liens permitted by SECTION 7.01.            5.09 ENVIRONMENTAL COMPLIANCE. Borrower and its Subsidiaries conduct in the ordinary course of business a review of the effect of existing Environmental Laws and claims alleging potential liability or responsibility for violation of any Environmental Law on their respective businesses, operations and properties, and as a result thereof Borrower has reasonably concluded that, except as specifically disclosed in SCHEDULE 5.09, such Environmental Laws and claims could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.            5.10 INSURANCE. The properties of Borrower and its Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of Borrower, in such amounts (after giving effect to any self-insurance compatible with the                                         29   following standards), with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where Borrower or the applicable Subsidiary operates.            5.11 TAXES. Borrower and its Subsidiaries have filed all Federal, state and other material tax returns and reports required to be filed, and have paid all Federal, state and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP. There is no proposed tax assessment against Borrower or any Subsidiary that would, if made, have a Material Adverse Effect.            5.12 ERISA COMPLIANCE. (a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state Laws. Each Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto and, to the best knowledge of Borrower, nothing has occurred which would prevent, or cause the loss of, such qualification. Borrower and each ERISA Affiliate have made all required contributions to each Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan.  (b)  There are no pending or, to the best knowledge of Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could be reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Effect.  (c)  (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Sections 4069 or 4212(c) of ERISA.            5.13 SUBSIDIARIES. As of the Closing Date, Borrower has no Subsidiaries other than those specifically disclosed in Part (a) of SCHEDULE 5.13, and all of the outstanding Equity Interests in such Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by a Loan Party in the amounts specified on Part (a) of Schedule 5.13 free and clear of all Liens. Borrower has no equity investments in any other corporation or entity other than those specifically disclosed in Part(b) of SCHEDULE 5.13. All of the outstanding Equity Interests in Borrower have been validly issued and are fully paid and nonassessable and are owned by Maine & Maritimes Corporation in the amounts specified on Part (c) of SCHEDULE 5.13 free and clear of all Liens.            5.14 MARGIN REGULATIONS; INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT. (a) Borrower is not engaged and will not engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock. Following the application of the proceeds of each Borrowing or drawing under each Letter of Credit, not more than 25% of the value of the assets (either of Borrower only or of Borrower and its Subsidiaries on a consolidated basis) subject to the provisions of SECTION 7.01 or SECTION 7.05 or subject to any restriction contained in any agreement or instrument between Borrower and any Lender or any Affiliate of any Lender relating to Indebtedness and within the scope of SECTION 8.01(e) will be margin stock.  (b)  None of Borrower, any Person Controlling Borrower, or any Subsidiary is or is required to be registered as an "investment company" under the Investment Company Act of 1940.  (c)  The Parent and each of its subsidiaries, including the Borrower, have been exempted as a "holding company" and a "subsidiary", respectively, under the Public Utility Holding Company Act of 1935 (repealed effective February 8, 2006) pursuant to annual filings made with the SEC on Form U-3A-2, the most recent of which is now in full force and effect and has not been revoked, modified or amended. While the Parent meets the definition of a "holding company" under the Public Utility Holding Company Act of 2005, and the Borrower meets the definition of a "subsidiary" under such Act, (a) the only applicable                                         30   requirements under such Act are state and federal government access to books and records of holding companies and their subsidiaries for other regulatory purposes, and (b) either the Parent or the Borrower, or both, may come under the terms of exemptions under regulations yet to be promulgated under such Act by the Federal Energy Regulatory Commission. The provisions of the Federal Power Act giving jurisdiction over securities issued by certain utilities does not extend to the securities and other obligations of the Borrower issued or incurred under this Agreement, since it is organized and operating in a state under the laws of which the security issues and other obligations under this Agreement are regulated by a state commission. The Borrower is subject to the jurisdiction of the PUC, which is vested with comprehensive powers of supervision, regulation and control over various matters, including the issuance of securities.            5.15 DISCLOSURE. Borrower has disclosed to Agent and Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. No report, financial statement, certificate or other information furnished (whether in writing or orally) by or on behalf of any Loan Party to Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other Loan Document (in each case, as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; PROVIDED that, with respect to projected financial information, Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.            5.16 COMPLIANCE WITH LAWS. Each of Borrower and each Subsidiary is in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.            5.17 INTELLECTUAL PROPERTY; LICENSES, ETC. Borrower and its Subsidiaries own, or possess the right to use, all of the trademarks, service marks, trade names, copyrights, patents, patent rights, franchises, licenses and other intellectual property rights that are reasonably necessary for the operation of their respective businesses, without conflict with the rights of any other Person. To the best knowledge of Borrower, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by Borrower or any Subsidiary infringes upon any rights held by any other Person. No claim or litigation regarding any of the foregoing is pending or, to the best knowledge of Borrower, threatened, which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.            5.18 RIGHTS IN COLLATERAL; PRIORITY OF LIENS. Borrower and each other Loan Party have caused the First Mortgage Bonds to be duly executed and delivered in accordance with the terms of the Collateral Documents, as collateral security for Borrower's obligations hereunder, and this Agreement is the "Revolving Credit Agreement" referred to in the Twenty-First Supplemental Indenture.  ARTICLE VI.    AFFIRMATIVE COVENANTS  So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, Borrower shall, and shall (except in the case of the covenants set forth in SECTIONS 6.01, 6.02, and 6.03) cause each Subsidiary to:            6.01 FINANCIAL STATEMENTS. Deliver to Agent a sufficient number of copies for delivery by Agent to each Lender, in form and detail satisfactory to Agent and the Required Lenders:  (a)  as soon as available, but in any event within 120 days after the end of each fiscal year of Borrower,  (i)  a consolidated and consolidating balance sheet of Parent and its subsidiaries as at the end of such fiscal year, and the related consolidated and consolidating statements of income or operations, shareholders' equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, such consolidated statements to be audited and accompanied by (i) a report and opinion of Vitale, Caturano and Co., Ltd. or another Registered Public Accounting Firm of nationally recognized standing reasonably acceptable to the Required Lenders, which report and opinion shall be prepared in accordance with generally accepted auditing standards and applicable Securities Laws and shall not be subject to any "going concern" or like qualification or exception or any qualification or                                         31   exception as to the scope of such audit and (ii) when and to the extent required by the SEC an attestation report of such Registered Public Accounting Firm as to the Parent's internal controls pursuant to Section 404 of Sarbanes-Oxley expressing a conclusion to which the Required Lenders do not object and such consolidating statements to be certified by a Responsible Officer of Parent to the effect that such statements are fairly stated in all material respects when considered in relation to the consolidated financial statements of Parent and its subsidiaries, provided, however, that so long as Parent is subject to section 13 of the Securities Exchange Act of 1934, as amended, this requirement shall be satisfied with respect to Parent by delivery within such 120-day period of the annual report of Parent on Form 10-K for such fiscal year, together with all documents from the preceding fiscal year which are incorporated therein by reference, and have theretofore not been delivered, as filed by Parent with the SEC; and  (ii) a consolidated and consolidating balance sheet of Borrower and its Subsidiaries as at the end of such fiscal year, and the related consolidated and consolidating statements of income or operations, shareholders' equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, and such consolidating statements to be certified by a Responsible Officer of Borrower to the effect that such statements are fairly stated in all material respects when considered in relation to the consolidated financial statements of Borrower and its Subsidiaries (the "BORROWER FINANCIAL STATEMENTS");  (b)  as soon as available, but in any event within 60 days after the end of each of the first three fiscal quarters of each fiscal year of Borrower,  (i)  a consolidated and consolidating balance sheet of Parent and its subsidiaries as at the end of such fiscal quarter, and the related consolidated and consolidating statements of income or operations, shareholders' equity and cash flows for such fiscal quarter and for the portion of Parent's fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail, such consolidated statements to be certified by a Responsible Officer of Parent as fairly presenting the financial condition, results of operations, shareholders' equity and cash flows of Parent and its subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes and such consolidating statements to be certified by a Responsible Officer of Parent to the effect that such statements are fairly stated in all material respects when considered in relation to the consolidated financial statements of the Parent and its subsidiaries, provided, however, that so long as Parent is subject to section 13 of the Securities Exchange Act of 1934, as amended, this requirement shall be satisfied with respect to Parent by delivery within such 60-day period of the annual report of Parent on Form 10-Q for such quarter, as filed by Parent with the SEC; and  (ii) a consolidated and consolidating balance sheet of Borrower and its Subsidiaries as at the end of such fiscal quarter, and the related consolidated and consolidating statements of income or operations, shareholders' equity and cash flows for such fiscal quarter and for the portion of Borrower's fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail, such consolidated statements to be certified by a Responsible Officer of Borrower as fairly presenting the financial condition, results of operations, shareholders' equity and cash flows of Borrower and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes and such consolidating statements to be certified by a Responsible Officer of Borrower to the effect that such statements are fairly stated in all material respects when considered in relation to the consolidated financial statements of the Borrower and its Subsidiaries; and  (c)  as soon as available, but in any event at least 60 days after the end of each fiscal year of Borrower, forecasts prepared by management of Borrower, in form satisfactory to Agent and the Required Lenders, of consolidated balance sheets and statements of income or operations and cash flows of Borrower and its Subsidiaries on a monthly basis for the immediately following fiscal year (including the fiscal year in which the Maturity Date occurs).            6.02 CERTIFICATES; OTHER INFORMATION. Deliver to Agent a sufficient number of copies for delivery by Agent to each Lender, in form and detail satisfactory to Agent and the Required Lenders:  (a)  concurrently with the delivery of the financial statements referred to in SECTION 6.01(a), a certificate of its independent certified public accountants certifying such financial statements and stating that in making the examination necessary therefor no knowledge was obtained of any Default or, if any such Default shall exist, stating the nature and status of such event;                                         32   (b)  concurrently with the delivery of the financial statements referred to in SECTIONS 6.01(a) and (b), a duly completed Compliance Certificate signed by a Responsible Officer of Borrower;  (c)  promptly after any request by Agent or any Lender, copies of any detailed audit reports, management letters or recommendations submitted to the board of directors (or the audit committee of the board of directors) of Borrower by independent accountants in connection with the accounts or books of Borrower or any Subsidiary, or any audit of any of them;  (d)  promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of Borrower, and copies of all annual, regular, periodic and special reports and registration statements which Borrower may file or be required to file with the Securities and Exchange Commission under Section 13 or 15(d) of the Securities Exchange Act of 1934, and not otherwise required to be delivered to Agent pursuant hereto;  (e)  promptly after the furnishing thereof, copies of any statement or report furnished to any holder of debt securities of any Loan Party or any Subsidiary thereof pursuant to the terms of any indenture, loan or credit or similar agreement and not otherwise required to be furnished to the Lenders pursuant to Section 6.01 or any other clause of this Section 6.02;  (f)  promptly, and in any event within five Business Days after receipt thereof by any Loan Party or any Subsidiary thereof, copies of each notice or other correspondence received from the Securities and Exchange Commission (or comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation or possible investigation or other inquiry by such agency regarding financial or other operational results of any Loan Party or any Subsidiary thereof; and  (g)  promptly, such additional information regarding the business, financial or corporate affairs of Borrower or any Subsidiary, or compliance with the terms of the Loan Documents, as Agent or any Lender may from time to time reasonably request.  Borrower hereby acknowledges that (a) Agent will make available to Lenders and the L/C Issuer materials and/or information provided by or on behalf of Borrower hereunder (collectively, "BORROWER MATERIALS") by posting Borrower Materials on IntraLinks or another similar electronic system (the "PLATFORM") and (b) certain of the Lenders may be "public-side" Lenders (I.E., Lenders that do not wish to receive material non-public information with respect to Borrower or its securities) (each, a "PUBLIC LENDER"). Borrower hereby agrees that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked "PUBLIC" so long as Borrower is the issuer of any outstanding debt or equity securities that are registered or issued pursuant to a private offering or is actively contemplating issuing any such securities which, at a minimum, shall mean that the word "PUBLIC" shall appear prominently on the first page thereof; (x) by marking Borrower Materials "PUBLIC," Borrower shall be deemed to have authorized Agent, the L/C Issuer and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to Borrower or its securities for purposes of United States Federal and state securities laws (provided, however, that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 10.07); (y) all Borrower Materials marked "PUBLIC" are permitted to be made available through a portion of the Platform designated "Public Investor;" and (z) Agent shall be entitled to treat any Borrower Materials that are not marked "PUBLIC" as being suitable only for posting on a portion of the Platform not designated "Public Investor. Notwithstanding the foregoing, the Borrower shall be under no obligation to mark any Borrower Materials "PUBLIC."            6.03 NOTICES. Promptly notify Agent and each Lender:  (a)  of the occurrence of any Default;  (b)  of any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect, including (i) breach or non-performance of, or any default under, a Contractual Obligation of Borrower or any Subsidiary; (ii) any dispute, litigation, investigation, proceeding or suspension between Borrower or any Subsidiary and any Governmental Authority; or (iii) the commencement of, or any material development in, any litigation or proceeding affecting Borrower or any Subsidiary, including pursuant to any applicable Environmental Laws;  (c)  of the occurrence of any ERISA Event;  and  (d)       of the occurrence of any Internal Control Event.                                         33   Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer of Borrower setting forth details of the occurrence referred to therein and stating what action Borrower has taken and proposes to take with respect thereto. Each notice pursuant to SECTION 6.03(a) shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached.            6.04 PAYMENT OF OBLIGATIONS. Pay and discharge as the same shall become due and payable, all its obligations and liabilities, including (a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by Borrower or such Subsidiary; (b) all lawful claims which, if unpaid, would by law become a Lien upon its property; and (c) all Indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness.            6.05 PRESERVATION OF EXISTENCE, ETC. (a) Preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization except in a transaction permitted by SECTION 7.04 or 7.05; (b) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which could reasonably be expected to have a Material Adverse Effect.            6.06 MAINTENANCE OF PROPERTIES. (a) Maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted; (b) make all necessary repairs thereto and renewals and replacements thereof except where the failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) use the standard of care typical in the industry in the operation and maintenance of its facilities.            6.07 MAINTENANCE OF INSURANCE. Maintain with financially sound and reputable insurance companies not Affiliates of Borrower, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts (after giving effect to any self-insurance compatible with the following standards) as are customarily carried under similar circumstances by such other Persons and providing for not less than 30 days' prior notice to Agent of termination, lapse or cancellation of such insurance.            6.08 COMPLIANCE WITH LAWS. Comply in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (a) such requirement of Law or order, write, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (b) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.            6.09 BOOKS AND RECORDS. (a) Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of Borrower or such Subsidiary, as the case may be; and (b) maintain such books of record and account in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over Borrower or such Subsidiary, as the case may be. Borrower shall maintain, or cause to be maintained, at all times books and records pertaining to the Collateral in such detail, form and scope as Agent or any Lender shall reasonably require.            6.10 INSPECTION RIGHTS. Permit representatives and independent contractors of Agent and each Lender to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants, all at the expense of Borrower and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to Borrower; PROVIDED, HOWEVER, that when an Event of Default exists Agent or any Lender (or any of their respective representatives or independent contractors) may do any of the foregoing at the expense of Borrower at any time during normal business hours and without advance notice.            6.11 USE OF PROCEEDS. Use the proceeds of the Credit Extensions for general corporate purposes not in contravention of any Law or of any Loan Document.            6.12 FINANCIAL COVENANTS.                                         34             (a) TANGIBLE NET WORTH. Maintain on a consolidated basis Tangible Net Worth equal to at least Thirty Two Million Five Hundred Seventy Four Thousand Dollars ($32,574,000).            (b) CONSOLIDATED TOTAL INDEBTEDNESS FOR BORROWED MONEY TO CONSOLIDATED TOTAL CAPITAL. Maintain Consolidated Total Indebtedness for Borrowed Money to an amount equal to or lesser than 65% of Consolidated Total Capital, calculated at the end of each quarter, using the results of the twelve-month period ending with that reporting period.            (c) DEBT SERVICE COVERAGE RATIO. Maintain a ratio of Consolidated Net Income Available for Fixed Charges to Consolidated Interest Expense of at least 1.75:1.0, calculated at the end of each quarter, using the results of the twelve-month period ending with that reporting period.            6.13 COLLATERAL RECORDS. To execute and deliver promptly, and to cause each other Loan Party to execute and deliver promptly, to Agent, from time to time, solely for Agent's convenience in maintaining a record of the Collateral, such written statements and schedules as Agent may reasonably require designating, identifying or describing the Collateral. The failure by Borrower or any other Loan Party, however, to promptly give Agent such statements or schedules shall not affect, diminish, modify or otherwise limit the Liens granted pursuant to the Collateral Documents.            6.14 SECURITY INTERESTS. To, and to cause each other Loan Party to, (a) defend the Collateral against all claims and demands of all Persons at any time claiming the same or any interest therein, and (b) do whatever Agent may reasonably request, from time to time, to effect the purposes of this Agreement and the other Loan Documents, including cooperating with Agent's representatives and paying claims which might, if unpaid, become a Lien on the Collateral.  ARTICLE VII. NEGATIVE COVENANTS  So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, Borrower shall not, nor shall it permit any Subsidiary to, directly or indirectly:            7.01 LIENS. Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, other than the following:  (a)  Liens pursuant to any Loan Document;  (b)  Liens existing on the date hereof and listed on SCHEDULE 7.01 and any renewals or extensions thereof, PROVIDED that (i) the property covered thereby is not changed, (ii) the amount secured or benefited thereby is not increased, (iii) the direct or any contingent obligor with respect thereto is not changed, and (iv) and any renewal or extension of the obligations secured or benefited thereby is permitted by SECTION 7.03(b);  (c)  Liens for taxes not yet due or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP;  (d)  carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 30 days or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person;  (e)  pledges or deposits in the ordinary course of business in connection with workers' compensation, unemployment insurance and other social security legislation, other than any Lien imposed by ERISA;  (f)  deposits to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;  (g)  easements, rights-of-way, restrictions and other similar encumbrances affecting real property which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person;                                         35   (h)  Liens securing judgments for the payment of money not constituting an Event of Default under SECTION 8.01(h); and  (i)  Liens securing Indebtedness permitted under SECTION 7.03(e); PROVIDED that (i) such Liens do not at any time encumber any property other than the property financed by such Indebtedness and (ii) the Indebtedness secured thereby does not exceed the cost or fair market value, whichever is lower, of the property being acquired on the date of acquisition.            7.02 INVESTMENTS. Make any Investments, except:  (a)  Investments held by Borrower or such Subsidiary in the form of cash equivalents or short-term marketable debt securities;  (b)  advances to officers, directors and employees of Borrower and Subsidiaries in an aggregate amount not to exceed $50,000 at any time outstanding, for travel, entertainment, relocation and analogous ordinary business purposes;  (c)  Investments of Borrower in any wholly-owned Subsidiary and Investments of any wholly-owned Subsidiary in Borrower or in another wholly-owned Subsidiary;  (d)  Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss; and  (e)  Guarantees permitted by SECTION 7.03.            7.03 INDEBTEDNESS. Create, incur, assume or suffer to exist any Indebtedness, except:  (a)  Indebtedness under the Loan Documents;  (b)  Indebtedness outstanding on the date hereof and listed on SCHEDULE 7.03 and any refinancings, refundings, renewals or extensions thereof; PROVIDED that (i) the amount of such Indebtedness is not increased at the time of such refinancing, refunding, renewal or extension except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such refinancing and by an amount equal to any existing commitments unutilized thereunder and (ii) the terms relating to principal amount, amortization, maturity, collateral (if any) and subordination (if any), and other material terms taken as a whole, of any such refinancing, refunding, renewing or extending Indebtedness, and of any agreement entered into and of any instrument issued in connection therewith, are no less favorable in any material respect to the Loan Parties or Lenders than the terms of any agreement or instrument governing the Indebtedness being refinanced, refunded, renewed or extended and the interest rate applicable to any such refinancing, refunding, renewing or extending Indebtedness does not exceed the then applicable market interest rate;  (c)  Guarantees of Borrower or any Subsidiary in respect of Indebtedness otherwise permitted hereunder of Borrower or any wholly-owned Subsidiary;  (d)  obligations (contingent or otherwise) of Borrower or any Subsidiary existing or arising under any Swap Contract, PROVIDED that (i) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments, investments, assets, or property held or reasonably anticipated by such Person, or changes in the value of securities issued by such Person, and not for purposes of speculation or taking a "market view;" and (ii) such Swap Contract does not contain any provision exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party; and  (e)  Indebtedness in respect of capital leases, Synthetic Lease Obligations and purchase money obligations for fixed or capital assets within the limitations set forth in SECTION 7.01(i); PROVIDED, HOWEVER, that the cumulative amount of all such Indebtedness outstanding during the term of this Agreement shall not exceed $2,500,000.            7.04 FUNDAMENTAL CHANGES. Merge, dissolve, liquidate, consolidate with or into another Person, or Dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person, except that, so long as no Default exists or would result therefrom, Borrower's sole                                         36   Subsidiary may be dissolved or otherwise terminate its existence, inasmuch as it has heretofore disposed of substantially all of its operating assets.            7.05 DISPOSITIONS. Make any Disposition or enter into any agreement to make any Disposition, except:  (a)  Dispositions of obsolete or worn out property, whether now owned or hereafter acquired, in the ordinary course of business;  (b)  Dispositions of inventory in the ordinary course of business;  (c)  Dispositions of equipment or real property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property or (ii) the proceeds of such Disposition are reasonably promptly applied to the purchase price of such replacement property;  (d)  Dispositions of property by any Subsidiary to Borrower or to a wholly-owned Subsidiary; PROVIDED that if the transferor of such property is a Guarantor, the transferee thereof must either be Borrower or a Guarantor; and  (e)  Dispositions permitted by SECTION 7.04.  PROVIDED, HOWEVER, that any Disposition pursuant to clauses (a) through (e) shall be for fair market value.            7.06 RESTRICTED PAYMENTS. Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, or issue or sell any Equity Interests, except that, so long as no Default shall have occurred and be continuing at the time of any action described below or would result therefrom:  (a)  each Subsidiary may make Restricted Payments to Borrower, Guarantors and any other Person that owns an Equity Interest in such Subsidiary, ratably according to their respective holdings of the type of Equity Interest in respect of which such Restricted Payment is being made;  (b)  Borrower and each Subsidiary may declare and make dividend payments or other distributions payable solely in the common stock or other common Equity Interests of such Person;  (c)  Borrower and each Subsidiary may purchase, redeem or otherwise acquire Equity Interests issued by it with the proceeds received from the substantially concurrent issue of new shares of its common stock or other common Equity Interests; and  (d)  Borrower may pay dividends to Parent to the full extent permitted by the PUC.            7.07 CHANGE IN NATURE OF BUSINESS. Engage in any material line of business substantially different from those lines of business conducted by Borrower and its Subsidiaries on the date hereof or any business substantially related or incidental thereto.            7.08 TRANSACTIONS WITH AFFILIATES. Enter into any transaction of any kind with any Affiliate of Borrower, whether or not in the ordinary course of business, other than on fair and reasonable terms substantially as favorable to Borrower or such Subsidiary as would be obtainable by Borrower or such Subsidiary at the time in a comparable arm's length transaction with a Person other than an Affiliate, provided that (a) the foregoing restriction shall not apply to transactions between or among Borrower and any Guarantor or between and among Guarantors, and (b) transactions permitted by order of the PUC shall be conclusively presumed to meet the foregoing standard.            7.09 BURDENSOME AGREEMENTS. Enter into any Contractual Obligation (other than this Agreement or any other Loan Document) that (a) limits the ability (i) of any Subsidiary to make Restricted Payments to Borrower or to otherwise transfer property to Borrower, (ii) of any Subsidiary to Guarantee the Indebtedness of Borrower or (iii) of Borrower or any Subsidiary to create, incur, assume or suffer to exist Liens on property of such Person; PROVIDED, HOWEVER, that this clause (iii) shall not prohibit any negative pledge incurred or provided in favor of any holder of Indebtedness permitted under SECTION 7.03(e) solely to the extent any such negative pledge relates to the property financed by or the subject of such Indebtedness; or (b) requires the grant of a Lien to secure an obligation of such Person if a Lien is granted to secure another obligation of such Person.                                         37             7.10 USE OF PROCEEDS. Use the proceeds of any Credit Extension, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the FRB) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose.  ARTICLE VIII.  EVENTS OF DEFAULT AND REMEDIES            8.01 EVENTS OF DEFAULT. Any of the following shall constitute an Event of Default:  (a)  NON-PAYMENT. Borrower or any other Loan Party fails to pay (i) when and as required to be paid herein, any amount of principal of any Loan or any L/C Obligation, or (ii) within three days after the same becomes due, any interest on any Loan or on any L/C Obligation, or any fee due hereunder, or (iii) within five days after the same becomes due, any other amount payable hereunder or under any other Loan Document; or  (b)  SPECIFIC COVENANTS. Borrower fails to perform or observe any term, covenant or agreement contained in any of SECTION 6.01, 6.02(a) THROUGH (g) INCLUSIVE, 6.03, 6.05, 6.10, 6.11 or 6.12 or ARTICLE VII; or  (c)  OTHER DEFAULTS. Any Loan Party fails to perform or observe any other covenant or agreement (not specified in subsection (a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for 30 days or any default or Event of Default occurs under any other Loan Document; or  (d)  REPRESENTATIONS AND WARRANTIES. Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of Borrower or any other Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith shall be incorrect or misleading when made or deemed made; or  (e)  CROSS-DEFAULT. (i) Borrower or any Subsidiary (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee (other than Indebtedness hereunder and Indebtedness under Swap Contracts) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than the Threshold Amount, or (B) fails to observe or perform any other agreement or condition relating to any such Indebtedness or Guarantee or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which Borrower or any Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which Borrower or any Subsidiary is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by Borrower or such Subsidiary as a result thereof is greater than the Threshold Amount; or  (f)  INSOLVENCY PROCEEDINGS, ETC. Any Loan Party or any of its Subsidiaries institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for 60 calendar days, or an order for relief is entered in any such proceeding; or  (g)  INABILITY TO PAY DEBTS; ATTACHMENT. (i) Borrower or any Subsidiary becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within 30 days after its issue or levy; or                                         38   (h)  JUDGMENTS. There is entered against Borrower or any Subsidiary (i) a final judgment or order for the payment of money in an aggregate amount exceeding the Threshold Amount (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage), or (ii) any one or more non-monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of 10 consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or  (i)  ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold Amount, or (ii) Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or  (j)  INVALIDITY OF LOAN DOCUMENTS. Any Loan Document or any provision thereof, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party or any other Person contests in any manner the validity or enforceability of any Loan Document or any provision thereof; or any Loan Party denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any Loan Document or any provision thereof; or  (k)  CHANGE OF CONTROL. There occurs any Change of Control with respect to Borrower without the prior written consent of the Required Lenders, such consent not to be unreasonably withheld, conditioned or delayed;  (l)  MATERIAL ADVERSE EFFECT. There occurs any event or circumstance that has a Material Adverse Effect; or  (m)  FAILURE TO REDOCUMENT OTHER LETTER OF CREDIT FACILITIES. If, for any reason, on or before December 31, 2005, the Bank of America, N.A. has not replaced The Bank of New York as Agent and Issuing Bank under (i) the Letter of Credit and Reimbursement Agreement dated as of June 1, 1996 concerning the Maine Public Utility Financing Bank Public Utility Revenue Bonds, Series 1996 (Maine Public Service Company Project) and (ii) the Letter of Credit and Reimbursement Agreement dated as of October 1, 2000 concerning the Maine Public Utility Financing Bank Public Utility Revenue Bonds, Series 2000 (Maine Public Service Company Project).            8.02 REMEDIES UPON EVENT OF DEFAULT. If any Event of Default occurs and is continuing, Agent shall, at the request of, or may, with the consent of, the Required Lenders, take any or all of the following actions:  (a)  declare the commitment of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions to be terminated, whereupon such commitments and obligation shall be terminated;  (b)  declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by Borrower;  (c)  require that Borrower Cash Collateralize the L/C Obligations (in an amount equal to the then Outstanding Amount thereof); and  (d)  exercise on behalf of itself and the Lenders all rights and remedies available to it and the Lenders under the Loan Documents;  PROVIDED, HOWEVER, that upon the occurrence of an actual or deemed entry of an order for relief with respect to Borrower under the Bankruptcy Code of the United States, the obligation of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, and the obligation of Borrower to Cash Collateralize the L/C Obligations as aforesaid shall automatically become effective, in each case without further act of Agent or any Lender.                                         39             8.03 APPLICATION OF FUNDS. After the exercise of remedies provided for in SECTION 8.02 (or after the Loans have automatically become immediately due and payable and the L/C Obligations have automatically been required to be Cash Collateralized as set forth in the proviso to SECTION 8.02), any amounts received on account of the Obligations shall be applied by Agent in the following order:  FIRST, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to Agent (including fees and time charges for attorneys who may be employees of Agent) and amounts payable under ARTICLE III) payable to Agent in its capacity as such;  SECOND, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal interest and L/C Fees) payable to Lenders and the L/C Issuer (including fees, charges and disbursements of counsel to the respective Lenders and the L/C Issuer (including fees and time charges for attorneys who may be employees of any Lender or the L/C Issuer) and amounts payable under ARTICLE III), ratably among them in proportion to the respective amounts described in this clause SECOND payable to them;  THIRD, to payment of that portion of the Obligations constituting accrued and unpaid L/C Fees and interest on the Loans, L/C Borrowings and other Obligations, ratably among Lenders and the L/C Issuer in proportion to the respective amounts described in this clause THIRD payable to them;  FOURTH, to payment of that portion of the Obligations constituting unpaid principal of the Loans and L/C Borrowings, ratably among Lenders and the L/C Issuer in proportion to the respective amounts described in this clause FOURTH held by them;  FIFTH, to Agent for the account of the L/C Issuer, to Cash Collateralize that portion of L/C Obligations comprised of the aggregate undrawn amount of Letters of Credit; and  LAST, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to Borrower or as otherwise required by Law.  Subject to SECTION 2.03(c), amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause FIFTH above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above.  ARTICLE IX.    ADMINISTRATIVE AGENT            9.01 APPOINTMENT AND AUTHORIZATION OF ADMINISTRATIVE AGENT. Each of the Lenders and the L/C issuer hereby irrevocably appoints Bank of America to act on its behalf as Administrative Agent hereunder and under the other Loan Documents and authorizes Agent to take such actions on its behalf and to exercise such powers as are delegated to Agent by the terms hereof and thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of Agent, the Lenders and the L/C Issuer, and neither the Borrower nor any other Loan Party shall have rights as a third party beneficiary of any of such provisions.            9.02 RIGHTS AS A LENDER. The Person serving as Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not Agent and the term "Lender" or "Lenders" shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not Agent hereunder and without any duty to account therefor to Lenders.            9.03 EXCULPATORY PROVISIONS. Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, Agent:            (a)  shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;                                         40             (b)  shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), PROVIDED that Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose Agent to liability or that is contrary to any Loan Document or applicable Law; and            (c)       shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as Agent or any of its Affiliates in any capacity.            (d)       Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as Agent shall believe in good faith shall be necessary, under the circumstances as provided in SECTIONS 8.02 and 10.01) or (ii) in the absence of its own gross negligence or willful misconduct. Agent shall be deemed not to have knowledge of any Default unless and until written notice describing such Default is given to Agent by Borrower, a Lender or the L/C Issuer. Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in ARTICLE IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to Agent.            9.04 RELIANCE BY ADMINISTRATIVE AGENT. Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the L/C Issuer, Agent may presume that such condition is satisfactory to such Lender or the L/C Issuer unless Agent shall have received notice to the contrary from such Lender or the L/C Issuer prior to the making of such Loan or the issuance of such Letter of Credit. Agent may consult with legal counsel (who may be counsel for Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.            9.05 DELEGATION OF DUTIES. Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by Agent. Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Agent.            9.06 RESIGNATION OF AGENT. Agent may at any time give notice of its resignation to Lenders, the L/C Issuer and Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation, then the retiring Agent may on behalf of Lenders and the L/C Issuer, appoint a successor Agent meeting the qualifications set forth above; PROVIDED that if Agent shall notify the Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (1) the retiring Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by Agent on behalf of the Lenders or the L/C Issuer under any of the Loan Documents, the retiring Agent shall continue to hold such collateral security until such time as a successor Agent is appointed) and (2) all payments, communications and determinations provided to be made by, to or through Agent shall instead be made by or to each Lender and the L/C Issuer directly, until such                                         41   time as the Required Lenders appoint a successor Agent as provided for above in this Section. Upon the acceptance of a successor's appointment as Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Agent, and the retiring Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section). The fees payable by Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between Borrower and such successor. After the retiring Agent's resignation hereunder and under the other Loan Documents, the provisions of this Article and SECTION 10.04 shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.  Any resignation by Bank of America as Agent pursuant to this Section shall also constitute its resignation as L/C Issuer. Upon the acceptance of a successor's appointment as Agent hereunder, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer, (b) the retiring L/C Issuer shall be discharged from all of their respective duties and obligations hereunder or under the other Loan Documents, and (c) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the retiring L/C Issuer to effectively assume the obligations of the retiring L/C Issuer with respect to such Letters of Credit.            9.07 NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender and the L/C Issuer acknowledges that it has, independently and without reliance upon Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and the L/C Issuer also acknowledges that it will, independently and without reliance upon Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.            9.08 NO OTHER DUTIES, ETC. Anything herein to the contrary notwithstanding, no Lender holding a title listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as Agent, a Lender or the L/C Issuer hereunder.            9.09 ADMINISTRATIVE AGENT MAY FILE PROOFS OF CLAIM. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to any Loan Party, Agent (irrespective of whether the principal of any Loan or L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether Agent shall have made any demand on Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise            (a)  to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, L/C Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of Lenders, the L/C Issuer and Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of Lenders, the L/C Issuer and Agent and their respective agents and counsel and all other amounts due Lenders, the L/C Issuer and Agent under SECTIONS 2.03(i) and (j), 2.09 and 10.04) allowed in such judicial proceeding; and            (b)  to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;  and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and the L/C Issuer to make such payments to Agent and, in the event that Agent shall consent to the making of such payments directly to Lenders and the L/C Issuer, to pay to Agent any amount due for the reasonable compensation, expenses, disbursements and advances of Agent and its agents and counsel, and any other amounts due Agent under SECTIONS 2.09 and 10.04. Nothing contained herein shall be deemed to authorize Agent to authorize or consent to or accept or adopt on behalf of any Lender or the L/C Issuer any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to authorize Agent to vote in respect of the claim of any Lender in any such proceeding.                                         42             9.10 COLLATERAL MATTERS. (a) Each Lender and the L/C Issuer hereby irrevocably authorizes and directs Agent to accept the First Mortgage Bonds on behalf of the Agent, the Lenders and the L/C Issuer and to enter into the Collateral Documents for the benefit of such Lender and the L/C Issuer. Each Lender and the L/C Issuer hereby agrees, and each holder of any Note by the acceptance thereof will be deemed to agree, that, except as otherwise set forth in Section 10.01, any action taken by the Required Lenders, in accordance with the provisions of this Agreement or the Collateral Documents, and the exercise by the Required Lenders of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all of Lenders and the L/C Issuer. Agent is hereby authorized (but not obligated) on behalf of all of Lenders and the L/C Issuer, without the necessity of any notice to or further consent from any Lender or the L/C Issuer from time to time prior to, an Event of Default, to take any action with respect to any Collateral or Collateral Documents which may be necessary to perfect and maintain perfected the Liens granted pursuant to the Collateral Documents.            (b)  Each Lender and the L/C issuer hereby irrevocably authorize Agent, at its option and in its discretion,                      (i)  to release any Lien on any property granted to or held by Agent under any Loan Document (A) upon termination of the Aggregate Commitments and payment in full of all Obligations (other than contingent indemnification obligations) and the expiration or termination of all Letters of Credit, (B) that is sold or to be sold as part of or in connection with any sale permitted hereunder or under any other Loan Document, (C) subject to SECTION 10.01, if approved, authorized or ratified in writing by the Required Lenders, or (D) in connection with any foreclosure sale or other disposition of Collateral after the occurrence of an Event of Default; and                      (ii) to subordinate any Lien on any property granted to or held by Agent under any Loan Document to the holder of any Lien on such property that is permitted by this Agreement or any other Loan Document.  Upon request by Agent at any time, each Lender and the L/C Issuer will confirm in writing Agent's authority to release or subordinate its interest in particular types or items of Collateral pursuant to this SECTION 9.10.            (c)  Subject to (b) above, Agent shall (and is hereby irrevocably authorized by each Lender and the L/C Issuer) to execute such documents as may be necessary to evidence the release or subordination of the Liens granted to Agent for the benefit of Agent and Lenders and the L/C Issuer herein or pursuant hereto upon the applicable Collateral and/or the Collateral Documents; provided that (i) Agent shall not be required to execute any such document on terms which, in Agent's opinion, would expose Agent to or create any liability or entail any consequence other than the release or subordination of such Liens without recourse or warranty and (ii) such release, exchange or subordination shall not in any manner discharge, affect or impair the Obligations or any Liens upon (or obligations of Borrower or any other Loan Party in respect of) all interests retained by Borrower or any other Loan Party, including the proceeds of the sale, all of which shall continue to constitute part of the Collateral and/or the Collateral Documents. In the event of any sale or transfer of Collateral and/or the Collateral Documents, or any foreclosure with respect to any of the Collateral and/or the Collateral Documents, Agent shall be authorized to deduct all expenses reasonably incurred by Agent from the proceeds of any such sale, transfer or foreclosure.            (d)  Agent shall have no obligation whatsoever to any Lender, the L/C Issuer or any other Person to assure that the Collateral exists or is owned by Borrower or any other Loan Party or is cared for, protected or insured or that the Liens granted to Agent herein or in any of the Collateral Documents or pursuant hereto or thereto have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise or to continue exercising at all or in any manner or under any duty of care, disclosure or fidelity any of the rights, authorities and powers granted or available to Agent in this SECTION 9.10 or in any of the Collateral Documents, it being understood and agreed that in respect of the Collateral and/or the Collateral Documents, or any act, omission or event related thereto, Agent may act in any manner it may deem appropriate, in its sole discretion, given Agent's own interest in the Collateral and/or the Collateral Documents as one of the Lenders and that Agent shall have no duty or liability whatsoever to Lenders or the L/C Issuer.            (e)  Each Lender and the L/C Issuer hereby appoints each other Lender as agent for the purpose of perfecting Lenders' and the L/C Issuer's security interest in assets which, in accordance with Article 9 of the UCC can be perfected only by possession. Should any Lender or the L/C Issuer (other than Agent) obtain possession of any such Collateral, such Lender or the L/C Issuer shall notify Agent thereof, and, promptly upon Agent's request therefor shall deliver such Collateral to Agent or in accordance with Agent's instructions.                                         43             (f)  Agent agrees that it shall not release the Collateral or its interest in the Collateral without the prior written consent of each Lender.  ARTICLE X.     MISCELLANEOUS            10.01 AMENDMENTS, ETC. No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by Borrower or any other Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders and Borrower or the applicable Loan Party, as the case may be, and acknowledged by Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; PROVIDED, HOWEVER, that no such amendment, waiver or consent shall:  (a)  waive any condition set forth in SECTION 4.01(a) without the written consent of each Lender; PROVIDED, HOWEVER, in the sole discretion of Agent, only a waiver by Agent shall be required with respect to immaterial matters or items specified in SECTION 4.01(a) (iii) or (iv) with respect to which Borrower has given assurances satisfactory to Agent that such items shall be delivered promptly following the Closing Date;  (b)  extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to SECTION 8.02) without the written consent of such Lender;  (c)  postpone any date fixed by this Agreement or any other Loan Document for any payment (excluding mandatory prepayments) of principal, interest, fees or other amounts due to Lenders (or any of them) hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby;  (d)  reduce the principal of, or the rate of interest specified herein on, any Loan or L/C Borrowing, or (subject to clause (iv) of the second proviso to this SECTION 10.01) any fees or other amounts payable hereunder or under any other Loan Document, without the written consent of each Lender directly affected thereby; PROVIDED, HOWEVER, that only the consent of the Required Lenders shall be necessary to amend the definition of "Default Rate" or to waive any obligation of Borrower to pay interest or L/C Fees at the Default Rate;  (e)  amend any financial covenant in Section 6.12 without written consent of each Lender;  (f)  change SECTION 2.13 or SECTION 8.03 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender; or  (g)  change any provision of this Section or the definition of "Required Lenders" or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender;  and, PROVIDED FURTHER, that (i) no amendment, waiver or consent shall, unless in writing and signed by the L/C Issuer in addition to the Lenders required above, affect the rights or duties of the L/C Issuer under this Agreement or any Issuer Document relating to any Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing and signed by Agent in addition to the Lenders required above, affect the rights or duties of Agent under this Agreement or any other Loan Document; and (iii) the Agent Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except that the Commitment of such Lender may not be increased or extended without the consent of such Lender.            10.02 NOTICES; EFFECTIVENESS; ELECTRONIC COMMUNICATIONS. (a) NOTICES GENERALLY. Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:            (i)  if to Borrower, Agent or the L/C Issuer, to the address, telecopier number, electronic mail address or telephone number specified for such Person on SCHEDULE 10.02 ; and                                         44             (ii) if to any other Lender, to the address, telecopier number, electronic mail address or telephone number specified in its Administrative Questionnaire.  Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Notices delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as provided in such subsection (b).  (b)  ELECTRONIC COMMUNICATIONS. Notices and other communications to Lenders and the L/C Issuer hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by Agent, provided that the foregoing shall not apply to notices to any Lender or the L/C Issuer pursuant to Article II if such Lender or the L/C Issuer, as applicable has notified the Agent that it is incapable of receiving notices under such Article by electronic communication. Agent or Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications. Unless Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender's receipt of an acknowledgement from the intended recipient (such as by the "return receipt requested" function, as available, return e-mail or other written acknowledgement), PROVIDED that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.  (c)  THE PLATFORM. THE PLATFORM IS PROVIDED "AS IS" AND "AS AVAILABLE." THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall Agent or any of its Related Parties (collectively, the "Agent Parties") have any liability to Borrower, any Lender, the L/C Issuer or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of Borrower's or Agent's transmission of Borrower Materials through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party; provided, however, that in no event shall any Agent Party have any liability to Borrower, any Lender, the L/C Issuer or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages).  (d)  CHANGE OF ADDRESS, ETC. Each of the Borrower, Agent and the L/C Issuer may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the other parties hereto. Each other Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to Borrower, Agent and the L/C Issuer. IN ADDITION, EACH LENDER AGREES TO NOTIFY AGENT FROM TIME TO TIME TO ENSURE THAT AGENT HAS ON RECORD (i) AN EFFECTIVE ADDRESS, CONTACT NAME, TELEPHONE NUMBER, TELECOPIER NUMBER AND ELECTRONIC MAIL ADDRESS TO WHICH NOTICES AND OTHER COMMUNICATIONS MAY BE SENT AND (ii) ACCURATE WIRE INSTRUCTIONS FOR SUCH LENDER.  (e)  RELIANCE BY AGENT. L/C ISSUER AND LENDERS. Agent, the L/C Issuer and Lenders shall be entitled to rely and act upon any notices (including telephonic Committed Loan Notices) purportedly given by or on behalf of Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. Borrower shall indemnify Agent, the L/C Issuer, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of Borrower. All telephonic notices to and other telephonic communications with Agent may be recorded by Agent, and each of the parties hereto hereby consents to such recording.                                         45             10.03 NO WAIVER; CUMULATIVE REMEDIES. No failure by any Lender, the L/C Issuer or Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.            10.04 EXPENSES; INDEMNITY; DAMAGE WAIVER. (a) COSTS AND EXPENSES. Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by Agent and its Affiliates (including the reasonable fees, charges and disbursements of counsel for Agent), in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by the L/C Issuer in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all out-of-pocket expenses incurred by Agent, any Lender or the L/C Issuer (including the fees, charges and disbursements of any counsel for Agent, any Lender or the L/C Issuer), and shall pay all fees and time charges for attorneys who may be employees of Agent, any Lender or the L/C Issuer, in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.  (b)  INDEMNIFICATION BY THE BORROWER. Borrower shall indemnify Agent (and any sub-agent thereof), each Lender and the L/C Issuer, and each Related Party of any of the foregoing Persons (each such Person being called an "INDEMNITEE") against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee), and shall indemnify and hold harmless each Indemnitee from all fees and time charges and disbursements for attorneys who may be employees of any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee by any third party or by Borrower or any other Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder, or the consummation of the transactions contemplated hereby or thereby, or, in the case of Agent (and any sub-agent thereof) and its Related Parties only, the administration of this Agreement and the other Loan Documents, (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the L/C Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower or any other Loan Party, and regardless of whether any Indemnitee is a party thereto, in all cases, whether or not caused by or arising, in whole or in part, out of the comparative, contributory or sole negligence of the Indemnitee; PROVIDED that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by Borrower or any other Loan Party against an Indemnitee for breach in bad faith of such Indemnitee's obligations hereunder or under any other Loan Document, if Borrower or such Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.  (c)  REIMBURSEMENT BY LENDERS. To the extent that Borrower for any reason fails to indefeasibly pay any amount required under subsection (a) or (b) of this Section to be paid by it to Agent (or any sub-agent thereof), the L/C Issuer or any Related Party of any of the foregoing, each Lender severally agrees to pay to Agent (or any such sub-agent), the L/C Issuer or such Related Party, as the case may be, such Lender's Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, PROVIDED that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against Agent (or any such sub-agent) or the L/C Issuer in its capacity as such, or against any Related Party of any of the foregoing acting for Agent (or any such sub-agent) or L/C Issuer in connection with such capacity. The obligations of the Lenders under this subsection (c) are subject to the provisions of SECTION 2.12(d).                                         46   (d)  WAIVER OF CONSEQUENTIAL DAMAGES, ETC. To the fullest extent permitted by applicable law, Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof. No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.  (e)  PAYMENTS. All amounts due under this Section shall be payable not later than ten Business Days after demand therefor.  (f)  SURVIVAL. The agreements in this Section shall survive the resignation of Agent and the L/C Issuer, the replacement of any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations.            10.05 PAYMENTS SET ASIDE. To the extent that any payment by or on behalf of Borrower is made to Agent, the L/C Issuer or any Lender, or Agent, the L/C Issuer or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by Agent, the L/C Issuer or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender and the L/C Issuer severally agrees to pay to Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Lenders and the L/C Issuer under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.            10.06 SUCCESSORS AND ASSIGNS. (a) SUCCESSORS AND ASSIGNS GENERALLY. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that neither Borrower nor any other Loan Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of Agent, the L/C Issuer and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of Agent, the L/C Issuer and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.  (b)  ASSIGNMENTS BY LENDERS. Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans (including for purposes of this subsection (b), participations in L/C Obligations) at the time owing to it); PROVIDED that (i) except in the case of an assignment of the entire remaining amount of the assigning Lender's Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender or an Affiliate of a Lender, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to Agent or, if "Trade Date" is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $2,500,000 unless each of Agent and, so long as no Event of Default has occurred and is continuing, Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed); (ii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations under this Agreement with respect to the Loans or the Commitment assigned; (iii) any assignment of a Commitment must be approved by Agent and the L/C Issuer unless the Person that is the proposed assignee is itself a Lender (whether or not the proposed assignee would otherwise qualify as an Eligible Assignee); and (iv) the parties to each assignment shall execute and deliver to Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500 and the Eligible Assignee, if it shall not be a Lender, shall deliver to Agent an Administrative Questionnaire. Subject to acceptance and recording thereof by Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the                                         47   Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of SECTIONS 3.01, 3.04, 3.05, and 10.04 with respect to facts and circumstances occurring prior to the effective date of such assignment. Upon request, Borrower (at its expense) shall execute and deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.  (c)  REGISTER. Agent, acting solely for this purpose as an agent of Borrower, shall maintain at Administrative Agent's Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the "REGISTER"). The entries in the Register shall be conclusive, and Borrower, Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by each of Borrower and the L/C Issuer, at any reasonable time and from time to time upon reasonable prior notice. In addition, at any time that a request for a consent for a material or substantive change to the Loan Documents is pending, any Lender may request and receive from Agent a copy of the Register.  (d)  PARTICIPATIONS. Any Lender may at any time, without the consent of, or notice to, Borrower or Agent, sell participations to any Person (other than a natural person or Borrower or any of Borrower's Affiliates or Subsidiaries) (each, a "PARTICIPANT") in all or a portion of such Lender's rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans (including such Lender's participations in L/C Obligations ) owing to it); PROVIDED that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) Borrower, Agent, the L/C Issuer and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; PROVIDED that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to SECTION 10.01 that affects such Participant. Subject to subsection (e) of this Section, Borrower agrees that each Participant shall be entitled to the benefits of SECTIONS 3.01, 3.04 and 3.05 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of SECTION 10.08 as though it were a Lender, PROVIDED such Participant agrees to be subject to SECTION 2.13 as though it were a Lender.  (e)  LIMITATIONS UPON PARTICIPANT RIGHTS. A Participant shall not be entitled to receive any greater payment under SECTION 3.01 or 3.04 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with Borrower's prior written consent.  (f)  CERTAIN PLEDGES. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; PROVIDED that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.  (g)  ELECTRONIC EXECUTION OF ASSIGNMENTS. The words "execution," "signed," "signature," and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.  (h)  DEEMED CONSENT OF BORROWER. If the consent of Borrower to an assignment to an Eligible Assignee is required hereunder (including a consent to an assignment which does not meet the minimum assignment threshold specified in clause (i) of the proviso to the first sentence of SECTION 10.06(b)), Borrower shall be deemed to have given its consent five Business Days after                                         48   the date notice thereof has been delivered to Borrower by the assigning Lender (through Agent) unless such consent is expressly refused by Borrower prior to such fifth Business Day.  (i)  RESIGNATION AS L/C ISSUER. Notwithstanding anything to the contrary contained herein, if at any time Bank of America assigns all of its Commitment and Loans pursuant to subsection (b) above, Bank of America may, upon 30 days' notice to Borrower and the Lenders, resign as L/C Issuer. In the event of any such resignation as L/C Issuer, Borrower shall be entitled to appoint from among Lenders a successor L/C Issuer hereunder; PROVIDED, HOWEVER, that no failure by Borrower to appoint any such successor shall affect the resignation of Bank of America as L/C Issuer, as the case may be. If Bank of America resigns as L/C Issuer, it shall retain all the rights, powers, privileges and duties of the L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with respect thereto (including the right to require the Lenders to make Base Rate Committed Loans or fund risk participations in Unreimbursed Amounts pursuant to SECTION 2.03(c)). Upon the appointment of a successor L/C Issuer, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer, as the case may be, and (b) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to Bank of America to effectively assume the obligations of Bank of America with respect to such Letters of Credit.            10.07 TREATMENT OF CERTAIN INFORMATION; CONFIDENTIALITY. Each of Agent, Lenders and the L/C Issuer agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates' respective partners, directors, officers, employees, agents, advisors and representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority, purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to Borrower and its obligations, (g) with the consent of Borrower or (h) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to Agent, any Lender, the L/C Issuer or any of their respective Affiliates on a nonconfidential basis from a source other than Borrower. For purposes of this Section, "INFORMATION" means all information received from Borrower or any Subsidiary relating to Borrower or any Subsidiary or any of their respective businesses, other than any such information that is available to Agent, any Lender or the L/C Issuer on a nonconfidential basis prior to disclosure by Borrower or any Subsidiary, PROVIDED that, in the case of information received from Borrower or any Subsidiary after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. Each of Agent, the Lenders and the L/C Issuer acknowledges that (a) the Information may include material non-public information concerning the Borrower or a Subsidiary, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable Law, including Federal and state securities Laws.            10.08 RIGHT OF SETOFF. If an Event of Default shall have occurred and be continuing, each Lender, the L/C Issuer and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender, the L/C Issuer or any such Affiliate to or for the credit or the account of Borrower or any other Loan Party against any and all of the obligations of Borrower or such Loan Party now or hereafter existing under this Agreement or any other Loan Document to such Lender or the L/C Issuer or any such Affiliate, irrespective of whether or not such Lender or the L/C Issuer shall have made any demand under this Agreement or any other Loan Document and although such obligations of Borrower or such Loan Party may be contingent or unmatured or are owed to a branch or office of such Lender or the L/C Issuer different from the branch or office holding such deposit or obligated on such indebtedness. The rights of each Lender, the L/C Issuer and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, the L/C Issuer or their respective Affiliates may have. Each Lender and the L/C Issuer agrees to notify Borrower and Agent promptly after any such setoff and application, PROVIDED that the failure to give such notice shall not affect the validity of such setoff and application.                                         49             10.09 INTEREST RATE LIMITATION. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the "MAXIMUM RATE"). If Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to Borrower. In determining whether the interest contracted for, charged, or received by Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.            10.10 COUNTERPARTS ; INTEGRATION; EFFECTIVENESS. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in SECTION 4.01, this Agreement shall become effective when it shall have been executed by Agent and when Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.            10.11 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by Agent and each Lender, regardless of any investigation made by Agent or any Lender or on their behalf and notwithstanding that Agent or any Lender may have had notice or knowledge of any Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.            10.12 SEVERABILITY. If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.            10.13 GOVERNING LAW; JURISDICTION; ETC. (a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF MAINE.  (b)       SUBMISSION TO JURISDICTION. THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF MAINE SITTING IN CUMBERLAND COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE STATE OF MAINE, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH MAINE STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT AGENT, ANY LENDER OR THE L/C ISSUER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.                                         50             (c)  WAIVER OF VENUE. THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.            (d)  SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.            10.14 WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.            10.15 USA PATRIOT ACT NOTICE. Each Lender that is subject to the Act (as hereinafter defined) and Agent (for itself and not on behalf of any Lender) hereby notifies Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the "Act"), it is required to obtain, verify and record information that identifies Borrower, which information includes the name and address of Borrower and other information that will allow such Lender or Agent, as applicable, to identify Borrower in accordance with the Act.            10.16 TIME OF THE ESSENCE. Time is of the essence of the Loan Documents.            10.17. MAINE NOTICE. By signing below, the Borrower agrees and acknowledges that, under Maine law, no promise, contract, or agreement to lend money, extend credit, forbear from collection of debt or make any other accommodation for the repayment of a debt for more than Two Hundred Fifty Thousand Dollars ($250,000) may be enforced against the Bank unless the promise, contract, or agreement (or some memorandum or note thereof) is in writing and signed by the Bank. The Borrower executed this Agreement as of the date stated at the top of the first page, intending to create an instrument executed under seal.            IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written intending to create an instrument executed under seal.                                 MAINE PUBLIC SERVICE COMPANY                                By:                                    ---------------------------------------------                               Name:   J. Nicholas Bayne                               Title: Chief Executive Officer                                And By:                                        -----------------------------------------                               Name:   Kurt A. Tornquist                               Title: Chief Financial Officer                                              51                                 BANK OF AMERICA, N.A., as                               Administrative Agent                                By:                                    ---------------------------------------------                               Name:   Stephan P. deCastro                               Title: Vice President                                 BANK OF AMERICA, N.A., as a Lender and L/C Issuer                                By:                                    ---------------------------------------------                               Name:   Stephan P. deCastro                               Title: Vice President                                 KEY BANK, N.A., as a Lender                               By:                                    ---------------------------------------------                                Name:   Neil C. Buitenhuys                               Title: Senior Vice President                                         52                                                                      SCHEDULE 2.01                                     COMMITMENTS                            AND APPLICABLE PERCENTAGES                                                                  APPLICABLE         LENDER                               COMMITMENT       PERCENTAGE - --------------------------------------------------------------------------------    Bank of America, N.A.                       $  5,500,000      55% Key Bank, N.A.                              $  4,500,000      45% Total                                       $ 10,000,000      100.000000000%                                                                       SCHEDULE 5.06                                     LITIGATION  NONE.                                                                       SCHEDULE 5.09                                ENVIRONMENTAL MATTERS  NONE.                                                                       SCHEDULE 5.13                                    SUBSIDIARIES                           AND OTHER EQUITY INVESTMENTS                         AND EQUITY INTERESTS IN BORROWER  Part (a). SUBSIDIARIES.  Maine & New Brunswick Electrical Power Company, Ltd  Part (b). OTHER EQUITY INVESTMENTS.  Borrower owns 5% of the common stock of Maine Yankee Atomic Power Company ("Maine Yankee"), a jointly-owned nuclear electric power company, and 7.49% of the common stock of the Maine Electric Power Company ("MEPCO,") a jointly-owned electric transmission company.  Part (c). OWNERS OF EQUITY INTERESTS IN BORROWER.  Parent owns all 1,636,137 shares of Borrower common stock.                                                                       SCHEDULE 7.01                                   EXISTING LIENS  Liens created under the Indenture of Mortgage and Deed of Trust dated as of October 1, 1945, as amended, between Borrower and U.S. Bank National Association (formerly named U.S. Bank Trust National Association and successor to Continental Illinois National Bank and Trust Company of Chicago), as Trustee, relating to the issuance of First Mortgage and Collateral Trust Bonds     Liens created under the Indenture of Mortgage and Deed of Trust dated as of    October 1, 1985, as amended, between Borrower and The Bank of New York, as        successor to J. Henry Schroder Bank and Trust Company), as Trustee,      relating to the issuance of Second Mortgage and Collateral Trust Bonds                                                                       SCHEDULE 7.03                                EXISTING INDEBTEDNESS                                                                                 AMOUNTS AS OF 9-30-05                                                                              ---------------------                                                                                      ($000'S)                                                                                      --------   Maine Public Utility Financing Bank, Public Utility Revenue Bonds:   Refunding Series 1996:  Due 2021 - Variable Interest   payable Monthly                                                                         $ 13,600   (2.1% as of December 31, 2004)   Series 2000:  Due 2025 - Variable Interest Payable Monthly                                 9,000   (2.1% as of December 31, 2004) Finance Authority of Maine:   1998 Taxable Electric Rate Stabilization   Revenue Notes:  Due 2008 - Variable Interest Payable   Monthly  (2.4% as of December 31, 2004)                                                    5,840 Bank of America, N.A. (Successor by merger to Fleet National Bank): $6,000,000, 7 Year Term Loan   Due November 1, 2011 - Variable   Interest Payable Monthly ($4,050,000 at 3.84% and    $1,900,000 at 3.91%)                  5,450    The Bank of New York and Bank of America, N.A.:   existing credit line being paid off hereunder (See Section 4.01(a)(x)                      5,450                                                                      SCHEDULE 10.02                           ADMINISTRATIVE AGENT'S OFFICE,                           CERTAIN ADDRESSES FOR NOTICES  BORROWER: Maine Public Service Company 209 State Street Presque Isle, ME 04769  Attention: Chief Financial Officer Telephone: 207-760-2445 Telecopier: 207-760-2421 Electronic Mail: ktornquist@maineandmaritimes.com Website Address:  www.maineandmaritimes.com  ADMINISTRATIVE AGENT:  ADMINISTRATIVE AGENT'S OFFICE (FOR PAYMENTS AND REQUESTS FOR CREDIT EXTENSIONS): Bank of America, N.A. Kathy Mumpower Credit Services Representative Bank of America, N.A. Mail Code: NC1-001-15-04 One Independence Center 101 N. Tryon St. Charlotte, NC 28255-0001 Phone: 704-386-0482 Fax: 704-409-0700 Email: kathy.mumpower@bankofamerica.com  Account No.:  136-621-225-0600 Attn:  Credit Services Ref: Maine Public Service ABA#  026-009-593  OTHER NOTICES AS ADMINISTRATIVE AGENT: Bank of America, N.A. Agency Management Tamisha Eason Agency Management Officer Bank of America, N.A. Mail Code: MA5-100-11-02 100 Federal Street Boston, MA  02110 Telephone:  617-434-9205 Fax:   617-790-1284 Email: tamisha.u.eason@bankofamerica.com                                          1   L/C ISSUER: STANDBY LETTERS OF CREDIT:  Bank of America, N.A. Trade Operations One Fleet Way Mail Code: PA6-580-02-30 Scranton, PA  18507 Attention:  Alfonso (Al) Malave             Telephone:  570.330.4212             Telecopier:  570.330.4186             Electronic Mail:  alfonso.malave@bankofamerica.com  COMMERCIAL LETTERS OF CREDIT                                 Bank of America, N.A.                                Trade Operations-Scranton                                1 Fleet Way                                Mail Code:  PA6-580-02-30                                Scranton, PA  18507                                Attention:      Robert D. Morgan                                                Telephone:  570.330.4570                                                Telecopier:  800.755.8740                                                Electronic Mail:                                                robert.d.morgan@bankofamerica.com  BANKERS ACCEPTANCE  Bank of America, N.A. Trade Operations-Los Angeles 333 S. Beaudry Avenue, 19th Floor Mail Code:  CA9-703-19-15 Los Angeles, CA 90017-1466 Attention:      Frantz Bellevue                 Vice President                 Telephone:  213.345.6616                 Telecopier:  213.345.9665                 Electronic Mail:                 frantz.bellevue@bankofamerica.com                            Form of Committed Loan Notice                                         A-1                                                                          EXHIBIT A                            FORM OF COMMITTED LOAN NOTICE                                                         Date:  ___________, _____  To:  Bank of America, N.A., as Agent  Ladies and Gentlemen:       Reference is made to that certain Credit Agreement, dated as of October__, 2005 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "AGREEMENT;" the terms defined therein being used herein as therein defined), among MAINE PUBLIC SERVICE COMPANY, a Maine corporation (the "BORROWER"), the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent and L/C Issuer.       The undersigned hereby requests (select one):       A Borrowing of Committed Loans                 A conversion or continuation                                                     of Committed Loans       1.   On                                                   (a Business Day).              --------------------------------------------------       2.   In the amount of $                                   .                             -----------------------------------       3.   Comprised of                                         .                        ----------------------------------------                               [Type of Committed Loan requested]       4.   For Eurodollar Rate Loans:  with an Interest Period of ______ months.       The Committed Borrowing, if any, requested herein complies with the provisos to the first sentence of SECTION 2.01 of the Agreement.                                MAINE PUBLIC SERVICE COMPANY                                By:                                    ---------------------------------------------                               Name:                                      -------------------------------------------                               Title:                                     --------------------------------------------                            Form of Committed Loan Notice                                         A-1                                                                          EXHIBIT B                               [INTENTIONALLY OMITTED]                               [Intentionally Omitted]                                        B - 1                                                                          EXHIBIT C                                    FORM OF NOTE  $____________________________                            _______________________       FOR VALUE RECEIVED, the undersigned ("BORROWER"), hereby promises to pay to _____________________ or registered assigns ("LENDER"), in accordance with the provisions of the Agreement (as hereinafter defined), the principal amount of each Loan from time to time made by the Lender to Borrower under that certain Credit Agreement, dated as of October __, 2005 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "AGREEMENT;" the terms defined therein being used herein as therein defined), among Borrower, the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent and L/C Issuer.       Borrower promises to pay interest on the unpaid principal amount of each Loan from the date of such Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Agreement. All payments of principal and interest shall be made to Agent for the account of the Lender in Dollars in immediately available funds at the Administrative Agent's Office. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Agreement.       This Note is one of the Notes referred to in the Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject to the terms and conditions provided therein. This Note is also secured by the Collateral. Upon the occurrence and continuation of one or more of the Events of Default specified in the Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable all as provided in the Agreement. Loans made by the Lender shall be evidenced by one or more loan accounts or records maintained by the Lender in the ordinary course of business. The Lender may also attach schedules to this Note and endorse thereon the date, amount and maturity of its Loans and payments with respect thereto.       Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note.       THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MAINE.  ATTESTING WITNESS:                      MAINE PUBLIC SERVICE COMPANY                                          By: - -------------------------                     ----------------------------------                                         Name:                                               ----------------------------------                                         Title:                                               ----------------------------------                                    Form of Note                                        C - 1                        LOANS AND PAYMENTS WITH RESPECT THERETO                                                                 AMOUNT OF    OUTSTANDING                                                             PRINCIPAL OR   PRINCIPAL             TYPE OF LOAN  AMOUNT OF LOAN  END OF INTEREST  INTEREST PAID  BALANCE THIS   NOTATION MADE     DATE        MADE           MADE            PERIOD        THIS DATE        DATE            BY - --------------------------------------------------------------------------------------------------------          ________   ____________  ______________  _______________  _____________  ____________  ________________  ________   ____________  ______________  _______________  _____________  ____________  ________________  ________   ____________  ______________  _______________  _____________  ____________  ________________  ________   ____________  ______________  _______________  _____________  ____________  ________________  ________   ____________  ______________  _______________  _____________  ____________  ________________  ________   ____________  ______________  _______________  _____________  ____________  ________________  ________   ____________  ______________  _______________  _____________  ____________  ________________  ________   ____________  ______________  _______________  _____________  ____________  ________________  ________   ____________  ______________  _______________  _____________  ____________  ________________  ________   ____________  ______________  _______________  _____________  ____________  ________________  ________   ____________  ______________  _______________  _____________  ____________  ________________  ________   ____________  ______________  _______________  _____________  ____________  ________________  ________   ____________  ______________  _______________  _____________  ____________  ________________  ________   ____________  ______________  _______________  _____________  ____________  ________________  ________   ____________  ______________  _______________  _____________  ____________  ________________  ________   ____________  ______________  _______________  _____________  ____________  ________________  ________   ____________  ______________  _______________  _____________  ____________  ________________  ________   ____________  ______________  _______________  _____________  ____________  ________________                                     Form of Note                                        C - 2                                                                          EXHIBIT D                          FORM OF COMPLIANCE CERTIFICATE                                                  Financial Statement Date:______,  To:  Bank of America, N.A., as Administrative Agent  Ladies and Gentlemen:       Reference is made to that certain Credit Agreement, dated as of October __, 2005 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "AGREEMENT;" the terms defined therein being used herein as therein defined), among MAINE PUBLIC SERVICE COMPANY, a Maine corporation ("BORROWER"), the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent and L/C Issuer.       The undersigned Responsible Officer hereby certifies as of the date hereof that he/she is the _____ of Borrower, and that, as such, he/she is authorized to execute and deliver this Certificate to Agent on the behalf of Borrower, and that:        [USE FOLLOWING PARAGRAPH 1 FOR FISCAL YEAR-END FINANCIAL STATEMENTS]       1.   Attached hereto as SCHEDULE 1 are the year-end audited financial statements and other reporting and certifications as required by SECTION 6.01(a) of the Agreement for the fiscal year ended as of the above date.       [USE FOLLOWING PARAGRAPH 1 FOR FISCAL QUARTER-END FINANCIAL STATEMENTS]       1.   Attached hereto as SCHEDULE 1 are the unaudited financial statements and other reporting and certifications as required by SECTION 6.01(b) of the Agreement for the fiscal quarter ended as of the above date.       2.   The undersigned has reviewed and is familiar with the terms of the Agreement and has made, or has caused to be made under his/her supervision, a detailed review of the transactions and condition (financial or otherwise) of Borrower during the accounting period covered by the attached financial statements.       3.   A review of the activities of Borrower during such fiscal period has been made under the supervision of the undersigned with a view to determining whether during such fiscal period Borrower performed and observed all its Obligations under the Loan Documents, and                                    [SELECT ONE:]       [TO THE BEST KNOWLEDGE OF THE UNDERSIGNED DURING SUCH FISCAL PERIOD, BORROWER PERFORMED AND OBSERVED EACH COVENANT AND CONDITION OF THE LOAN DOCUMENTS APPLICABLE TO IT, AND NO DEFAULT HAS OCCURRED AND IS CONTINUING.]                                       --OR--       [THE FOLLOWING COVENANTS OR CONDITIONS HAVE NOT BEEN PERFORMED OR OBSERVED AND THE FOLLOWING IS A LIST OF EACH SUCH DEFAULT AND ITS NATURE AND STATUS:]       4.   The representations and warranties of Borrower contained in ARTICLE V of the Agreement, and/or any representations and warranties of Borrower or any other Loan Party that are contained in any document furnished at any time under or in connection with the Loan Documents, are true and correct on and as of the date hereof, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date.       5.   The financial covenant analyses and information set forth on SCHEDULE 2 attached hereto are true and accurate on and as of the date of this Certificate.       IN WITNESS WHEREOF, the undersigned has executed this Certificate as of - --------------------, ----------------.                           Form of Compliance Certificate                                        D - 1                                           MAINE PUBLIC SERVICE COMPANY                                          By:                                              -----------------------------------                                         Name:                                                ---------------------------------                                         Title:                                                 --------------------------------                           Form of Compliance Certificate                                        D - 2                             For the Quarter/Year ended _________("STATEMENT DATE")                                     SCHEDULE 2                           to the Compliance Certificate                                   ($ in 000's)  I.   SECTION 6.12(a) TANGIBLE NET WORTH.       A.   Tangible Net Worth at Statement Date:            1.   Total Tangible Assets:                              $ -----------            2.   Total Liabilities (minus non-current portion of                Subordinated Liabilities):                          $ -----------            3.   Tangible Net Worth (Line II.A.1 less Line II.A.2):                                                                    $ -----------       B.   Minimum Required Tangible Net Worth :                    $32,574,000       C.   Excess (deficient) for covenant compliance           (Line I.A.3 less I.B):                                   $ -----------  II.  SECTION 6.12(b) CONSOLIDATED TOTAL INDEBTEDNESS TO CONSOLIDATED CAPITAL .       A.   Consolidated Total Indebtedness for Borrowed Money:      $ -----------       B.   Consolidated Total Capital:                              $ -----------       C.   Percentage (Line II.A DIVIDED BY Line II.B):           _____%       D.   Maximum Allowed:                                       65%  III. SECTION 6.12(c) DEBT SERVICE COVERAGE RATIO.       A.   Consolidated Net Income Available for Fixed Charges:   $ -------------       B.   Consolidated Interest Expense:                         $ -------------       C.   Ratio (Line III.A DIVIDED BY Line III.B):              ---------to 1.0       D.   Minimum Required                                       1.75:1.0                           Form of Compliance Certificate                                        D - 3                                                                          EXHIBIT E                                       FORM                                        OF                             ASSIGNMENT AND ASSUMPTION            This Assignment and Assumption (this "ASSIGNMENT AND ASSUMPTION") is dated as of the Effective Date set forth below and is entered into by and between [INSERT NAME OF ASSIGNOR] (the "ASSIGNOR") and [INSERT NAME OF ASSIGNEE] (the "ASSIGNEE"). Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (the "CREDIT AGREEMENT"), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.            For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by Agent as contemplated below (i) all of the Assignor's rights and obligations as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including, without limitation, the Letters of Credit included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as, the "ASSIGNED INTEREST"). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.  1.   Assignor: ______________________________  2.   Assignee: ______________________________ [AND IS AN AFFILIATE OF [IDENTIFY      LENDER]]  3.   Borrower(s): ______________________________  4.   Administrative Agent: Bank of America, N. A., as the administrative agent      under the Credit Agreement  5.   Credit Agreement: Credit Agreement, dated as of October __, 2005, among      Maine Public Service Company, the Lenders from time to time party thereto,      Bank of America, N.A., as Administrative Agent and L/C Issuer  6.   Assigned Interest:                                Aggregate                             Amount of          Amount of         Percentage                          Commitment/Loans   Commitment/Loans     Assigned of     Facility Assigned    for all lenders*      Assigned*      Commitment/Loans    CUSIP No.     -----------------   -----------------  -----------------  ----------------  -------------                  -------------     $----------------  $----------------   --------------%  -------------        -------------     $----------------  $----------------   --------------%  -------------        -------------     $----------------  $----------------   --------------%  -------------   [7.  TRADE DATE: __________________]  Effective Date: __________________, 20__ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]                          Form of Assignment and Assumption                                        E - 1   The terms set forth in this Assignment and Assumption are hereby agreed to:                                          ASSIGNOR                                         [NAME OF ASSIGNOR]                                          By:                                             ----------------------------                                               Title:                                          ASSIGNEE                                         [NAME OF ASSIGNEE]                                          By:                                             ----------------------------                                               Title: [CONSENTED TO AND] Accepted:  Bank of America, N. A., as   Administrative Agent  By:     ------------------------------     Title:  [CONSENTED TO:]  By:     ------------------------------     Title:                          Form of Assignment and Assumption                                        E - 2                                               ANNEX 1 TO ASSIGNMENT AND ASSUMPTION                          STANDARD TERMS AND CONDITIONS FOR                              ASSIGNMENT AND ASSUMPTION            1.   REPRESENTATIONS AND WARRANTIES.            1.1. ASSIGNOR. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.            1.2. ASSIGNEE. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all requirements of an Eligible Assignee under the Credit Agreement (subject to receipt of such consents as may be required under the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, and (iv) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section [__] thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on Agent or any other Lender; and (b) agrees that (i) it will, independently and without reliance on Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.            2. PAYMENTS. From and after the Effective Date, Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.            3. GENERAL PROVISIONS. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of Maine.                          Form of Assignment and Assumption                                        E - 3    EX-10.AK 10 a2168719zex-10_ak.txt EXHIBIT 10.AK                                                                       Exhibit 10.ak  ================================================================================                                  CREDIT AGREEMENT                            Dated as of October 21, 2005                                       among                          MAINE & MARITIMES CORPORATION,                                   as Borrower,                              BANK OF AMERICA, N.A.,                              as Administrative Agent                                        and                                    L/C Issuer,                                        and                          The Other Lenders Party Hereto  ================================================================================                                    TABLE OF CONTENTS    Section                                                                                                    Page - -------                                                                                                    ----   ARTICLE I.        DEFINITIONS AND ACCOUNTING TERMS............................................................1         1.01      Defined Terms...............................................................................1         1.02      Other Interpretive Provisions..............................................................12         1.03      Accounting Terms...........................................................................13         1.04      Rounding...................................................................................13         1.05      Times of Day...............................................................................13         1.06      Letter of Credit Amounts...................................................................13  ARTICLE II.       THE COMMITMENTS AND CREDIT EXTENSIONS......................................................14         2.01      Committed Loans............................................................................14         2.02      Borrowings, Conversions and Continuations of Committed Loans...............................14         2.03      Letters of Credit..........................................................................15         2.04      [Intentionally Omitted]....................................................................20         2.05      Prepayments................................................................................20         2.06      Termination or Reduction of Commitments....................................................20         2.07      Repayment of Loans.........................................................................21         2.08      Interest...................................................................................21         2.09      Fees.......................................................................................21         2.10      Computation of Interest and Fees...........................................................21         2.11      Evidence of Debt...........................................................................22         2.12      Payments Generally; Agent's Clawback.......................................................22         2.13      Sharing of Payments........................................................................23  ARTICLE III.      TAXES, YIELD PROTECTION AND ILLEGALITY.....................................................23         3.01      Taxes......................................................................................23         3.02      Illegality.................................................................................24         3.03      Inability to Determine Rates...............................................................25         3.04      Increased Costs............................................................................25         3.05      Compensation for Losses....................................................................26         3.06      Mitigation Obligations.....................................................................26         3.07      Survival...................................................................................26  ARTICLE IV.       CONDITIONS PRECEDENT TO CREDIT EXTENSIONS..................................................26         4.01      Conditions of Initial Credit Extension.....................................................26         4.02      Conditions to all Credit Extensions........................................................27  ARTICLE V.        REPRESENTATIONS AND WARRANTIES.............................................................28         5.01      Existence, Qualification and Power; Compliance with Laws...................................28         5.02      Authorization; No Contravention............................................................28         5.03      Governmental Authorization; Other Consents.................................................28         5.04      Binding Effect.............................................................................28         5.05      Financial Statements; No Material Adverse Effect; No Internal Control Event................28         5.06      Litigation.................................................................................29         5.07      No Default.................................................................................29         5.08      Ownership of Property; Liens...............................................................29         5.09      Environmental Compliance...................................................................29         5.10      Insurance..................................................................................29         5.11      Taxes......................................................................................29         5.12      ERISA Compliance...........................................................................29         5.13      Subsidiaries...............................................................................30         5.14      Margin Regulations; Investment Company Act; Public Utility Holding Company Act.............30         5.15      Disclosure.................................................................................30         5.16      Compliance with Laws.......................................................................31                                           i             5.17      Intellectual Property; Licenses, Etc.......................................................31         5.18      Rights in Collateral; Priority of Liens....................................................31  ARTICLE VI.       AFFIRMATIVE COVENANTS......................................................................31         6.01      Financial Statements.......................................................................31         6.02      Certificates; Other Information............................................................32         6.03      Notices....................................................................................33         6.04      Payment of Obligations.....................................................................33         6.05      Preservation of Existence, Etc.............................................................33         6.06      Maintenance of Properties..................................................................33         6.07      Maintenance of Insurance...................................................................33         6.08      Compliance with Laws.......................................................................33         6.09      Books and Records..........................................................................34         6.10      Inspection Rights..........................................................................34         6.11      Use of Proceeds............................................................................34         6.12      Financial Covenants........................................................................34         6.13      Collateral Records.........................................................................34         6.14      Security Interests.........................................................................34  ARTICLE VII.      NEGATIVE COVENANTS.........................................................................35         7.01      Liens......................................................................................35         7.02      [Intentionally Omitted]....................................................................35         7.03      Indebtedness...............................................................................35         7.04      Fundamental Changes........................................................................36         7.05      Dispositions...............................................................................36         7.06      Restricted Payments........................................................................37         7.07      Change in Nature of Business...............................................................37         7.08      Transactions with Affiliates...............................................................37         7.09      [Intentionally Omitted]....................................................................37         7.10      Use of Proceeds............................................................................37  ARTICLE VIII.     EVENTS OF DEFAULT AND REMEDIES.............................................................37         8.01      Events of Default..........................................................................37         8.02      Remedies Upon Event of Default.............................................................39         8.03      Application of Funds.......................................................................39  ARTICLE IX.       ADMINISTRATIVE AGENT.......................................................................40         9.01      Appointment and Authorization of Administrative Agent......................................40         9.02      Rights as a Lender.........................................................................40         9.03      Exculpatory Provisions.....................................................................40         9.04      Reliance by Administrative Agent...........................................................41         9.05      Delegation of Duties.......................................................................41         9.06      Resignation of Agent.......................................................................41         9.07      Non-Reliance on Agent and Other Lenders....................................................41         9.08      No Other Duties, Etc.......................................................................42         9.09      Administrative Agent May File Proofs of Claim..............................................42         9.10      Collateral Matters.........................................................................42  ARTICLE X.        MISCELLANEOUS..............................................................................43         10.01     Amendments, Etc............................................................................43         10.02     Notices; Effectiveness; Electronic Communications..........................................44         10.03     No Waiver; Cumulative Remedies.............................................................45         10.04     Expenses; Indemnity: Damage Waiver.........................................................45         10.05     Payments Set Aside.........................................................................46         10.06     Successors and Assigns.....................................................................46         10.07     Treatment of Certain Information; Confidentiality..........................................48         10.08     Right of Setoff............................................................................49         10.09     Interest Rate Limitation...................................................................49                                          ii             10.10     Counterparts; Integration; Effectiveness...................................................49         10.11     Survival of Representations and Warranties.................................................49         10.12     Severability...............................................................................49         10.13     Governing Law; Jurisdiction; Etc...........................................................50         10.14     Waiver of Right to Trial by Jury...........................................................50         10.15     USA Patriot Act Notice.....................................................................50         10.16     Time of the Essence........................................................................50         10.17     Maine Notice...............................................................................50   SCHEDULES          2.01    Commitments and Applicable Percentages         5.06    Litigation         5.09    Environmental Matters         5.13    Subsidiaries and Other Equity Investments         7.01    Existing Liens         7.03    Existing Indebtedness         10.02   Administrative Agent's Office, Certain Addresses for Notices  EXHIBITS         FORM OF         A       Committed Loan Notice         B       [Intentionally Omitted]         C       Note         D       Compliance Certificate         E       Assignment and Assumption                                         iii                                   CREDIT AGREEMENT  CREDIT AGREEMENT (this "AGREEMENT") is entered into as of October 21, 2005, among MAINE & MARITIMES CORPORATION, a Maine corporation ("BORROWER"), each lender from time to time party hereto (collectively, "LENDERS" and individually, a "LENDER"), and BANK OF AMERICA, N.A., as Administrative Agent and L/C Issuer.  Borrower has requested that Lenders provide a revolving credit facility, and Lenders are willing to do so on the terms and conditions set forth herein. In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:  ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS          1.01 DEFINED TERMS. As used in this Agreement, the following terms shall have the meanings set forth below:  "ADMINISTRATIVE AGENT" or "AGENT" means Bank of America in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.  "ADMINISTRATIVE AGENT'S OFFICE" means Agent's address and, as appropriate, account as set forth on SCHEDULE 10.02, or such other address or account as Agent may from time to time notify Borrower and Lenders.  "ADMINISTRATIVE QUESTIONNAIRE" means an Administrative Questionnaire in a form supplied by Agent.  "AFFILIATE" means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.  "AGENT FEE LETTER" has the meaning specified in SECTION 2.09(b).  "AGGREGATE COMMITMENTS" means the Commitments of all Lenders.  "AGREEMENT" means this Credit Agreement.  "APPLICABLE PERCENTAGE" means with respect to any Lender at any time, the percentage (carried out to the ninth decimal place) of the Aggregate Commitments represented by such Lender's Commitment at such time. If the commitment of each Lender to make Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have been terminated pursuant to SECTION 8.02 or if the Aggregate Commitments have expired, then the Applicable Percentage of each Lender shall be determined based on the Applicable Percentage of such Lender most recently in effect, giving effect to any subsequent assignments. The initial Applicable Percentage of each Lender is set forth opposite the name of such Lender on SCHEDULE 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.  "APPLICABLE RATE" means a per annum rate equal to:  (a)     with respect to Base Rate Loans, 0%;  (b)     with respect to Eurodollar Rate Loans, 2.0%; and  (c)     with respect to and Letters of Credit, 1.5%.  "ASSIGNMENT AND ASSUMPTION" means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by SECTION 10.06(b), and accepted by Agent, in substantially the form of EXHIBIT E or any other form approved by Agent.  "ATTRIBUTABLE INDEBTEDNESS" means, on any date, (a) in respect of any capital lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would                                          1   appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a capital lease.  "AUDITED FINANCIAL STATEMENTS" means the audited consolidated balance sheet of Borrower and its Subsidiaries for the fiscal year ended December 31, 2004, and the related consolidated statements of income or operations, shareholders' equity and cash flows for such fiscal year of Borrower and its Subsidiaries, including the notes thereto.  "AVAILABILITY PERIOD" means the period from and including the Closing Date to the earliest of (a) the Maturity Date, (b) the date of termination of the Aggregate Commitments pursuant to SECTION 2.06, and (c) the date of termination of the commitment of each Lender to make Loans and of the obligation of the L/C Issuer to make L/C Credit Extensions pursuant to SECTION 8.02.  "BANK OF AMERICA" means Bank of America, N.A. and its successors.  "BASE RATE" means for any day a fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its "prime rate." The "prime rate" is a rate set by Bank of America based upon various factors including Bank of America's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.  "BASE RATE COMMITTED LOAN" means a Committed Loan that is a Base Rate Loan.  "BASE RATE LOAN" means a Loan that bears interest based on the Base Rate.  "BORROWER" has the meaning specified in the introductory paragraph hereto.  "BORROWER MATERIALS" has the meaning specified in Section 6.02.  "BORROWING" means a Committed Borrowing.  "BUSINESS DAY" means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where Administrative Agent's Office is located and, if such day relates to any Eurodollar Rate Loan, means any such day on which dealings in Dollar deposits are conducted by and between banks in the London interbank eurodollar market.  "CAPITAL LEASE" means a lease which has been or should be capitalized on the books of the lessee in accordance with GAAP.  "CASH COLLATERALIZE" has the meaning specified in SECTION 2.03(g).  CHANGE IN LAW" means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority.  "CHANGE OF CONTROL" means, with respect to any Person, an event or series of events by which:  (a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have "beneficial ownership" of all securities that such person or group has the right to acquire (such right, an "OPTION RIGHT"), whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 25% or more of the equity securities of such Person entitled to vote for members of the board of directors or equivalent governing body of such Person on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right);                                          2   (b) during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of such Person cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body (excluding, in the case of both clause (ii) and clause (iii), any individual whose initial nomination for, or assumption of office as, a member of that board or equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the board of directors); or  (c) any individual(s) or entity(s) acting in concert shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation thereof, will result in its or their acquisition of the power to exercise, directly or indirectly, a controlling influence over the management or policies of such Person, or control over the equity securities of such Person entitled to vote for members of the board of directors or equivalent governing body of such Person on a fully-diluted basis (and taking into account all such securities that such individual(s) or entity(s) or group has the right to acquire pursuant to any option right) representing 25% or more of the combined voting power of such securities.  "CLOSING DATE" means the first date all the conditions precedent in SECTION 4.01 are satisfied or waived in accordance with SECTION 10.01.  "CODE" means the Internal Revenue Code of 1986.  "COLLATERAL" shall mean any and all assets and rights and interests in or to property of Borrower and each of the other Loan Parties, whether real or personal, tangible or intangible, in which a Lien is granted or purported to be granted pursuant to the Collateral Documents.  "COLLATERAL DOCUMENTS" means the Security Agreement of even date herewith from Borrower to Agent, and all other agreements, instruments and documents hereafter executed and delivered in connection with this Agreement pursuant to which Liens are granted or purported to be granted to Agent in Collateral securing all or part of the Obligations each in form and substance satisfactory to Agent.  "COMMITMENT" means, as to each Lender, its obligation to (a) make Committed Loans to Borrower pursuant to SECTION 2.01, and (b) purchase participations in L/C Obligations, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender's name on SCHEDULE 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.  "COMMITTED BORROWING" means a borrowing consisting of simultaneous Committed Loans of the same Type and, in the case of Eurodollar Rate Loans, having the same Interest Period made by each of the Lenders pursuant to SECTION 2.01.  "COMMITTED LOAN" has the meaning specified in SECTION 2.01.  "COMMITTED LOAN NOTICE" means a notice of (a) a Committed Borrowing, (b) a conversion of Committed Loans from one Type to the other, or (c) a continuation of Eurodollar Rate Loans, pursuant to SECTION 2.02(a), which, if in writing, shall be substantially in the form of EXHIBIT A.  "COMPLIANCE CERTIFICATE" means a certificate substantially in the form of EXHIBIT D.  "CONSOLIDATED EBIT" means, for the Borrower and its Subsidiaries, net income, less income or plus loss from discontinued operations and extraordinary items, plus income taxes, plus interest expense.  "CONSOLIDATED INTEREST EXPENSE" means, for any specified period, the total consolidated interest charges of the Borrower and its Subsidiaries for such period, determined in accordance with GAAP, plus (i) the allowance for borrowed funds used during construction for such period, minus (ii) interest on customer deposits for such period.                                          3   "CONSOLIDATED TOTAL CAPITAL" means, at a particular date, the total of the amounts that, in conformity with GAAP, would be included on a consolidated balance sheet of the Borrower and its Subsidiaries as of such date in respect of (i) Consolidated Total Indebtedness for Borrowed Money (excluding Indebtedness of other Persons guaranteed by the Borrower or a Subsidiary), and (ii) Common Shareholders' Equity.  "CONSOLIDATED TOTAL INDEBTEDNESS FOR BORROWED MONEY" means at any particular date, the total amount, but without duplication, of (i) Indebtedness of the Borrower and its Subsidiaries, excluding intercompany items, that, in conformity with GAAP, would be included on a consolidated balance sheet of the Borrower and its Subsidiaries (a) in respect of money borrowed, (b) in respect of obligations evidenced by a note, bond, debenture or other like written obligation to pay money, (c) in respect of obligations under Capital Leases, and (d) in respect of obligations under conditional sales or other title retention agreements, and (ii) Indebtedness of other Persons of the nature described in clauses (a) through (d) above which is guaranteed by the Borrower or a Subsidiary or with respect to which the Borrower or a Subsidiary is contingently liable. In no event shall the term include preferred stock.  "CONTRACTUAL OBLIGATION" means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.  "CONTROL" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. "CONTROLLING" and "CONTROLLED" have meanings correlative thereto.  "CREDIT EXTENSION" means each of the following: (a) a Borrowing and (b) an L/C Credit Extension.  "DEBTOR RELIEF LAWS" means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.  "DEFAULT" means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.  "DEFAULT RATE" means (a) when used with respect to Obligations other than L/C Fees an interest rate equal to (i) the Base Rate PLUS (ii) the Applicable Rate, if any, applicable to Base Rate Loans PLUS (iii) 4% per annum; PROVIDED, HOWEVER, that with respect to a Eurodollar Rate Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Rate) otherwise applicable to such Loan plus 4% per annum, and (b) when used with respect to L/C Fees, a rate equal to the Applicable Rate plus 4% per annum.  "DEFAULTING LENDER" means any Lender that (a) has failed to fund any portion of the Committed Loans, participations in L/C Obligations required to be funded by it hereunder within one Business Day of the date required to be funded by it hereunder, (b) has otherwise failed to pay over to Agent or any other Lender any other amount required to be paid by it hereunder within one Business Day of the date when due, unless the subject of a good faith dispute, or (c) has been deemed insolvent or become the subject of a bankruptcy or insolvency proceeding.  "DISPOSITION" or "DISPOSE" means the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.  "DOLLAR" and "$" mean lawful money of the United States.  "ELIGIBLE ASSIGNEE" means (a) a Lender; (b) an Affiliate of a Lender; and (c) any other Person (other than a natural person) approved by (i) Agent and the L/C Issuer, and (ii) unless an Event of Default has occurred and is continuing, Borrower (each such approval not to be unreasonably withheld or delayed); PROVIDED that notwithstanding the foregoing, "Eligible Assignee" shall not include Borrower or any of Borrower's Affiliates or Subsidiaries.  "ENVIRONMENTAL LAWS" means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating                                          4   to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.  "ENVIRONMENTAL LIABILITY" means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of Borrower, any other Loan Party or any of their respective Subsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.  "EQUITY INTERESTS" means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.  "ERISA" means the Employee Retirement Income Security Act of 1974.  "ERISA AFFILIATE" means any trade or business (whether or not incorporated) under common control with Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).  "ERISA EVENT" means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon Borrower or any ERISA Affiliate.  "EURODOLLAR BASE RATE" has the meaning specified in the definition of Eurodollar Rate.                                          5   "EURODOLLAR RATE" means for any Interest Period with respect to a Eurodollar Rate Loan, a rate per annum determined by Agent pursuant to the following formula:                                       EURODOLLAR BASE RATE           Eurodollar Rate = ---------------------------------------                             1.00 - Eurodollar Reserve Percentage          Where,          "EURODOLLAR BASE RATE" means, for such Interest Period (rounded upwards,         as necessary, to the nearest 1/100 of 1%) the rate per annum equal to         the British Bankers Association LIBOR Rate ("BBA LIBOR"), as published         by Reuters (or other commercially available source providing quotations         of BBA LIBOR as designated by Agent from time to time) at approximately         11:00 a.m., London time, two Business Days prior to the commencement of         such Interest Period, for Dollar deposits (for delivery on the first day         of such Interest Period) with a term equivalent to such Interest Period.         If such rate is not available at such time for any reason, then the         "EURODOLLAR BASE RATE" for such Interest Period (rounded upwards, as         necessary, to the nearest 1/100 of 1%) shall be the rate per annum         determined by Agent to be the rate at which deposits in Dollars for         delivery on the first day of such Interest Period in same day funds in         the approximate amount of the Eurodollar Rate Loan being made, continued         or converted by Bank of America and with a term equivalent to such         Interest Period would be offered by Bank of America's London Branch to         major banks in the London interbank eurodollar market at their request         at approximately 11:00 a.m. (London time) two Business Days prior to the         commencement of such Interest Period.          "EURODOLLAR RESERVE PERCENTAGE" means, for any day during any Interest         Period, the reserve percentage (expressed as a decimal, carried out to         five decimal places) in effect on such day, whether or not applicable to         any Lender, under regulations issued from time to time by the Board of         Governors of the Federal Reserve System of the United States for         determining the maximum reserve requirement (including any emergency,         supplemental or other marginal reserve requirement) with respect to         Eurocurrency funding (currently referred to as "Eurocurrency         liabilities"). The Eurodollar Rate for each outstanding Eurodollar Rate         Loan shall be adjusted automatically as of the effective date of any         change in the Eurodollar Reserve Percentage.  "EURODOLLAR RATE LOAN" means a Committed Loan that bears interest at a rate based on the Eurodollar Rate.  "EVENT OF DEFAULT" has the meaning specified in SECTION 8.01.  "EXCLUDED TAXES" means, with respect to Agent, any Lender, the L/C Issuer or any other recipient of any payment to be made by or on account of any obligation of Borrower hereunder, (a) taxes imposed on or measured by its overall net income (however denominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable Lending Office is located, and (b) any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction in which Borrower is located.  "EXISTING LETTER OF CREDIT" means the Irrevocable Standby Letter of Credit Number 68009213, dated October 5, 2005, in the face amount of $1,730,137.00, issued by Bank of America, N.A. for the account of Borrower with Royal Bank of Canada as the beneficiary, as the same may be amended or otherwise modified from time to time.  "FEDERAL FUNDS RATE" means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; PROVIDED that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by Agent.  "FRB" means the Board of Governors of the Federal Reserve System of the United States.  "GAAP" means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements                                          6   of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.  "GOVERNMENTAL AUTHORITY" means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).  "GUARANTEE" means, as to any Person, any (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the "primary obligor") in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term "Guarantee" as a verb has a corresponding meaning.  "HAZARDOUS MATERIALS" means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.  "INDEBTEDNESS" means, as to any Person at a particular time, without duplication(for example, Borrower's letters of credit securing other Indebtedness shall not count as Indebtedness independent of the Indebtedness being secured), all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:          (a) all obligations of such Person for borrowed money and all         obligations of such Person evidenced by bonds, debentures, notes, loan         agreements or other similar instruments;          (b) all direct or contingent obligations of such Person arising under         letters of credit (including standby and commercial), bankers'         acceptances, bank guaranties, surety bonds and similar instruments;          (c) net obligations of such Person under any Swap Contract;          (d) all obligations of such Person to pay the deferred purchase price of         property or services (other than trade accounts payable in the ordinary         course of business and, in each case, not past due for more than 60 days         after the date on which such trade account payable was created);          (e) indebtedness (excluding prepaid interest thereon) secured by a Lien         on property owned or being purchased by such Person (including         indebtedness arising under conditional sales or other title retention         agreements), whether or not such indebtedness shall have been assumed by         such Person or is limited in recourse;          (f) capital leases and Synthetic Lease Obligations;                                          7           (g) all obligations of such Person to purchase, redeem, retire, defease         or otherwise make any payment in respect of any Equity Interest in such         Person or any other Person, provided that the term "Indebtedness" shall         not include preferred stock ; and          (h) all Guarantees of such Person in respect of any of the foregoing.  For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person. The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date. The amount of any capital lease or Synthetic Lease Obligation as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date.  "INDEMNIFIED TAXES" means Taxes other than Excluded Taxes.  "INDEMNITEES" has the meaning specified in SECTION 10.04(b).  "INFORMATION" has the meaning specified in SECTION 10.07.  "INTEREST COVERAGE RATIO" means the ratio of Consolidated EBIT to (Consolidated Interest Expense PLUS preferred dividends paid).  "INTEREST PAYMENT DATE" means, (a) as to any Loan other than a Base Rate Loan, the last day of each Interest Period applicable to such Loan and the Maturity Date; PROVIDED, HOWEVER, that if any Interest Period for a Eurodollar Rate Loan exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates; and (b) as to any Base Rate Loan, the last Business Day of each March, June, September and December and the Maturity Date.  "INTEREST PERIOD" means, as to each Eurodollar Rate Loan, the period commencing on the date such Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar Rate Loan and ending on the date one, two, three or six months thereafter, as selected by Borrower in its Committed Loan Notice; PROVIDED that:          (i)   any Interest Period that would otherwise end on a day that is not         a Business Day shall be extended to the next succeeding Business Day         unless such Business Day falls in another calendar month, in which case         such Interest Period shall end on the next preceding Business Day;          (ii)  any Interest Period that begins on the last Business Day of a         calendar month (or on a day for which there is no numerically         corresponding day in the calendar month at the end of such Interest         Period) shall end on the last Business Day of the calendar month at the         end of such Interest Period; and          (iii) no Interest Period shall extend beyond the Maturity Date.  "INTERNAL CONTROL EVENT" means a material weakness in, or fraud that involves management or other employees who have a significant role in, Borrower's internal controls over financial reporting, in each case as described in the Securities Laws, in each case as described in the Securities Laws and when relevant requirements become effective as to Borrower under regulations promulgated under the Securities Laws.  "INVESTMENT" means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of capital stock or other securities of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person and any arrangement pursuant to which the investor Guarantees Indebtedness of such other Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.                                          8   "IRS" means the United States Internal Revenue Service.  "ISP" means, with respect to any Letter of Credit, the "International Standby Practices 1998" published by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance).  "ISSUER DOCUMENTS" means with respect to any Letter of Credit, the L/C Application, and any other document, agreement and instrument entered into by the L/C Issuer and Borrower (or any Subsidiary) or in favor of the L/C Issuer and relating to any such Letter of Credit.  "LAWS" means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.  "L/C ADVANCE" means, with respect to each Lender, such Lender's funding of its participation in any L/C Borrowing in accordance with its Applicable Percentage.  "L/C APPLICATION" means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by the L/C Issuer.  "L/C BORROWING" means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made or refinanced as a Committed Borrowing.  "L/C CREDIT EXTENSION" means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.  "L/C EXPIRATION DATE" means the day that is thirty days prior to the Maturity Date then in effect (or, if such day is not a Business Day, the next preceding Business Day).  "L/C FEE" has the meaning specified in Section 2.03(i).  "L/C ISSUER" means Bank of America in its capacity as issuer of Letters of Credit hereunder, or any successor issuer of Letters of Credit hereunder.  "L/C OBLIGATIONS" means, as at any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit PLUS the aggregate of all Unreimbursed Amounts, including all L/C Borrowings. For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with SECTION 1.06. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be "outstanding" in the amount so remaining available to be drawn.  "L/C SUBLIMIT" means an amount equal to $2,000,000. The L/C Sublimit is part of, and not in addition to, the Aggregate Commitments.  "LENDER" has the meaning specified in the introductory paragraph hereto.  "LENDING OFFICE" means, as to any Lender, the office or offices of such Lender described as such in such Lender's Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify Borrower and Agent.  "LETTER OF CREDIT" means any letter of credit issued hereunder and shall include the Existing Letter of Credit. A Letter of Credit may be a commercial letter of credit or a standby letter of credit.  "LIEN" means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind                                          9   or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).  "LOAN" means an extension of credit by a Lender to Borrower under ARTICLE II in the form of a Committed Loan.  "LOAN DOCUMENTS" means this Agreement, each Note, each Issuer Document, the Agent Fee Letter and each Collateral Document.  "LOAN PARTIES" means, collectively, Borrower and each Person (other than Agent, the L/C Issuer, or any Lender) executing a Loan Document.  "MATERIAL ADVERSE EFFECT" means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, liabilities (actual or contingent), condition (financial or otherwise) or prospects of Borrower or Borrower and its Subsidiaries taken as a whole; (b) a material impairment of the ability of any Loan Party to perform its obligations under any Loan Document to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party.  "MATURITY DATE" means October 21, 2008.  "MULTIEMPLOYER PLAN" means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.  "NOTE" means a promissory note made by Borrower in favor of a Lender evidencing Loans made by such Lender, substantially in the form of EXHIBIT C.  "OBLIGATIONS" means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document, Swap Contract or otherwise with respect to any Loan or Letter of Credit, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.  "ORGANIZATION DOCUMENTS" means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.  "OTHER TAXES" means all present or future stamp, intangible or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.  "OUTSTANDING AMOUNT" means (i) with respect to Committed Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Committed Loans occurring on such date; and (ii) with respect to any L/C Obligations on any date, the amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements by Borrower of Unreimbursed Amounts.  "PARTICIPANT" has the meaning specified in SECTION 10.06(d).  "PBGC" means the Pension Benefit Guaranty Corporation.                                         10   "PENSION PLAN" means any "employee pension benefit plan" (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by Borrower or any ERISA Affiliate or to which Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years.  "PERSON" means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.  "PLAN" means any "employee benefit plan" (as such term is defined in Section 3(3) of ERISA) established by Borrower or, with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.  "PLATFORM" has the meaning specified in SECTION 6.02.  "REGISTER" has the meaning specified in SECTION 10.06(c).  "REGISTERED PUBLIC ACCOUNTING FIRM" has the meaning specified in the Securities Laws and shall be independent of Borrower as prescribed by the Securities Laws.  "RELATED PARTIES" means, with respect to any Person, such Person's Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person's Affiliates.  "REPORTABLE EVENT" means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived.  "REQUEST FOR CREDIT EXTENSION" means (a) with respect to a Borrowing, conversion or continuation of Committed Loans, a Committed Loan Notice, and (b) with respect to an L/C Credit Extension, a L/C Application.  "REQUIRED LENDERS" means, as of any date of determination, Lenders having more than 50% of the Aggregate Commitments or, if the commitment of each Lender to make Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have been terminated pursuant to SECTION 8.02, Lenders holding in the aggregate more than 50% of the Total Outstandings (with the aggregate amount of each Lender's risk participation and funded participation in L/C Obligations being deemed "held" by such Lender for purposes of this definition); PROVIDED that the Commitment of, and the portion of the Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.  "RESPONSIBLE OFFICER" means the chief executive officer, president, chief financial officer, chief accounting officer, treasurer or assistant treasurer of a Loan Party. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.  "RESTRICTED PAYMENT" means any dividend or other distribution (whether in cash, securities or other property) with respect to any capital stock or other Equity Interest of Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such capital stock or other Equity Interest or on account of any return of capital to Borrower's stockholders, partners or members (or the equivalent Person thereof).  "SARBANES-OXLEY" means the Sarbanes-Oxley Act of 2002.  "SEC" means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.  "SECURITIES LAWS" means the Securities Act of 1933, the Securities Exchange Act of 1934, Sarbanes-Oxley and the applicable accounting and auditing principles, rules, standards and practices promulgated, approved or incorporated by the SEC or the Public Company Accounting Oversight Board, as each of the foregoing may be amended and in effect on any applicable date hereunder.                                         11   "SUBORDINATED LIABILITIES" means liabilities subordinated to the Obligations in a manner acceptable to Agent in its sole discretion.  "SUBSIDIARY" of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a "Subsidiary" or to "Subsidiaries" shall refer to a Subsidiary or Subsidiaries of Borrower.  "SWAP CONTRACT" means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a "MASTER AGREEMENT"), including any such obligations or liabilities under any Master Agreement.  "SWAP TERMINATION VALUE" means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).  "SYNTHETIC LEASE OBLIGATION" means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).  "TAXES" means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.  "THRESHOLD AMOUNT" means $500,000.  "TOTAL LIABILITIES" means the sum of current liabilities plus long term liabilities.  "TOTAL OUTSTANDINGS" means the aggregate Outstanding Amount of all Loans and all L/C Obligations.  "TYPE" means, with respect to a Committed Loan, its character as a Base Rate Loan or a Eurodollar Rate Loan.  "UNFUNDED PENSION LIABILITY" means the excess of a Pension Plan's benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan's assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year.  "UNITED STATES" and "U.S." mean the United States of America.  "UNREIMBURSED AMOUNT" has the meaning specified in SECTION 2.03(c)(i).          1.02 OTHER INTERPRETIVE PROVISIONS. With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:                                         12        (a) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "INCLUDE," "INCLUDES" and "INCLUDING" shall be deemed to be followed by the phrase "without limitation." The word "WILL" shall be construed to have the same meaning and effect as the word "SHALL." Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person's successors and assigns, (iii) the words "HEREIN," "HEREOF" and "HEREUNDER," and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (vi) the words "ASSET" and "PROPERTY" shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.  (b)  In the computation of periods of time from a specified date to a later specified date, the word "FROM" means "FROM AND INCLUDING;" the words "TO" and "UNTIL" each mean "TO BUT EXCLUDING;" and the word "THROUGH" means "TO AND INCLUDING."  (c)  Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.          1.03 ACCOUNTING TERMS. (a) GENERALLY. All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, EXCEPT as otherwise specifically prescribed herein.  (b) CHANGES IN GAAP. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either Borrower or the Required Lenders shall so request, Agent, Lenders and Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); PROVIDED THAT, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) Borrower shall provide to Agent and Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.  (c)     CONSOLIDATION OF VARIABLE INTEREST ENTITIES. All references herein to consolidated financial statements of Borrower and its Subsidiaries or to the determination of any amount for Borrower and its Subsidiaries on a consolidated basis or any similar reference shall, in each case, be deemed to include each variable interest entity that the Borrower is required to consolidate pursuant to FASB Interpretation No. 46 - Consolidation of Variable Interest Entities: an interpretation of ARB No. 51 (January 2003) as if such variable interest entity were a Subsidiary as defined herein.          1.04 ROUNDING. Any financial ratios required to be maintained by Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).          1.05 TIMES OF DAY. Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).          1.06 LETTER OF CREDIT AMOUNTS. Unless otherwise specified herein the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; PROVIDED, HOWEVER, that with respect to any Letter of Credit that, by its terms or the terms of any Issuer Document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount                                         13   of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.  ARTICLE II. THE COMMITMENTS AND CREDIT EXTENSIONS          2.01 COMMITTED LOANS. Subject to the terms and conditions set forth herein, each Lender severally agrees to make loans (each such loan, a "COMMITTED LOAN") to Borrower from time to time, on any Business Day during the Availability Period, in an aggregate amount not to exceed at any time outstanding the amount of such Lender's Commitment; PROVIDED, HOWEVER, that after giving effect to any Committed Borrowing, (i) the Total Outstandings shall not exceed the Aggregate Commitments, and (ii) the aggregate Outstanding Amount of the Committed Loans of any Lender, PLUS such Lender's Applicable Percentage of the Outstanding Amount of all L/C Obligations shall not exceed such Lender's Commitment. Within the limits of each Lender's Commitment, and subject to the other terms and conditions hereof, Borrower may borrow under this SECTION 2.01, prepay under SECTION 2.05, and reborrow under this SECTION 2.01. Committed Loans may be Base Rate Loans or Eurodollar Rate Loans, as further provided herein.          2.02 BORROWINGS, CONVERSIONS AND CONTINUATIONS OF COMMITTED LOANS. (a) Each Committed Borrowing, each conversion of Committed Loans from one Type to the other, and each continuation of Eurodollar Rate Loans shall be made upon Borrower's irrevocable notice to Agent, which may be given by telephone. Each such notice must be received by Agent not later than 11:00 a.m. (i) three Business Days prior to the requested date of any Borrowing of, conversion to or continuation of Eurodollar Rate Loans or of any conversion of Eurodollar Rate Loans to Base Rate Committed Loans, and (ii) on the requested date of any Borrowing of Base Rate Committed Loans. Each telephonic notice by Borrower pursuant to this SECTION 2.02(a) must be confirmed promptly by delivery to Agent of a written Committed Loan Notice, appropriately completed and signed by a Responsible Officer of Borrower. Each Borrowing of, conversion to or continuation of Eurodollar Rate Loans shall be in a principal amount of $100,000 or a whole multiple of $1,000 in excess thereof. Except as provided in SECTION 2.03(c) , each Borrowing of or conversion to Base Rate Committed Loans shall be in a principal amount of $100,000 or a whole multiple of $1,000 in excess thereof. Each Committed Loan Notice (whether telephonic or written) shall specify (i) whether Borrower is requesting a Committed Borrowing, a conversion of Committed Loans from one Type to the other, or a continuation of Eurodollar Rate Loans, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Committed Loans to be borrowed, converted or continued, (iv) the Type of Committed Loans to be borrowed or to which existing Committed Loans are to be converted, and (v) if applicable, the duration of the Interest Period with respect thereto. If Borrower fails to specify a Type of Committed Loan in a Committed Loan Notice or if Borrower fails to give a timely notice requesting a conversion or continuation, then the applicable Committed Loans shall be made as, or converted to, Base Rate Loans. Any such automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurodollar Rate Loans. If Borrower requests a Borrowing of, conversion to, or continuation of Eurodollar Rate Loans in any such Committed Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month.  (b)     Following receipt of a Committed Loan Notice, Agent shall within one Business Day thereafter notify each Lender of the amount of its Applicable Percentage of the applicable Committed Loans, and if no timely notice of a conversion or continuation is provided by Borrower, Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans described in the preceding subsection. In the case of a Committed Borrowing, each Lender shall make the amount of its Committed Loan available to Agent in immediately available funds at Administrative Agent's Office not later than 1:00 p.m. on the Business Day specified in the applicable Committed Loan Notice. Upon satisfaction of the applicable conditions set forth in SECTION 4.02 (and, if such Borrowing is the initial Credit Extension, SECTION 4.01), Agent shall make all funds so received available to Borrower in like funds as received by Agent either by (i) crediting the account of Borrower on the books of Bank of America with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) Agent by Borrower; PROVIDED, HOWEVER, that if, on the date the Committed Loan Notice with respect to such Borrowing is given by Borrower, there are L/C Borrowings outstanding, then the proceeds of such Borrowing FIRST, shall be applied, to the payment in full of any such L/C Borrowings, and SECOND, shall be made available to Borrower as provided above.  (c)     Except as otherwise provided herein, a Eurodollar Rate Loan may be continued or converted only on the last day of an Interest Period for such Eurodollar Rate Loan. During the existence of a Default, no Loans may be requested as, converted to or continued as Eurodollar Rate Loans without the consent of the Required Lenders, and the Required Lenders may demand that any or all of the then outstanding Eurodollar Rate Loans be converted immediately to Base Rate Committed Loans and Borrower agrees to pay all amounts due under SECTION 3.05 in accordance with the terms thereof due to any such conversion..                                         14   (d)     Agent shall promptly notify Borrower and Lenders of the interest rate applicable to any Interest Period for Eurodollar Rate Loans upon determination of such interest rate.  (e)     After giving effect to all Committed Borrowings, all conversions of Committed Loans from one Type to the other, and all continuations of Committed Loans as the same Type, there shall not be more than two Interest Periods in effect with respect to Committed Loans.          2.03 LETTERS OF CREDIT. (a) THE LETTER OF CREDIT COMMITMENT.          (i) Subject to the terms and conditions set forth herein, (A) the L/C Issuer agrees, in reliance upon the agreements of the other Lenders set forth in this SECTION 2.03, (1) from time to time on any Business Day during the period from the Closing Date until the L/C Expiration Date, to issue Letters of Credit for the account of Borrower or its Subsidiaries, and to amend or extend Letters of Credit previously issued by it, in accordance with subsection (b) below, and (2) to honor drawings under the Letters of Credit; and (B) the Lenders severally agree to participate in Letters of Credit issued for the account of Borrower or its Subsidiaries and any drawings thereunder; PROVIDED that after giving effect to any L/C Credit Extension with respect to any Letter of Credit, (x) the Total Outstandings shall not exceed the Aggregate Commitments, (y) the aggregate Outstanding Amount of the Committed Loans of any Lender, PLUS such Lender's Applicable Percentage of the Outstanding Amount of all L/C Obligations shall not exceed such Lender's Commitment, or (z) the Outstanding Amount of the L/C Obligations shall not exceed the L/C Sublimit. Each request by Borrower for the issuance or amendment of a Letter of Credit shall be deemed to be a representation by Borrower that the L/C Credit Extension so requested complies with the conditions set forth in the proviso to the preceding sentence. Within the foregoing limits, and subject to the terms and conditions hereof, Borrower's ability to obtain Letters of Credit shall be fully revolving, and accordingly Borrower may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed. All Existing Letters of Credit shall be deemed to have been issued pursuant hereto, and from and after the Closing Date shall be subject to and governed by the terms and conditions hereof.          (ii) The L/C Issuer shall not issue any Letter of Credit, if:  (A)     subject to Section 2.03(b)(iv), the expiry date of such requested Letter of Credit would occur more than twelve months after the date of issuance or last extension, unless the Required Lenders have approved such expiry date; or  (B)     the expiry date of such requested Letter of Credit would occur after the L/C Expiration Date, unless all the Lenders have approved such expiry date.          (iii) The L/C Issuer shall be under no obligation to issue any Letter of Credit if:  (A) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the L/C Issuer from issuing such Letter of Credit, or any Law applicable to the L/C Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the L/C Issuer shall prohibit, or request that the L/C Issuer refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the L/C Issuer with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which the L/C Issuer in good faith deems material to it;  (B) the issuance of such Letter of Credit would violate one or more policies of the L/C Issuer;  (C) except as otherwise agreed by Agent and the L/C Issuer, such Letter of Credit is in an initial stated amount less than $100,000, in the case of a commercial Letter of Credit, or $500,000, in the case of a standby Letter of Credit;  (D) such Letter of Credit is to be denominated in a currency other than Dollars;  (E) a default of any Lender's obligations to fund under Section 2.03(c) exists or any Lender is at such time a Defaulting Lender hereunder, unless the L/C Issuer has entered into satisfactory arrangements with Borrower or such Lender to eliminate the L/C Issuer's risk with respect to such Lender; or                                         15   (F) unless specifically provided for in this Agreement, such Letter of Credit contains any provisions for automatic reinstatement of the stated amount after any drawing thereunder.          (iv) The L/C Issuer shall not amend any Letter of Credit if the L/C Issuer would not be permitted at such time to issue such Letter of Credit in its amended form under the terms hereof.          (v) The L/C Issuer shall be under no obligation to amend any Letter of Credit if (A) the L/C Issuer would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.          (vi) The L/C Issuer shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and the L/C Issuer shall have all of the benefits and immunities (A) provided to Agent in ARTICLE IX with respect to any acts taken or omissions suffered by the L/C Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and Issuer Documents pertaining to such Letters of Credit as fully as if the term "Administrative Agent" or "Agent" as used in ARTICLE IX included the L/C Issuer with respect to such acts or omissions, and (B) as additionally provided herein with respect to the L/C Issuer.  (b)     PROCEDURES FOR ISSUANCE AND AMENDMENT OF LETTERS OF CREDIT; AUTO-EXTENSION LETTERS OF CREDIT.          (i) Each Letter of Credit shall be issued or amended, as the case may be, upon the request of Borrower delivered to the L/C Issuer (with a copy to Agent) in the form of a L/C Application, appropriately completed and signed by a Responsible Officer of Borrower. Such L/C Application must be received by the L/C Issuer and Agent not later than 11:00 a.m. at least two Business Days (or such later date and time as Agent and the L/C Issuer may agree in a particular instance in their sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request for an initial issuance of a Letter of Credit, such L/C Application shall specify in form and detail satisfactory to the L/C Issuer: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; and (G) such other matters as the L/C Issuer may require. In the case of a request for an amendment of any outstanding Letter of Credit, such L/C Application shall specify in form and detail satisfactory to the L/C Issuer (A) the Letter of Credit to be amended; (B) the proposed date of amendment thereof (which shall be a Business Day); (C) the nature of the proposed amendment; and (D) such other matters as the L/C Issuer may require. Additionally, Borrower shall furnish to the L/C Issuer and Agent such other documents and information pertaining to such requested Letter of Credit issuance or amendment, including any Issuer Documents, as the L/C Issuer or Agent may require.          (ii) Promptly after receipt of any L/C Application at the address set forth in SECTION 10.02 for receiving L/C Applications and related correspondence, the L/C Issuer will confirm with Agent (by telephone or in writing) that Agent has received a copy of such L/C Application from Borrower and, if not, the L/C Issuer will provide Agent with a copy thereof. Unless the L/C Issuer has received written notice from any Lender, Agent or any Loan Party, at least one Business Day prior to the requested date of issuance or amendment of the applicable Letter of Credit, that one or more applicable conditions in ARTICLE IV shall not then be satisfied, then, subject to the terms and conditions hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of Borrower (or the applicable Subsidiary) or enter into the applicable amendment, as the case may be, in each case in accordance with the L/C Issuer's usual and customary business practices. Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the L/C Issuer a risk participation in such Letter of Credit in an amount equal to the product of such Lender's Applicable Percentage TIMES the amount of such Letter of Credit.          (iii) Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the L/C Issuer will also deliver to Borrower and Agent a true and complete copy of such Letter of Credit or amendment.          (iv) If Borrower so requests in any applicable L/C Application, the L/C Issuer may, in its sole and absolute discretion, agree to issue a Letter of Credit that has automatic extension provisions (each, an "AUTO-EXTENSION LETTER OF CREDIT"); provided that any such Auto-Extension Letter of Credit must permit the L/C Issuer to prevent any such extension at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the "NON-EXTENSION NOTICE DATE") in each such twelve-month period to be agreed upon at the time                                         16   such Letter of Credit is issued. Unless otherwise directed by the L/C Issuer, Borrower shall not be required to make a specific request to the L/C Issuer for any such extension. Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the L/C Issuer to permit the extension of such Letter of Credit at any time to an expiry date not later than the L/C Expiration Date; provided, however, that the L/C Issuer shall not permit any such extension if (A) the L/C Issuer has determined that it would not be permitted, or would have no obligation, at such time to issue such Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of clause (ii) or (iii) of SECTION 2.03(a) or otherwise), or (B) it has received notice (which may be by telephone or in writing) on or before the day that is five Business Days before the Non-Extension Notice Date (1) from Agent that the Required Lenders have elected not to permit such extension or (2) from Agent, any Lender or Borrower that one or more of the applicable conditions specified in Section 4.02 is not then satisfied, and in each such case directing the L/C Issuer not to permit such extension.          (v) If Borrower so requests in any applicable Letter of Credit Application, the L/C Issuer may, in its sole and absolute discretion, agree to issue a Letter of Credit that permits the automatic reinstatement of all or a portion of the stated amount thereof after any drawing thereunder (each, an "AUTO-REINSTATEMENT LETTER OF CREDIT"). Unless otherwise directed by the L/C Issuer, Borrower shall not be required to make a specific request to the L/C Issuer to permit such reinstatement. Once an Auto-Reinstatement Letter of Credit has been issued, except as provided in the following sentence, the Lenders shall be deemed to have authorized (but may not require) the L/C Issuer to reinstate all or a portion of the stated amount thereof in accordance with the provisions of such Letter of Credit. Notwithstanding the foregoing, if such Auto-Reinstatement Letter of Credit permits the L/C Issuer to decline to reinstate all or any portion of the stated amount thereof after a drawing thereunder by giving notice of such non-reinstatement within a specified number of days after such drawing (the "NON-REINSTATEMENT DEADLINE"), the L/C Issuer shall not permit such reinstatement if it has received a notice (which may be by telephone or in writing) on or before the day that is five Business Days before the Non-Reinstatement Deadline (A) from Agent that the Required Lenders have elected not to permit such reinstatement or (B) from Agent, any Lender or Borrower that one or more of the applicable conditions specified in SECTION 4.02 is not then satisfied (treating such reinstatement as an L/C Credit Extension for purposes of this clause) and, in each case, directing the L/C Issuer not to permit such reinstatement.  (c)     DRAWINGS AND REIMBURSEMENTS; FUNDING OF PARTICIPATIONS.          (i) Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the L/C Issuer shall notify Borrower and Agent thereof. Not later than 11:00 a.m. on the date of any payment by the L/C Issuer under a Letter of Credit (each such date, an "HONOR DATE"), Borrower shall reimburse the L/C Issuer through Agent in an amount equal to the amount of such drawing. If Borrower fails to so reimburse the L/C Issuer by such time, Agent shall promptly notify each Lender of the Honor Date, the amount of the unreimbursed drawing (the "UNREIMBURSED AMOUNT"), and the amount of such Lender's Applicable Percentage thereof. In such event, Borrower shall be deemed to have requested a Committed Borrowing of Base Rate Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed Amount, without regard to the minimum and multiples specified in SECTION 2.02 for the principal amount of Base Rate Loans, but subject to the amount of the unutilized portion of the Aggregate Commitments and the conditions set forth in SECTION 4.02 (other than the delivery of a Committed Loan Notice). Any notice given by the L/C Issuer or Agent pursuant to this SECTION 2.03(c)(i) may be given by telephone if immediately confirmed in writing; PROVIDED that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.          (ii) Each Lender shall upon any notice pursuant to SECTION 2.03(c)(i) make funds available to Agent for the account of the L/C Issuer at the Administrative Agent's Office in an amount equal to its Applicable Percentage of the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in such notice by Agent, whereupon, subject to the provisions of SECTION 2.03(c)(iii), each Lender that so makes funds available shall be deemed to have made a Base Rate Committed Loan to Borrower in such amount. Agent shall remit the funds so received to the L/C Issuer.          (iii) With respect to any Unreimbursed Amount that is not fully refinanced by a Committed Borrowing of Base Rate Loans because the conditions set forth in SECTION 4.02 cannot be satisfied or for any other reason, Borrower shall be deemed to have incurred from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate. In such event, each Lender's payment to Agent for the account of the L/C Issuer pursuant to SECTION 2.03(c)(ii) shall be deemed payment in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its participation obligation under this SECTION 2.03.                                         17           (iv) Until each Lender funds its Committed Loan or L/C Advance pursuant to this SECTION 2.03(c) to reimburse the L/C Issuer for any amount drawn under any Letter of Credit, interest in respect of such Lender's Applicable Percentage of such amount shall be solely for the account of the L/C Issuer.          (v) Each Lender's obligation to make Committed Loans or L/C Advances to reimburse the L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this SECTION 2.03(c), shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the L/C Issuer, Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; PROVIDED, HOWEVER, that each Lender's obligation to make Committed Loans pursuant to this SECTION 2.03(c) is subject to the conditions set forth in SECTION 4.02 (other than delivery by Borrower of a Committed Loan Notice). No such making of an L/C Advance shall relieve or otherwise impair the obligation of Borrower to reimburse the L/C Issuer for the amount of any payment made by the L/C Issuer under any Letter of Credit, together with interest as provided herein.          (vi) If any Lender fails to make available to Agent for the account of the L/C Issuer any amount required to be paid by such Lender pursuant to the foregoing provisions of this SECTION 2.03(c) by the time specified in SECTION 2.03(c)(ii), the L/C Issuer shall be entitled to recover from such Lender (acting through Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the L/C Issuer at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by the L/C issuer in accordance with banking industry rules on interbank compensation, PLUS any administrative, processing or similar fees customarily charged by the LC/ Issuer in connection with the foregoing. A certificate of the L/C Issuer submitted to any Lender (through Agent) with respect to any amounts owing under this clause (vi) shall be conclusive absent manifest error.  (d)     REPAYMENT OF PARTICIPATIONS.          (i) At any time after the L/C Issuer has made a payment under any Letter of Credit and has received from any Lender such Lender's L/C Advance in respect of such payment in accordance with SECTION 2.03(c), if Agent receives for the account of the L/C Issuer any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from Borrower or otherwise, including proceeds of Cash Collateral applied thereto by Agent), Agent will distribute to such Lender within two Business Days thereafter its Applicable Percentage thereof (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender's L/C Advance was outstanding) in the same funds as those received by Agent.          (ii) If any payment received by Agent for the account of the L/C Issuer pursuant to SECTION 2.03(c)(i) is required to be returned under any of the circumstances described in SECTION 10.05 (including pursuant to any settlement entered into by the L/C Issuer in its discretion), each Lender shall pay to Agent for the account of the L/C Issuer its Applicable Percentage thereof on demand of Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Lender, at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.  (e)     OBLIGATIONS ABSOLUTE. The obligation of Borrower to reimburse the L/C Issuer for each drawing under each Letter of Credit and to repay each L/C Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:          (i) any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other Loan Document;          (ii) the existence of any claim, counterclaim, setoff, defense or other right that Borrower or any Subsidiary may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the L/C Issuer or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;          (iii) any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;          (iv) any payment by the L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by the L/C Issuer under such Letter of Credit to                                         18   any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law; or          (v) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, Borrower or any Subsidiary.  Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with Borrower's instructions or other irregularity, Borrower will immediately notify the L/C Issuer. Borrower shall be conclusively deemed to have waived any such claim against the L/C Issuer and its correspondents unless such notice is given as aforesaid.  (f)     ROLE OF L/C ISSUER. Each Lender and Borrower agree that, in paying any drawing under a Letter of Credit, the L/C Issuer shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of the L/C Issuer, Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of Lenders or the Required Lenders, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Issuer Document. Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; PROVIDED, HOWEVER, that this assumption is not intended to, and shall not, preclude Borrower's pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of the L/C Issuer, Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer, shall be liable or responsible for any of the matters described in clauses (i) through (v) of SECTION 2.03(e); PROVIDED, HOWEVER, that anything in such clauses to the contrary notwithstanding, Borrower may have a claim against the L/C Issuer, and the L/C Issuer may be liable to Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by Borrower which Borrower proves were caused by the L/C Issuer's willful misconduct or gross negligence or the L/C Issuer's willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, the L/C Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and the L/C Issuer shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.  (g)     CASH COLLATERAL. Upon the request of Agent, (i) if the L/C Issuer has honored any full or partial drawing request under any Letter of Credit and such drawing has resulted in an L/C Borrowing, or (ii) if, as of the L/C Expiration Date, any L/C Obligation for any reason remains outstanding, Borrower shall , in each case, immediately Cash Collateralize the then Outstanding Amount of all L/C Obligations . Sections 2.05 and 8.02(c) set forth certain additional requirements to deliver Cash Collateral hereunder. For purposes hereof, "CASH COLLATERALIZE" means to pledge and deposit with or deliver to Agent, for the benefit of the L/C Issuer and the Lenders, as collateral for the L/C Obligations, cash or deposit account balances pursuant to documentation in form and substance satisfactory to Agent and the L/C Issuer (which documents are hereby consented to by Lenders). Derivatives of such term have corresponding meanings. Borrower hereby grants to Agent, for the benefit of the L/C Issuer and Lenders, a security interest in all such cash, deposit accounts and all balances therein and all proceeds of the foregoing. Cash collateral shall be maintained in blocked, non-interest bearing deposit accounts at Bank of America.  (h)     APPLICABILITY OF ISP AND UCP. Unless otherwise expressly agreed by the L/C Issuer and Borrower when a Letter of Credit is issued (including any such agreement applicable to an Existing Letter of Credit), (i) the rules of the ISP shall apply to each standby Letter of Credit, and (ii) the rules of the Uniform Customs and Practice for Documentary Credits, as most recently published by the International Chamber of Commerce (the "ICC") at the time of issuance shall apply to each commercial Letter of Credit.  (i)     L/C FEES. Borrower shall pay to Agent for the account of each Lender in accordance with its Applicable Percentage a L/C fee (the "L/C FEE") for each Letter of Credit equal to the Applicable Rate TIMES the daily amount available to be drawn under such Letter of Credit. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with SECTION 1.06. L/C Fees shall be (i) computed on a quarterly                                         19   basis in arrears and (ii) due and payable on the first Business Day after the end of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of Credit, on the L/C Expiration Date and thereafter on demand. If there is any change in the Applicable Rate during any quarter, the daily amount available to be drawn under each Letter of Credit shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect. Notwithstanding anything to the contrary contained herein, upon the request of the Required Lenders, while any Event of Default exists, all L/C Fees shall accrue at the Default Rate.  (j)     FRONTING FEE AND DOCUMENTARY AND PROCESSING CHARGES PAYABLE TO L/C ISSUER. Borrower shall pay directly to the L/C Issuer for its own account a fronting fee with respect to each Letter of Credit, at the rate per annum specified in the Agent Fee Letter, computed on the daily amount available to be drawn under such Letter of Credit and on a quarterly basis in arrears. Such fronting fee shall be due and payable on the tenth Business Day after the end of each March, June, September and December, in respect of the most recently-ended quarterly period (or portion thereof, in the case of the first payment), commencing with the first such date to occur after the issuance of such Letter of Credit, on the L/C Expiration Date and thereafter on demand. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with SECTION 1.06. In addition, Borrower shall pay directly to the L/C Issuer for its own account the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of the L/C Issuer relating to letters of credit as from time to time in effect. Such individual customary fees and standard costs and charges are due and payable on demand and are nonrefundable.  (k)     CONFLICT WITH ISSUER DOCUMENTS. In the event of any conflict between the terms hereof and the terms of any Issuer Documents, the terms hereof shall control.  (l)     LETTERS OF CREDIT ISSUED FOR SUBSIDIARIES. Notwithstanding that a Letter of Credit issued or outstanding hereunder is in support of any obligations of, or is for the account of, a Subsidiary, Borrower shall be obligated to reimburse the L/C Issuer hereunder for any and all drawings under such Letter of Credit. Borrower hereby acknowledges that the issuance of Letters of Credit for the account of Subsidiaries inures to the benefit of Borrower, and that Borrower's business derives substantial benefits from the businesses of such Subsidiaries.          2.04 [INTENTIONALLY OMITTED]          2.05 PREPAYMENTS. (a) Borrower may, upon notice to Agent, at any time or from time to time voluntarily prepay Committed Loans in whole or in part without premium or penalty; PROVIDED that (i) such notice must be received by Agent not later than 11:00 a.m. (A) three Business Days prior to any date of prepayment of Eurodollar Rate Loans and (B) on the date of prepayment of Base Rate Committed Loans; (ii) any prepayment of Eurodollar Rate Loans shall be in a principal amount of $100,000 or a whole multiple of $1,000 in excess thereof; and (iii) any prepayment of Base Rate Committed Loans shall be in a principal amount of $100,000 or a whole multiple of $1,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding. Each such notice shall specify the date and amount of such prepayment and the Type(s) of Committed Loans to be prepaid. Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender's Applicable Percentage of such prepayment. If such notice is given by Borrower, Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to SECTION 3.05. Each such prepayment shall be applied to the Committed Loans of Lenders in accordance with their respective Applicable Percentages.  (b) If for any reason the Total Outstandings at any time exceed the Aggregate Commitments then in effect, Borrower shall immediately prepay Loans and/or Cash Collateralize the L/C Obligations in an aggregate amount equal to such excess; PROVIDED, HOWEVER, that Borrower shall not be required to Cash Collateralize the L/C Obligations pursuant to this SECTION 2.05(b) unless after the prepayment in full of the Loans the Total Outstandings exceed the Aggregate Commitments then in effect.          2.06 TERMINATION OR REDUCTION OF COMMITMENTS. Borrower may, upon notice to Agent, terminate the Aggregate Commitments, or from time to time permanently reduce the Aggregate Commitments; PROVIDED that (i) any such notice shall be received by Agent not later than 11:00 a.m. five Business Days prior to the date of termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of $100,000 or any whole multiple of $100,000 in excess thereof, (iii) Borrower shall not terminate or reduce the Aggregate Commitments if, after giving effect thereto and to any concurrent prepayments hereunder, the Total Outstandings would exceed the Aggregate Commitments, and (iv) if, after giving effect to any reduction of the Aggregate Commitments, the L/C Sublimit exceeds the amount of the Aggregate Commitments, such Sublimit shall be                                         20   automatically reduced by the amount of such excess. Agent will promptly notify the Lenders of any such notice of termination or reduction of the Aggregate Commitments. Any reduction of the Aggregate Commitments shall be applied to the Commitment of each Lender according to its Applicable Percentage. All fees accrued until the effective date of any termination of the Aggregate Commitments shall be paid on the effective date of such termination.          2.07 REPAYMENT OF LOANS. (a) Borrower shall repay to Lenders on the Maturity Date the aggregate principal amount of Committed Loans outstanding on such date.          2.08 INTEREST. (a) Subject to the provisions of subsection (b) below, (i) each Eurodollar Rate Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Eurodollar Rate for such Interest Period PLUS the Applicable Rate; and (ii) each Base Rate Committed Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate PLUS the Applicable Rate.  (b) (i) If any amount of principal of any Loan is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.       (ii) If any amount (other than principal of any Loan) payable by Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then upon the request of the Required Lenders, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.       (iii) Upon the request of the Required Lenders, while any Event of Default exists, Borrower shall pay interest on the principal amount of all outstanding Obligations hereunder at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.       (iv) Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.  (c) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.          2.09 FEES. In addition to certain fees described in subsections (i) and (j) of SECTION 2.03:  (a)     [Intentionally Omitted]  (b)     AGENT'S FEES. Borrower shall pay to Agent for Agent's own account, fees in the amounts and at the times specified in the letter agreement, dated October 3, 2005 (the "AGENT FEE LETTER"), between Borrower and Agent. Such fees shall be fully earned when paid and shall be nonrefundable for any reason whatsoever.  (c)     LENDERS' UPFRONT FEE. On the Closing Date, Borrower shall pay to Agent, for the account of each Lender in accordance with their respective Applicable Percentages, an upfront fee in an amount of 1/4 of 1% of the Commitment of such Lender, which shall be paid by Agent to each Lender within two Business Days of its receipt. Such upfront fees are for the credit facilities committed by Lenders under this Agreement and are fully earned on the date paid. The upfront fee paid to each Lender is solely for its own account and is nonrefundable for any reason whatsoever.          2.10 COMPUTATION OF INTEREST AND FEES. All computations of interest for Base Rate Loans when the Base Rate is determined by Bank of America's "prime rate" shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year). Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, PROVIDED that any Loan that is repaid on the same day on which it is made shall, subject to SECTION 2.12(a), bear interest for one day. Each determination by Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.                                         21           2.11 EVIDENCE OF DEBT. (a) The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by Agent in the ordinary course of business. The accounts or records maintained by Agent and each Lender shall be conclusive absent manifest error of the amount of the Credit Extensions made by Lenders to Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of Agent in respect of such matters, the accounts and records of Agent shall control in the absence of manifest error. Upon the request of any Lender made through Agent, Borrower shall execute and deliver to such Lender (through Agent) a Note, which shall evidence such Lender's Loans in addition to such accounts or records. Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto.  (b) In addition to the accounts and records referred to in subsection (a), each Lender and Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit. In the event of any conflict between the accounts and records maintained by Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of Agent shall control in the absence of manifest error.          2.12 PAYMENTS GENERALLY; AGENT'S CLAWBACK. (a)(i) GENERAL. All payments to be made by Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by Borrower hereunder shall be made to Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent's Office in Dollars and in immediately available funds not later than 12:00 noon on the date specified herein. Agent will promptly distribute to each Lender its Applicable Percentage(or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender's Lending Office. All payments received by Agent after 12:00 noon shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. If any payment to be made by Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.  (ii) On each date when the payment of any principal, interest or fees are due hereunder or under any Note, Borrower agrees to maintain on deposit in an ordinary checking account maintained by Borrower with Agent (as such account shall be designated by Borrower in a written notice to Agent from time to time, the "BORROWER ACCOUNT") an amount sufficient to pay such principal, interest or fees in full on such date. Borrower hereby authorizes Agent (A) to deduct automatically all principal, interest or fees when due hereunder or under any Note from the Borrower Account, and (B) if and to the extent any payment of principal, interest or fees under this Agreement or any Note is not made when due to deduct any such amount from any or all of the accounts of Borrower maintained at Agent. Agent agrees to provide written notice to Borrower of any automatic deduction made pursuant to this SECTION 2.12(a)(ii) showing in reasonable detail the amounts of such deduction. Lenders agree to reimburse Borrower based on their Applicable Percentage for any amounts deducted from such accounts in excess of amount due hereunder and under any other Loan Documents.  (b) (i) FUNDING BY LENDERS; PRESUMPTION BY AGENT. Unless Agent shall have received notice from a Lender prior to the proposed date of any Committed Borrowing of Eurodollar Rate Loans (or, in the case of any Committed Borrowing of Base Rate Loans, prior to 12:00 noon on the date of such Committed Borrowing) that such Lender will not make available to Agent such Lender's share of such Committed Borrowing, Agent may assume that such Lender has made such share available on such date in accordance with Section 2.02 (or, in the case of a Committed Borrowing of Base Rate Loans, that such Lender has made such share available in accordance with and at the time required by Section 2.02) and may, in reliance upon such assumption, make available to Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Committed Borrowing available to Agent, then the applicable Lender and Borrower severally agree to pay to Agent forthwith on demand such corresponding amount in immediately available funds with interest thereon, for each day from and including the date such amount is made available to Borrower to but excluding the date of payment to Agent, at (A) in the case of a payment to be made by such Lender, the greater of the Federal Funds Rate and a rate determined by Agent in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by Agent in connection with the foregoing and (B) in the case of a payment to be made by Borrower, the interest rate applicable to Base Rate Loans. If Borrower and such Lender shall pay such interest to Agent for the same or an overlapping period, Agent shall promptly remit to Borrower the amount of such interest paid by Borrower for such period. If such Lender pays its share of the applicable Committed Borrowing to Agent, then the amount so paid shall constitute such Lender's Committed Loan included in such Committed Borrowing. Any payment by Borrower shall be without prejudice to any claim Borrower may have against a Lender that shall have failed to make such payment to Agent.                                         22   (ii)    PAYMENTS BY BORROWER; PRESUMPTIONS BY AGENT. Unless Agent shall have received notice from Borrower prior to the date on which any payment is due to Agent for the account of the Lenders or the L/C Issuer hereunder that Borrower will not make such payment, Agent may assume that Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to Lenders or the L/C Issuer, as the case may be, the amount due. In such event, if Borrower has not in fact made such payment, then each of Lenders or the L/C Issuer, as the case may be, severally agrees to repay to Agent forthwith on demand the amount so distributed to such Lender or the L/C Issuer, in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to Agent, at the greater of the Federal Funds Rate and a rate determined by Agent in accordance with banking industry rules on interbank compensation. A notice of Agent to any Lender or Borrower with respect to any amount owing under this subsection (b) shall be conclusive, absent manifest error.  (c)     FAILURE TO SATISFY CONDITIONS PRECEDENT. If any Lender makes available to Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this ARTICLE II, and such funds are not made available to Borrower by Agent because the conditions to the applicable Credit Extension set forth in ARTICLE IV are not satisfied or waived in accordance with the terms hereof, Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.  (d)     OBLIGATIONS OF LENDERS SEVERAL. The obligations of Lenders hereunder to make Committed Loans, to fund participations in Letters of Credit and to make payments under SECTION 10.04(c) are several and not joint. The failure of any Lender to make any Committed Loan, to fund any such participation or to make any payment under SECTION 10.04(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Committed Loan, purchase its participation or to make its payment under SECTION 10.04(c):  (e)     FUNDING SOURCE. Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.          2.13 SHARING OF PAYMENTS. If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of the Committed Loans made by it, or the participations in L/C Obligations held by it resulting in such Lender's receiving payment of a proportion of the aggregate amount of such Committed Loans or participations and accrued interest thereon greater than its PRO RATA share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify Agent of such fact, and (b) purchase (for cash at face value) participations in the Committed Loans and subparticipations in L/C Obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Committed Loans and other amounts owing them, PROVIDED that:          (i)    if any such participations or subparticipations are purchased and         all or any portion of the payment giving rise thereto is recovered, such         participations or subparticipations shall be rescinded and the purchase         price restored to the extent of such recovery, without interest; and          (ii)   the provisions of this Section shall not be construed to apply to         (x) any payment made by Borrower pursuant to and in accordance with the         express terms of this Agreement or (y) any payment obtained by a Lender         as consideration for the assignment of or sale of a participation in any         of its Committed Loans or subparticipations in L/C Obligations to any         assignee or participant, other than to Borrower or any Subsidiary         thereof (as to which the provisions of this Section shall apply).  Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Loan Party in the amount of such participation.  ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY          3.01 TAXES. (a) PAYMENTS FREE OF TAXES. Any and all payments by Borrower to or on account of any obligation of Borrower hereunder or under any other Loan Document shall be made free and clear of and without reduction or withholding for                                         23   any Indemnified Taxes or Other Taxes, provided that if Borrower shall be required by any applicable law to deduct any Indemnified Taxes (including any Other Taxes) from such payments, then, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section), Agent, Lender or L/C Issuer, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) Borrower shall make such deductions, and (iii) Borrower shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.  (b) PAYMENT OF OTHER TAXES BY BORROWER. Without limiting the provisions of subsection (a) above, Borrower shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.  (c) INDEMNIFICATION BY BORROWER. Borrower shall indemnify Agent, each Lender and the L/C Issuer, within 10 days after demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by Agent, such Lender or the L/C Issuer, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to Borrower by a Lender or the L/C Issuer (with a copy to Agent), or by Agent on its own behalf or on behalf of a Lender or the L/C Issuer, shall be conclusive absent manifest error.  (d) EVIDENCE OF PAYMENTS. As soon as practicable after any payment of Indemnified Taxes or Other Taxes by Borrower to a Governmental Authority, Borrower shall deliver to Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to Agent.  (e)     STATUS OF LENDERS. Any Lender, if requested by Borrower or Agent, shall deliver such documentation prescribed by applicable law or reasonably requested by Borrower or Agent as will enable the Borrower or Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.  (f)     TREATMENT OF CERTAIN REFUNDS. If Agent, any Lender or the L/C Issuer determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by Borrower or with respect to which Borrower has paid additional amounts pursuant to this Section, it shall pay to Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by Borrower under this Section with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of Agent, such Lender or the L/C Issuer, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), PROVIDED that Borrower, upon the request of Agent, such Lender or the L/C Issuer, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to Agent, such Lender or the L/C Issuer in the event Agent, such Lender or the L/C Issuer is required to repay such refund to such Governmental Authority. This subsection shall not be construed to require Agent, any Lender or the L/C Issuer to make available its tax returns (or any other information relating to its taxes that it deems confidential) to the Borrower or any other Person.          3.02 ILLEGALITY. If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Eurodollar Rate Loans, or to determine or charge interest rates based upon the Eurodollar Rate, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank market, then, on notice thereof by such Lender to Borrower through Agent, any obligation of such Lender to make or continue Eurodollar Rate Loans or to convert Base Rate Committed Loans to Eurodollar Rate Loans shall be suspended until such Lender notifies Agent and Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, Borrower shall, upon demand from such Lender (with a copy to Agent), prepay or, if applicable, convert all Eurodollar Rate Loans of such Lender to Base Rate Loans, either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurodollar Rate Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Eurodollar Rate Loans. Upon any such prepayment or conversion, Borrower shall also pay accrued interest on the amount so prepaid or converted and all amounts due under SECTION 3.05 in accordance with the terms thereof due to such prepayment or conversion.                                         24           3.03 INABILITY TO DETERMINE RATES. If Agent determines in connection with any request for a Eurodollar Rate Loan or a conversion to or continuation thereof that (a) Dollar deposits are not being offered to banks in the London interbank eurodollar market for the applicable amount and Interest Period of such Eurodollar Rate Loan, (b) adequate and reasonable means do not exist for determining the Eurodollar Base Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan, or (c) the Eurodollar Base Rate for any requested Interest Period with respect to a proposed Eurodollar Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding such Loan, Agent will promptly so notify Borrower and each Lender. Thereafter, the obligation of Lenders to make or maintain Eurodollar Rate Loans shall be suspended until Agent (upon the instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, Borrower may revoke any pending request for a Borrowing of, conversion to or continuation of Eurodollar Rate Loans or, failing that, will be deemed to have converted such request into a request for a Committed Borrowing of Base Rate Loans in the amount specified therein.          3.04 INCREASED COSTS (a) INCREASED COSTS GENERALLY. If any Change in Law shall:          (i)    impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in the Eurodollar Rate) or the L/C Issuer;          (ii)   subject any Lender or the L/C Issuer to any tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, any participation in a Letter of Credit or any Eurodollar Rate Loan made by it, or change the basis of taxation of payments to such Lender or the L/C Issuer in respect thereof (except for Indemnified Taxes or Other Taxes covered by SECTION 3.01 and the imposition of, or any change in the rate of, any Excluded Tax payable by such Lender or the L/C Issuer); or          (iii)  impose on any Lender or the L/C Issuer or the London interbank market any other condition, cost or expense affecting this Agreement or Eurodollar Rate Loans made by such Lender or any Letter of Credit or participation therein;  and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Rate Loan (or of maintaining its obligation to make any such Loan), or to increase the cost to such Lender or the L/C Issuer of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender or the L/C Issuer hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or the L/C Issuer, Borrower will pay to such Lender or the L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or the L/C Issuer, as the case may be, for such additional costs incurred or reduction suffered.  (b)     CAPITAL REQUIREMENTS. If any Lender or the L/C Issuer determines that any Change in Law affecting such Lender or the L/C Issuer or any Lending Office of such Lender or such Lender's or the L/C Issuer's holding company, if any, regarding capital requirements has or would have the effect of reducing the rate of return on such Lender's or the L/C Issuer's capital or on the capital of such Lender's or the L/C Issuer's holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the L/C Issuer, to a level below that which such Lender or the L/C Issuer or such Lender's or the L/C Issuer's holding company could have achieved but for such Change in Law (taking into consideration such Lender's or the L/C Issuer's policies and the policies of such Lender's or the L/C Issuer's holding company with respect to capital adequacy), then from time to time Borrower will pay to such Lender or the L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or the L/C Issuer or such Lender's or the L/C Issuer's holding company for any such reduction suffered.  (c)     CERTIFICATES FOR REIMBURSEMENT. A certificate of a Lender or the L/C Issuer setting forth the amount or amounts necessary to compensate such Lender or the L/C Issuer or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to Borrower shall be conclusive absent manifest error. Borrower shall pay such Lender or the L/C Issuer, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.  (d)     DELAY IN REQUESTS. Failure or delay on the part of any Lender or the L/C Issuer to demand compensation pursuant to the foregoing provisions of this Section shall not constitute a waiver of such Lender's or the L/C Issuer's right to demand such compensation, PROVIDED that Borrower shall not be required to compensate a Lender or the L/C Issuer pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than nine months prior to the date that such Lender or the L/C Issuer, as the case may be, notifies Borrower of the Change in Law giving rise to such increased costs or                                         25   reductions and of such Lender's or the L/C Issuer's intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).          3.05 COMPENSATION FOR LOSSES. Upon demand of any Lender (with a copy to Agent) from time to time, Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:  (a) any continuation, conversion, payment or prepayment of any Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise); or  (b) any failure by Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the date or in the amount notified by Borrower;  including any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained. Borrower shall also pay any customary administrative fees charged by such Lender in connection with the foregoing. For purposes of calculating amounts payable by Borrower to Lenders under this SECTION 3.05, each Lender shall be deemed to have funded each Eurodollar Rate Loan made by it at the Eurodollar Base Rate used in determining the Eurodollar Rate for such Loan by a matching deposit or other borrowing in the London interbank eurodollar market for a comparable amount and for a comparable period, whether or not such Eurodollar Rate Loan was in fact so funded.          3.06 MITIGATION OBLIGATIONS. If any Lender requests compensation under SECTION 3.04, or Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to SECTION 3.01, or if any Lender gives a notice pursuant to SECTION 3.02, then such Lender shall use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to SECTION 3.01 or 3.04, as the case may be, in the future, or eliminate the need for the notice pursuant to SECTION 3.02, as applicable, and (ii) in each case, would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment to the extent reasonably attributable to the Loans hereunder.          3.07 SURVIVAL. All of Borrower's obligations under this ARTICLE III shall survive termination of the Aggregate Commitments and repayment of all other Obligations hereunder.  ARTICLE IV. CONDITIONS PRECEDENT TO CREDIT EXTENSIONS          4.01 CONDITIONS OF INITIAL CREDIT EXTENSION. The obligation of the L/C Issuer and each Lender to make its initial Credit Extension hereunder is subject to satisfaction of the following conditions precedent:  (a) Agent's receipt of the following, each of which shall be originals or telecopies (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing Loan Party, each dated the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance satisfactory to Agent and each of the Lenders:          (i) executed counterparts of this Agreement and all Collateral         Documents, sufficient in number for distribution to Agent, each Lender         and Borrower;          (ii) a Note executed by Borrower in favor of each Lender requesting a         Note;          (iii) such certificates of resolutions or other action, incumbency         certificates and/or other certificates of Responsible Officers of each         Loan Party as Agent may require evidencing the identity, authority and         capacity of each Responsible Officer thereof authorized to act as a         Responsible Officer in connection with this Agreement and the other Loan         Documents to which such Loan Party is a party;                                         26           (iv) such documents and certifications as Agent may reasonably require         to evidence that each Loan Party is duly organized or formed, and that         each Loan Party is validly existing, in good standing and qualified to         engage in business in each jurisdiction where its ownership, lease or         operation of properties or the conduct of its business requires such         qualification, except to the extent that failure to do so could not         reasonably be expected to have a Material Adverse Effect;          (v) a favorable opinion of counsel to the Loan Parties acceptable to         Agent addressed to Agent and each Lender, as to the matters set forth         concerning the Loan Parties and the Loan Documents in form and substance         satisfactory to Agent;          (vi) a certificate of a Responsible Officer of each Loan Party either         (A) attaching copies of all consents, licenses and approvals required in         connection with the execution, delivery and performance by such Loan         Party and the validity against such Loan Party of the Loan Documents to         which it is a party, and stating that such consents, licenses and         approvals shall be in full force and effect, or (B) stating that no such         consents, licenses or approvals are so required;          (vii) a certificate signed by a Responsible Officer of Borrower         certifying (A) that the conditions specified in SECTIONS 4.02(a) and (b)         have been satisfied, and (B) that there has been no event or         circumstance since the date of the Audited Financial Statements that has         had or could be reasonably expected to have, either individually or in         the aggregate, a Material Adverse Effect;          (viii) evidence that all insurance required to be maintained pursuant to         the Loan Documents has been obtained and is in effect; and          (ix) such other assurances, certificates, documents, consents or         opinions as Agent, the L/C Issuer or the Required Lenders reasonably may         require.  (b)     Any fees required to be paid on or before the Closing Date shall have been paid.  (c)     Unless waived by Agent, Borrower shall have paid all fees, charges and disbursements of counsel to Agent to the extent invoiced prior to or on the Closing Date, plus such additional amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final settling of accounts between Borrower and Agent).  (d)     The Closing Date shall have occurred on or before October 31, 2005.  Without limiting the generality of the provisions of SECTION 9.04, for purposes of determining compliance with the conditions specified in this SECTION 4.01, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.          4.02 CONDITIONS TO ALL CREDIT EXTENSIONS. The obligation of each Lender to honor any Request for Credit Extension is subject to the following conditions precedent:  (a) The representations and warranties of Borrower and each other Loan Party contained in ARTICLE V or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct on and as of the date of such Credit Extension, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date, and except that for purposes of this SECTION 4.02, the representations and warranties contained in subsections (a) and (b) of SECTION 5.05 shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of SECTION 6.01.  (b) No Default shall exist, or would result from such proposed Credit Extension or from the application of the proceeds thereof.  (c) Agent and, if applicable, the L/C Issuer shall have received a Request for Credit Extension in accordance with the requirements hereof.                                         27   (d) Agent shall have received, in form and substance satisfactory to it, such other assurances, certificates, documents or consents related to the foregoing as Agent or the Required Lenders reasonably may require.  Each Request for Credit Extension submitted by Borrower shall be deemed to be a representation and warranty that the conditions specified in SECTIONS 4.02(a) and (b) have been satisfied on and as of the date of the applicable Credit Extension.  ARTICLE V. REPRESENTATIONS AND WARRANTIES  Borrower represents and warrants to Agent and the Lenders that:          5.01 EXISTENCE, QUALIFICATION AND POWER; COMPLIANCE WITH LAWS. Each Loan Party and each Subsidiary thereof (a) is duly organized or formed, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party, (c) is duly qualified and is licensed and in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license, and (d) is in compliance with all Laws; except in each case referred to in clause (b)(i), (c) or (d), to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.          5.02 AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is party, have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of any of such Person's Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, or require any payment to be made under (i) any Contractual Obligation to which such Person is a party or affecting such Person or the properties of such Person or any of its Subsidiaries or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (c) violate any Law. Each Loan Party and each Subsidiary thereof is in compliance with all Contractual Obligations referred to in clause (b)(i), except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.          5.03 GOVERNMENTAL AUTHORIZATION; OTHER CONSENTS. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document.          5.04 BINDING EFFECT. This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto. This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms.          5.05 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE EFFECT; NO INTERNAL CONTROL EVENT. (a) The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present the financial condition of Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show all material indebtedness and other liabilities, direct or contingent, of Borrower and its Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Indebtedness and preferred stock.  (b) The unaudited consolidated balance sheets of Borrower and its Subsidiaries dated June 30, 2005, and the related consolidated statements of income or operations, shareholders' equity and cash flows for the fiscal quarter ended on that date (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present the financial condition of Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby, subject, in the case of clauses (i) and (ii), to the absence of footnotes and to normal year-end audit adjustments.  (c) Since the date of the Audited Financial Statements, there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect.                                         28   (d) Since the date of the Audited Financial Statements, no Internal Control Event has occurred.  (e) Subject to the second sentence of this subsection, the consolidated pro forma balance sheets of Borrower and its Subsidiaries as at December 31, 2005, and the related consolidated pro forma statements of income and cash flows of Borrower and its Subsidiaries for the twelve months then ended, certified by the chief financial officer of Borrower, copies of which have been furnished to each Lender, fairly present the consolidated pro forma financial condition of Borrower and its Subsidiaries as at such date and the consolidated pro forma results of operations of Borrower and its Subsidiaries for the period ended on such date, all in accordance with GAAP. The consolidated forecasted balance sheet and statements of income and cash flows of the Borrower and its Subsidiaries were prepared in good faith on the basis of the assumptions stated therein, which assumptions were fair in light of the conditions existing at the time of delivery of such forecasts, and represented, at the time of delivery, the Borrower's best estimate of its future financial performance.          5.06 LITIGATION. There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of Borrower after due and diligent investigation, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against Borrower or any of its Subsidiaries or against any of their properties or revenues that (a) purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby, or (b) except as specifically disclosed in SCHEDULE 5.06, either individually or in the aggregate, if determined adversely, could reasonably be expected to have a Material Adverse Effect, and there has been no adverse change in the status, or financial effect on any Loan Party or any Subsidiary thereof, of the matters described on SCHEDULE 5.06.          5.07 NO DEFAULT. Neither Borrower nor any Subsidiary is in default under or with respect to any Contractual Obligation that could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. No Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.          5.08 OWNERSHIP OF PROPERTY; LIENS. Each of Borrower and each Subsidiary has good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business, except for such defects in title as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The property of Borrower and its Subsidiaries is subject to no Liens, other than Liens permitted by SECTION 7.01.          5.09 ENVIRONMENTAL COMPLIANCE. Borrower and its Subsidiaries conduct in the ordinary course of business a review of the effect of existing Environmental Laws and claims alleging potential liability or responsibility for violation of any Environmental Law on their respective businesses, operations and properties, and as a result thereof Borrower has reasonably concluded that, except as specifically disclosed in SCHEDULE 5.09, such Environmental Laws and claims could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.          5.10 INSURANCE. The properties of Borrower and its Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of Borrower, in such amounts (after giving effect to any self-insurance compatible with the following standards), with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where Borrower or the applicable Subsidiary operates.          5.11 TAXES. Borrower and its Subsidiaries have filed all Federal, state and other material tax returns and reports required to be filed, and have paid all Federal, state and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP. There is no proposed tax assessment against Borrower or any Subsidiary that would, if made, have a Material Adverse Effect.          5.12 ERISA COMPLIANCE. (a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state Laws. Each Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto and, to the best knowledge of Borrower, nothing has occurred which would prevent, or cause the loss of, such qualification. Borrower and each ERISA Affiliate have made all required contributions to each Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan.                                         29   (b) There are no pending or, to the best knowledge of Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could be reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Effect.  (c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Sections 4069 or 4212(c) of ERISA.          5.13 SUBSIDIARIES. As of the Closing Date, Borrower has no Subsidiaries other than those specifically disclosed in Part (a) of SCHEDULE 5.13, and all of the outstanding Equity Interests in any such Subsidiaries that are wholly-owned have been validly issued, are fully paid and nonassessable and are owned by a Loan Party in the amounts specified on Part (a) of Schedule 5.13 free and clear of all Liens. Borrower has no equity investments in any other corporation or entity other than those specifically disclosed in Part(b) of SCHEDULE 5.13. All of the outstanding Equity Interests in Borrower have been validly issued and are fully paid and nonassessable.          5.14 MARGIN REGULATIONS; INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT. (a) Borrower is not engaged and will not engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock. Following the application of the proceeds of each Borrowing or drawing under each Letter of Credit, not more than 25% of the value of the assets (either of Borrower only or of Borrower and its Subsidiaries on a consolidated basis) subject to the provisions of SECTION 7.01 or SECTION 7.05 or subject to any restriction contained in any agreement or instrument between Borrower and any Lender or any Affiliate of any Lender relating to Indebtedness or preferred stock and within the scope of SECTION 8.01(e) will be margin stock.  (b) None of Borrower, any Person Controlling Borrower, or any Subsidiary is or is required to be registered as an "investment company" under the Investment Company Act of 1940.  (c) The Borrower and each of its Subsidiaries have been exempted as a "holding company" and a "subsidiary", respectively, under the Public Utility Holding Company Act of 1935 (repealed effective February 8, 2006) pursuant to annual filings made with the SEC on Form U-3A-2, the most recent of which is now in full force and effect and has not been revoked, modified or amended. While the Borrower meets the definition of a "holding company" under the Public Utility Holding Company Act of 2005, and some or all of its Subsidiaries meet the definition of a "subsidiary" under such Act, (a) the only applicable requirements under such Act are state and federal government access to books and records of holding companies and their subsidiaries for other regulatory purposes, and (b) either the Borrower or its Subsidiaries, or both, may come under the terms of exemptions under regulations yet to be promulgated under such Act by the Federal Energy Regulatory Commission. The provisions of the Federal Power Act giving jurisdiction over securities issued by certain utilities does not extend to the securities and other obligations of the Borrower issued or incurred under this Agreement, since (i) Borrower's wholly-owned utility subsidiary, Maine Public Service Company, will not be incurring any obligation under this Agreement and (ii) both Borrower and Maine Public Service Company are organized and operating in a state under the laws of which the security issues and other obligations of such utility subsidiary are regulated by a state commission. Maine Public Service Company is subject to the jurisdiction of the Maine Public Utilities Commission, which is vested with comprehensive powers of supervision, regulation and control over various matters, including the issuance of securities by Maine Public Service Company.          5.15 DISCLOSURE. Borrower has disclosed to Agent and Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. No report, financial statement, certificate or other information furnished (whether in writing or orally) by or on behalf of any Loan Party to Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other Loan Document (in each case, as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which                                         30   they were made, not misleading; PROVIDED that, with respect to projected financial information, Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.          5.16 COMPLIANCE WITH LAWS. Each of Borrower and each Subsidiary is in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.          5.17 INTELLECTUAL PROPERTY; LICENSES, ETC. Borrower and its Subsidiaries own, or possess the right to use, all of the trademarks, service marks, trade names, copyrights, patents, patent rights, franchises, licenses and other intellectual property rights that are reasonably necessary for the operation of their respective businesses, without conflict with the rights of any other Person. To the best knowledge of Borrower, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by Borrower or any Subsidiary infringes upon any rights held by any other Person. No claim or litigation regarding any of the foregoing is pending or, to the best knowledge of Borrower, threatened, which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.          5.18 RIGHTS IN COLLATERAL; PRIORITY OF LIENS. Borrower and each other Loan Party own the property granted by it as Collateral under the Collateral Documents, free and clear of any and all Liens in favor of third parties. Upon the proper filing of UCC financing statements, and the taking of the other actions required by the Required Lenders, the Liens granted pursuant to the Collateral Documents will constitute valid and enforceable first, prior and perfected Liens on the Collateral in favor of Agent, for the ratable benefit of Agent and Lenders.  ARTICLE VI. AFFIRMATIVE COVENANTS  So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, Borrower shall, and shall (except in the case of the covenants set forth in SECTIONS 6.01, 6.02, and 6.03) cause each Subsidiary to:          6.01 FINANCIAL STATEMENTS. Deliver to Agent a sufficient number of copies for delivery by Agent to each Lender, in form and detail satisfactory to Agent and the Required Lenders:  (a) as soon as available, but in any event within 120 days after the end of each fiscal year of Borrower, a consolidated and consolidating balance sheet of Borrower and its Subsidiaries as at the end of such fiscal year, and the related consolidated and consolidating statements of income or operations, shareholders' equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, such consolidated statements to be audited and accompanied by (i) a report and opinion of Vitale, Caturano and Co., Ltd., or another Registered Public Accounting Firm of nationally recognized standing reasonably acceptable to the Required Lenders, which report and opinion shall be prepared in accordance with generally accepted auditing standards and applicable Securities Laws and shall not be subject to any "going concern" or like qualification or exception or any qualification or exception as to the scope of such audit and (ii) when and to the extent required by the SEC, an attestation report of such Registered Public Accounting Firm as to the Borrower's internal controls pursuant to Section 404 of Sarbanes-Oxley expressing a conclusion to which the Required Lenders do not object and such consolidating statements to be certified by a Responsible Officer of Borrower to the effect that such statements are fairly stated in all material respects when considered in relation to the consolidated financial statements of Borrower and its Subsidiaries, provided, however, that so long as Borrower is subject to section 13 of the Securities Exchange Act of 1934, as amended, the requirement as to consolidated financial statements (but not the other requirements) shall be satisfied with respect to Borrower by delivery within such 120-day period of the annual report of Borrower on Form 10-K for such fiscal year, together with all documents from the preceding fiscal year which are incorporated therein by reference, and have theretofore not been delivered, as filed by Borrower with the SEC;  (b) as soon as available, but in any event within 60 days after the end of each of the first three fiscal quarters of each fiscal year of Borrower, a consolidated and consolidating balance sheet of Borrower and its Subsidiaries as at the end of such fiscal quarter, and the related consolidated and consolidating statements of income or operations, shareholders' equity and cash flows for such fiscal quarter and for the portion of Borrower's fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail, such consolidated statements to be certified by a Responsible Officer of Borrower as fairly presenting the                                         31   financial condition, results of operations, shareholders' equity and cash flows of Borrower and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes and such consolidating statements to be certified by a Responsible Officer of Borrower to the effect that such statements are fairly stated in all material respects when considered in relation to the consolidated financial statements of the Borrower and its Subsidiaries, provided, however, that so long as Borrower is subject to section 13 of the Securities Exchange Act of 1934, as amended, the requirement with respect to consolidated financial statements (but not the other requirements)shall be satisfied with respect to Borrower by delivery within such 60-day period of the report of Borrower on Form 10-Q for such quarter, as filed by Borrower with the SEC; and  (c) as soon as available, but in any event at least 60 days after the end of each fiscal year of Borrower, forecasts prepared by management of Borrower, in form satisfactory to Agent and the Required Lenders, of consolidated balance sheets and statements of income or operations and cash flows of Borrower and its Subsidiaries on a monthly basis for the immediately following fiscal year (including the fiscal year in which the Maturity Date occurs).          6.02 CERTIFICATES; OTHER INFORMATION. Deliver to Agent a sufficient number of copies for delivery by Agent to each Lender, in form and detail satisfactory to Agent and the Required Lenders:  (a) concurrently with the delivery of the financial statements referred to in SECTION 6.01(a), a certificate of its independent certified public accountants certifying such financial statements and stating that in making the examination necessary therefor no knowledge was obtained of any Default or, if any such Default shall exist, stating the nature and status of such event;  (b) concurrently with the delivery of the financial statements referred to in SECTIONS 6.01(a) and (b), a duly completed Compliance Certificate signed by a Responsible Officer of Borrower;  (c) promptly after any request by Agent or any Lender, copies of any detailed audit reports, management letters or recommendations submitted to the board of directors (or the audit committee of the board of directors) of Borrower by independent accountants in connection with the accounts or books of Borrower or any Subsidiary, or any audit of any of them;  (d) promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of Borrower, and copies of all annual, regular, periodic and special reports and registration statements which Borrower may file or be required to file with the Securities and Exchange Commission under Section 13 or 15(d) of the Securities Exchange Act of 1934, and not otherwise required to be delivered to Agent pursuant hereto;  (e) promptly after the furnishing thereof, copies of any statement or report furnished to any holder of debt securities of any Loan Party or any Subsidiary thereof pursuant to the terms of any indenture, loan or credit or similar agreement and not otherwise required to be furnished to the Lenders pursuant to Section 6.01 or any other clause of this Section 6.02;  (f) promptly, and in any event within five Business Days after receipt thereof by any Loan Party or any Subsidiary thereof, copies of each notice or other correspondence received from the Securities and Exchange Commission (or comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation or possible investigation or other inquiry by such agency regarding financial or other operational results of any Loan Party or any Subsidiary thereof; and  (g) promptly, such additional information regarding the business, financial or corporate affairs of Borrower or any Subsidiary, or compliance with the terms of the Loan Documents, as Agent or any Lender may from time to time reasonably request.  Borrower hereby acknowledges that (a) Agent will make available to Lenders and the L/C Issuer materials and/or information provided by or on behalf of Borrower hereunder (collectively, "BORROWER MATERIALS") by posting Borrower Materials on IntraLinks or another similar electronic system (the "PLATFORM") and (b) certain of the Lenders may be "public-side" Lenders (I.E., Lenders that do not wish to receive material non-public information with respect to Borrower or its securities) (each, a "PUBLIC LENDER"). Borrower hereby agrees that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked "PUBLIC" so long as Borrower is the issuer of any outstanding debt or equity securities that are registered or issued pursuant to a private offering or is actively contemplating issuing any such securities which, at a minimum, shall mean that the word "PUBLIC" shall appear prominently on the first page thereof; (x) by marking Borrower Materials "PUBLIC," Borrower shall be deemed to have authorized Agent, the L/C Issuer and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to Borrower or its securities for purposes of United States Federal and state securities laws (provided, however, that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section                                         32   10.07); (y) all Borrower Materials marked "PUBLIC" are permitted to be made available through a portion of the Platform designated "Public Investor;" and (z) Agent shall be entitled to treat any Borrower Materials that are not marked "PUBLIC" as being suitable only for posting on a portion of the Platform not designated "Public Investor. Notwithstanding the foregoing, the Borrower shall be under no obligation to mark any Borrower Materials "PUBLIC."          6.03 NOTICES. Promptly notify Agent and each Lender:  (a) of the occurrence of any Default;  (b) of any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect, including (i) breach or non-performance of, or any default under, a Contractual Obligation of Borrower or any Subsidiary; (ii) any dispute, litigation, investigation, proceeding or suspension between Borrower or any Subsidiary and any Governmental Authority; or (iii) the commencement of, or any material development in, any litigation or proceeding affecting Borrower or any Subsidiary, including pursuant to any applicable Environmental Laws;  (c) of the occurrence of any ERISA Event; and  (d) of the occurrence of any Internal Control Event.  Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer of Borrower setting forth details of the occurrence referred to therein and stating what action Borrower has taken and proposes to take with respect thereto. Each notice pursuant to SECTION 6.03(a) shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached.          6.04 PAYMENT OF OBLIGATIONS. Pay and discharge as the same shall become due and payable, all its obligations and liabilities, including (a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by Borrower or such Subsidiary; (b) all lawful claims which, if unpaid, would by law become a Lien upon its property; and (c) all Indebtedness and preferred stock, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness or preferred stock.          6.05 PRESERVATION OF EXISTENCE, ETC. (a) Preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization except in a transaction permitted by SECTION 7.04 or 7.05; (b) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which could reasonably be expected to have a Material Adverse Effect.          6.06 MAINTENANCE OF PROPERTIES. (a) Maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted; (b) make all necessary repairs thereto and renewals and replacements thereof except where the failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) use the standard of care typical in the industry in the operation and maintenance of its facilities.          6.07 MAINTENANCE OF INSURANCE. Maintain with financially sound and reputable insurance companies not Affiliates of Borrower, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts (after giving effect to any self-insurance compatible with the following standards) as are customarily carried under similar circumstances by such other Persons and providing for not less than 30 days' prior notice to Agent of termination, lapse or cancellation of such insurance.          6.08 COMPLIANCE WITH LAWS. Comply in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (a) such requirement of Law or order, write, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (b) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.                                         33           6.09 BOOKS AND RECORDS. (a) Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of Borrower or such Subsidiary, as the case may be; and (b) maintain such books of record and account in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over Borrower or such Subsidiary, as the case may be. Borrower shall maintain at all times books and records pertaining to the Collateral in such detail, form and scope as Agent or any Lender shall reasonably require.          6.10 INSPECTION RIGHTS. Permit representatives and independent contractors of Agent and each Lender to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants, all at the expense of Borrower and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to Borrower; PROVIDED, HOWEVER, that when an Event of Default exists Agent or any Lender (or any of their respective representatives or independent contractors) may do any of the foregoing at the expense of Borrower at any time during normal business hours and without advance notice.          6.11 USE OF PROCEEDS. Use the proceeds of the Credit Extensions for general corporate purposes, including working capital and including advances to Subsidiaries, not in contravention of any Law or of any Loan Document.          6.12 FINANCIAL COVENANTS.          (a) DEBT TO CAPITAL RATIO. Not allow Consolidated Total Indebtedness for Borrowed Money to exceed the percentage of Consolidated Total Capital indicated for each period specified below:            Period                                                        Maximum Percentage         ------                                                        ------------------                   Quarter ending 12/31/05 through quarter ending 3/31/07        57%         Thereafter                                                    55%   This ratio will be calculated at the end of each quarter, commencing with the quarter ending December 31, 2005, using the results of the twelve-month period ending with that reporting period.          (b) INTEREST COVERAGE RATIO. Maintain on a consolidated basis an Interest Coverage Ratio of at least the ratio indicated for each period specified below:            Period                                      Ratio         ------                                      -----                   Quarter ending12/31/05                      1.00:1.0         Quarter ending 3/31/06                      1.10:1.0         Quarter ending 6/30/06                      1.40:1.0         Quarter ending 9/30/06                      1.75:1.0         Quarter ending 12/31/06                     1.75:1.0         Quarter ending 3/30/07                      2.00:1.0         Quarter ending 6/30/07 and thereafter       2.50:1.0   This ratio will be calculated at the end of each quarter, commencing with the quarter ending December 31, 2005, using the results of the twelve-month period ending with that reporting period.          6.13 COLLATERAL RECORDS. To execute and deliver promptly, and to cause each other Loan Party to execute and deliver promptly, to Agent, from time to time, solely for Agent's convenience in maintaining a record of the Collateral, such written statements and schedules as Agent may reasonably require designating, identifying or describing the Collateral. The failure by Borrower or any other Loan Party, however, to promptly give Agent such statements or schedules shall not affect, diminish, modify or otherwise limit the Liens on the Collateral granted pursuant to the Collateral Documents.          6.14 SECURITY INTERESTS. To, and to cause each other Loan Party to, (a) defend the Collateral against all claims and demands of all Persons at any time claiming the same or any interest therein, (b) comply with the requirements of all state and federal laws in order to grant to Agent and Lenders valid and perfected first priority security interests in the Collateral, with perfection, in the case of any investment property, deposit account or letter of credit, being effected by giving Agent control of such investment property or deposit account or letter of credit, rather than by the filing of a Uniform Commercial Code ("UCC") financing statement with respect to such investment property, and (c) do whatever Agent may reasonably request, from time to time, to effect the purposes of this Agreement and the other Loan Documents, including filing notices of liens, UCC financing                                         34   statements, fixture filings and amendments, renewals and continuations thereof; cooperating with Agent's representatives; keeping stock records; obtaining waivers from landlords and mortgagees and from warehousemen and their landlords and mortgages; and, paying claims which might, if unpaid, become a Lien on the Collateral. Agent is hereby authorized by Borrower to file any UCC financing statements covering the Collateral whether or not Borrower's signatures appear thereon.  ARTICLE VII. NEGATIVE COVENANTS  So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, Borrower shall not, nor shall it permit any Subsidiary to, directly or indirectly:          7.01 LIENS. Create, incur, assume or suffer to exist any Lien upon any of the Collateral, whether now owned or hereafter acquired, other than the following:  (a) Liens pursuant to any Loan Document;  (b) Liens existing on the date hereof and listed on SCHEDULE 7.01 and any renewals or extensions thereof, PROVIDED that (i) the property covered thereby is not changed, (ii) the amount secured or benefited thereby is not increased, (iii) the direct or any contingent obligor with respect thereto is not changed, and (iv) and any renewal or extension of the obligations secured or benefited thereby is permitted by SECTION 7.03(b);  (c) Liens for taxes not yet due or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP;  (d) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 30 days or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person;  (e) pledges or deposits in the ordinary course of business in connection with workers' compensation, unemployment insurance and other social security legislation, other than any Lien imposed by ERISA;  (f) deposits to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;  (g) easements, rights-of-way, restrictions and other similar encumbrances affecting real property which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person;  (h) Liens securing judgments for the payment of money not constituting an Event of Default under SECTION 8.01(h); and  (i) Liens securing Indebtedness permitted under SECTION 7.03(e); PROVIDED that (i) such Liens do not at any time encumber any property other than the property financed by such Indebtedness and (ii) the Indebtedness secured thereby does not exceed the cost or fair market value, whichever is lower, of the property being acquired on the date of acquisition.          7.02 [INTENTIONALLY OMITTED]          7.03 INDEBTEDNESS. Neither Borrower, nor any Subsidiary the Indebtedness of which is Guaranteed by Borrower (but this Section 7.03 shall apply to a Subsidiary only to the extent such Subsidiary's Indebtedness is Guaranteed by Borrower), shall create, incur, assume or suffer to exist any Indebtedness, except:  (a) Indebtedness under the Loan Documents;                                         35   (b) Indebtedness outstanding on the date hereof and listed on SCHEDULE 7.03 and any refinancings, refundings, renewals or extensions thereof; PROVIDED that (i) the amount of such Indebtedness is not increased at the time of such refinancing, refunding, renewal or extension except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such refinancing and by an amount equal to any existing commitments unutilized thereunder and (ii) the terms relating to principal amount, amortization, maturity, collateral (if any) and subordination (if any), and other material terms taken as a whole, of any such refinancing, refunding, renewing or extending Indebtedness, and of any agreement entered into and of any instrument issued in connection therewith, are no less favorable in any material respect to the Loan Parties or Lenders than the terms of any agreement or instrument governing the Indebtedness being refinanced, refunded, renewed or extended and the interest rate applicable to any such refinancing, refunding, renewing or extending Indebtedness does not exceed the then applicable market interest rate;  (c) Guarantees of Borrower in respect of Indebtedness otherwise permitted hereunder of Borrower;  (d) obligations (contingent or otherwise) of Borrower or any Subsidiary existing or arising under any Swap Contract, PROVIDED that (i) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments, investments, assets, or property held or reasonably anticipated by such Person, or changes in the value of securities issued by such Person, and not for purposes of speculation or taking a "market view;" and (ii) such Swap Contract does not contain any provision exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party;  (e) Indebtedness in respect of capital leases, Synthetic Lease Obligations and purchase money obligations for fixed or capital assets within the limitations set forth in SECTION 7.01(i); PROVIDED, HOWEVER, that the aggregate amount of all such Indebtedness at any one time outstanding shall not exceed $500,000; and  (f) Indebtedness of Maine Public Service Company approved by the Maine Public Utilities Commission.          7.04 FUNDAMENTAL CHANGES. Merge, dissolve, liquidate, consolidate with or into another Person, or Dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person, except that, so long as no Default exists or would result therefrom:  (a) any Subsidiary may merge with (i) Borrower, PROVIDED that Borrower shall be the continuing or surviving Person, or (ii) any one or more other Subsidiaries, PROVIDED that when any wholly-owned Subsidiary is merging with another Subsidiary, the wholly-owned Subsidiary shall be the continuing or surviving Person; and  (b) any Subsidiary may Dispose of all or substantially all of its assets (upon voluntary liquidation or otherwise) to Borrower or to another Subsidiary; PROVIDED that if the transferor in such a transaction is a wholly-owned Subsidiary, then the transferee must either be Borrower or a wholly-owned Subsidiary.  This Section 7.04 shall not apply to any Subsidiaries except Maine Public Service Company.          7.05 DISPOSITIONS. Make any Disposition or enter into any agreement to make any Disposition, except:  (a) Dispositions of obsolete or worn out property, whether now owned or hereafter acquired, in the ordinary course of business;  (b) Dispositions of inventory in the ordinary course of business;  (c) Dispositions of equipment or real property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property or (ii) the proceeds of such Disposition are reasonably promptly applied to the purchase price of such replacement property;  (d) Dispositions of property by any Subsidiary to Borrower or to a wholly-owned Subsidiary; PROVIDED that if the transferor of such property is a Guarantor, the transferee thereof must either be Borrower or a Guarantor; and  (e) Dispositions permitted by SECTION 7.04.                                         36   PROVIDED, HOWEVER, that any Disposition pursuant to clauses (a) through (e) shall be for fair market value. This Section 7.05 shall not apply to any Subsidiaries except Maine Public Service Company.          7.06 RESTRICTED PAYMENTS. Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, or issue or sell any Equity Interests, except that, so long as no Default shall have occurred and be continuing at the time of any action described below or would result therefrom:  (a) each Subsidiary may make Restricted Payments to Borrower, Guarantors and any other Person that owns an Equity Interest in such Subsidiary, ratably according to their respective holdings of the type of Equity Interest in respect of which such Restricted Payment is being made;  (b) Borrower and each Subsidiary may declare and make dividend payments or other distributions payable solely in the common stock or other common Equity Interests of such Person;  (c) Borrower and each Subsidiary may purchase, redeem or otherwise acquire Equity Interests issued by it ;  (d) payments on preferred stock of Borrower;  (e) Borrower may declare and make payments of dividends to the holders of its common stock; and  (f) Borrower may issue Equity in connection with stock option plans for it is employees..  This Section 7.06 shall not apply to any Subsidiaries except Maine Public Service Company.          7.07 CHANGE IN NATURE OF BUSINESS. Engage in any material line of business substantially different from those lines of business conducted by Borrower and its Subsidiaries on the date hereof or any business substantially related or incidental thereto.          7.08 TRANSACTIONS WITH AFFILIATES. Enter into any transaction of any kind with any Affiliate of Borrower, whether or not in the ordinary course of business, other than on fair and reasonable terms substantially as favorable to Borrower or such Subsidiary as would be obtainable by Borrower or such Subsidiary at the time in a comparable arm's length transaction with a Person other than an Affiliate, provided that the foregoing restriction shall not apply to transactions between or among Borrower and any Guarantor or between and among Guarantors.          7.09 [INTENTIONALLY OMITTED.]          7.10 USE OF PROCEEDS. Use the proceeds of any Credit Extension, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the FRB) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose.  ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES          8.01 EVENTS OF DEFAULT. Any of the following shall constitute an Event of Default:  (a) NON-PAYMENT. Borrower or any other Loan Party fails to pay (i) when and as required to be paid herein, any amount of principal of any Loan or any L/C Obligation, or (ii) within three days after the same becomes due, any interest on any Loan or on any L/C Obligation, or any fee due hereunder, or (iii) within five days after the same becomes due, any other amount payable hereunder or under any other Loan Document; or  (b) SPECIFIC COVENANTS. Borrower fails to perform or observe any term, covenant or agreement contained in any of SECTION 6.01, 6.02 (a) THROUGH (g), INCLUSIVE, 6.03, 6.05, 6.10, 6.11 or 6.12 or ARTICLE VII; or  (c) OTHER DEFAULTS. Any Loan Party fails to perform or observe any other covenant or agreement (not specified in subsection (a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for 30 days or                                         37   any default or Event of Default occurs under any other Loan Document or Borrower defaults under any obligation to Katahdin Trust Company (for so long as it is a Lender hereunder) and such default remains uncured beyond any applicable cure period; or  (d) REPRESENTATIONS AND WARRANTIES. Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of Borrower or any other Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith shall be incorrect or misleading when made or deemed made; or  (e) CROSS-DEFAULT. (i) Borrower, its Subsidiary Maine Public Service Company or any Subsidiary with respect to an obligation of such Subsidiary that has been guaranteed by Borrower (but no other Subsidiaries) (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness, preferred stock or Guarantee (other than Indebtedness hereunder and Indebtedness under Swap Contracts) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than the Threshold Amount, or (B) fails to observe or perform any other agreement or condition relating to any such Indebtedness, preferred stock or Guarantee or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness or preferred stock or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness or preferred stock to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness or preferred stock to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which Borrower or any Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which Borrower or any Subsidiary is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by Borrower or such Subsidiary as a result thereof is greater than the Threshold Amount; or  (f) INSOLVENCY PROCEEDINGS, ETC. Any Loan Party or any of its Subsidiaries institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for 60 calendar days, or an order for relief is entered in any such proceeding; or  (g) INABILITY TO PAY DEBTS; ATTACHMENT. (i) Borrower or any Subsidiary becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within 30 days after its issue or levy; or  (h) JUDGMENTS. There is entered against Borrower or any Subsidiary (i) a final judgment or order for the payment of money in an aggregate amount exceeding the Threshold Amount (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage), or (ii) any one or more non-monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of 10 consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or  (i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold Amount, or (ii) Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or  (j) INVALIDITY OF LOAN DOCUMENTS. Any Loan Document or any provision thereof, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party or any other Person contests in any manner the validity or enforceability of any Loan                                         38   Document or any provision thereof; or any Loan Party denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any Loan Document or any provision thereof; or  (k) CHANGE OF CONTROL. There occurs any Change of Control with respect to Borrower without the prior written consent of the Required Lenders, such consent not to be unreasonably withheld, conditioned or delayed; or  (l) MATERIAL ADVERSE EFFECT. There occurs any event or circumstance that has a Material Adverse Effect.          8.02 REMEDIES UPON EVENT OF DEFAULT. If any Event of Default occurs and is continuing, Agent shall, at the request of, or may, with the consent of, the Required Lenders, take any or all of the following actions:  (a) declare the commitment of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions to be terminated, whereupon such commitments and obligation shall be terminated;  (b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by Borrower;  (c) require that Borrower Cash Collateralize the L/C Obligations (in an amount equal to the then Outstanding Amount thereof); and  (d) exercise on behalf of itself and the Lenders all rights and remedies available to it and the Lenders under the Loan Documents;  PROVIDED, HOWEVER, that upon the occurrence of an actual or deemed entry of an order for relief with respect to Borrower under the Bankruptcy Code of the United States, the obligation of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, and the obligation of Borrower to Cash Collateralize the L/C Obligations as aforesaid shall automatically become effective, in each case without further act of Agent or any Lender.          8.03 APPLICATION OF FUNDS. After the exercise of remedies provided for in SECTION 8.02 (or after the Loans have automatically become immediately due and payable and the L/C Obligations have automatically been required to be Cash Collateralized as set forth in the proviso to SECTION 8.02), any amounts received on account of the Obligations shall be applied by Agent in the following order, without duplication:  FIRST, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to Agent (including fees and time charges for attorneys who may be employees of Agent) and amounts payable under ARTICLE III) payable to Agent in its capacity as such;  SECOND, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal interest and L/C Fees) payable to Lenders and the L/C Issuer (including fees, charges and disbursements of counsel to the respective Lenders and the L/C Issuer (including fees and time charges for attorneys who may be employees of any Lender or the L/C Issuer) and amounts payable under ARTICLE III), ratably among them in proportion to the respective amounts described in this clause SECOND payable to them;  THIRD, to payment of that portion of the Obligations constituting accrued and unpaid L/C Fees and interest on the Loans, L/C Borrowings and other Obligations, ratably among Lenders and the L/C Issuer in proportion to the respective amounts described in this clause THIRD payable to them;  FOURTH, to payment of that portion of the Obligations constituting unpaid principal of the Loans and L/C Borrowings, ratably among Lenders and the L/C Issuer in proportion to the respective amounts described in this clause FOURTH held by them;  FIFTH, to Agent for the account of the L/C Issuer, to Cash Collateralize that portion of L/C Obligations comprised of the aggregate undrawn amount of Letters of Credit; and                                         39   LAST, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to Borrower or as otherwise required by Law.  Subject to SECTION 2.03(c), amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause FIFTH above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above.  ARTICLE IX. ADMINISTRATIVE AGENT          9.01 APPOINTMENT AND AUTHORIZATION OF ADMINISTRATIVE AGENT. Each of the Lenders and the L/C issuer hereby irrevocably appoints Bank of America to act on its behalf as Administrative Agent hereunder and under the other Loan Documents and authorizes Agent to take such actions on its behalf and to exercise such powers as are delegated to Agent by the terms hereof and thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of Agent, the Lenders and the L/C Issuer, and neither the Borrower nor any other Loan Party shall have rights as a third party beneficiary of any of such provisions. The Agent shall act in a commercially reasonable manner for the benefit of the Lenders and the L/C Issuer but shall be liable only for its gross negligence and willful misconduct.          9.02 RIGHTS AS A LENDER. The Person serving as Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not Agent and the term "Lender" or "Lenders" shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not Agent hereunder and without any duty to account therefor to Lenders.          9.03 EXCULPATORY PROVISIONS. Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, Agent:          (a) shall not be subject to any implied duties, regardless of whether a Default has occurred and is continuing;          (b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), PROVIDED that Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose Agent to liability or that is contrary to any Loan Document or applicable Law; and          (c)    shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as Agent or any of its Affiliates in any capacity.          (d)    Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as Agent shall believe in good faith shall be necessary, under the circumstances as provided in SECTIONS 8.02 and 10.01) or (ii) in the absence of its own gross negligence or willful misconduct. Agent shall be deemed not to have knowledge of any Default unless and until written notice describing such Default is given to Agent by Borrower, a Lender or the L/C Issuer. Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in ARTICLE IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to Agent.                                         40           9.04 RELIANCE BY ADMINISTRATIVE AGENT. Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the L/C Issuer, Agent may presume that such condition is satisfactory to such Lender or the L/C Issuer unless Agent shall have received notice to the contrary from such Lender or the L/C Issuer prior to the making of such Loan or the issuance of such Letter of Credit. Agent may consult with legal counsel (who may be counsel for Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.          9.05 DELEGATION OF DUTIES. Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by Agent. Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Agent.          9.06 RESIGNATION OF AGENT. Agent may at any time give notice of its resignation to Lenders, the L/C Issuer and Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation, then the retiring Agent may on behalf of Lenders and the L/C Issuer, appoint a successor Agent meeting the qualifications set forth above; PROVIDED that if Agent shall notify the Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (1) the retiring Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by Agent on behalf of the Lenders or the L/C Issuer under any of the Loan Documents, the retiring Agent shall continue to hold such collateral security until such time as a successor Agent is appointed) and (2) all payments, communications and determinations provided to be made by, to or through Agent shall instead be made by or to each Lender and the L/C Issuer directly, until such time as the Required Lenders appoint a successor Agent as provided for above in this Section. Upon the acceptance of a successor's appointment as Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Agent, and the retiring Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section). The fees payable by Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between Borrower and such successor. After the retiring Agent's resignation hereunder and under the other Loan Documents, the provisions of this Article and SECTION 10.04 shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.  Any resignation by Bank of America as Agent pursuant to this Section shall also constitute its resignation as L/C Issuer. Upon the acceptance of a successor's appointment as Agent hereunder, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer, (b) the retiring L/C Issuer shall be discharged from all of their respective duties and obligations hereunder or under the other Loan Documents, and (c) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the retiring L/C Issuer to effectively assume the obligations of the retiring L/C Issuer with respect to such Letters of Credit.          9.07 NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender and the L/C Issuer acknowledges that it has, independently and without reliance upon Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and the L/C Issuer also acknowledges that it will, independently and without reliance upon Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.                                         41           9.08 NO OTHER DUTIES, ETC. Anything herein to the contrary notwithstanding, no Lender holding a title listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as Agent, a Lender or the L/C Issuer hereunder.          9.09 ADMINISTRATIVE AGENT MAY FILE PROOFS OF CLAIM. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to any Loan Party, Agent (irrespective of whether the principal of any Loan or L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether Agent shall have made any demand on Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise          (a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, L/C Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of Lenders, the L/C Issuer and Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of Lenders, the L/C Issuer and Agent and their respective agents and counsel and all other amounts due Lenders, the L/C Issuer and Agent under SECTIONS 2.03(i) and (j), 2.09 and 10.04) allowed in such judicial proceeding; and          (b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;  and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and the L/C Issuer to make such payments to Agent and, in the event that Agent shall consent to the making of such payments directly to Lenders and the L/C Issuer, to pay to Agent any amount due for the reasonable compensation, expenses, disbursements and advances of Agent and its agents and counsel, and any other amounts due Agent under SECTIONS 2.09 and 10.04. Nothing contained herein shall be deemed to authorize Agent to authorize or consent to or accept or adopt on behalf of any Lender or the L/C Issuer any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to authorize Agent to vote in respect of the claim of any Lender in any such proceeding.          9.10 COLLATERAL MATTERS. (a) Each Lender and the L/C Issuer hereby irrevocably authorizes and directs Agent to enter into the Collateral Documents for the benefit of such Lender and the L/C Issuer. Each Lender and the L/C Issuer hereby agrees, and each holder of any Note by the acceptance thereof will be deemed to agree, that, except as otherwise set forth in Section 10.01, any action taken by the Required Lenders, in accordance with the provisions of this Agreement or the Collateral Documents, and the exercise by the Required Lenders of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all of Lenders and the L/C Issuer. Agent is hereby authorized (but not obligated) on behalf of all of Lenders and the L/C Issuer, without the necessity of any notice to or further consent from any Lender or the L/C Issuer from time to time prior to, an Event of Default, to take any action with respect to any Collateral or Collateral Documents which may be necessary to perfect and maintain perfected the Liens upon the Collateral granted pursuant to the Collateral Documents.          (b) Each Lender and the L/C issuer hereby irrevocably authorize Agent, at its option and in its discretion,                 (i) to release any Lien on any property granted to or held by Agent under any Loan Document (A) upon termination of the Aggregate Commitments and payment in full of all Obligations (other than contingent indemnification obligations) and the expiration or termination of all Letters of Credit, (B) that is sold or to be sold as part of or in connection with any sale permitted hereunder or under any other Loan Document, (C) subject to SECTION 10.01, if approved, authorized or ratified in writing by the Required Lenders, or (D) in connection with any foreclosure sale or other disposition of Collateral after the occurrence of an Event of Default; and                 (ii) to subordinate any Lien on any property granted to or held by Agent under any Loan Document to the holder of any Lien on such property that is permitted by this Agreement or any other Loan Document.  Upon request by Agent at any time, each Lender and the L/C Issuer will confirm in writing Agent's authority to release or subordinate its interest in particular types or items of Collateral pursuant to this SECTION 9.10.                                         42           (c) Subject to (b) above, Agent shall (and is hereby irrevocably authorized by each Lender and the L/C Issuer), to execute such documents as may be necessary to evidence the release or subordination of the Liens granted to Agent for the benefit of Agent and Lenders and the L/C Issuer herein or pursuant hereto upon the applicable Collateral; provided that (i) Agent shall not be required to execute any such document on terms which, in Agent's opinion, would expose Agent to or create any liability or entail any consequence other than the release or subordination of such Liens without recourse or warranty and (ii) such release or subordination shall not in any manner discharge, affect or impair the Obligations or any Liens upon (or obligations of Borrower or any other Loan Party in respect of) all interests retained by Borrower or any other Loan Party, including the proceeds of the sale, all of which shall continue to constitute part of the Collateral. In the event of any sale or transfer of Collateral, or any foreclosure with respect to any of the Collateral, Agent shall be authorized to deduct all expenses reasonably incurred by Agent from the proceeds of any such sale, transfer or foreclosure.          (d) Agent shall have no obligation whatsoever to any Lender, the L/C Issuer or any other Person to assure that the Collateral exists or is owned by Borrower or any other Loan Party or is cared for, protected or insured or that the Liens granted to Agent herein or in any of the Collateral Documents or pursuant hereto or thereto have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise or to continue exercising at all or in any manner or under any duty of care, disclosure or fidelity any of the rights, authorities and powers granted or available to Agent in this SECTION 9.10 or in any of the Collateral Documents, it being understood and agreed that in respect of the Collateral, or any act, omission or event related thereto, Agent may act in any manner it may deem appropriate, in its sole discretion, given Agent's own interest in the Collateral as one of the Lenders and that Agent shall have no duty or liability whatsoever to Lenders or the L/C Issuer.          (e) Each Lender and the L/C Issuer hereby appoints each other Lender as agent for the purpose of perfecting Lenders' and the L/C Issuer's security interest in assets which, in accordance with Article 9 of the UCC can be perfected only by possession. Should any Lender or the L/C Issuer (other than Agent) obtain possession of any such Collateral, such Lender or the L/C Issuer shall notify Agent thereof, and, promptly upon Agent's request therefor shall deliver such Collateral to Agent or in accordance with Agent's instructions.  ARTICLE X. MISCELLANEOUS          10.01 AMENDMENTS, ETC. No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by Borrower or any other Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders and Borrower or the applicable Loan Party, as the case may be, and acknowledged by Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; PROVIDED, HOWEVER, that no such amendment, waiver or consent shall:  (a) waive any condition set forth in SECTION 4.01(a) without the written consent of each Lender; PROVIDED, HOWEVER, in the sole discretion of Agent, only a waiver by Agent shall be required with respect to immaterial matters or items specified in SECTION 4.01(a) (iii) or (iv) with respect to which Borrower has given assurances satisfactory to Agent that such items shall be delivered promptly following the Closing Date;  (b) extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to SECTION 8.02) without the written consent of such Lender;  (c) postpone any date fixed by this Agreement or any other Loan Document for any payment (excluding mandatory prepayments) of principal, interest, fees or other amounts due to Lenders (or any of them) hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby;  (d) reduce the principal of, or the rate of interest specified herein on, any Loan or L/C Borrowing, or (subject to clause (iv) of the second proviso to this SECTION 10.01) any fees or other amounts payable hereunder or under any other Loan Document, without the written consent of each Lender directly affected thereby; PROVIDED, HOWEVER, that only the consent of the Required Lenders shall be necessary (i) to amend the definition of "Default Rate" or to waive any obligation of Borrower to pay interest or L/C Fees at the Default Rate or (ii) to amend any financial covenant hereunder (or any defined term used therein) even if the effect of such amendment would be to reduce the rate of interest on any Loan or L/C Borrowing or to reduce any fee payable hereunder;  (e) change SECTION 2.13 or SECTION 8.03 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender;                                         43   (f) amend any financial covenant in Section 6.12 without the written consent of each Lender; or  (g) change any provision of this Section or the definition of "Required Lenders" or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender;  and, PROVIDED FURTHER, that (i) no amendment, waiver or consent shall, unless in writing and signed by the L/C Issuer in addition to the Lenders required above, affect the rights or duties of the L/C Issuer under this Agreement or any Issuer Document relating to any Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing and signed by Agent in addition to the Lenders required above, affect the rights or duties of Agent under this Agreement or any other Loan Document; and (iii) the Agent Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except that the Commitment of such Lender may not be increased or extended without the consent of such Lender.          10.02 NOTICES; EFFECTIVENESS; ELECTRONIC COMMUNICATIONS. (a) NOTICES GENERALLY. Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:          (i) if to Borrower, Agent or the L/C Issuer, to the address, telecopier number, electronic mail address or telephone number specified for such Person on SCHEDULE 10.02 ; and          (ii) if to any other Lender, to the address, telecopier number, electronic mail address or telephone number specified in its Administrative Questionnaire.  Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Notices delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as provided in such subsection (b).  (b) ELECTRONIC COMMUNICATIONS. Notices and other communications to Lenders and the L/C Issuer hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by Agent, provided that the foregoing shall not apply to notices to any Lender or the L/C Issuer pursuant to Article II if such Lender or the L/C Issuer, as applicable has notified the Agent that it is incapable of receiving notices under such Article by electronic communication. Agent or Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications. Unless Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender's receipt of an acknowledgement from the intended recipient (such as by the "return receipt requested" function, as available, return e-mail or other written acknowledgement), PROVIDED that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.  (c)     THE PLATFORM. THE PLATFORM IS PROVIDED "AS IS" AND "AS AVAILABLE." THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall Agent or any of its Related Parties (collectively, the "Agent Parties") have any liability to Borrower, any Lender, the L/C Issuer or any other Person for losses, claims, damages,                                         44   liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of Borrower's or Agent's transmission of Borrower Materials through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party; provided, however, that in no event shall any Agent Party have any liability to Borrower, any Lender, the L/C Issuer or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages).  (d) CHANGE OF ADDRESS, ETC. Each of the Borrower, Agent and the L/C Issuer may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the other parties hereto. Each other Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to Borrower, Agent and the L/C Issuer. IN ADDITION, EACH LENDER AGREES TO NOTIFY AGENT FROM TIME TO TIME TO ENSURE THAT AGENT HAS ON RECORD (i) AN EFFECTIVE ADDRESS, CONTACT NAME, TELEPHONE NUMBER, TELECOPIER NUMBER AND ELECTRONIC MAIL ADDRESS TO WHICH NOTICES AND OTHER COMMUNICATIONS MAY BE SENT AND (ii) ACCURATE WIRE INSTRUCTIONS FOR SUCH LENDER.  (e) RELIANCE BY AGENT. L/C ISSUER AND LENDERS. Agent, the L/C Issuer and Lenders shall be entitled to rely and act upon any notices (including telephonic Committed Loan Notices) purportedly given by or on behalf of Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. Borrower shall indemnify Agent, the L/C Issuer, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of Borrower. All telephonic notices to and other telephonic communications with Agent may be recorded by Agent, and each of the parties hereto hereby consents to such recording.          10.03 NO WAIVER; CUMULATIVE REMEDIES. No failure by any Lender, the L/C Issuer or Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.          10.04 EXPENSES; INDEMNITY; DAMAGE WAIVER. (a) COSTS AND EXPENSES. Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by Agent and its Affiliates (including the reasonable fees, charges and disbursements of counsel for Agent), in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by the L/C Issuer in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all out-of-pocket expenses incurred by Agent, any Lender or the L/C Issuer (including the fees, charges and disbursements of any counsel for Agent, any Lender or the L/C Issuer), and shall pay all fees and time charges for attorneys who may be employees of Agent, any Lender or the L/C Issuer, in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.  (b) INDEMNIFICATION BY THE BORROWER. Borrower shall indemnify Agent (and any sub-agent thereof), each Lender and the L/C Issuer, and each Related Party of any of the foregoing Persons (each such Person being called an "INDEMNITEE") against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee), and shall indemnify and hold harmless each Indemnitee from all fees and time charges and disbursements for attorneys who may be employees of any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee by any third party or by Borrower or any other Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder, or the consummation of the transactions contemplated hereby or thereby, or, in the case of Agent (and any sub-agent thereof) and its Related Parties only, the administration of this Agreement and the other Loan Documents, (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the L/C Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or                                         45   operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower or any other Loan Party, and regardless of whether any Indemnitee is a party thereto, in all cases, whether or not caused by or arising, in whole or in part, out of the comparative, contributory or sole negligence of the Indemnitee; PROVIDED that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by Borrower or any other Loan Party against an Indemnitee for breach in bad faith of such Indemnitee's obligations hereunder or under any other Loan Document, if Borrower or such Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.  (c) REIMBURSEMENT BY LENDERS. To the extent that Borrower for any reason fails to indefeasibly pay any amount required under subsection (a) or (b) of this Section to be paid by it to Agent (or any sub-agent thereof), the L/C Issuer or any Related Party of any of the foregoing, each Lender severally agrees to pay to Agent (or any such sub-agent), the L/C Issuer or such Related Party, as the case may be, such Lender's Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, PROVIDED that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against Agent (or any such sub-agent) or the L/C Issuer in its capacity as such, or against any Related Party of any of the foregoing acting for Agent (or any such sub-agent) or L/C Issuer in connection with such capacity. The obligations of the Lenders under this subsection (c) are subject to the provisions of SECTION 2.12(d).  (d) WAIVER OF CONSEQUENTIAL DAMAGES, ETC. To the fullest extent permitted by applicable law, Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof. No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.  (e) PAYMENTS. All amounts due under this Section shall be payable not later than ten Business Days after demand therefor.  (f) SURVIVAL. The agreements in this Section shall survive the resignation of Agent and the L/C Issuer, the replacement of any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations.          10.05 PAYMENTS SET ASIDE. To the extent that any payment by or on behalf of Borrower is made to Agent, the L/C Issuer or any Lender, or Agent, the L/C Issuer or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by Agent, the L/C Issuer or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender and the L/C Issuer severally agrees to pay to Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Lenders and the L/C Issuer under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.          10.06 SUCCESSORS AND ASSIGNS. (a) SUCCESSORS AND ASSIGNS GENERALLY. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that neither Borrower nor any other Loan Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of Agent, the L/C Issuer and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to                                         46   confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of Agent, the L/C Issuer and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.  (b) ASSIGNMENTS BY LENDERS. Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans (including for purposes of this subsection (b), participations in L/C Obligations) at the time owing to it); PROVIDED that (i) except in the case of an assignment of the entire remaining amount of the assigning Lender's Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender or an Affiliate of a Lender, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to Agent or, if "Trade Date" is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $1,000,000 unless each of Agent and, so long as no Event of Default has occurred and is continuing, Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed); (ii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations under this Agreement with respect to the Loans or the Commitment assigned, (iii) any assignment of a Commitment must be approved by Agent and the L/C Issuer unless the Person that is the proposed assignee is itself a Lender (whether or not the proposed assignee would otherwise qualify as an Eligible Assignee); and (iv) the parties to each assignment shall execute and deliver to Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500 and the Eligible Assignee, if it shall not be a Lender, shall deliver to Agent an Administrative Questionnaire. Subject to acceptance and recording thereof by Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of SECTIONS 3.01, 3.04, 3.05, and 10.04 with respect to facts and circumstances occurring prior to the effective date of such assignment. Upon request, Borrower (at its expense) shall execute and deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.  (c) REGISTER. Agent, acting solely for this purpose as an agent of Borrower, shall maintain at Administrative Agent's Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the "REGISTER"). The entries in the Register shall be conclusive, and Borrower, Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by each of Borrower and the L/C Issuer, at any reasonable time and from time to time upon reasonable prior notice. In addition, at any time that a request for a consent for a material or substantive change to the Loan Documents is pending, any Lender may request and receive from Agent a copy of the Register.  (d) PARTICIPATIONS. Any Lender may at any time, without the consent of, or notice to, Borrower or Agent, sell participations to any Person (other than a natural person or Borrower or any of Borrower's Affiliates or Subsidiaries) (each, a "PARTICIPANT") in all or a portion of such Lender's rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans (including such Lender's participations in L/C Obligations) owing to it); PROVIDED that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) Borrower, Agent, the L/C Issuer and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; PROVIDED that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to SECTION 10.01 that affects such Participant. Subject to subsection (e) of this Section, Borrower agrees that each Participant shall be entitled to the benefits of SECTIONS 3.01, 3.04 and 3.05 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this                                         47   Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of SECTION 10.08 as though it were a Lender, PROVIDED such Participant agrees to be subject to SECTION 2.13 as though it were a Lender.  (e) LIMITATIONS UPON PARTICIPANT RIGHTS. A Participant shall not be entitled to receive any greater payment under SECTION 3.01 or 3.04 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with Borrower's prior written consent.  (f) CERTAIN PLEDGES. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; PROVIDED that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.  (g) ELECTRONIC EXECUTION OF ASSIGNMENTS. The words "execution," "signed," "signature," and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.  (h) DEEMED CONSENT OF BORROWER. If the consent of Borrower to an assignment to an Eligible Assignee is required hereunder (including a consent to an assignment which does not meet the minimum assignment threshold specified in clause (i) of the proviso to the first sentence of SECTION 10.06(b)), Borrower shall be deemed to have given its consent five Business Days after the date notice thereof has been delivered to Borrower by the assigning Lender (through Agent) unless such consent is expressly refused by Borrower prior to such fifth Business Day.  (i) RESIGNATION AS L/C ISSUER. Notwithstanding anything to the contrary contained herein, if at any time Bank of America assigns all of its Commitment and Loans pursuant to subsection (b) above, Bank of America may, upon 30 days' notice to Borrower and the Lenders, resign as L/C Issuer. In the event of any such resignation as L/C Issuer, Borrower shall be entitled to appoint from among Lenders a successor L/C Issuer hereunder; PROVIDED, HOWEVER, that no failure by Borrower to appoint any such successor shall affect the resignation of Bank of America as L/C Issuer. If Bank of America resigns as L/C Issuer, it shall retain all the rights, powers, privileges and duties of the L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with respect thereto (including the right to require the Lenders to make Base Rate Committed Loans or fund risk participations in Unreimbursed Amounts pursuant to SECTION 2.03(c)). Upon the appointment of a successor L/C Issuer, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer, and (b) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to Bank of America to effectively assume the obligations of Bank of America with respect to such Letters of Credit.          10.07 TREATMENT OF CERTAIN INFORMATION; CONFIDENTIALITY. Each of Agent, Lenders and the L/C Issuer agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates' respective partners, directors, officers, employees, agents, advisors and representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority, purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to Borrower and its obligations, (g) with the consent of Borrower or (h) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to Agent, any Lender, the L/C Issuer or any of their respective Affiliates on a nonconfidential basis from a source other than Borrower. For purposes of this Section, "INFORMATION" means all information received from Borrower or any Subsidiary relating to Borrower or any Subsidiary or any of their respective businesses, other than any such information that is available to Agent, any Lender or the L/C Issuer on a nonconfidential basis prior to disclosure by Borrower or any Subsidiary, PROVIDED that, in the case of information received from Borrower or any Subsidiary after the date hereof, such information is                                         48   clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. Each of Agent, the Lenders and the L/C Issuer acknowledges that (a) the Information may include material non-public information concerning the Borrower or a Subsidiary, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable Law, including Federal and state securities Laws.          10.08 RIGHT OF SETOFF. If an Event of Default shall have occurred and be continuing, each Lender, the L/C Issuer and each of their respective Affiliates is hereby authorized at any time and from time to time, after obtaining the prior written consent of Agent, to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender, the L/C Issuer or any such Affiliate to or for the credit or the account of Borrower or any other Loan Party against any and all of the obligations of Borrower or such Loan Party now or hereafter existing under this Agreement or any other Loan Document to such Lender or the L/C Issuer or any such Affiliate, irrespective of whether or not such Lender or the L/C Issuer shall have made any demand under this Agreement or any other Loan Document and although such obligations of Borrower or such Loan Party may be contingent or unmatured or are owed to a branch or office of such Lender or the L/C Issuer different from the branch or office holding such deposit or obligated on such indebtedness. The rights of each Lender, the L/C Issuer and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, the L/C Issuer or their respective Affiliates may have. Each Lender and the L/C Issuer agrees to notify Borrower and Agent promptly after any such setoff and application, PROVIDED that the failure to give such notice shall not affect the validity of such setoff and application.          10.09 INTEREST RATE LIMITATION. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the "MAXIMUM RATE"). If Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to Borrower. In determining whether the interest contracted for, charged, or received by Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.          10.10 COUNTERPARTS ; INTEGRATION; EFFECTIVENESS. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in SECTION 4.01, this Agreement shall become effective when it shall have been executed by Agent and when Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.          10.11 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by Agent and each Lender, regardless of any investigation made by Agent or any Lender or on their behalf and notwithstanding that Agent or any Lender may have had notice or knowledge of any Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.          10.12 SEVERABILITY. If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.                                         49           10.13 GOVERNING LAW; JURISDICTION; ETC. (a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF MAINE.  (b)     SUBMISSION TO JURISDICTION. THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF MAINE SITTING IN CUMBERLAND COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE STATE OF MAINE, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH MAINE STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT AGENT, ANY LENDER OR THE L/C ISSUER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.                 (c)    WAIVER OF VENUE. THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.                 (d)    SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.          10.14 WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.          10.15 USA PATRIOT ACT NOTICE. Each Lender that is subject to the Act (as hereinafter defined) and Agent (for itself and not on behalf of any Lender) hereby notifies Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the "Act"), it is required to obtain, verify and record information that identifies Borrower, which information includes the name and address of Borrower and other information that will allow such Lender or Agent, as applicable, to identify Borrower in accordance with the Act.          10.16 TIME OF THE ESSENCE. Time is of the essence of the Loan Documents.          10.17 MAINE NOTICE. By signing below, the Borrower agrees and acknowledges that, under Maine law, no promise, contract, or agreement to lend money, extend credit, forbear from collection of debt or make any other accommodation for the repayment of a debt for more than Two Hundred Fifty Thousand Dollars ($250,000) may be enforced against the Bank unless                                         50   the promise, contract, or agreement (or some memorandum or note thereof) is in writing and signed by the Bank. The Borrower executed this Agreement as of the date stated at the top of the first page, intending to create an instrument executed under seal.                    [THE SIGNATURE PAGES FOLLOW ON THE NEXT PAGES.]                                         51   IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written intending to create an instrument executed under seal.                                 MAINE & MARITIMES CORPORATION                                By:                                  -----------------------------------------------                               Name: J. Nicholas Bayne                                Title: President and Chief Executive Officer                                And By:                                      -------------------------------------------                               Name:                                    ---------------------------------------------                               Title:                                     --------------------------------------------                                         52                                 BANK OF AMERICA, N.A., as                               Administrative Agent                                By:                                  -----------------------------------------------                               Name: Stephen P. deCastro                                Title: Vice President                                 BANK OF AMERICA, N.A., as a Lender and L/C Issuer                                By:                                  -----------------------------------------------                               Name: Stephen P. deCastro                                Title: Vice President                                 KATAHDIN TRUST COMPANY, as a Lender                                By:                                  -----------------------------------------------                               Name:                                    ---------------------------------------------                               Title:                                     --------------------------------------------                                         53                                                                      SCHEDULE 2.01                                     COMMITMENTS                            AND APPLICABLE PERCENTAGES                Lender                     Commitment       Applicable                                                         Percentage - ---------------------------------------------------------------------    Bank of America, N.A.                $    2,500,000     62.5%  Katahdin Trust Company               $    1,500,000     37.5%  Total                                $    4,000,000     100.000000000%                                                                       SCHEDULE 5.06                                     LITIGATION                                        NONE.                                                                       SCHEDULE 5.09                                ENVIRONMENTAL MATTERS                                        NONE.                                                                       SCHEDULE 5.13                                    SUBSIDIARIES                           AND OTHER EQUITY INVESTMENTS                        [AND EQUITY INTERESTS IN BORROWER]  Part (a). SUBSIDIARIES. Maine Public Service Company ("MPS") Maine and New Brunswick Electrical Power Company Ltd. Energy Atlantic, LLC The Maricor Group The Maricor Group New England, Inc. The Maricor Group, Canada Ltd. Maricor Properties Ltd. Mecel Properties Ltd. Maricor Ashford Ltd. Maricor Technologies, Inc.   Part (b). OTHER EQUITY INVESTMENTS.  MPS owns 5% of the common stock of Maine Yankee Atomic Power Company ("Maine Yankee"), a jointly-owned nuclear electric power company, and 7.49% of the common stock of the Maine Electric Power Company ("MEPCO,") a jointly-owned electric transmission company.                                                                       SCHEDULE 7.01                                   EXISTING LIENS                                        NONE.                                                                       SCHEDULE 7.03                                EXISTING INDEBTEDNESS  Indebtedness to Katahdin Trust Company pursuant to a Commercial Term Note in the amount of US$2,000,000 dated August 12, 2004. It is anticipated that this indebtedness will be refinanced in October, 2005 with a CDN$2,300,000 revolving term facility from Royal Bank of Canada.  Guarantee and Postponement of Claim provided to Royal Bank of Canada dated October 10, 2005, in the amount of CDN$2,000,000, pursuant to a revolving term facility in the amount of CDN$2,300,000.  Indebtedness to Banknorth, N.A. pursuant to a Commercial Note given by The Maricor Group to Banknorth, N.A. in the amount of $2,200,000 and a Commercial Line of Credit Note given by The Maricor Group to Banknorth,N.A. for up to $1,000,000 both dated September 21, 2004. It is anticipated that this indebtedness will be refinanced in October, 2005 with a $2,200,000 term loan and a $1,000,000 revolving line of credit from Katahdin Trust Company.  Guaranty of Payment and Performance provided to Banknorth, N.A. dated September 21, 2004, pursuant to a Commercial Note given by The Maricor Group to Banknorth, N.A. in the amount of $2,200,000 and a Commercial Line of Credit Note given by The Maricor Group to Banknorth,N.A. for up to $1,000,000.  Guarantee provided to Katahdin Trust Company pursuant to their $2,200,000 term loan and $1,000,000 revolving line of credit for The Maricor Group, scheduled to close in October, 2005, to refinance the indebtedness to Banknorth, N.A.  Indebtedness to Katahdin Trust Company in the amount of $750,000.00 plus accrued interest of $3,308.23 pursuant to a Short Term Line of Credit Agreement dated July 28, 2005. This Indebtedness will be repaid from the proceeds of this Credit Agreement.  Such indebtedness as is disclosed in the Borrower's 10-K and 10-Q filings with the Securities and Exchange Commission regarding certain contingent obligations of subsidiaries pursuant to various stock purchase agreements.                                          1                                                                     SCHEDULE 10.02                           ADMINISTRATIVE AGENT'S OFFICE,                           CERTAIN ADDRESSES FOR NOTICES  BORROWER:  Maine & Maritimes Corporation 209 State Street Presque Isle, ME 04769 Attention: Chief Financial Officer Telephone: 207-760-2445 Telecopier: 207-760-2421 Electronic Mail: ktornquist@maineandmaritimes.com Website Address: www.maineandmaritimes.com  ADMINISTRATIVE AGENT:  ADMINISTRATIVE AGENT'S OFFICE (FOR PAYMENTS AND REQUESTS FOR CREDIT EXTENSIONS): Bank of America, N.A. Kathy Mumpower Credit Services Representative Bank of America, N.A. Mail Code: NC1-001-15-04 One Independence Center 101 N. Tryon St. Charlotte, NC 28255-0001 Phone: 704-386-0482 Fax: 704-409-0700 Email: kathy.mumpower@bankofamerica.com  Account No.: 136-621-225-0600 Attn: Credit Services Ref: Maine & Maritimes ABA#  026-009-593  OTHER NOTICES AS ADMINISTRATIVE AGENT: Bank of America, N.A. Agency Management Tamisha Eason Agency Management Officer Bank of America, N.A. Mail Code: MA5-100-11-02 100 Federal Street Boston, MA  02110 Telephone: 617-434-9205 Fax: 617-790-1284 Email: tamisha.u.eason@bankofamerica.com                                          2   L/C ISSUER: STANDBY LETTERS OF CREDIT:  Bank of America, N.A. Trade Operations One Fleet Way Mail Code: PA6-580-02-30 Scranton, PA 18507 Attention: Alfonso (Al) Malave            Telephone: 570.330.4212            Telecopier: 570.330.4186            Electronic Mail: alfonso.malave@bankofamerica.com  COMMERCIAL LETTERS OF CREDIT  Bank of America, N.A. Trade Operations-Scranton 1 Fleet Way Mail Code: PA6-580-02-30 Scranton, PA  18507 Attention:     Robert D. Morgan                Telephone: 570.330.4570                Telecopier: 800.755.8740                Electronic Mail:                robert.d.morgan@bankofamerica.com  BANKERS ACCEPTANCE  Bank of America, N.A. Trade Operations-Los Angeles 333 S. Beaudry Avenue, 19th Floor Mail Code: CA9-703-19-15 Los Angeles, CA 90017-1466 Attention:     Frantz Bellevue                Vice President                Telephone: 213.345.6616                Telecopier: 213.345.9665                Electronic Mail:                frantz.bellevue@bankofamerica.com                                          3                                                                          EXHIBIT A                            FORM OF COMMITTED LOAN NOTICE                                                          Date: ___________, _____  To:     Bank of America, N.A., as Agent  Ladies and Gentlemen:          Reference is made to that certain Credit Agreement, dated as of October __, 2005 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "AGREEMENT;" the terms defined therein being used herein as therein defined), among Maine & Maritimes Corporation, a Maine corporation (the "BORROWER"), the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent and L/C Issuer.          The undersigned hereby requests (select one):          A Borrowing of Committed Loans        A conversion or continuation of         Committed Loans          1.   On___________________________________________(a Business Day).          2.   In the amount of $___________________________.          3.   Comprised of_________________________________.                          [Type of Committed Loan requested]          4.   For Eurodollar Rate Loans: with an Interest Period of______months.          The Committed Borrowing, if any, requested herein complies with the provisos to the first sentence of SECTION 2.01 of the Agreement.                                 MAINE & MARITIMES CORPORATION                                 By:                                  -----------------------------------------------                               Name:                                    ---------------------------------------------                               Title:                                     --------------------------------------------                            Form of Committed Loan Notice                                         A-1                                                                          EXHIBIT B                               [INTENTIONALLY OMITTED]                               [Intentionally Omitted]                                         B-1                                                                          EXHIBIT C                                    FORM OF NOTE  $________________________                                 ______________________          FOR VALUE RECEIVED, the undersigned ("BORROWER"), hereby promises to pay to _____________________ or registered assigns ("LENDER"), in accordance with the provisions of the Agreement (as hereinafter defined), the principal amount of each Loan from time to time made by the Lender to Borrower under that certain Credit Agreement, dated as of October 21, 2005 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "AGREEMENT;" the terms defined therein being used herein as therein defined), among Borrower, the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent, and L/C Issuer.          Borrower promises to pay interest on the unpaid principal amount of each Loan from the date of such Loan until such principal amount is paid in full, at such interest rates and at such times as provided in the Agreement. All payments of principal and interest shall be made to Agent for the account of the Lender in Dollars in immediately available funds at the Administrative Agent's Office. If any amount is not paid in full when due hereunder, such unpaid amount shall bear interest, to be paid upon demand, from the due date thereof until the date of actual payment (and before as well as after judgment) computed at the per annum rate set forth in the Agreement.          This Note is one of the Notes referred to in the Agreement, is entitled to the benefits thereof and may be prepaid in whole or in part subject to the terms and conditions provided therein. This Note is secured by the Collateral. Upon the occurrence and continuation of one or more of the Events of Default specified in the Agreement, all amounts then remaining unpaid on this Note shall become, or may be declared to be, immediately due and payable all as provided in the Agreement. Loans made by the Lender shall be evidenced by one or more loan accounts or records maintained by the Lender in the ordinary course of business. The Lender may also attach schedules to this Note and endorse thereon the date, amount and maturity of its Loans and payments with respect thereto.          Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note.          THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MAINE.  ATTESTING WITNESS:            MAINE & MARITIMES CORPORATION                                By: - --------------------              ----------------------------------------------                               Name:                                     --------------------------------------------                               Title:                                      -------------------------------------------                                    Form of Note                                         C-1                         LOANS AND PAYMENTS WITH RESPECT THERETO                                                                      AMOUNT OF      OUTSTANDING                                                                  PRINCIPAL OR     PRINCIPAL                TYPE OF LOAN   AMOUNT OF LOAN  END OF INTEREST   INTEREST PAID    BALANCE THIS     NOTATION MADE     DATE           MADE            MADE           PERIOD          THIS DATE          DATE              BY - ------------  --------------  --------------  ---------------  ---------------  --------------  ----------------          ___________  ______________  ______________  _______________  _______________  ______________  _______________  ___________  ______________  ______________  _______________  _______________  ______________  _______________  ___________  ______________  ______________  _______________  _______________  ______________  _______________  ___________  ______________  ______________  _______________  _______________  ______________  _______________  ___________  ______________  ______________  _______________  _______________  ______________  _______________  ___________  ______________  ______________  _______________  _______________  ______________  _______________  ___________  ______________  ______________  _______________  _______________  ______________  _______________  ___________  ______________  ______________  _______________  _______________  ______________  _______________  ___________  ______________  ______________  _______________  _______________  ______________  _______________  ___________  ______________  ______________  _______________  _______________  ______________  _______________  ___________  ______________  ______________  _______________  _______________  ______________  _______________  ___________  ______________  ______________  _______________  _______________  ______________  _______________  ___________  ______________  ______________  _______________  _______________  ______________  _______________  ___________  ______________  ______________  _______________  _______________  ______________  _______________  ___________  ______________  ______________  _______________  _______________  ______________  _______________  ___________  ______________  ______________  _______________  _______________  ______________  _______________  ___________  ______________  ______________  _______________  _______________  ______________  _______________  ___________  ______________  ______________  _______________  _______________  ______________  _______________                                     Form of Note                                         C-2                                                                          EXHIBIT D                           FORM OF COMPLIANCE CERTIFICATE                                               Financial Statement Date:_________,  To:     Bank of America, N.A., as Administrative Agent  Ladies and Gentlemen:          Reference is made to that certain Credit Agreement, dated as of October __, 2005 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "AGREEMENT;" the terms defined therein being used herein as therein defined), among Maine & Maritimes Corporation ("BORROWER"), the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent and L/C Issuer.          The undersigned Responsible Officer hereby certifies as of the date hereof that he/she is the____________________________________________of Borrower, and that, as such, he/she is authorized to execute and deliver this Certificate to Agent on the behalf of Borrower, and that:       (USE THE FOLLOWING PARAGRAPH FOR FISCAL YEAR-END FINANCIAL STATEMENTS)          1.  Attached hereto as Schedule 1 are the year-end audited financial             statements and other reporting and certifications as required by             Section 6.01(a) of the Agreement for the fiscal year ended as of the             above date.       (USE THE FOLLOWING PARAGRAPH FOR QUARTER YEAR-END FINANCIAL STATEMENTS)          1.  Attached hereto as Schedule 1 are the unaudited financial statements             and other reporting and certifications as required by Section             6.01(b) of the Agreement for the fiscal quarter ended as of the             above date.          2.  The undersigned has reviewed and is familiar with the terms of the             Agreement and has made, or has caused to be made under his/her             supervision, a detailed review of the transactions and condition             (financial or otherwise) of Borrower during the accounting period             covered by the attached financial statements.          3.  A review of the activities of Borrower during such fiscal period has             been made under the supervision of the undersigned with a view to             determining whether during such fiscal period Borrower performed and             observed all its Obligations under the Loan Documents and                                    (SELECT ONE)  (to the best knowledge of the undersigned during such fiscal period, Borrower performed and observed each covenant and condition of the Loan Documents applicable to it, and no Default has occurred and it continuing.)                                        -OR-          (the following covenants or conditions have not been performed or observed and the following is a list of each such Default and its nature and status:)          4.    The representations and warranties of Borrower contained in ARTICLE V of the Agreement, and/or any representations and warranties of Borrower or any other Loan Party that are contained in any document furnished at any time under or in connection with the Loan Documents, are true and correct on and as of the date hereof, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date.          5.    The financial covenant analyses and information set forth on SCHEDULE 2 attached hereto are true and accurate on and as of the date of this Certificate.                           Form of Compliance Certificate                                         D-1           IN WITNESS WHEREOF, the undersigned has executed this Certificate as of__________________, _______________.                                MAINE & MARITIMES CORPORATION                                By:                                  -----------------------------------------------                               Name:                                    ---------------------------------------------                               Title:                                     --------------------------------------------                           Form of Compliance Certificate                                         D-2                     For the Quarter/Year ended _________________("STATEMENT DATE")                                     SCHEDULE 2                           to the Compliance Certificate                                   ($ in 000's)     I.   Section 6.12(a) Debt to Capital Ratio       A.  Consolidated Total Indebtedness for Borrowed Money:           $___________       B.  Common Shareholder's Equity                                            $___________       C.  Consolidated Total Capital (Line IA + IB)                              $___________       D.  Percentage (Line I A DIVIDED BY Line I C)                              ____%       E.  Maximum Allowed                                                        57% [55%]   II.  Section 6.12(b) Interest Coverage Ratio       A.  Consolidated EBIT:                                            $___________       B.  Consolidated Interest Expense                                          $___________       C.  Preferred Dividend Paid                                                $___________       D.  Ratio (Line II A) DIVIDED BY (Line II B + II C)               _________ to 1.0       E.  Minimum Required                                                       1.0 : 1.0 [USE APPLICABLE RATIO]                            Form of Compliance Certificate                                         D-3                                                                          EXHIBIT E                                        FORM                                        OF                             ASSIGNMENT AND ASSUMPTION              This Assignment and Assumption (this "ASSIGNMENT AND ASSUMPTION") is dated as of the Effective Date set forth below and is entered into by and between [INSERT NAME OF ASSIGNOR] (the "ASSIGNOR") and [INSERT NAME OF ASSIGNEE] (the "ASSIGNEE"). Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (the "CREDIT AGREEMENT"), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.              For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by Agent as contemplated below (i) all of the Assignor's rights and obligations as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including, without limitation, the Letters of Credit included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as, the "ASSIGNED INTEREST"). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.  1.      Assignor:____________________________  2.      Assignee:       _____________________________ [AND IS AN AFFILIATE OF         [IDENTIFY LENDER]]  3.      Borrower(s):    _____________________________  4.      Administrative Agent: Bank of America, N. A., as the administrative         agent under the Credit Agreement  5.      Credit Agreement: Credit Agreement, dated as of October__, 2005, among         Maine & Maritimes Corporation, the Lenders from time to time party         thereto, Bank of America, N.A., as Administrative Agent and L/C Issuer  6.      Assigned Interest:                                     Aggregate                                  Amount of              Amount of             Percentage                               Commitment/Loans       Commitment/Loans         Assigned of     Facility Assigned         for All Lenders*          Assigned*          Commitment/loans          Cusip No. - -----------------------------------------------------------------------------------------------------------------                  _____________          $_________________     $_________________      ______________%         _____________       _____________          $_________________     $_________________      ______________%         _____________       _____________          $_________________     $_________________      ______________%         _____________   [7.     TRADE DATE:     __________________]                          Form of Assignment and Assumption                                         E-1   Effective Date: __________________, 20__ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]  The terms set forth in this Assignment and Assumption are hereby agreed to:                                     ASSIGNOR                                    [NAME OF ASSIGNOR]                                     By:                                       -----------------------------                                        Title:                                     ASSIGNEE                                    [NAME OF ASSIGNEE]                                     By:                                       -----------------------------                                         Title:  [CONSENTED TO AND] Accepted:  Bank of America, N. A., as  Administrative Agent  By:    -----------------------------     Title:  [CONSENTED TO:]  By:    -----------------------------     Title:                          Form of Assignment and Assumption                                         E-2                                               ANNEX 1 TO ASSIGNMENT AND ASSUMPTION                          STANDARD TERMS AND CONDITIONS FOR                              ASSIGNMENT AND ASSUMPTION              1.   REPRESENTATIONS AND WARRANTIES.              1.1. ASSIGNOR. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.              1.2. ASSIGNEE. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all requirements of an Eligible Assignee under the Credit Agreement (subject to receipt of such consents as may be required under the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, and (iv) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section [__] thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on Agent or any other Lender; and (b) agrees that (i) it will, independently and without reliance on Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.              2.   PAYMENTS. From and after the Effective Date, Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.              3.   GENERAL PROVISIONS. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of Maine.                          Form of Assignment and Assumption                                         E-3    EX-10.AL 11 a2168719zex-10_al.txt EXHIBIT 10.AL                                                                       Exhibit 10.al  ================================================================================                                                                           (1996)                     LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT                            Dated as of January 31, 2006                                       among                           MAINE PUBLIC SERVICE COMPANY,                                   as Borrower,                              BANK OF AMERICA, N.A.,                            as Administrative Agent and                                    L/C Issuer,                                        and                          The Other Lenders Party Hereto   ================================================================================                                    TABLE OF CONTENTS    Section                                                                                                     Page - -------                                                                                                     ----   ARTICLE I.         DEFINITIONS AND ACCOUNTING TERMS............................................................1          1.01      Defined Terms...............................................................................1          1.02      Other Interpretive Provisions..............................................................12          1.03      Accounting Terms...........................................................................13          1.04      Rounding...................................................................................13          1.05      Times of Day...............................................................................13          1.06      Letter of Credit Amounts...................................................................13  ARTICLE II.        THE COMMITMENTS AND CREDIT EXTENSIONS......................................................13          2.01      Letters of Credit..........................................................................13          2.02      Termination or Reduction of Commitments....................................................18          2.03      Repayment of L/C Borrowings; Interest......................................................18          2.04      Fees.......................................................................................18          2.05      Computation of Interest and Fees...........................................................19          2.06      Payments Generally; Agent's Clawback.......................................................19          2.07      Sharing of Payments........................................................................20  ARTICLE III.       TAXES, YIELD PROTECTION AND ILLEGALITY.....................................................20          3.01      Taxes......................................................................................20          3.02      Increased Costs............................................................................21          3.03      Mitigation Obligations.....................................................................22          3.04      Survival...................................................................................22  ARTICLE IV.        CONDITIONS PRECEDENT TO L/C CREDIT EXTENSIONS..............................................22          4.01      Conditions of Initial L/C Credit Extension.................................................22          4.02      Conditions to all L/C Credit Extensions....................................................24  ARTICLE V.         REPRESENTATIONS AND WARRANTIES.............................................................24          5.01      Existence, Qualification and Power; Compliance with Laws...................................24          5.02      Authorization; No Contravention............................................................24          5.03      Governmental Authorization; Other Consents.................................................24          5.04      Binding Effect.............................................................................24          5.05      Financial Statements; No Material Adverse Effect; No Internal Control Event................25          5.06      Litigation.................................................................................25          5.07      No Default.................................................................................25          5.08      Ownership of Property; Liens...............................................................25          5.09      Environmental Compliance...................................................................25          5.10      Insurance..................................................................................26          5.11      Taxes......................................................................................26          5.12      ERISA Compliance...........................................................................26          5.13      Subsidiaries...............................................................................26          5.14      Margin Regulations; Investment Company Act; Public Utility Holding Company Act.............26          5.15      Disclosure.................................................................................27          5.16      Compliance with Laws.......................................................................27          5.17      Intellectual Property; Licenses, Etc.......................................................27          5.18      Rights in Collateral; Priority of Liens....................................................27  ARTICLE VI.        AFFIRMATIVE COVENANTS......................................................................27          6.01      Financial Statements.......................................................................27          6.02      Certificates; Other Information............................................................28          6.03      Notices....................................................................................29          6.04      Payment of Obligations.....................................................................30          6.05      Preservation of Existence, Etc.............................................................30          6.06      Maintenance of Properties..................................................................30          6.07      Maintenance of Insurance...................................................................30                                           i              6.08      Compliance with Laws.......................................................................30          6.09      Books and Records..........................................................................30          6.10      Inspection Rights..........................................................................30          6.11      Use of Proceeds............................................................................30          6.12      Financial Covenants........................................................................31          6.13      Collateral Records.........................................................................31          6.14      Security Interests.........................................................................31  ARTICLE VII.       NEGATIVE COVENANTS.........................................................................31          7.01      Liens......................................................................................31          7.02      Investments................................................................................32          7.03      Indebtedness...............................................................................32          7.04      Fundamental Changes........................................................................33          7.05      Dispositions...............................................................................33          7.06      Restricted Payments........................................................................33          7.07      Change in Nature of Business...............................................................33          7.08      Transactions with Affiliates...............................................................33          7.09      Burdensome Agreements......................................................................33          7.10      Use of Proceeds............................................................................34  ARTICLE VIII.      EVENTS OF DEFAULT AND REMEDIES.............................................................34          8.01      Events of Default..........................................................................34          8.02      Remedies Upon Event of Default.............................................................35          8.03      Application of Funds.......................................................................36  ARTICLE IX.        ADMINISTRATIVE AGENT.......................................................................36          9.01      Appointment and Authorization of Administrative Agent......................................36          9.02      Rights as a Lender.........................................................................37          9.03      Exculpatory Provisions.....................................................................37          9.04      Reliance by Administrative Agent...........................................................37          9.05      Delegation of Duties.......................................................................38          9.06      Resignation of Agent.......................................................................38          9.07      Non-Reliance on Agent and Other Lenders....................................................38          9.08      No Other Duties, Etc.......................................................................38          9.09      Administrative Agent May File Proofs of Claim..............................................38          9.10      Collateral Matters.........................................................................39  ARTICLE X.         MISCELLANEOUS..............................................................................40          10.01     Amendments, Etc............................................................................40          10.02     Notices; Effectiveness; Electronic Communications..........................................41          10.03     No Waiver; Cumulative Remedies.............................................................42          10.04     Expenses; Indemnity: Damage Waiver.........................................................42          10.05     Payments Set Aside.........................................................................43          10.06     Successors and Assigns.....................................................................43          10.07     Treatment of Certain Information; Confidentiality..........................................45          10.08     Right of Setoff............................................................................46          10.09     Interest Rate Limitation...................................................................46          10.10     Counterparts; Integration; Effectiveness...................................................46          10.11     Survival of Representations and Warranties.................................................46          10.12     Severability...............................................................................46          10.13     Governing Law; Jurisdiction; Etc...........................................................46          10.14     Waiver of Right to Trial by Jury...........................................................47          10.15     USA Patriot Act Notice.....................................................................47          10.16     Time of the Essence........................................................................47          10.17     Maine Notice...............................................................................47                                          ii   SCHEDULES           2.01      Commitments and Applicable Percentages          5.06      Litigation          5.09      Environmental Matters          5.13      Subsidiaries and Other Equity Investments          7.01      Existing Liens          7.03      Existing Indebtedness          10.02     Administrative Agent's Office, Certain Addresses for Notices  EXHIBITS          FORM OF          A         Compliance Certificate          B         Assignment and Assumption                                         iii                     LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT  LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT (this "AGREEMENT") is entered into as of January 31, 2006, among MAINE PUBLIC SERVICE COMPANY, a Maine corporation ("BORROWER"), each lender from time to time party hereto (collectively, the "LENDERS" and individually, a "LENDER"), and BANK OF AMERICA, N.A., as Administrative Agent and L/C Issuer. This Agreement memorializes the replacement of Borrower's Letter of Credit and Reimbursement Agreement dated as of June 1, 1996, with The Bank of New York as Agent and Issuing Bank, as the same has been amended to date, which is being terminated in connection with Borrower's execution and delivery of this Agreement, and as such the Letter of Credit to be issued hereunder is an "Alternate Credit Facility" as such term is used in the MPUFB Indenture and this Agreement is intended to be the "Reimbursement Agreement" and to evidence "Reimbursement Agreement Obligations" as such terms are used in the Second Mortgage Indenture (as defined below). As collateral for the Borrower's obligations hereunder the Borrower has pledged its Second Mortgage and Collateral Trust Bonds, Series 2021, in the principal amount of $14,400,000 (the "SECOND MORTGAGE BONDS"), originally issued under and secured by the Sixth Supplemental Indenture dated as of June 1, 2002 (the "SECOND MORTGAGE SUPPLEMENTAL INDENTURE"), which supplemented the Indenture of Second Mortgage and Deed of Trust, dated as of October 1, 1985, between the Borrower and The Bank of New York Trust Company, N.A., successor trustee as Trustee (the "SECOND MORTGAGE TRUSTEE") (as it has been or may be supplemented, amended or otherwise modified from time to time, the "SECOND MORTGAGE INDENTURE").  Borrower has requested that Lenders provide a revolving credit facility for the issuance of letters of credit, and Lenders are willing to do so on the terms and conditions set forth herein. In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:  ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS            1.01 DEFINED TERMS. As used in this Agreement, the following terms shall have the meanings set forth below:  "ADMINISTRATIVE AGENT" or "AGENT" means Bank of America in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.  "ADMINISTRATIVE AGENT'S OFFICE" means Agent's address and, as appropriate, account as set forth on SCHEDULE 10.02, or such other address or account as Agent may from time to time notify Borrower and Lenders.  "ADMINISTRATIVE QUESTIONNAIRE" means an Administrative Questionnaire in a form supplied by Agent.  "AFFILIATE" means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.  "AGENT FEE LETTER" has the meaning specified in Section 2.04(b).  "AGGREGATE COMMITMENTS" means the Commitments of all Lenders.  "AGREEMENT" means this Letter of Credit and Reimbursement Agreement.  "APPLICABLE PERCENTAGE" means with respect to any Lender at any time, the percentage (carried out to the ninth decimal place) of the Aggregate Commitments represented by such Lender's Commitment at such time. If the obligation of the L/C Issuer to make L/C Credit Extensions have been terminated pursuant to SECTION 8.02 or if the Aggregate Commitments have expired, then the Applicable Percentage of each Lender shall be determined based on the Applicable Percentage of such Lender most recently in effect, giving effect to any subsequent assignments. The initial Applicable Percentage of each Lender is set forth opposite the name of such Lender on SCHEDULE 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.  "APPLICABLE RATE" means a per annum rate equal to:  (a)       with respect to Letters of Credit, 1.375%; and                                          1   (B)       with respect to the commitment fee, 0.25%.  "ASSIGNMENT AND ASSUMPTION" means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by SECTION 10.06(b), and accepted by Agent, in substantially the form of EXHIBIT B or any other form approved by Agent.  "ATTRIBUTABLE INDEBTEDNESS" means, on any date, (a) in respect of any capital lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a capital lease.  "AUDITED FINANCIAL STATEMENTS" means the audited consolidated balance sheet of Parent and its subsidiaries for the fiscal year ended December 31, 2004, and the related consolidated statements of income or operations, shareholders' equity and cash flows for such fiscal year of Parent and its subsidiaries, including the notes thereto.  "BANK OF AMERICA" means Bank of America, N.A. and its successors.  "BASE RATE" means for any day a fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its "prime rate." The "prime rate" is a rate set by Bank of America based upon various factors including Bank of America's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.  "BORROWER" has the meaning specified in the introductory paragraph hereto.  "BORROWER FINANCIAL STATEMENTS" has the meaning specified in Section 6.01(a)(ii)  "BORROWER MATERIALS" has the meaning specified in Section 6.02.  "BUSINESS DAY" means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where Administrative Agent's Office is located.  "CASH COLLATERALIZE" has the meaning specified in Section 2.01(h).  CHANGE IN LAW" means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority.  "CHANGE OF CONTROL" means, with respect to any Person, an event or series of events by which:  (a)       any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have "beneficial ownership" of all securities that such person or group has the right to acquire (such right, an "option right"), whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 25% or more of the equity securities of such Person entitled to vote for members of the board of directors or equivalent governing body of such Person on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right);  (b)       during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of such Person cease to be composed of individuals (i) who were members of that board or equivalent governing                                          2   body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body (excluding, in the case of both clause (ii) and clause (iii), any individual whose initial nomination for, or assumption of office as, a member of that board or equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the board of directors); or  (c)       any individual(s) or entity(s) acting in concert shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation thereof, will result in its or their acquisition of the power to exercise, directly or indirectly, a controlling influence over the management or policies of such Person, or control over the equity securities of such Person entitled to vote for members of the board of directors or equivalent governing body of such Person on a fully-diluted basis (and taking into account all such securities that such individual(s) or entity(s) or group has the right to acquire pursuant to any option right) representing 25% or more of the combined voting power of such securities.  "CLOSING DATE" means the first date all the conditions precedent in SECTION 4.01 are satisfied or waived in accordance with SECTION 10.01.  "CODE" means the Internal Revenue Code of 1986, as amended.  "COLLATERAL" shall mean the Second Mortgage Bonds.  "COLLATERAL DOCUMENTS" means the Second Mortgage Bonds, the Second Mortgage Supplemental Indenture, and all agreements, instruments and documents now or hereafter executed and delivered in connection with this Agreement pursuant to which Liens are granted or purported to be granted to Agent in Collateral securing all or part of the Obligations each in form and substance satisfactory to Agent.  "COMMITMENT" means, as to each Lender, its obligation to purchase participations in L/C Obligations, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender's name on SCHEDULE 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.  "COMPLIANCE CERTIFICATE" means a certificate substantially in the form of EXHIBIT A.  "CONSOLIDATED INTEREST EXPENSE" means, for any specified period, the total consolidated interest charges of the Borrower and its Subsidiaries for such period, determined in accordance with GAAP, plus (i) the allowance for borrowed funds used during construction for such period, minus (ii) interest on customer deposits for such period.  "CONSOLIDATED NET INCOME AVAILABLE FOR FIXED CHARGES" means, for any specified period, the consolidated income or loss before extraordinary items of the Borrower and its Subsidiaries for such period, determined in accordance with GAAP, plus (i) Consolidated Interest Expense for such period, plus (ii) the provision for income taxes for such period, minus (iii) the allowance for equity funds used during construction for such period.  "CONSOLIDATED TOTAL CAPITAL" means, at a particular date, the total of the amounts that, in conformity with GAAP, would be included on a consolidated balance sheet of the Borrower and its Subsidiaries as of such date in respect of (i) Consolidated Indebtedness for Borrowed Money (excluding Indebtedness of other Persons guaranteed by the Borrower or a Subsidiary), (ii) preferred and preference stock, and (iii) Common Shareholders' Equity.  "CONSOLIDATED TOTAL INDEBTEDNESS FOR BORROWED MONEY" means at any particular date, the total amount of (i) Indebtedness of the Borrower and its Subsidiaries, excluding intercompany items, that, in conformity with GAAP, would be included on a consolidated balance sheet of the Borrower and its Subsidiaries (a) in respect of money borrowed, (b) in respect of obligations evidenced by a note, bond, debenture or other like written obligation to pay money, (c) in respect of obligations under Capital Leases, and (d) in respect of obligations under conditional sales or other title retention agreements, and (ii) Indebtedness of other Persons of the nature described in clauses (a) through (d) above which is guaranteed by the Borrower or a Subsidiary or with respect to which the Borrower or a Subsidiary is contingently liable.                                          3   "CONTRACTUAL OBLIGATION" means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.  "CONTROL" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. "CONTROLLING" and "CONTROLLED" have meanings correlative thereto.  "DEBTOR RELIEF LAWS" means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.  "DEBT SERVICE COVERAGE RATIO" means the ratio computed in accordance with Section 6.12(c).  "DEFAULT" means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.  "DEFAULT RATE" means (a) when used with respect to Obligations other than L/C Fees an interest rate equal to (i) the Base Rate plus (ii) 4% per annum, and (b) when used with respect to L/C Fees, a rate equal to the Applicable Rate plus 4% per annum.  "DEFAULTING LENDER" means any Lender that (a) has failed to fund any portion of participations in L/C Obligations required to be funded by it hereunder within one Business Day of the date required to be funded by it hereunder, (b) has otherwise failed to pay over to Agent or any other Lender any other amount required to be paid by it hereunder within one Business Day of the date when due, unless the subject of a good faith dispute, or (c) has been deemed insolvent or become the subject of a bankruptcy or insolvency proceeding.  "DETERMINATION OF TAXABILITY" means (a) a Determination of Taxability under the MPUFB Indenture or (b) a determination that the interest income on any of the MPUFB Bonds is includable in gross income for federal income tax purposes (except for any determination that as a result of interest on the MPUFB Bonds being included as an item of tax preference or otherwise being taken into account in determining alternative minimum taxable income under the Code)(each such exception being a "TAX CODE EXCEPTION"), which determination shall be deemed to have been made upon the occurrence of the first to occur of the following (in each case not including any such matter as a result of a Tax Code Exception): (i) the day on which Borrower or MPUFB is advised in writing by the Commissioner or any District Director of the Internal Revenue Service that, based upon any filings of Borrower or MPUFB or upon any other grounds whatsoever, the interest on the MPUFB Bonds is includable in the gross income for federal income tax purposes of any holder or former holder thereof; (ii) the day on which Borrower receives notice from the Agent that the Agent has been advised by nationally recognized bond counsel, in response to a request by the Agent, that interest on the MPUFB Bonds by any holder or former holder is includable in the gross income for federal income tax purposes of such holder; (iii) the day on which Borrower, MPUFB, the Agent or the Second Mortgage Trustee receives notice in writing from any holder or former holder of a MPUFB Bond that the Internal Revenue Service has issued a statutory notice of deficiency or similar notice to such holder or former holder that asserts in effect that interest on the MPUFB Bonds received by such holder or former holder is includable in the gross income for federal income tax purposes of such holder; (iv) the day on which Borrower or MPUFB is advised in writing by the Commissioner or any District Director of the Internal Revenue Service that there has been issued a public or private ruling of the Internal Revenue Service or a technical advice memorandum issued by the National Office of the Internal Revenue Service that the interest on the MPUFB Bonds is includable in the gross income for federal income tax purposes of any holder or former holder of a MPUFB Bond; (v) the day on which Borrower or MPUFB is advised in writing that a final determination, from which no further right of appeal exists, has been made by a court of competent jurisdiction in the United States of America in a proceeding with respect to which Borrower or MPUFB has been given written notice and an opportunity to participate and defend that the interest on the MPUFB Bonds is includable in the gross income for federal income tax purposes of any holder or former holder of a MPUFB Bond; or (vi) the effective date of any legislation, judicial decision, decree, or order, ruling ,regulation or official statement of the Department of the Treasury or Internal Revenue Service, of general application that results in the interest on the MPUFB Bonds being includable in the gross income for federal income tax purposes of any holder or former holder thereof; provided, however, that no Determination of Taxability shall occur under subparagraph (i), (ii), (iii), (iv) or (vi) of this definition unless Borrower has been afforded the opportunity, at its expense, to contest any such conclusion and/or assessment and, further, no Determination of Taxability shall occur until such contest, if made, has been finally determined. Borrower shall be deemed to have been afforded the opportunity to contest the occurrence of a Determination of Taxability if it                                          4   shall have been permitted to commence and maintain any action in the name of any holder or former holder of a MPUFB Bond to judgment and through any appeals therefrom or other proceedings related thereto.  "DISPOSITION" or "DISPOSE" means the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.  "DOLLAR" and "$" mean lawful money of the United States.  "ELIGIBLE ASSIGNEE" means (a) a Lender; (b) an Affiliate of a Lender; and (c) any other Person (other than a natural person) approved by (i) Agent and the L/C Issuer, and (ii) unless an Event of Default has occurred and is continuing, Borrower (each such approval not to be unreasonably withheld or delayed); PROVIDED that notwithstanding the foregoing, "Eligible Assignee" shall not include Borrower or any of Borrower's Affiliates or Subsidiaries.  "ENVIRONMENTAL LAWS" means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.  "ENVIRONMENTAL LIABILITY" means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of Borrower, any other Loan Party or any of their respective Subsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.  "EQUITY INTERESTS" means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.  "ERISA" means the Employee Retirement Income Security Act of 1974.  "ERISA AFFILIATE" means any trade or business (whether or not incorporated) under common control with Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).  "ERISA EVENT" means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon Borrower or any ERISA Affiliate.  "EVENT OF DEFAULT" has the meaning specified in SECTION 8.01.  "EXCLUDED TAXES" means, with respect to Agent, any Lender, the L/C Issuer or any other recipient of any payment to be made by or on account of any obligation of Borrower hereunder, (a) taxes imposed on or measured by its overall net income (however                                          5   denominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable Lending Office is located, and (b) any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction in which Borrower is located.  "FEDERAL FUNDS RATE" means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; PROVIDED that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by Agent.  "FIRST MORTGAGE INDENTURE" means the Indenture of Mortgage and Deed of Trust, dated as of October 1, 1945, between Borrower and U.S. Bank Trust National Association, successor trustee as Trustee thereunder, as it has been or may be supplemented, amended or otherwise modified from time to time.  "FRB" means the Board of Governors of the Federal Reserve System of the United States.  "GAAP" means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.  "GOVERNMENTAL AUTHORITY" means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank). ..  "GUARANTEE" means, as to any Person, any (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the "primary obligor") in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term "Guarantee" as a verb has a corresponding meaning.  "GUARANTOR" means a Person that gives a Guarantee to the Agent for the benefit of the Lenders and/or the L/C Issuer.  "HAZARDOUS MATERIALS" means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.                                          6   "INDEBTEDNESS" means, as to any Person at a particular time, without duplication (for example, Borrower's letters of credit securing other Indebtedness shall not count as Indebtedness independent of the Indebtedness being secured), all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:            (a) all obligations of such Person for borrowed money and all           obligations of such Person evidenced by bonds, debentures, notes, loan           agreements or other similar instruments;            (b) all direct or contingent obligations of such Person arising under           letters of credit (including standby and commercial), bankers'           acceptances, bank guaranties, surety bonds and similar instruments;            (c) net obligations of such Person under any Swap Contract;            (d) all obligations of such Person to pay the deferred purchase price           of property or services (other than trade accounts payable in the           ordinary course of business and, in each case, not past due for more           than 60 days after the date on which such trade account payable was           created);            (e) indebtedness (excluding prepaid interest thereon) secured by a           Lien on property owned or being purchased by such Person (including           indebtedness arising under conditional sales or other title retention           agreements), whether or not such indebtedness shall have been assumed           by such Person or is limited in recourse;            (f) capital leases and Synthetic Lease Obligations;            (g) all obligations of such Person to purchase, redeem, retire,           defease or otherwise make any payment in respect of any Equity           Interest in such Person or any other Person, valued, in the case of a           redeemable preferred interest, at the greater of its voluntary or           involuntary liquidation preference PLUS accrued and unpaid dividends;           and            (h) all Guarantees of such Person in respect of any of the foregoing.  For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person. The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date. The amount of any capital lease or Synthetic Lease Obligation as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date.  "INDEMNIFIED TAXES" means Taxes other than Excluded Taxes.  "INDEMNITEES" has the meaning specified in SECTION 10.04(b).  "INFORMATION" has the meaning specified in SECTION 10.07.  "INTERNAL CONTROL EVENT" means a material weakness in, or fraud that involves management or other employees who have a significant role in, Borrower's internal controls over financial reporting, in each case as described in the Securities Laws and when relevant requirements become effective as to Borrower under regulations promulgated under the Securities Laws.  "INVESTMENT" means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of capital stock or other securities of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other Person and any arrangement pursuant to which the investor Guarantees Indebtedness of such other Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.  "IRS" means the United States Internal Revenue Service.                                          7   "ISP" means, with respect to any Letter of Credit, the "International Standby Practices 1998" published by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance).  "ISSUER DOCUMENTS" means with respect to any Letter of Credit (but not including the Letter of Credit itself), the L/C Application, and any other document, agreement and instrument entered into by the L/C Issuer and Borrower (or any Subsidiary) or in favor of the L/C Issuer and relating to any such Letter of Credit.  "LAWS" means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.  "L/C ADVANCE" means, with respect to each Lender, such Lender's funding of its participation in any L/C Borrowing in accordance with its Applicable Percentage. "L/C APPLICATION" means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by the L/C Issuer.  "L/C BORROWING" means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made.  "L/C CREDIT EXTENSION" means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.  "L/C EXPIRATION DATE" means the day that is thirty days prior to the Maturity Date then in effect (or, if such day is not a Business Day, the next preceding Business Day).  "L/C FEE" has the meaning specified in Section 2.01(j).  "L/C ISSUER" means Bank of America in its capacity as issuer of Letters of Credit hereunder, or any successor issuer of Letters of Credit hereunder.  "L/C OBLIGATIONS" means, as at any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit PLUS the aggregate of all Unreimbursed Amounts, including all L/C Borrowings. For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with SECTION 1.06. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be "outstanding" in the amount so remaining available to be drawn.  "LENDER" has the meaning specified in the introductory paragraph hereto.  "LENDING OFFICE" means, as to any Lender, the office or offices of such Lender described as such in such Lender's Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify Borrower and Agent.  "LETTER OF CREDIT" means any letter of credit issued hereunder. A Letter of Credit may be a commercial letter of credit or a standby letter of credit.  "LIEN" means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).  "LOAN DOCUMENTS" means this Agreement, each Issuer Document and the Agent Fee Letter.                                          8   "LOAN PARTIES" means, collectively, Borrower and each Person (other than Agent, the L/C Issuer, or any Lender) executing a Loan Document.  "MATERIAL ADVERSE EFFECT" means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, liabilities (actual or contingent), condition (financial or otherwise) or prospects of Borrower or Borrower and its Subsidiaries taken as a whole; (b) a material impairment of the ability of any Loan Party to perform its obligations under any Loan Document to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party.  "MATURITY DATE" means January 31, 2009.  "MPUFB" means the Maine Public Utility Financing Bank.  "MPUFB BONDS" means the Maine Public Utility Financing Bank Public Utility Refunding Revenue Bonds, Series 1996 (Maine Public Service Company Project) in the original principal amount of $15,000,000, issued pursuant to the MPUFB Indenture.  "MPUFB INDENTURE" means the Indenture of Trust, dated as of June 1, 1996, between MPUFB, as Issuer, and U.S. Bank National Association (successor to Fleet National Bank), as Trustee, as the same has been and may be amended from time to time.  "MPUFB LOAN AGREEMENT" means the Loan Agreement, dated as of June 1, 1996, between Borrower and MPUFB, as the same has been and may be amended from time to time.  "MULTIEMPLOYER PLAN" means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.  "OBLIGATIONS" means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Letter of Credit, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.  "ORGANIZATION DOCUMENTS" means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.  "OTHER TAXES" means all present or future stamp, intangible or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Document or any Collateral Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document or any Collateral Document.  "OUTSTANDING AMOUNT" means on any date, the amount of L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements by Borrower of Unreimbursed Amounts.  "PARENT" means Maine & Maritimes Corporation, a Maine corporation which owns 100% of the issued and outstanding capital stock of the Borrower.  "PARTICIPANT" has the meaning specified in SECTION 10.06(d).                                          9   "PBGC" means the Pension Benefit Guaranty Corporation.  "PENSION PLAN" means any "employee pension benefit plan" (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by Borrower or any ERISA Affiliate or to which Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years.  "PERSON" means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.  "PLAN" means any "employee benefit plan" (as such term is defined in Section 3(3) of ERISA) established by Borrower or, with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.  "PLATFORM" has the meaning specified in SECTION 6.02.  "PLEDGE AGREEMENT" means the Pledge and Security Agreement, dated as of June 1, 1996, among Borrower, Tender Agent and Adminsitrative Agent, as the same has been and may be amended from time to time.  "PUC" means the Maine Public Utilities Commission.  "REGISTER" has the meaning specified in SECTION 10.06(c).  "REGISTERED PUBLIC ACCOUNTING FIRM" has the meaning specified in the Securities Laws and shall be independent of Borrower as prescribed by the Securities Laws.  "RELATED DOCUMENTS" means any Letter of Credit, the Second Mortgage Supplemental Indenture, the Second Mortgage Bonds, the MPUFB Indenture, the MPUFB Bonds, the Tender Agreement, the MPUFB Loan Agreement, the Pledge Agreement , the Remarketing Agreement and any other agreement or instrument relating to any of the foregoing.  "RELATED PARTIES" means, with respect to any Person, such Person's Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person's Affiliates.  "REMARKETING AGENT" means Banc of America Securities LLC, successor to The Bank of New York.  "REMARKETING AGREEMENT" means the Remarketing Agreement dated as of June 1, 1996 between Borrower and the Remarketing Agent, as the same has been or may be amended from time to time.  "REPORTABLE EVENT" means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived.  "REQUIRED LENDERS" means, as of any date of determination, Lenders having more than 50% of the Aggregate Commitments or, if the obligation of the L/C Issuer to make L/C Credit Extensions has been terminated pursuant to SECTION 8.02, Lenders holding in the aggregate more than 50% of the Total Outstandings (with the aggregate amount of each Lender's risk participation and funded participation in L/C Obligations being deemed "held" by such Lender for purposes of this definition); PROVIDED that the Commitment of, and the portion of the Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.   "RESPONSIBLE OFFICER" means the chief executive officer, president, chief financial officer, chief accounting officer, treasurer or assistant treasurer of a Loan Party. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.                                         10   "RESTRICTED PAYMENT" means any dividend or other distribution (whether in cash, securities or other property) with respect to any capital stock or other Equity Interest of Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such capital stock or other Equity Interest or on account of any return of capital to Borrower's stockholders, partners or members (or the equivalent Person thereof).  "SARBANES-OXLEY" means the Sarbanes-Oxley Act of 2002.  "SEC" means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.  "SECOND MORTGAGE BONDS" has the meaning set forth in the first paragraph of this Agreement.  "SECOND MORTGAGE INDENTURE" has the meaning set forth in the first paragraph of this Agreement.  "SECOND MORTGAGE SUPPLEMENTAL INDENTURE" has the meaning set forth in the first paragraph of this Agreement.  "SECOND MORTGAGE TRUSTEE" has the meaning set forth in the first paragraph of this Agreement.  "SECURITIES LAWS" means the Securities Act of 1933, the Securities Exchange Act of 1934, Sarbanes-Oxley and the applicable accounting and auditing principles, rules, standards and practices promulgated, approved or incorporated by the SEC or the Public Company Accounting Oversight Board, as each of the foregoing may be amended and in effect on any applicable date hereunder.  "SUBORDINATED LIABILITIES" means liabilities subordinated to the Obligations in a manner acceptable to Agent in its sole discretion.  "SUBSIDIARY" of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a "Subsidiary" or to "Subsidiaries" shall refer to a Subsidiary or Subsidiaries of Borrower.  "SWAP CONTRACT" means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a "MASTER AGREEMENT"), including any such obligations or liabilities under any Master Agreement.  "SWAP TERMINATION VALUE" means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).  "SYNTHETIC LEASE OBLIGATION" means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance                                         11   sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).  "TANGIBLE NET WORTH" means the value of total assets (including leaseholds and leasehold improvements and reserves against assets but excluding goodwill, patents, trademarks, trade names, organization expense, unamortized debt discount and expense, capitalized or deferred research and development costs, deferred marketing expenses, and other like intangibles, and monies due from Affiliates, officers, directors, employees, shareholders, members or managers) less Total Liabilities, including but not limited to accrued and deferred income taxes, but excluding the non-current portion of Subordinated Liabilities.  "TAXES" means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.  "TENDER AGENT" means U.S. Bank National Association, successor to Fleet National Bank.  "TENDER AGREEMENT" means the Tender Agreement dated as of June 1, 1996, among the MPUFB Trustee, the Tender Agent, the Borrower and the Remarketing Agent, as the same has been or may be amended from time to time.  "THRESHOLD AMOUNT" means $1,000,000.  "TOTAL LIABILITIES" means the sum of current liabilities plus long term liabilities.  "TOTAL OUTSTANDINGS" means the aggregate Outstanding Amount of all L/C Obligations.  "UNFUNDED PENSION LIABILITY" means the excess of a Pension Plan's benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan's assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year.  "UNITED STATES" and "U.S." mean the United States of America.  "UNREIMBURSED AMOUNT" has the meaning specified in Section 2.01(c)(i).            1.02 OTHER INTERPRETIVE PROVISIONS. With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:       (a) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "INCLUDE," "INCLUDES" and "INCLUDING" shall be deemed to be followed by the phrase "without limitation." The word "WILL" shall be construed to have the same meaning and effect as the word "SHALL." Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person's successors and assigns, (iii) the words "HEREIN," "HEREOF" and "HEREUNDER," and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (vi) the words "ASSET" and "PROPERTY" shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.  (b) In the computation of periods of time from a specified date to a later specified date, the word "FROM" means "FROM AND INCLUDING;" the words "TO" and "UNTIL" each mean "TO BUT EXCLUDING;" and the word "THROUGH" means "TO AND INCLUDING."                                         12   (c) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.            1.03 ACCOUNTING TERMS. (a) GENERALLY. All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, EXCEPT as otherwise specifically prescribed herein.  (b) CHANGES IN GAAP. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either Borrower or the Required Lenders shall so request, Agent, Lenders and Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); PROVIDED THAT, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) Borrower shall provide to Agent and Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.  (c) CONSOLIDATION OF VARIABLE INTEREST ENTITIES. All references herein to consolidated financial statements of Borrower and its Subsidiaries or to the determination of any amount for Borrower and its Subsidiaries on a consolidated basis or any similar reference shall, in each case, be deemed to include each variable interest entity that Borrower is required to consolidate pursuant to FASB Interpretation No. 46 - Consolidation of Variable Interest Entities: an interpretation of ARB No. 51 (January 2003) as if such variable interest entity were a Subsidiary as defined herein.            1.04 ROUNDING. Any financial ratios required to be maintained by Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).            1.05 TIMES OF DAY. Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).            1.06 LETTER OF CREDIT AMOUNTS. Unless otherwise specified herein the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; PROVIDED, HOWEVER, that with respect to any Letter of Credit that, by its terms or the terms of any Issuer Document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time and FURTHER PROVIDED, HOWEVER, that with respect to any Letter of Credit that, by its terms, provides for a different availability based on the applicable interest rate period for the bonds to which such Letter of Credit relates, then, for purposes of determining L/C Fees only, the stated amount shall be the aggregate principal amount together with the amount that would be available for the payment of interest if the weekly interest rate period or monthly interest rate period was then in effect, regardless of the actual then-prevailing interest rate period.  ARTICLE II. THE COMMITMENTS AND L/C CREDIT EXTENSIONS            2.01 LETTERS OF CREDIT. (a) THE LETTER OF CREDIT COMMITMENT.            (i) Subject to the terms and conditions set forth herein, (A) the L/C Issuer agrees, in reliance upon the agreements of the other Lenders set forth in this SECTION 2.01, (1) from time to time on any Business Day during the period from the Closing Date until the L/C Expiration Date, to issue Letters of Credit for the account of Borrower, and to amend or extend Letters of Credit previously issued by it, in accordance with subsection (b) below, and (2) to honor drawings under the Letters of Credit; and (B) the Lenders severally agree to participate in Letters of Credit issued for the account of Borrower and any drawings thereunder; PROVIDED that after giving effect to any L/C Credit Extension with respect to any Letter of Credit, (x) the Outstanding Amount of all L/C Obligations shall not exceed the Aggregate Commitments, and (y) the Applicable Percentage of the Outstanding Amount of all L/C Obligations of any Lender shall not exceed such Lender's Commitment. Each request by Borrower for the issuance or amendment of a Letter of Credit shall be deemed to be a representation by Borrower that the L/C Credit Extension so requested complies with the conditions set forth in the proviso to the preceding sentence. Within the                                         13   foregoing limits, and subject to the terms and conditions hereof, Borrower's ability to obtain Letters of Credit shall be fully revolving, and accordingly Borrower may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed.            (ii) The L/C Issuer shall not issue any Letter of Credit, if:  (A)       subject to Section 2.01(b)(iv), the expiry date of such requested Letter of Credit would occur more than twelve months after the date of issuance or last extension, unless the Required Lenders have approved such expiry date; or  (B)       the expiry date of such requested Letter of Credit would occur after the L/C Expiration Date, unless all the Lenders have approved such expiry date.            (iii) The L/C Issuer shall be under no obligation to issue any Letter of Credit if:  (A) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the L/C Issuer from issuing such Letter of Credit, or any Law applicable to the L/C Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the L/C Issuer shall prohibit, or request that the L/C Issuer refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the L/C Issuer with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which the L/C Issuer in good faith deems material to it;  (B) the issuance of such Letter of Credit would violate one or more policies of the L/C Issuer;  (C) except as otherwise agreed by Agent and the L/C Issuer, such Letter of Credit is in an initial stated amount less than $100,000, in the case of a commercial Letter of Credit, or $500,000, in the case of a standby Letter of Credit;  (D) such Letter of Credit is to be denominated in a currency other than Dollars;  (E) a default of any Lender's obligations to fund under Section 2.01(c) exists or any Lender is at such time a Defaulting Lender hereunder, unless the L/C Issuer has entered into satisfactory arrangements with Borrower or such Lender to eliminate the L/C Issuer's risk with respect to such Lender; or  (F) unless specifically provided for in this Agreement, such Letter of Credit contains any provisions for automatic reinstatement of the stated amount after any drawing thereunder.            (iv) The L/C Issuer shall not amend any Letter of Credit if the L/C Issuer would not be permitted at such time to issue such Letter of Credit in its amended form under the terms hereof.            (v) The L/C Issuer shall be under no obligation to amend any Letter of Credit if (A) the L/C Issuer would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.            (vi) The L/C Issuer shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and the L/C Issuer shall have all of the benefits and immunities (A) provided to Agent in ARTICLE IX with respect to any acts taken or omissions suffered by the L/C Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and Issuer Documents pertaining to such Letters of Credit as fully as if the term "Administrative Agent" or "Agent" as used in ARTICLE IX included the L/C Issuer with respect to such acts or omissions, and (B) as additionally provided herein with respect to the L/C Issuer.  (b)       PROCEDURES FOR ISSUANCE AND AMENDMENT OF LETTERS OF CREDIT; AUTO-EXTENSION LETTERS OF CREDIT.  (i) Each Letter of Credit shall be issued or amended, as the case may be, upon the request of Borrower delivered to the L/C Issuer (with a copy to Agent) in the form of a L/C Application, appropriately completed and signed by a Responsible Officer of Borrower. Such L/C Application must be received by the L/C Issuer and Agent not later than 11:00 a.m. at least two Business Days (or such later date and time as Agent and the L/C Issuer may agree in a particular instance in their sole discretion) prior to                                         14   the proposed issuance date or date of amendment, as the case may be. In the case of a request for an initial issuance of a Letter of Credit, such L/C Application shall specify in form and detail satisfactory to the L/C Issuer: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; and (G) such other matters as the L/C Issuer may require. In the case of a request for an amendment of any outstanding Letter of Credit, such L/C Application shall specify in form and detail satisfactory to the L/C Issuer (A) the Letter of Credit to be amended; (B) the proposed date of amendment thereof (which shall be a Business Day); (C) the nature of the proposed amendment; and (D) such other matters as the L/C Issuer may require. Additionally, Borrower shall furnish to the L/C Issuer and Agent such other documents and information pertaining to such requested Letter of Credit issuance or amendment, including any Issuer Documents, as the L/C Issuer or Agent may require.            (ii) Promptly after receipt of any L/C Application at the address set forth in SCHEDULE 10.02 for receiving L/C Applications and related correspondence, the L/C Issuer will confirm with Agent (by telephone or in writing) that Agent has received a copy of such L/C Application from Borrower and, if not, the L/C Issuer will provide Agent with a copy thereof. Unless the L/C Issuer has received written notice from any Lender, Agent or any Loan Party, at least one Business Day prior to the requested date of issuance or amendment of the applicable Letter of Credit, that one or more applicable conditions in ARTICLE IV shall not then be satisfied, then, subject to the terms and conditions hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of Borrower or enter into the applicable amendment, as the case may be, in each case in accordance with the L/C Issuer's usual and customary business practices. Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the L/C Issuer a risk participation in such Letter of Credit in an amount equal to the product of such Lender's Applicable Percentage TIMES the amount of such Letter of Credit.            (iii) Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the L/C Issuer will also deliver to Borrower and Agent a true and complete copy of such Letter of Credit or amendment.            (iv) If Borrower so requests in any applicable L/C Application, the L/C Issuer may, in its sole and absolute discretion, agree to issue a Letter of Credit that has automatic extension provisions (each, an "AUTO-EXTENSION LETTER OF CREDIT"); provided that any such Auto-Extension Letter of Credit must permit the L/C Issuer to prevent any such extension at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the "NON-EXTENSION NOTICE DATE") in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the L/C Issuer, Borrower shall not be required to make a specific request to the L/C Issuer for any such extension. Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the L/C Issuer to permit the extension of such Letter of Credit at any time to an expiry date not later than the L/C Expiration Date; provided, however, that the L/C Issuer shall not permit any such extension if (A) the L/C Issuer has determined that it would not be permitted, or would have no obligation, at such time to issue such Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of clause (ii) or (iii) of SECTION 2.01(a) or otherwise), or (B) it has received notice (which may be by telephone or in writing) on or before the day that is five Business Days before the Non-Extension Notice Date (1) from Agent that the Required Lenders have elected not to permit such extension or (2) from Agent, any Lender or Borrower that one or more of the applicable conditions specified in Section 4.02 is not then satisfied, and in each such case directing the L/C Issuer not to permit such extension.            (v) If Borrower so requests in any applicable Letter of Credit Application, the L/C Issuer may, in its sole and absolute discretion, agree to issue a Letter of Credit that permits the automatic reinstatement of all or a portion of the stated amount thereof after any drawing thereunder (each, an "AUTO-REINSTATEMENT LETTER OF CREDIT"). Unless otherwise directed by the L/C Issuer, Borrower shall not be required to make a specific request to the L/C Issuer to permit such reinstatement. Once an Auto-Reinstatement Letter of Credit has been issued, except as provided in the following sentence, the Lenders shall be deemed to have authorized (but may not require) the L/C Issuer to reinstate all or a portion of the stated amount thereof in accordance with the provisions of such Letter of Credit. Notwithstanding the foregoing, if such Auto-Reinstatement Letter of Credit permits the L/C Issuer to decline to reinstate all or any portion of the stated amount thereof after a drawing thereunder by giving notice of such non-reinstatement within a specified number of days after such drawing (the "NON-REINSTATEMENT DEADLINE"), the L/C Issuer shall not permit such reinstatement if it has received a notice (which may be by telephone or in writing) on or before the day that is five Business Days before the Non-Reinstatement Deadline (A) from Agent that the Required Lenders have elected not to permit such reinstatement or (B) from Agent, any Lender or Borrower that one or more of the applicable conditions specified in                                         15   SECTION 4.02 is not then satisfied (treating such reinstatement as an L/C Credit Extension for purposes of this clause) and, in each case, directing the L/C Issuer not to permit such reinstatement.  (c)       DRAWINGS AND REIMBURSEMENTS; FUNDING OF PARTICIPATIONS.            (i) Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the L/C Issuer shall notify Borrower and Agent thereof. Not later than 11:00 a.m. on the date of any payment by the L/C Issuer under a Letter of Credit (each such date, an "HONOR DATE"), Borrower shall reimburse the L/C Issuer through Agent in an amount equal to the amount of such drawing. If Borrower fails to so reimburse the L/C Issuer by such time, Borrower shall be deemed to have incurred from the L/C Issuer an L/C Borrowing in the amount of the unreimbursed drawing (the "UNREIMBURSED AMOUNT") which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate. Agent shall promptly notify each Lender of the Honor Date, the Unreimbursed Amount, and the amount of such Lender's Applicable Percentage thereof. Any notice given by the L/C Issuer or Agent pursuant to this SECTION 2.01(c)(i) may be given by telephone if immediately confirmed in writing; PROVIDED that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.            (ii) Each Lender shall upon any notice pursuant to SECTION 2.01(c)(i) make funds available to Agent for the account of the L/C Issuer at the Administrative Agent's Office in an amount equal to its Applicable Percentage of the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in such notice by Agent. Each Lender's payment to Agent for the account of the L/C Issuer pursuant to this SECTION 2.01(c)(ii) shall be deemed payment in respect of its participation in the applicable L/C Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its participation obligation under this SECTION 2.01. Agent shall remit the funds so received to the L/C Issuer.            (iii) Until each Lender funds its L/C Advance pursuant to this SECTION 2.01(c) to reimburse the L/C Issuer for any amount drawn under any Letter of Credit, interest in respect of such Lender's Applicable Percentage of such amount shall be solely for the account of the L/C Issuer.            (iv) Each Lender's obligation to make L/C Advances to reimburse the L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this SECTION 2.01(c), shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the L/C Issuer, Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing. No such making of an L/C Advance shall relieve or otherwise impair the obligation of Borrower to reimburse the L/C Issuer for the amount of any payment made by the L/C Issuer under any Letter of Credit, together with interest as provided herein.            (v) If any Lender fails to make available to Agent for the account of the L/C Issuer any amount required to be paid by such Lender pursuant to the foregoing provisions of this SECTION 2.01(c) by the time specified in SECTION 2.01(c)(ii), the L/C Issuer shall be entitled to recover from such Lender (acting through Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the L/C Issuer at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by the L/C Issuer in accordance with banking industry rules on interbank compensation, PLUS any administrative, processing or similar fees customarily charged by the L/C Issuer in connection with the foregoing. A certificate of the L/C Issuer submitted to any Lender (through Agent) with respect to any amounts owing under this clause (v) shall be conclusive absent manifest error.  (d)       REPAYMENT OF PARTICIPATIONS.            (i) At any time after the L/C Issuer has made a payment under any Letter of Credit and has received from any Lender such Lender's L/C Advance in respect of such payment in accordance with SECTION 2.01(c), if Agent receives for the account of the L/C Issuer any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from Borrower or otherwise, including proceeds of Cash Collateral applied thereto by Agent), Agent will distribute to such Lender its Applicable Percentage thereof (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender's L/C Advance was outstanding) in the same funds as those received by Agent.            (ii) If any payment received by Agent for the account of the L/C Issuer pursuant to SECTION 2.01(c)(i) is required to be returned under any of the circumstances described in SECTION 10.05 (including pursuant to any settlement entered into by the L/C Issuer in its discretion), each Lender shall pay to Agent for the account of the L/C Issuer its Applicable Percentage thereof on                                         16   demand of Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Lender, at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.  (e)       OBLIGATIONS ABSOLUTE. The obligation of Borrower to reimburse the L/C Issuer for each drawing under each Letter of Credit and to repay each L/C Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:            (i) any lack of validity or enforceability of such Letter of Credit, this Agreement, any other Loan Document or any Collateral Document;            (ii) the existence of any claim, counterclaim, setoff, defense or other right that Borrower or any Subsidiary may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the L/C Issuer or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;            (iii) any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;            (iv) any payment by the L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by the L/C Issuer under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law; or            (v) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, Borrower or any Subsidiary.  Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with Borrower's instructions or other irregularity, Borrower will immediately notify the L/C Issuer. Borrower shall be conclusively deemed to have waived any such claim against the L/C Issuer and its correspondents unless such notice is given as aforesaid.  (f) RECORDS. Each Lender and Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit. In the event of any conflict between the accounts and records maintained by Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of Agent shall control in the absence of manifest error.  (g)       ROLE OF L/C ISSUER. Each Lender and Borrower agree that, in paying any drawing under a Letter of Credit, the L/C Issuer shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of the L/C Issuer, Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of Lenders or the Required Lenders, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Issuer Document. Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; PROVIDED, HOWEVER, that this assumption is not intended to, and shall not, preclude Borrower's pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of the L/C Issuer, Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer, shall be liable or responsible for any of the matters described in clauses (i) through (v) of SECTION 2.01(e); PROVIDED, HOWEVER, that anything in such clauses to the contrary notwithstanding, Borrower may have a claim against the L/C Issuer, and the L/C Issuer may be liable to Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by Borrower which Borrower proves were caused by the L/C Issuer's willful misconduct or gross negligence or the L/C Issuer's willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and                                         17   conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, the L/C Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and the L/C Issuer shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.  (h)       CASH COLLATERAL. Upon the request of Agent, if, as of the L/C Expiration Date, any L/C Obligation for any reason remains outstanding, Borrower shall, immediately Cash Collateralize the then Outstanding Amount of all L/C Obligations. Section 8.02(c) sets forth certain additional requirements to deliver Cash Collateral hereunder. In addition, if for any reason, the Total Outstandings at any time exceeds the Aggregate Commitment then in effect, Borrower shall immediately Cash Collateralize the L/C Obligations in an amount equal to such excess. For purposes hereof, "CASH COLLATERALIZE" means to pledge and deposit with or deliver to Agent, for the benefit of the L/C Issuer and the Lenders, as collateral for the L/C Obligations, cash or deposit account balances pursuant to documentation in form and substance satisfactory to Agent and the L/C Issuer (which documents are hereby consented to by Lenders). Derivatives of such term have corresponding meanings. Borrower hereby grants to Agent, for the benefit of the L/C Issuer and Lenders, a security interest in all such cash, deposit accounts and all balances therein and all proceeds of the foregoing. Cash collateral shall be maintained in blocked, non-interest bearing deposit accounts at Bank of America.  (i)       APPLICABILITY OF ISP AND UCP. Unless otherwise expressly agreed by the L/C Issuer and Borrower when a Letter of Credit is issued, (i) the rules of the ISP shall apply to each standby Letter of Credit, and (ii) the rules of the Uniform Customs and Practice for Documentary Credits, as most recently published by the International Chamber of Commerce (the "ICC") at the time of issuance shall apply to each commercial Letter of Credit.  (j)       L/C FEES. Borrower shall pay to Agent for the account of each Lender in accordance with its Applicable Percentage a L/C fee (the "L/C FEE") for each Letter of Credit equal to the Applicable Rate TIMES the daily amount available to be drawn under such Letter of Credit. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with SECTION 1.06. L/C Fees shall be (i) computed on a quarterly basis in arrears and (ii) due and payable on the first Business Day after the end of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of Credit, on the L/C Expiration Date and thereafter on demand. Notwithstanding anything to the contrary contained herein, upon the request of the Required Lenders, while any Event of Default exists, all L/C Fees shall accrue at the Default Rate.  (k)       CONFLICT WITH ISSUER DOCUMENTS. In the event of any conflict between the terms hereof and the terms of any Issuer Documents, the terms hereof shall control.            2.02 TERMINATION OR REDUCTION OF COMMITMENTS. Borrower may, upon notice to Agent, terminate the Aggregate Commitments, or from time to time permanently reduce the Aggregate Commitments; PROVIDED that (i) any such notice shall be received by Agent not later than 11:00 a.m. five Business Days prior to the date of termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of $1,000,000 or any whole multiple of $1,000,000 in excess thereof, (iii) Borrower shall not terminate or reduce the Aggregate Commitments if, after giving effect thereto, the Outstanding Amount of all L/C Obligations would exceed the Aggregate Commitments. Agent will promptly notify the Lenders of any such notice of termination or reduction of the Aggregate Commitments. Any reduction of the Aggregate Commitments shall be applied to the Commitment of each Lender according to its Applicable Percentage. All fees accrued until the effective date of any termination of the Aggregate Commitments shall be paid on the effective date of such termination.            2.03 REPAYMENT OF L/C BORROWINGS; INTEREST. Each L/C Borrowing is due and payable on demand. Each L/C Borrowing and, upon the request of the Required Lenders, any other amount payable by Borrower under any Loan Document that is not paid when due (without regard to any applicable grace periods), whether at stated maturity, upon demand, by acceleration or otherwise, shall bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws. Accrued and unpaid interest as set forth above (including interest on past due interest) shall be due and payable upon demand. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.            2.04 FEES. In addition to certain fees described in subsection (j) of SECTION 2.01:                                         18   (a)       COMMITMENT FEE. Borrower shall pay to Agent for the account of each Lender in accordance with its Applicable Percentage, a commitment fee equal to the Applicable Rate TIMES the actual daily amount by which the Aggregate Commitments exceed the Outstanding Amount of L/C Obligations. The commitment fee shall accrue at all times from the Closing Date until the Maturity Date, including at any time during which one or more of the conditions in ARTICLE IV is not met, and shall be due and payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing with the first such date to occur after the Closing Date, and on the Maturity Date. The commitment fee shall be calculated quarterly in arrears, and if there is any change in the Applicable Rate during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect.  (b)       AGENT'S FEES. Borrower shall pay to Agent for Agent's own account, fees in the amounts and at the times specified in the letter agreement, dated October 3, 2005 (the "AGENT FEE LETTER"), between Borrower and Agent. Such fees shall be fully earned when paid and shall be nonrefundable for any reason whatsoever.  (c)       LENDERS' UPFRONT FEE. On the Closing Date, Borrower shall pay to Agent, for the account of each Lender in accordance with their respective Applicable Percentages, an upfront fee in an amount of 1/4 of 1% of the Commitment of such Lender. Such upfront fees are for the credit facilities committed by Lenders under this Agreement and are fully earned on the date paid. The upfront fee paid to each Lender is solely for its own account and is nonrefundable for any reason whatsoever.  (d)       DRAW FEE AND AMENDMENT FEE. Borrower shall pay to the Agent for the account of each Lender in accordance with its Applicable Percentage, a fee for each draw request made on a Letter of Credit and for each amendment made to a Letter of Credit; such fees are currently $175 and $250, respectively, and are subject to change from time to time. In addition, Borrower shall pay directly to the L/C Issuer for its own account the customary issuance, presentation and other processing fees, and other standard costs and charges, of the L/C Issuer relating to letters of credit as from time to time in effect. All such fees, costs and charges are due and payable on demand and are nonrefundable.            2.05 COMPUTATION OF INTEREST AND FEES. All computations of interest when the Base Rate is determined by Bank of America's "prime rate" shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year). Interest shall accrue on each L/C Borrowing for the day on which the L/C Borrowing is made, and shall not accrue on a L/C Borrowing, or any portion thereof, for the day on which the L/C Borrowing or such portion is paid, PROVIDED that any L/C Borrowing that is repaid on the same day on which it is made shall, subject to SECTION 2.06(a), bear interest for one day. Each determination by Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.            2.06 PAYMENTS GENERALLY; AGENT'S CLAWBACK. (a)(i) GENERAL. All payments to be made by Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by Borrower hereunder shall be made to Agent, for the account of L/C Issuer or the respective Lenders to which such payment is owed, at the Administrative Agent's Office in Dollars and in immediately available funds not later than 12:00 noon on the date specified herein. Agent will promptly distribute to each Lender its Applicable Percentage(or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender's Lending Office. All payments received by Agent after 12:00 noon shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. If any payment to be made by Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.  (ii)    On each date when the payment of any principal, interest or fees are due hereunder or under any other Loan Document, Borrower agrees to maintain on deposit in an ordinary checking account maintained by Borrower with Agent (as such account shall be designated by Borrower in a written notice to Agent from time to time, the "BORROWER ACCOUNT") an amount sufficient to pay such principal, interest or fees in full on such date. Borrower hereby authorizes Agent (A) to deduct automatically all principal, interest or fees when due hereunder from the Borrower Account, and (B) if and to the extent any payment of principal, interest or fees under this Agreement is not made when due to deduct any such amount from any or all of the accounts of Borrower maintained at Agent. Agent agrees to provide written notice to Borrower of any automatic deduction made pursuant to this SECTION 2.06(a)(ii) showing in reasonable detail the amounts of such deduction. Lenders agree to reimburse Borrower based on their Applicable Percentage for any amounts deducted from such accounts in excess of amount due hereunder and under any other Loan Documents.                                         19   (b)       PAYMENTS BY BORROWER; PRESUMPTIONS BY AGENT. Unless Agent shall have received notice from Borrower prior to the date on which any payment is due to Agent for the account of the Lenders or the L/C Issuer hereunder that Borrower will not make such payment, Agent may assume that Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to Lenders or the L/C Issuer, as the case may be, the amount due. In such event, if Borrower has not in fact made such payment, then each of Lenders or the L/C Issuer, as the case may be, severally agrees to repay to Agent forthwith on demand the amount so distributed to such Lender or the L/C Issuer, in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to Agent, at the greater of the Federal Funds Rate and a rate determined by Agent in accordance with banking industry rules on interbank compensation. A notice of Agent to any Lender or Borrower with respect to any amount owing under this subsection (b) shall be conclusive, absent manifest error.  (c)       OBLIGATIONS OF LENDERS SEVERAL. The obligations of Lenders hereunder to fund participations in Letters of Credit and to make payments under SECTION 10.04(c) are several and not joint. The failure of any Lender to make any L/C Advance, to fund any such participation or to make any payment under SECTION 10.04(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its L/C Advance, purchase its participation or to make its payment under SECTION 10.04(c):            2.07 SHARING OF PAYMENTS. If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of the participations in L/C Obligations held by it resulting in such Lender's receiving payment of a proportion of the aggregate amount of such participations and accrued interest thereon greater than its PRO RATA share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify Agent of such fact, and (b) purchase (for cash at face value) subparticipations in L/C Obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective L/C Advances and other amounts owing them, PROVIDED that:            (i)       if any such subparticipations are purchased and all or any           portion of the payment giving rise thereto is recovered, such           subparticipations shall be rescinded and the purchase price restored           to the extent of such recovery, without interest; and            (ii)      the provisions of this Section shall not be construed to           apply to (x) any payment made by Borrower pursuant to and in           accordance with the express terms of this Agreement or (y) any payment           obtained by a Lender as consideration for subparticipations in L/C           Obligations to any assignee or participant, other than to Borrower or           any Subsidiary thereof (as to which the provisions of this Section           shall apply).  Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Loan Party in the amount of such participation.  ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY            3.01 TAXES. (a) PAYMENTS FREE OF TAXES. Any and all payments by Borrower to or on account of any obligation of Borrower hereunder or under any other Loan Document shall be made free and clear of and without reduction or withholding for any Indemnified Taxes or Other Taxes, provided that if Borrower shall be required by any applicable law to deduct any Indemnified Taxes (including any Other Taxes) from such payments, then, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section), Agent, Lender or L/C Issuer, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) Borrower shall make such deductions, and (iii) Borrower shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.  (b) PAYMENT OF OTHER TAXES BY BORROWER. Without limiting the provisions of subsection (a) above, Borrower shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.  (c) INDEMNIFICATION BY BORROWER. Borrower shall indemnify Agent, each Lender and the L/C Issuer, within 10 days after demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or                                         20   asserted on or attributable to amounts payable under this Section) paid by Agent, such Lender or the L/C Issuer, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to Borrower by a Lender or the L/C Issuer (with a copy to Agent), or by Agent on its own behalf or on behalf of a Lender or the L/C Issuer, shall be conclusive absent manifest error.  (d) EVIDENCE OF PAYMENTS. As soon as practicable after any payment of Indemnified Taxes or Other Taxes by Borrower to a Governmental Authority, Borrower shall deliver to Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to Agent.  (e) STATUS OF LENDERS. Any Lender, if requested by Borrower or Agent, shall deliver such documentation prescribed by applicable law or reasonably requested by Borrower or Agent as will enable the Borrower or Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.  (f) TREATMENT OF CERTAIN REFUNDS. If Agent, any Lender or the L/C Issuer determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by Borrower or with respect to which Borrower has paid additional amounts pursuant to this Section, it shall pay to Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by Borrower under this Section with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of Agent, such Lender or the L/C Issuer, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), PROVIDED that Borrower, upon the request of Agent, such Lender or the L/C Issuer, agrees to repay the amount paid over to Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to Agent, such Lender or the L/C Issuer in the event Agent, such Lender or the L/C Issuer is required to repay such refund to such Governmental Authority. This subsection shall not be construed to require Agent, any Lender or the L/C Issuer to make available its tax returns (or any other information relating to its taxes that it deems confidential) to Borrower or any other Person.            3.02 INCREASED COSTS (a) INCREASED COSTS GENERALLY. If any Change in Law shall:            (i)       impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender or the L/C Issuer;            (ii)      subject any Lender or the L/C Issuer to any tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, or any participation in a Letter of Credit, or change the basis of taxation of payments to such Lender or the L/C Issuer in respect thereof (except for Indemnified Taxes or Other Taxes covered by SECTION 3.01 and the imposition of, or any change in the rate of, any Excluded Tax payable by such Lender or the L/C Issuer); or            (iii)     impose on any Lender or the L/C Issuer any other condition, cost or expense affecting this Agreement or any Letter of Credit or participation therein;  and the result of any of the foregoing shall be to increase the cost to such Lender or the L/C Issuer of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender or the L/C Issuer hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or the L/C Issuer, Borrower will pay to such Lender or the L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or the L/C Issuer, as the case may be, for such additional costs incurred or reduction suffered.  (b)       CAPITAL REQUIREMENTS. If any Lender or the L/C Issuer determines that any Change in Law affecting such Lender or the L/C Issuer or any Lending Office of such Lender or such Lender's or the L/C Issuer's holding company, if any, regarding capital requirements has or would have the effect of reducing the rate of return on such Lender's or the L/C Issuer's capital or on the capital of such Lender's or the L/C Issuer's holding company, if any, as a consequence of this Agreement, the Commitments of such Lender, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the L/C Issuer, to a level below that which such Lender or the L/C Issuer or such Lender's or the L/C Issuer's holding company could have achieved                                         21   but for such Change in Law (taking into consideration such Lender's or the L/C Issuer's policies and the policies of such Lender's or the L/C Issuer's holding company with respect to capital adequacy), then from time to time Borrower will pay to such Lender or the L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or the L/C Issuer or such Lender's or the L/C Issuer's holding company for any such reduction suffered. If Borrower becomes obligated to make any material amount of recurring payments under this subsection, then Borrower shall have the right to find another issuer of an appropriate letter of credit, and, upon closing with such issuer and the return to the Agent of any Letters of Credit outstanding hereunder and payment of any amounts due hereunder, terminate this Agreement, provided however that no such termination shall affect Borrower's obligations to the Lenders, the Agent, and the L/C Issuer for matters arising during the period this Agreement was in effect and payment of their reasonable out-of-pocket costs, including reasonable attorneys' fees, in connection with such termination.  (c)       CERTIFICATES FOR REIMBURSEMENT. A certificate of a Lender or the L/C Issuer setting forth the amount or amounts necessary to compensate such Lender or the L/C Issuer or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to Borrower shall be conclusive absent manifest error. Borrower shall pay such Lender or the L/C Issuer, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.  (d)       DELAY IN REQUESTS. Failure or delay on the part of any Lender or the L/C Issuer to demand compensation pursuant to the foregoing provisions of this Section shall not constitute a waiver of such Lender's or the L/C Issuer's right to demand such compensation, PROVIDED that Borrower shall not be required to compensate a Lender or the L/C Issuer pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than nine months prior to the date that such Lender or the L/C Issuer, as the case may be, notifies Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender's or the L/C Issuer's intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).            3.03 MITIGATION OBLIGATIONS. If any Lender requests compensation under SECTION 3.02, or Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to SECTION 3.01, then such Lender shall use reasonable efforts to designate a different Lending Office or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to SECTION 3.01 or 3.02, as the case may be, in the future, and (ii) in each case, would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.            3.04 SURVIVAL. All of Borrower's obligations under this ARTICLE III shall survive termination of the Aggregate Commitments and repayment of all other Obligations hereunder.  ARTICLE IV. CONDITIONS PRECEDENT TO L/C CREDIT EXTENSIONS            4.01 CONDITIONS OF INITIAL L/C CREDIT EXTENSION. The obligation of the L/C Issuer to make the initial L/C Credit Extension hereunder is subject to satisfaction of the following conditions precedent:  (a) Agent's receipt of the following, each of which shall be originals or telecopies (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing Loan Party, each dated the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance satisfactory to Agent and each of the Lenders:            (i) executed counterparts of this Agreement sufficient in number for           distribution to Agent, each Lender and Borrower, together with           originals of the applicable Issuer Documents to be delivered to the           L/C Issuer and all Collateral Documents, with the original Second           Mortgage Bonds, to be delivered to the Agent;            (ii) such certificates of resolutions or other action, incumbency           certificates and/or other certificates of Responsible Officers of each           Loan Party as Agent may require evidencing the identity, authority and           capacity of each Responsible Officer thereof authorized to act as a           Responsible Officer in connection with this Agreement and the other           Loan Documents to which such Loan Party is a party;                                         22             (iii) such documents and certifications as Agent may reasonably           require to evidence that each Loan Party is duly organized or formed,           and that each Loan Party is validly existing, in good standing and           qualified to engage in business in each jurisdiction where its           ownership, lease or operation of properties or the conduct of its           business requires such qualification, except to the extent that           failure to do so could not reasonably be expected to have a Material           Adverse Effect;            (iv) a favorable opinion of counsel to the Loan Parties acceptable to           Agent addressed to Agent and each Lender, as to the matters set forth           concerning the Loan Parties and the Loan Documents in form and           substance satisfactory to Agent;            (v) a certificate of a Responsible Officer of each Loan Party either           (A) attaching copies of all consents, licenses and approvals required           in connection with the execution, delivery and performance by such           Loan Party and the validity against such Loan Party of the Loan           Documents to which it is a party, and stating that such consents,           licenses and approvals shall be in full force and effect, or (B)           stating that no such consents, licenses or approvals are so required;            (vi) a certificate signed by a Responsible Officer of Borrower           certifying (A) that the conditions specified in SECTIONS 4.02(a) and           (b) have been satisfied, and (B) that there has been no event or           circumstance since the date of the Borrower Financial Statements that           has had or could be reasonably expected to have, either individually           or in the aggregate, a Material Adverse Effect;            (vii) evidence that all insurance required to be maintained pursuant           to the Loan Documents has been obtained and is in effect;            (viii) a duly completed Compliance Certificate as of the last day of           the fiscal quarter of Borrower most recently ended prior to the           Closing Date, signed by a Responsible Officer of Borrower;            (ix) evidence that all commitments under the Letter of Credit and           Reimbursement Agreement dated as of June 1, 1996, with The Bank of New           York as Agent and Issuing Bank, as the same has been amended to date           (the "EXISTING CREDIT AGREEMENT") have been or concurrently with the           Closing Date are being terminated, and all outstanding amounts           thereunder paid in full and all Liens securing obligations under the           Existing Credit Agreement have been or concurrently with the Closing           Date are being released;            (x) evidence that the Letter of Credit to be issued hereunder has been           accepted as an "Alternate Credit Facility" by the Trustee under the           MPUFB Indenture;            (xi) true and complete copies of each of the following, as amended to           date, shall be provided to the Agent: the MPUFB Loan Agreement, the           MPUFB Indenture, the Second Mortgage Supplemental Indenture, the           Pledge Agreement, the Tender Agreement, the Remarketing Agreement; and            (xii) such other assurances, certificates, documents, consents or           opinions as Agent, the L/C Issuer or the Required Lenders reasonably           may require.  (b)       Any fees required to be paid on or before the Closing Date shall have been paid.  (c)       Unless waived by Agent, Borrower shall have paid all fees, charges and disbursements of counsel to Agent to the extent invoiced prior to or on the Closing Date, plus such additional amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final settling of accounts between Borrower and Agent).  (d)       The Closing Date shall have occurred on or before February 28, 2006.  Without limiting the generality of the provisions of SECTION 9.04, for purposes of determining compliance with the conditions specified in this SECTION 4.01, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or                                         23   acceptable or satisfactory to a Lender unless Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.            4.02 CONDITIONS TO ALL L/C CREDIT EXTENSIONS. The obligation of the L/C Issuer to honor any request for a L/C Credit Extension is subject to the following conditions precedent:  (a) The representations and warranties of Borrower and each other Loan Party contained in ARTICLE V or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct on and as of the date of such L/C Credit Extension, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date, and except that for purposes of this SECTION 4.02, the representations and warranties contained in subsections (a) and (b) of SECTION 5.05 shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of SECTION 6.01.  (b) No Default shall exist, or would result from such proposed L/C Credit Extension or from the application of the proceeds thereof.  (c) Agent and the L/C Issuer shall have received the L/C Application in accordance with the requirements hereof.  (d) Agent shall have received, in form and substance satisfactory to it, such other assurances, certificates, documents or consents related to the foregoing as Agent, the L/C Issuer or the Required Lenders reasonably may require.  Each L/C Application submitted by Borrower shall be deemed to be a representation and warranty that the conditions specified in SECTIONS 4.02(a) and (b) have been satisfied on and as of the date of the applicable L/C Credit Extension.  ARTICLE V. REPRESENTATIONS AND WARRANTIES  Borrower represents and warrants to Agent and the Lenders that:            5.01 EXISTENCE, QUALIFICATION AND POWER; COMPLIANCE WITH LAWS. Each Loan Party and each Subsidiary thereof (a) is duly organized or formed, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents and the Collateral Documents to which it is a party, (c) is duly qualified and is licensed and in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license, and (d) is in compliance with all Laws; except in each case referred to in clause (b)(i), (c) or (d), to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.            5.02 AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and performance by each Loan Party of each Loan Document and each Collateral Document to which such Person is party, have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of any of such Person's Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, or require any payment to be made under (i) any Contractual Obligation to which such Person is a party or affecting such Person or the properties of such Person or any of its Subsidiaries or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (c) violate any Law. Each Loan Party and each Subsidiary thereof is in compliance with all Contractual Obligations referred to in clause (b)(i), except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.            5.03 GOVERNMENTAL AUTHORIZATION; OTHER CONSENTS. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document or any Collateral Document except that any action requiring a sale of any material part of the Borrower's assets will require PUC approval.            5.04 BINDING EFFECT. This Agreement has been, and each other Loan Document and each Collateral Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto. This                                         24   Agreement constitutes, and each other Loan Document and each Collateral Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms.            5.05 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE EFFECT; NO INTERNAL CONTROL EVENT. (a) The Borrower Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present the financial condition of Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show all material indebtedness and other liabilities, direct or contingent, of Borrower and its Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Indebtedness.  (b) The unaudited consolidated and consolidating balance sheets of Borrower and its Subsidiaries dated September 30, 2005, and the related consolidated and consolidating statements of income or operations, shareholders' equity and cash flows for the fiscal quarter ended on that date (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present the financial condition of Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby, subject, in the case of clauses (i) and (ii), to the absence of footnotes and to normal year-end audit adjustments.  (c) Since the date of the Borrower Financial Statements, there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect.  (d) Since the date of the Borrower Financial Statements, no Internal Control Event has occurred.  (e) Subject to the second sentence of this subsection, the consolidated pro forma balance sheets of Borrower and its Subsidiaries as at December 31, 2005, and the related consolidated pro forma statements of income and cash flows of Borrower and its Subsidiaries for the twelve months then ended, certified by the chief financial officer of Borrower, copies of which have been furnished to each Lender, fairly present the consolidated pro forma financial condition of Borrower and its Subsidiaries as at such date and the consolidated pro forma results of operations of Borrower and its Subsidiaries for the period ended on such date, all in accordance with GAAP. The consolidated forecasted balance sheet and statements of income and cash flows of the Borrower and its Subsidiaries were prepared in good faith on the basis of the assumptions stated therein, which assumptions were fair in light of the conditions existing at the time of delivery of such forecasts, and represented, at the time of delivery, the Borrower's best estimate of its future financial performance.            5.06 LITIGATION. There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of Borrower after due and diligent investigation, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against Borrower or any of its Subsidiaries or against any of their properties or revenues that (a) purport to affect or pertain to this Agreement or any other Loan Document or any Collateral Document, or any of the transactions contemplated hereby, or (b) except as specifically disclosed in SCHEDULE 5.06, either individually or in the aggregate, if determined adversely, could reasonably be expected to have a Material Adverse Effect, and there has been no adverse change in the status, or financial effect on any Loan Party or any Subsidiary thereof, of the matters described on SCHEDULE 5.06.            5.07 NO DEFAULT. Neither Borrower nor any Subsidiary is in default under or with respect to any Contractual Obligation that could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. No Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.            5.08 OWNERSHIP OF PROPERTY; LIENS. Each of Borrower and each Subsidiary has good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business, except for such defects in title as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The property of Borrower and its Subsidiaries is subject to no Liens, other than Liens permitted by SECTION 7.01.            5.09 ENVIRONMENTAL COMPLIANCE. Borrower and its Subsidiaries conduct in the ordinary course of business a review of the effect of existing Environmental Laws and claims alleging potential liability or responsibility for violation of any Environmental Law on their respective businesses, operations and properties, and as a result thereof Borrower has reasonably                                         25   concluded that, except as specifically disclosed in SCHEDULE 5.09, such Environmental Laws and claims could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.            5.10 INSURANCE. The properties of Borrower and its Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of Borrower, in such amounts (after giving effect to any self-insurance compatible with the following standards), with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where Borrower or the applicable Subsidiary operates.            5.11 TAXES. Borrower and its Subsidiaries have filed all Federal, state and other material tax returns and reports required to be filed, and have paid all Federal, state and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP. There is no proposed tax assessment against Borrower or any Subsidiary that would, if made, have a Material Adverse Effect.            5.12 ERISA COMPLIANCE. (a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state Laws. Each Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto and, to the best knowledge of Borrower, nothing has occurred which would prevent, or cause the loss of, such qualification. Borrower and each ERISA Affiliate have made all required contributions to each Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan.  (b) There are no pending or, to the best knowledge of Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could be reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Effect.  (c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Sections 4069 or 4212(c) of ERISA.            5.13 SUBSIDIARIES. As of the Closing Date, Borrower has no Subsidiaries other than those specifically disclosed in Part (a) of SCHEDULE 5.13, and all of the outstanding Equity Interests in such Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by a Loan Party in the amounts specified on Part (a) of Schedule 5.13 free and clear of all Liens. Borrower has no equity investments in any other corporation or entity other than those specifically disclosed in Part(b) of SCHEDULE 5.13. All of the outstanding Equity Interests in Borrower have been validly issued and are fully paid and nonassessable and are owned by Maine & Maritimes Corporation in the amounts specified on Part (c) of SCHEDULE 5.13 free and clear of all Liens.            5.14 MARGIN REGULATIONS; INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT. (a) Borrower is not engaged and will not engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock. Following the application of the drawing under each Letter of Credit, not more than 25% of the value of the assets (either of Borrower only or of Borrower and its Subsidiaries on a consolidated basis) subject to the provisions of SECTION 7.01 or SECTION 7.05 or subject to any restriction contained in any agreement or instrument between Borrower and any Lender or any Affiliate of any Lender relating to Indebtedness and within the scope of SECTION 8.01(e) will be margin stock.  (b) None of Borrower, any Person Controlling Borrower, or any Subsidiary is or is required to be registered as an "investment company" under the Investment Company Act of 1940.                                         26   (c) The Parent and each of its subsidiaries, including the Borrower, have been exempted as a "holding company" and a "subsidiary", respectively, under the Public Utility Holding Company Act of 1935 (repealed effective February 8, 2006) pursuant to annual filings made with the SEC on Form U-3A-2, the most recent of which is now in full force and effect and has not been revoked, modified or amended. While the Parent meets the definition of a "holding company" under the Public Utility Holding Company Act of 2005, and the Borrower meets the definition of a "subsidiary" under such Act, (a) the only applicable requirements under such Act are state and federal government access to books and records of holding companies and their subsidiaries for other regulatory purposes, and (b) either the Parent or the Borrower, or both, may come under the terms of exemptions under regulations yet to be promulgated under such Act by the Federal Energy Regulatory Commission. The provisions of the Federal Power Act giving jurisdiction over securities issued by certain utilities does not extend to the securities and other obligations of the Borrower issued or incurred under this Agreement, since it is organized and operating in a state under the laws of which the security issues and other obligations under this Agreement are regulated by a state commission. The Borrower is subject to the jurisdiction of the PUC, which is vested with comprehensive powers of supervision, regulation and control over various matters, including the issuance of securities.            5.15 DISCLOSURE. Borrower has disclosed to Agent and Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. No report, financial statement, certificate or other information furnished (whether in writing or orally) by or on behalf of any Loan Party to Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other Loan Document (in each case, as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; PROVIDED that, with respect to projected financial information, Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.            5.16 COMPLIANCE WITH LAWS. Each of Borrower and each Subsidiary is in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.            5.17 INTELLECTUAL PROPERTY; LICENSES, ETC. Borrower and its Subsidiaries own, or possess the right to use, all of the trademarks, service marks, trade names, copyrights, patents, patent rights, franchises, licenses and other intellectual property rights that are reasonably necessary for the operation of their respective businesses, without conflict with the rights of any other Person. To the best knowledge of Borrower, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by Borrower or any Subsidiary infringes upon any rights held by any other Person. No claim or litigation regarding any of the foregoing is pending or, to the best knowledge of Borrower, threatened, which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.            5.18 RIGHTS IN COLLATERAL; PRIORITY OF LIENS. Borrower and each other Loan Party have caused the Second Mortgage Bonds to be duly executed and delivered in accordance with the terms of the Collateral Documents, as collateral security for Borrower's obligations hereunder, and the Letter of Credit to be issued under this Agreement is an "Alternate Credit Facility" as defined in the MPUFB Indenture. The Second Mortgage Bonds constitute valid and enforceable second priority perfected Liens on the property of Borrower, as described in the Second Mortgage Indenture, in favor of Agent, for the ratable benefit of Agent, L/C Issuer and Lenders.  ARTICLE VI. AFFIRMATIVE COVENANTS  So long as any Lender shall have any Commitment hereunder, any Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, Borrower shall, and shall (except in the case of the covenants set forth in SECTIONS 6.01, 6.02, and 6.03) cause each Subsidiary to:            6.01 FINANCIAL STATEMENTS. Deliver to Agent a sufficient number of copies for delivery by Agent to each Lender, in form and detail satisfactory to Agent and the Required Lenders:  (a) as soon as available, but in any event within 120 days after the end of each fiscal year of Borrower,                                         27   (i) a consolidated and consolidating balance sheet of Parent and its subsidiaries as at the end of such fiscal year, and the related consolidated and consolidating statements of income or operations, shareholders' equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, such consolidated statements to be audited and accompanied by (i) a report and opinion of Vitale, Caturano and Co., Ltd. or another Registered Public Accounting Firm of nationally recognized standing reasonably acceptable to the Required Lenders, which report and opinion shall be prepared in accordance with generally accepted auditing standards and applicable Securities Laws and shall not be subject to any "going concern" or like qualification or exception or any qualification or exception as to the scope of such audit and (ii) when and to the extent required by the SEC an attestation report of such Registered Public Accounting Firm as to the Parent's internal controls pursuant to Section 404 of Sarbanes-Oxley expressing a conclusion to which the Required Lenders do not object and such consolidating statements to be certified by a Responsible Officer of Parent to the effect that such statements are fairly stated in all material respects when considered in relation to the consolidated financial statements of Parent and its subsidiaries, provided, however, that so long as Parent is subject to section 13 of the Securities Exchange Act of 1934, as amended, this requirement shall be satisfied with respect to Parent by delivery within such 120-day period of the annual report of Parent on Form 10-K for such fiscal year, together with all documents from the preceding fiscal year which are incorporated therein by reference, and have theretofore not been delivered, as filed by Parent with the SEC; and  (ii) a consolidated and consolidating balance sheet of Borrower and its Subsidiaries as at the end of such fiscal year, and the related consolidated and consolidating statements of income or operations, shareholders' equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, and such consolidating statements to be certified by a Responsible Officer of Borrower to the effect that such statements are fairly stated in all material respects when considered in relation to the consolidated financial statements of Borrower and its Subsidiaries (the "Borrower Financial Statements");  (b) as soon as available, but in any event within 60 days after the end of each of the first three fiscal quarters of each fiscal year of Borrower,  (i) a consolidated and consolidating balance sheet of Parent and its subsidiaries as at the end of such fiscal quarter, and the related consolidated and consolidating statements of income or operations, shareholders' equity and cash flows for such fiscal quarter and for the portion of Parent's fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail, such consolidated statements to be certified by a Responsible Officer of Parent as fairly presenting the financial condition, results of operations, shareholders' equity and cash flows of Parent and its subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes and such consolidating statements to be certified by a Responsible Officer of Parent to the effect that such statements are fairly stated in all material respects when considered in relation to the consolidated financial statements of the Parent and its subsidiaries, provided, however, that so long as Parent is subject to section 13 of the Securities Exchange Act of 1934, as amended, this requirement shall be satisfied with respect to Parent by delivery within such 60-day period of the annual report of Parent on Form 10-Q for such quarter, as filed by Parent with the SEC; and  (ii) a consolidated and consolidating balance sheet of Borrower and its Subsidiaries as at the end of such fiscal quarter, and the related consolidated and consolidating statements of income or operations, shareholders' equity and cash flows for such fiscal quarter and for the portion of Borrower's fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail, such consolidated statements to be certified by a Responsible Officer of Borrower as fairly presenting the financial condition, results of operations, shareholders' equity and cash flows of Borrower and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes and such consolidating statements to be certified by a Responsible Officer of Borrower to the effect that such statements are fairly stated in all material respects when considered in relation to the consolidated financial statements of the Borrower and its Subsidiaries; and  (c) as soon as available, but in any event at least 60 days after the end of each fiscal year of Borrower, forecasts prepared by management of Borrower, in form satisfactory to Agent and the Required Lenders, of consolidated balance sheets and statements of income or operations and cash flows of Borrower and its Subsidiaries on a monthly basis for the immediately following fiscal year (including the fiscal year in which the Maturity Date occurs).            6.02 CERTIFICATES; OTHER INFORMATION. Deliver to Agent a sufficient number of copies for delivery by Agent to each Lender, in form and detail satisfactory to Agent and the Required Lenders:                                         28   (a) concurrently with the delivery of the financial statements referred to in SECTION 6.01(a), a certificate of its independent certified public accountants certifying such financial statements and stating that in making the examination necessary therefor no knowledge was obtained of any Default or, if any such Default shall exist, stating the nature and status of such event;  (b) concurrently with the delivery of the financial statements referred to in SECTIONS 6.01(a) and (b), a duly completed Compliance Certificate signed by a Responsible Officer of Borrower;  (c) promptly after any request by Agent or any Lender, copies of any detailed audit reports, management letters or recommendations submitted to the board of directors (or the audit committee of the board of directors) of Borrower by independent accountants in connection with the accounts or books of Borrower or any Subsidiary, or any audit of any of them;  (d) promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of Borrower, and copies of all annual, regular, periodic and special reports and registration statements which Borrower may file or be required to file with the Securities and Exchange Commission under Section 13 or 15(d) of the Securities Exchange Act of 1934, and not otherwise required to be delivered to Agent pursuant hereto;  (e) promptly after the furnishing thereof, copies of any statement or report furnished to any holder of debt securities of any Loan Party or any Subsidiary thereof pursuant to the terms of any indenture, loan or credit or similar agreement and not otherwise required to be furnished to the Lenders pursuant to Section 6.01 or any other clause of this Section 6.02;  (f) promptly, and in any event within five Business Days after receipt thereof by any Loan Party or any Subsidiary thereof, copies of each notice or other correspondence received from the Securities and Exchange Commission (or comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation or possible investigation or other inquiry by such agency regarding financial or other operational results of any Loan Party or any Subsidiary thereof; and  (g) promptly, such additional information regarding the business, financial or corporate affairs of Borrower or any Subsidiary, or compliance with the terms of the Loan Documents and the Collateral Documents, as Agent or any Lender may from time to time reasonably request.  Borrower hereby acknowledges that (a) Agent will make available to Lenders and the L/C Issuer materials and/or information provided by or on behalf of Borrower hereunder (collectively, "BORROWER MATERIALS") by posting Borrower Materials on IntraLinks or another similar electronic system (the "PLATFORM") and (b) certain of the Lenders may be "public-side" Lenders (I.E., Lenders that do not wish to receive material non-public information with respect to Borrower or its securities) (each, a "PUBLIC LENDER"). Borrower hereby agrees that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked "PUBLIC" so long as Borrower is the issuer of any outstanding debt or equity securities that are registered or issued pursuant to a private offering or is actively contemplating issuing any such securities which, at a minimum, shall mean that the word "PUBLIC" shall appear prominently on the first page thereof; (x) by marking Borrower Materials "PUBLIC," Borrower shall be deemed to have authorized Agent, the L/C Issuer and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to Borrower or its securities for purposes of United States Federal and state securities laws (provided, however, that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 10.07); (y) all Borrower Materials marked "PUBLIC" are permitted to be made available through a portion of the Platform designated "Public Investor;" and (z) Agent shall be entitled to treat any Borrower Materials that are not marked "PUBLIC" as being suitable only for posting on a portion of the Platform not designated "Public Investor". Notwithstanding the foregoing, the Borrower shall be under no obligation to mark any Borrower Materials "PUBLIC."            6.03 NOTICES. Promptly notify Agent and each Lender:  (a) of the occurrence of any Default;  (b) of any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect, including (i) breach or non-performance of, or any default under, a Contractual Obligation of Borrower or any Subsidiary; (ii) any dispute, litigation, investigation, proceeding or suspension between Borrower or any Subsidiary and any Governmental Authority; or (iii) the commencement of, or any material development in, any litigation or proceeding affecting Borrower or any Subsidiary, including pursuant to any applicable Environmental Laws;  (c) of the occurrence of any ERISA Event; and                                         29   (d) of the occurrence of any Internal Control Event.  Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer of Borrower setting forth details of the occurrence referred to therein and stating what action Borrower has taken and proposes to take with respect thereto. Each notice pursuant to SECTION 6.03(a) shall describe with particularity any and all provisions of this Agreement and any other Loan Document or Collateral Document that have been breached.            6.04 PAYMENT OF OBLIGATIONS. Pay and discharge as the same shall become due and payable, all its obligations and liabilities, including (a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by Borrower or such Subsidiary; (b) all lawful claims which, if unpaid, would by law become a Lien upon its property; and (c) all Indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness.            6.05 PRESERVATION OF EXISTENCE, ETC. (a) Preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization except in a transaction permitted by SECTION 7.04 or 7.05; (b) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which could reasonably be expected to have a Material Adverse Effect.            6.06 MAINTENANCE OF PROPERTIES. (a) Maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted; (b) make all necessary repairs thereto and renewals and replacements thereof except where the failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) use the standard of care typical in the industry in the operation and maintenance of its facilities.            6.07 MAINTENANCE OF INSURANCE. Maintain with financially sound and reputable insurance companies not Affiliates of Borrower, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts (after giving effect to any self-insurance compatible with the following standards) as are customarily carried under similar circumstances by such other Persons and providing for not less than 30 days' prior notice to Agent of termination, lapse or cancellation of such insurance.            6.08 COMPLIANCE WITH LAWS. Comply in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (a) such requirement of Law or order, write, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (b) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.            6.09 BOOKS AND RECORDS. (a) Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of Borrower or such Subsidiary, as the case may be; and (b) maintain such books of record and account in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over Borrower or such Subsidiary, as the case may be. Borrower shall maintain, or cause to be maintained, at all times books and records pertaining to the Collateral in such detail, form and scope as Agent or any Lender shall reasonably require.            6.10 INSPECTION RIGHTS. Permit representatives and independent contractors of Agent and each Lender to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants, all at the expense of Borrower and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to Borrower; PROVIDED, HOWEVER, that when an Event of Default exists Agent or any Lender (or any of their respective representatives or independent contractors) may do any of the foregoing at the expense of Borrower at any time during normal business hours and without advance notice.            6.11 USE OF PROCEEDS. Use the Letters of Credit for credit enhancement for the MPUFB Bonds and not for any other purpose.                                         30             6.12 FINANCIAL COVENANTS.            (a) TANGIBLE NET WORTH. Maintain on a consolidated basis Tangible Net Worth equal to at least Thirty Two Million Five Hundred Seventy Four Thousand Dollars ($32,574,000).            (b) CONSOLIDATED TOTAL INDEBTEDNESS FOR BORROWED MONEY TO CONSOLIDATED TOTAL CAPITAL. Maintain Consolidated Total Indebtedness for Borrowed Money to an amount equal to or lesser than 65% of Consolidated Total Capital, calculated at the end of each quarter, using the results of the twelve-month period ending with that reporting period.            (c) DEBT SERVICE COVERAGE RATIO. Maintain a ratio of Consolidated Net Income Available for Fixed Charges to Consolidated Interest Expense of at least 1.75:1.0, calculated at the end of each quarter, using the results of the twelve-month period ending with that reporting period.            6.13      COLLATERAL RECORDS. To execute and deliver promptly, and to cause each other Loan Party to execute and deliver promptly, to Agent, from time to time, solely for Agent's convenience in maintaining a record of the Collateral, such written statements and schedules as Agent may reasonably require designating, identifying or describing the Collateral. The failure by Borrower or any other Loan Party, however, to promptly give Agent such statements or schedules shall not affect, diminish, modify or otherwise limit the Liens on the Collateral granted pursuant to the Collateral Documents.            6.14      SECURITY INTERESTS. To, and to cause each other Loan Party to, (a) defend the Collateral against all claims and demands of all Persons at any time claiming the same or any interest therein, and (b) do whatever Agent may reasonably request, from time to time, to effect the purposes of this Agreement and the other Loan Documents and Collateral Documents, including cooperating with Agent's representatives and paying claims which might, if unpaid, become a Lien on the Collateral.  ARTICLE VII. NEGATIVE COVENANTS  So long as any Lender shall have any Commitment hereunder, any Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, Borrower shall not, nor shall it permit any Subsidiary to, directly or indirectly:            7.01 LIENS. Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, other than the following:  (a) Liens pursuant to any Loan Document or any Collateral Document;  (b) Liens existing on the date hereof and listed on SCHEDULE 7.01 and any renewals or extensions thereof, PROVIDED that (i) the property covered thereby is not changed, (ii) the amount secured or benefited thereby is not increased, (iii) the direct or any contingent obligor with respect thereto is not changed, and (iv) any renewal or extension of the obligations secured or benefited thereby is permitted by SECTION 7.03(b);  (c) Liens for taxes not yet due or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP;  (d) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 30 days or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person;  (e) pledges or deposits in the ordinary course of business in connection with workers' compensation, unemployment insurance and other social security legislation, other than any Lien imposed by ERISA;  (f) deposits to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;                                         31   (g) easements, rights-of-way, restrictions and other similar encumbrances affecting real property which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person;  (h) Liens securing judgments for the payment of money not constituting an Event of Default under SECTION 8.01(h); and  (i) Liens securing Indebtedness permitted under SECTION 7.03(e); PROVIDED that (i) such Liens do not at any time encumber any property other than the property financed by such Indebtedness and (ii) the Indebtedness secured thereby does not exceed the cost or fair market value, whichever is lower, of the property being acquired on the date of acquisition.            7.02 INVESTMENTS. Make any Investments, except:  (a) Investments held by Borrower or such Subsidiary in the form of cash equivalents or short-term marketable debt securities;  (b) advances to officers, directors and employees of Borrower and Subsidiaries in an aggregate amount not to exceed $50,000 at any time outstanding, for travel, entertainment, relocation and analogous ordinary business purposes;  (c) Investments of Borrower in any wholly-owned Subsidiary and Investments of any wholly-owned Subsidiary in Borrower or in another wholly-owned Subsidiary;  (d) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss; and  (e) Guarantees permitted by SECTION 7.03.            7.03 INDEBTEDNESS. Create, incur, assume or suffer to exist any Indebtedness, except:  (a) Indebtedness under the Loan Documents and Collateral Documents;  (b) Indebtedness outstanding on the date hereof and listed on SCHEDULE 7.03 and any refinancings, refundings, renewals or extensions thereof; PROVIDED that (i) the amount of such Indebtedness is not increased at the time of such refinancing, refunding, renewal or extension except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such refinancing and by an amount equal to any existing commitments unutilized thereunder and (ii) the terms relating to principal amount, amortization, maturity, collateral (if any) and subordination (if any), and other material terms taken as a whole, of any such refinancing, refunding, renewing or extending Indebtedness, and of any agreement entered into and of any instrument issued in connection therewith, are no less favorable in any material respect to the Loan Parties or Lenders than the terms of any agreement or instrument governing the Indebtedness being refinanced, refunded, renewed or extended and the interest rate applicable to any such refinancing, refunding, renewing or extending Indebtedness does not exceed the then applicable market interest rate;  (c) Guarantees of Borrower or any Subsidiary in respect of Indebtedness otherwise permitted hereunder of Borrower or any wholly-owned Subsidiary;  (d) obligations (contingent or otherwise) of Borrower or any Subsidiary existing or arising under any Swap Contract, PROVIDED that (i) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments, investments, assets, or property held or reasonably anticipated by such Person, or changes in the value of securities issued by such Person, and not for purposes of speculation or taking a "market view;" and (ii) such Swap Contract does not contain any provision exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party; and  (e) Indebtedness in respect of capital leases, Synthetic Lease Obligations and purchase money obligations for fixed or capital assets within the limitations set forth in SECTION 7.01(i); PROVIDED, HOWEVER, that the cumulative amount of all such Indebtedness outstanding during the term of this Agreement shall not exceed $2,500,000.                                         32             7.04 FUNDAMENTAL CHANGES. Merge, dissolve, liquidate, consolidate with or into another Person, or Dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person, except that, so long as no Default exists or would result therefrom, Borrower's sole Subsidiary may be dissolved or otherwise terminate its existence, inasmuch as it has heretofore disposed of substantially all of its operating assets.            7.05 DISPOSITIONS. Make any Disposition or enter into any agreement to make any Disposition, except:  (a) Dispositions of obsolete or worn out property, whether now owned or hereafter acquired, in the ordinary course of business;  (b) Dispositions of inventory in the ordinary course of business;  (c) Dispositions of equipment or real property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property or (ii) the proceeds of such Disposition are reasonably promptly applied to the purchase price of such replacement property;  (d) Dispositions of property by any Subsidiary to Borrower or to a wholly-owned Subsidiary; PROVIDED that if the transferor of such property is a Guarantor, the transferee thereof must either be Borrower or a Guarantor; and  (e) Dispositions permitted by SECTION 7.04.  PROVIDED, HOWEVER, that any Disposition pursuant to clauses (a) through (e) shall be for fair market value.            7.06 RESTRICTED PAYMENTS. Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, or issue or sell any Equity Interests, except that, so long as no Default shall have occurred and be continuing at the time of any action described below or would result therefrom:  (a) each Subsidiary may make Restricted Payments to Borrower, Guarantors and any other Person that owns an Equity Interest in such Subsidiary, ratably according to their respective holdings of the type of Equity Interest in respect of which such Restricted Payment is being made;  (b) Borrower and each Subsidiary may declare and make dividend payments or other distributions payable solely in the common stock or other common Equity Interests of such Person;  (c) Borrower and each Subsidiary may purchase, redeem or otherwise acquire Equity Interests issued by it with the proceeds received from the substantially concurrent issue of new shares of its common stock or other common Equity Interests; and  (d) Borrower may pay dividends to Parent to the full extent permitted by the PUC.            7.07 CHANGE IN NATURE OF BUSINESS. Engage in any material line of business substantially different from those lines of business conducted by Borrower and its Subsidiaries on the date hereof or any business substantially related or incidental thereto.            7.08 TRANSACTIONS WITH AFFILIATES. Enter into any transaction of any kind with any Affiliate of Borrower, whether or not in the ordinary course of business, other than on fair and reasonable terms substantially as favorable to Borrower or such Subsidiary as would be obtainable by Borrower or such Subsidiary at the time in a comparable arm's length transaction with a Person other than an Affiliate, provided that (a) the foregoing restriction shall not apply to transactions between or among Borrower and any Guarantor or between and among Guarantors, and (b) transactions permitted by order of the PUC shall be conclusively presumed to meet the foregoing standard.            7.09 BURDENSOME AGREEMENTS. Enter into any Contractual Obligation (other than this Agreement or any other Loan Document or any Collateral Document) that (a) limits the ability (i) of any Subsidiary to make Restricted Payments to Borrower or to otherwise transfer property to Borrower, (ii) of any Subsidiary to Guarantee the Indebtedness of Borrower or (iii) of Borrower or any Subsidiary to create, incur, assume or suffer to exist Liens on property of such Person; PROVIDED, HOWEVER, that this clause (iii) shall not prohibit any negative pledge incurred or provided in favor of any holder of Indebtedness permitted under SECTION 7.03(e) solely to the extent any such negative pledge relates to the property financed by or the subject of such Indebtedness; or                                         33   (b) requires the grant of a Lien to secure an obligation of such Person if a Lien is granted to secure another obligation of such Person.            7.10 USE OF PROCEEDS. Use the proceeds of any Letter of Credit, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the FRB) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose.  ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES            8.01 EVENTS OF DEFAULT. Any of the following shall constitute an Event of Default:  (a) NON-PAYMENT. Borrower or any other Loan Party fails to pay (i) when and as required to be paid herein any drawing under any Letter of Credit, any amount of principal of any L/C Obligation or any interest on any such drawing or L/C Obligation, or (ii) within three days after the same becomes due, any fee due hereunder, or (iii) within five days after the same becomes due, any other amount payable hereunder or under any other Loan Document or Collateral Document; or  (b) SPECIFIC COVENANTS. Borrower fails to perform or observe any term, covenant or agreement contained in any of SECTION 6.02(a) THROUGH (g) INCLUSIVE, 6.03, 6.05, 6.10, 6.11 or 6.12 or ARTICLE VII; or  (c) OTHER DEFAULTS. Any Loan Party fails to perform or observe any other covenant or agreement (not specified in subsection (a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for 30 days or any default or Event of Default occurs under any other Loan Document or any Collateral Document; or  (d) REPRESENTATIONS AND WARRANTIES. Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of Borrower or any other Loan Party herein, in any other Loan Document or any Collateral Document, or in any document delivered in connection herewith or therewith shall be incorrect or misleading when made or deemed made; or  (e) CROSS-DEFAULT. (i) Borrower or any Subsidiary (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee (other than Indebtedness hereunder and Indebtedness under Swap Contracts) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than the Threshold Amount, or (B) fails to observe or perform any other agreement or condition relating to any such Indebtedness or Guarantee or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded; (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which Borrower or any Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which Borrower or any Subsidiary is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by Borrower or such Subsidiary as a result thereof is greater than the Threshold Amount; or (iii) causes or suffers to exist an event of default, beyond any applicable notice or cure period, under any Related Document or the First Mortgage Indenture; or  (f) INSOLVENCY PROCEEDINGS, ETC. Any Loan Party or any of its Subsidiaries institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for 60 calendar days, or an order for relief is entered in any such proceeding; or                                         34   (g) INABILITY TO PAY DEBTS; ATTACHMENT. (i) Borrower or any Subsidiary becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within 30 days after its issue or levy; or  (h) JUDGMENTS. There is entered against Borrower or any Subsidiary (i) a final judgment or order for the payment of money in an aggregate amount exceeding the Threshold Amount (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage), or (ii) any one or more non-monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of 10 consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or  (i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold Amount, or (ii) Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or  (j) INVALIDITY OF LOAN DOCUMENTS, COLLATERAL DOCUMENTS OR RELATED DOCUMENTS. Any Loan Document, Collateral Document or any of the other Related Documents or any provision thereof, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party or any other Person contests in any manner the validity or enforceability of any Loan Document, any Collateral Document or any of the other Related Documents or any provision thereof; or any Loan Party denies that it has any or further liability or obligation under any Loan Document, any Collateral Document or any of the other Related Documents, or purports to revoke, terminate or rescind any Loan Document, any Collateral Document or any of the other Related Documents or any provision thereof; or  (k) CHANGE OF CONTROL. There occurs any Change of Control with respect to Borrower without the prior written consent of the Required Lenders, such consent not to be unreasonably withheld, conditioned or delayed; or  (l) MATERIAL ADVERSE EFFECT. There occurs any event or circumstance that has a Material Adverse Effect; or  (m) DETERMINATION OF TAXABILITY. There occurs a Determination of Taxability; or  (n) LIENS OF SECOND MORTGAGE INDENTURE. The Liens created by the Second Mortgage Indenture shall for any reason cease to create valid, perfected Liens and/or security interests in favor of Agent, for the ratable benefit of Agent, L/C Issuer and Lenders.            8.02 REMEDIES UPON EVENT OF DEFAULT. If any Event of Default occurs and is continuing, Agent shall, at the request of, or may, with the consent of, the Required Lenders, take any or all of the following actions and, if it does so, it shall give a notice that an Event of Default has occurred and is continuing (i) to the MPUFB Trustee pursuant to Section 9.01(f) of the MPUFB Indenture, and (ii)_to the Second Mortgage Trustee pursuant to Section 12.01(k) of the Second Mortgage Indenture:  (a) declare any obligation of the L/C Issuer to make L/C Credit Extensions to be terminated, whereupon such commitments and obligation shall be terminated;  (b) declare the unpaid principal amount of all L/C Obligations and any reimbursement obligations arising from drawing under any Letter of Credit, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by Borrower;  (c) require that Borrower Cash Collateralize the L/C Obligations (in an amount up to an amount equal to the then Outstanding Amount thereof); and  (d) exercise on behalf of itself and the Lenders all rights and remedies available to it and the Lenders under the Loan Documents and all rights and remedies available to it and the Lenders under the Collateral Documents;                                         35   PROVIDED, HOWEVER, that upon the occurrence of an actual or deemed entry of an order for relief with respect to Borrower under the Bankruptcy Code of the United States, any obligation of the L/C Issuer to make L/C Credit Extensions shall automatically terminate, the unpaid principal amount of all outstanding L/C Obligations and any unpaid reimbursement obligations arising from drawing under any Letter of Credit and all interest and other amounts as aforesaid shall automatically become due and payable, and the obligation of Borrower to Cash Collateralize the L/C Obligations as aforesaid shall automatically become effective, in each case without further act of Agent or any Lender.            If an Event of Default shall have occurred and be continuing and there shall be outstanding all or any part of any unreimbursed Letter of Credit payment(s) or any other Obligations, Borrower agrees that Agent, on behalf of the L/C Issuer and Lenders, shall be subrogated to any and all rights of Borrower or any Subsidiary against the beneficiary of any Letter of Credit, and Borrower agrees that, upon request of Agent, Borrower will promptly do such further acts and execute, acknowledge and deliver such documents as Agent may reasonably request in order to implement the assignment to Agent of such rights of Borrower or any Subsidiary against the beneficiary of any Letter of Credit.            8.03 APPLICATION OF FUNDS. After the exercise of remedies provided for in SECTION 8.02 (or after the L/C Obligations and unreimbursed drawings have automatically become immediately due and payable and the L/C Obligations have automatically been required to be Cash Collateralized as set forth in the proviso to SECTION 8.02), any amounts received on account of the Obligations shall be applied by Agent in the following order:  FIRST, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to Agent (including fees and time charges for attorneys who may be employees of Agent) and amounts payable under ARTICLE III) payable to Agent in its capacity as such;  SECOND, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal, interest and L/C Fees) payable to Lenders and the L/C Issuer (including fees, charges and disbursements of counsel to the respective Lenders and the L/C Issuer (including fees and time charges for attorneys who may be employees of any Lender or the L/C Issuer) and amounts payable under ARTICLE III), ratably among them in proportion to the respective amounts described in this clause SECOND payable to them;  THIRD, to payment of that portion of the Obligations constituting accrued and unpaid L/C Fees and interest on L/C Borrowings and other Obligations, ratably among Lenders and the L/C Issuer in proportion to the respective amounts described in this clause THIRD payable to them;  FOURTH, to payment of that portion of the Obligations constituting unpaid principal of the L/C Borrowings and unpaid reimbursement obligation arising from the drawings under Letters of Credit, ratably among Lenders and the L/C Issuer in proportion to the respective amounts described in this clause FOURTH held by them;  FIFTH, to Agent for the account of the L/C Issuer, to Cash Collateralize that portion of L/C Obligations comprised of the aggregate undrawn amount of Letters of Credit; and  LAST, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to Borrower or as otherwise required by Law.  Subject to SECTION 2.01(c), amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause FIFTH above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above.  ARTICLE IX. ADMINISTRATIVE AGENT            9.01 APPOINTMENT AND AUTHORIZATION OF ADMINISTRATIVE AGENT. (a) Each of the Lenders and the L/C Issuer hereby irrevocably appoints Bank of America to act on its behalf as Administrative Agent hereunder and under the other Loan Documents and authorizes Agent to take such actions on its behalf and to exercise such powers as are delegated to Agent by the terms hereof and thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this                                         36   Article are solely for the benefit of Agent, the Lenders and the L/C Issuer, and neither the Borrower nor any other Loan Party shall have rights as a third party beneficiary of any of such provisions.            (b) Agent shall also act as the "collateral agent" under the Loan Documents, and each of the Lenders and the L/C Issuer hereby irrevocably appoints and authorizes Agent to act as the agent of such Lender and the L/C Issuer for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure any of the Obligations, together with such powers and discretion as are reasonably incidental thereto. In this connection, Agent, as "collateral agent" and any co-agents, sub-agents and attorneys-in-fact appointed by Agent pursuant to Section 9.05 for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Collateral Documents, or for exercising any rights and remedies thereunder at the direction of Agent), shall be entitled to the benefits of all provisions of this Article IX and Article X (as though such co-agents, sub-agents and attorneys-in-fact were the "collateral agent" under the Loan Documents) as if set forth in full herein with respect thereto.            9.02 RIGHTS AS A LENDER. The Person serving as Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not Agent and the term "Lender" or "Lenders" shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not Agent hereunder and without any duty to account therefor to Lenders.            9.03 EXCULPATORY PROVISIONS. Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, Agent:            (a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;            (b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), PROVIDED that Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose Agent to liability or that is contrary to any Loan Document or applicable Law; and            (c) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as Agent or any of its Affiliates in any capacity.            Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as Agent shall believe in good faith shall be necessary, under the circumstances as provided in SECTIONS 8.02 and 10.01) or (ii) in the absence of its own gross negligence or willful misconduct. Agent shall be deemed not to have knowledge of any Default unless and until written notice describing such Default is given to Agent by Borrower, a Lender or the L/C Issuer. Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any Collateral Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in ARTICLE IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to Agent.            9.04 RELIANCE BY ADMINISTRATIVE AGENT. Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining                                         37   compliance with any condition hereunder to the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the L/C Issuer, Agent may presume that such condition is satisfactory to such Lender or the L/C Issuer unless Agent shall have received notice to the contrary from such Lender or the L/C Issuer prior to the issuance of such Letter of Credit. Agent may consult with legal counsel (who may be counsel for Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.            9.05 DELEGATION OF DUTIES. Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by Agent. Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Agent.            9.06 RESIGNATION OF AGENT. Agent may at any time give notice of its resignation to Lenders, the L/C Issuer and Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation, then the retiring Agent may on behalf of Lenders and the L/C Issuer, appoint a successor Agent meeting the qualifications set forth above; PROVIDED that if Agent shall notify Borrower and Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (1) the retiring Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by Agent on behalf of Lenders or the L/C Issuer under any of the Loan Documents, the retiring Agent shall continue to hold such collateral security until such time as a successor Agent is appointed) and (2) all payments, communications and determinations provided to be made by, to or through Agent shall instead be made by or to each Lender and the L/C Issuer directly, until such time as the Required Lenders appoint a successor Agent as provided for above in this Section. Upon the acceptance of a successor's appointment as Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Agent, and the retiring Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section). The fees payable by Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between Borrower and such successor. After the retiring Agent's resignation hereunder and under the other Loan Documents, the provisions of this Article and SECTION 10.04 shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.  Any resignation by Bank of America as Agent pursuant to this Section shall also constitute its resignation as L/C Issuer. Upon the acceptance of a successor's appointment as Agent hereunder, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer, (b) the retiring L/C Issuer shall be discharged from all of their respective duties and obligations hereunder or under the other Loan Documents, and (c) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the retiring L/C Issuer to effectively assume the obligations of the retiring L/C Issuer with respect to such Letters of Credit.            9.07 NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender and the L/C Issuer acknowledges that it has, independently and without reliance upon Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and the L/C Issuer also acknowledges that it will, independently and without reliance upon Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.            9.08 NO OTHER DUTIES, ETC. Anything herein to the contrary notwithstanding, no Lender holding a title listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as Agent, a Lender or the L/C Issuer hereunder.                                         38             9.09 ADMINISTRATIVE AGENT MAY FILE PROOFS OF CLAIM. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to any Loan Party, Agent (irrespective of whether the principal of L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether Agent shall have made any demand on Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise            (a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of L/C Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of Lenders, the L/C Issuer and Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of Lenders, the L/C Issuer and Agent and their respective agents and counsel and all other amounts due Lenders, the L/C Issuer and Agent under SECTIONS 2.01(j) and (k), 2.05 and 10.04) allowed in such judicial proceeding; and            (b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;  and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and the L/C Issuer to make such payments to Agent and, in the event that Agent shall consent to the making of such payments directly to Lenders and the L/C Issuer, to pay to Agent any amount due for the reasonable compensation, expenses, disbursements and advances of Agent and its agents and counsel, and any other amounts due Agent under SECTIONS 2.04 and 10.04. Nothing contained herein shall be deemed to authorize Agent to authorize or consent to or accept or adopt on behalf of any Lender or the L/C Issuer any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to authorize Agent to vote in respect of the claim of any Lender in any such proceeding.            9.10 COLLATERAL MATTERS. (a) Each Lender and the L/C Issuer hereby irrevocably authorizes and directs Agent to accept the Second Mortgage Bonds on behalf of the Agent, the Lenders and the L/C Issuer and to enter into the Collateral Documents for the benefit of such Lender and the L/C Issuer. Each Lender and the L/C Issuer hereby agrees that, except as otherwise set forth in Section 10.01, any action taken by the Required Lenders, in accordance with the provisions of this Agreement or the Collateral Documents, and the exercise by the Required Lenders of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all of Lenders and the L/C Issuer. Agent is hereby authorized (but not obligated) on behalf of all of Lenders and the L/C Issuer, without the necessity of any notice to or further consent from any Lender or the L/C Issuer from time to time prior to, an Event of Default, to take any action with respect to any Collateral or Collateral Documents which may be necessary to perfect and maintain perfected the Liens upon the Collateral granted pursuant to the Collateral Documents.            (b) Each Lender and the L/C issuer hereby irrevocably authorize Agent, at its option and in its discretion,                      (i) to release any Lien on any property granted to or held by Agent under any Loan Document (A) upon termination of the Aggregate Commitments and payment in full of all Obligations (other than contingent indemnification obligations) and the expiration or termination of all Letters of Credit, (B) that is sold or to be sold as part of or in connection with any sale permitted hereunder or under any other Loan Document, (C) subject to SECTION 10.01, if approved, authorized or ratified in writing by the Required Lenders, or (D) in connection with any foreclosure sale or other disposition of Collateral after the occurrence of an Event of Default; and                      (ii) to subordinate any Lien on any property granted to or held by Agent under any Loan Document to the holder of any Lien on such property that is permitted by this Agreement or any other Loan Document.  Upon request by Agent at any time, each Lender and the L/C Issuer will confirm in writing Agent's authority to release or subordinate its interest in particular types or items of Collateral pursuant to this SECTION 9.10.            (c) Subject to (b) above, Agent shall (and is hereby irrevocably authorized by each Lender and the L/C Issuer to) execute such documents as may be necessary to evidence the release or subordination of the Liens granted to Agent for the benefit of Agent and Lenders and the L/C Issuer herein or pursuant hereto upon the applicable Collateral and/or the Collateral Documents; provided that (i) Agent shall not be required to execute any such document on terms which, in Agent's opinion, would expose Agent to or create any liability or entail any consequence other than the release or subordination of such Liens                                         39   without recourse or warranty and (ii) such release or subordination shall not in any manner discharge, affect or impair the Obligations or any Liens upon (or obligations of Borrower or any other Loan Party in respect of) all interests retained by Borrower or any other Loan Party, including the proceeds of the sale, all of which shall continue to constitute part of the Collateral and/or the Collateral Documents. In the event of any sale or transfer of Collateral and/or the Collateral Documents, or any foreclosure with respect to any of the Collateral and/or the Collateral Documents, Agent shall be authorized to deduct all expenses reasonably incurred by Agent from the proceeds of any such sale, transfer or foreclosure.            (d) Agent shall have no obligation whatsoever to any Lender, the L/C Issuer or any other Person to assure that the Collateral exists or is owned by Borrower or any other Loan Party or is cared for, protected or insured or that the Liens granted to Agent herein or in any of the Collateral Documents or pursuant hereto or thereto have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise or to continue exercising at all or in any manner or under any duty of care, disclosure or fidelity any of the rights, authorities and powers granted or available to Agent in this SECTION 9.10 or in any of the Collateral Documents, it being understood and agreed that in respect of the Collateral and/or the Collateral Documents, or any act, omission or event related thereto, Agent may act in any manner it may deem appropriate, in its sole discretion, given Agent's own interest in the Collateral and/or the Collateral Documents as one of Lenders and that Agent shall have no duty or liability whatsoever to Lenders or the L/C Issuer.            (e) Each Lender and the L/C Issuer hereby appoints each other Lender as agent for the purpose of perfecting Lenders' and the L/C Issuer's security interest in assets which, in accordance with Article 9 of the UCC can be perfected only by possession. Should any Lender or the L/C Issuer (other than Agent) obtain possession of any such Collateral, such Lender or the L/C Issuer shall notify Agent thereof, and, promptly upon Agent's request therefor shall deliver such Collateral to Agent or in accordance with Agent's instructions.            (f) Agent agrees that it shall not release the Collateral or its interest in the Collateral without the prior written consent of each Lender.  ARTICLE X. MISCELLANEOUS            10.01 AMENDMENTS, ETC. No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by Borrower or any other Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders and Borrower or the applicable Loan Party, as the case may be, and acknowledged by Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; PROVIDED, HOWEVER, that no such amendment, waiver or consent shall:  (a) waive any condition set forth in SECTION 4.01(a) without the written consent of each Lender; PROVIDED, HOWEVER, in the sole discretion of Agent, only a waiver by Agent shall be required with respect to immaterial matters or items specified in SECTION 4.01(a) (iii) or (iv) with respect to which Borrower has given assurances satisfactory to Agent that such items shall be delivered promptly following the Closing Date;  (b) extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to SECTION 8.02) without the written consent of such Lender;  (c) postpone any date fixed by this Agreement or any other Loan Document for any payment (excluding mandatory prepayments) of principal, interest, fees or other amounts due to Lenders (or any of them) hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby;  (d) reduce the principal of, or the rate of interest specified herein on, any unreimbursed drawing under any Letter of Credit or L/C Borrowing, or (subject to clause (iii) of the second proviso to this SECTION 10.01) any fees or other amounts payable hereunder or under any other Loan Document, without the written consent of each Lender directly affected thereby; PROVIDED, HOWEVER, that only the consent of the Required Lenders shall be necessary to amend the definition of "Default Rate" or to waive any obligation of Borrower to pay interest or L/C Fees at the Default Rate;  (e) amend any financial covenant in Section 6.12 without written consent of each Lender;                                         40   (f) change SECTION 2.07 or SECTION 8.03 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender; or  (g) change any provision of this Section or the definition of "Required Lenders" or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender;  and, PROVIDED FURTHER, that (i) no amendment, waiver or consent shall, unless in writing and signed by the L/C Issuer in addition to the Lenders required above, affect the rights or duties of the L/C Issuer under this Agreement or any Issuer Document relating to any Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing and signed by Agent in addition to the Lenders required above, affect the rights or duties of Agent under this Agreement or any other Loan Document; and (iii) the Agent Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except that the Commitment of such Lender may not be increased or extended without the consent of such Lender.            10.02 NOTICES; EFFECTIVENESS; ELECTRONIC COMMUNICATIONS. (a) NOTICES GENERALLY. Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:            (i) if to Borrower, Agent or the L/C Issuer, to the address, telecopier number, electronic mail address or telephone number specified for such Person on SCHEDULE 10.02 ; and            (ii) if to any other Lender, to the address, telecopier number, electronic mail address or telephone number specified in its Administrative Questionnaire.  Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Notices delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as provided in such subsection (b).  (b) ELECTRONIC COMMUNICATIONS. Notices and other communications to Lenders and the L/C Issuer hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by Agent, provided that the foregoing shall not apply to notices to any Lender or the L/C Issuer pursuant to Article II if such Lender or the L/C Issuer, as applicable, has notified the Agent that it is incapable of receiving notices under such Article by electronic communication. Agent or Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications. Unless Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender's receipt of an acknowledgement from the intended recipient (such as by the "return receipt requested" function, as available, return e-mail or other written acknowledgement), PROVIDED that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.  (c) THE PLATFORM. THE PLATFORM IS PROVIDED "AS IS" AND "AS AVAILABLE." THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall Agent or any of its Related Parties (collectively,                                         41   the "Agent Parties") have any liability to Borrower, any Lender, the L/C Issuer or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of Borrower's or Agent's transmission of Borrower Materials through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party; provided, however, that in no event shall any Agent Party have any liability to Borrower, any Lender, the L/C Issuer or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages).  (d) CHANGE OF ADDRESS, ETC. Each of the Borrower, Agent and the L/C Issuer may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the other parties hereto. Each other Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to Borrower, Agent and, the L/C Issuer. IN ADDITION, EACH LENDER AGREES TO NOTIFY AGENT FROM TIME TO TIME TO ENSURE THAT AGENT HAS ON RECORD (i) AN EFFECTIVE ADDRESS, CONTACT NAME, TELEPHONE NUMBER, TELECOPIER NUMBER AND ELECTRONIC MAIL ADDRESS TO WHICH NOTICES AND OTHER COMMUNICATIONS MAY BE SENT AND (ii) ACCURATE WIRE INSTRUCTIONS FOR SUCH LENDER.  (d) RELIANCE BY AGENT. L/C ISSUER AND LENDERS. Agent, the L/C Issuer and Lenders shall be entitled to rely and act upon any notices purportedly given by or on behalf of Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. Borrower shall indemnify Agent, the L/C Issuer, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of Borrower. All telephonic notices to and other telephonic communications with Agent may be recorded by Agent, and each of the parties hereto hereby consents to such recording.            10.03 NO WAIVER; CUMULATIVE REMEDIES. No failure by any Lender, the L/C Issuer or Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.            10.04 EXPENSES; INDEMNITY; DAMAGE WAIVER. (a) COSTS AND EXPENSES. Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by Agent and its Affiliates (including the reasonable fees, charges and disbursements of counsel for Agent), in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by the L/C Issuer in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all out-of-pocket expenses incurred by Agent, any Lender or the L/C Issuer (including the fees, charges and disbursements of any counsel for Agent, any Lender or the L/C Issuer), and shall pay all fees and time charges for attorneys who may be employees of Agent, any Lender or the L/C Issuer, in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with Letters of Credit issued hereunder and all L/C Obligations, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Letters of Credit and L/C Obligations.  (b) INDEMNIFICATION BY THE BORROWER. Borrower shall indemnify Agent (and any sub-agent thereof), each Lender and the L/C Issuer, and each Related Party of any of the foregoing Persons (each such Person being called an "INDEMNITEE") against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee), and shall indemnify and hold harmless each Indemnitee from all fees and time charges and disbursements for attorneys who may be employees of any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee by any third party or by Borrower or any other Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document, any Collateral Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder, or the consummation of the transactions contemplated hereby or thereby, or, in the case of Agent (and any sub-agent thereof) and its Related Parties only, the administration of this Agreement and the other Loan Documents, (ii) any Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the L/C Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property                                         42   owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower or any other Loan Party, and regardless of whether any Indemnitee is a party thereto, in all cases, whether or not caused by or arising, in whole or in part, out of the comparative, contributory or sole negligence of the Indemnitee; PROVIDED that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by Borrower or any other Loan Party against an Indemnitee for breach in bad faith of such Indemnitee's obligations hereunder or under any other Loan Document, if Borrower or such Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.  (c) REIMBURSEMENT BY LENDERS. To the extent that Borrower for any reason fails to indefeasibly pay any amount required under subsection (a) or (b) of this Section to be paid by it to Agent (or any sub-agent thereof), the L/C Issuer or any Related Party of any of the foregoing, each Lender severally agrees to pay to Agent (or any such sub-agent), the L/C Issuer or such Related Party, as the case may be, such Lender's Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, PROVIDED that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against Agent (or any such sub-agent) or the L/C Issuer in its capacity as such, or against any Related Party of any of the foregoing acting for Agent (or any such sub-agent) or L/C Issuer in connection with such capacity. The obligations of the Lenders under this subsection (c) are subject to the provisions of SECTION 2.06(c).  (d) WAIVER OF CONSEQUENTIAL DAMAGES, ETC. To the fullest extent permitted by applicable law, Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any L/C Obligation or Letter of Credit or the use of the proceeds thereof. No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.  (e) PAYMENTS. All amounts due under this Section shall be payable not later than ten Business Days after demand therefor.  (f) SURVIVAL. The agreements in this Section shall survive the resignation of Agent and the L/C Issuer, the replacement of any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations.            10.05 PAYMENTS SET ASIDE. To the extent that any payment by or on behalf of Borrower is made to Agent, the L/C Issuer or any Lender, or Agent, the L/C Issuer or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by Agent, the L/C Issuer or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender and the L/C Issuer severally agrees to pay to Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Lenders and the L/C Issuer under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.  10.06 SUCCESSORS AND ASSIGNS. (a) SUCCESSORS AND ASSIGNS GENERALLY. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that neither Borrower nor any other Loan Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of Agent, the L/C Issuer and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to                                         43   confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of Agent, the L/C Issuer and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.  (b) ASSIGNMENTS BY LENDERS. Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment (including for purposes of this subsection (b), participations in L/C Obligations) at the time owing to it); PROVIDED that (i) except in the case of an assignment of the entire remaining amount of the assigning Lender's Commitment and its participations in L/C Obligations at the time owing to it or in the case of an assignment to a Lender or an Affiliate of a Lender, the aggregate amount of the Commitment (which for this purpose includes participation in L/C Obligations outstanding thereunder) or, if the Commitment is not then in effect, the principal outstanding balance of the L/C Obligations of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to Agent or, if "Trade Date" is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $2,500,000 unless each of Agent and, so long as no Event of Default has occurred and is continuing, Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed); (ii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations under this Agreement with respect to its participations in L/C Obligations or the Commitment assigned; (iii) any assignment of a Commitment must be approved by Agent and the L/C Issuer unless the Person that is the proposed assignee is itself a Lender (whether or not the proposed assignee would otherwise qualify as an Eligible Assignee); and (iv) the parties to each assignment shall execute and deliver to Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500 and the Eligible Assignee, if it shall not be a Lender, shall deliver to Agent an Administrative Questionnaire. Subject to acceptance and recording thereof by Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of SECTIONS 3.01, 3.02, and 10.04 with respect to facts and circumstances occurring prior to the effective date of such assignment. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.  (c) REGISTER. Agent, acting solely for this purpose as an agent of Borrower, shall maintain at Administrative Agent's Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the "REGISTER"). The entries in the Register shall be conclusive, and Borrower, Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by each of Borrower and the L/C Issuer, at any reasonable time and from time to time upon reasonable prior notice. In addition, at any time that a request for a consent for a material or substantive change to the Loan Documents is pending, any Lender may request and receive from Agent a copy of the Register.  (d) PARTICIPATIONS. Any Lender may at any time, without the consent of, or notice to, Borrower or Agent, sell participations to any Person (other than a natural person or Borrower or any of Borrower's Affiliates or Subsidiaries) (each, a "PARTICIPANT") in all or a portion of such Lender's rights and/or obligations under this Agreement (including all or a portion of its Commitment and such Lender's participations in L/C Obligations owing to it); PROVIDED that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) Borrower, Agent, the L/C Issuer and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; PROVIDED that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to SECTION 10.01 that affects such Participant. Subject to subsection (e) of this Section, Borrower agrees that each Participant shall be entitled to the benefits of SECTIONS 3.01, and 3.02 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section. To the extent permitted by law,                                         44   each Participant also shall be entitled to the benefits of SECTION 10.08 as though it were a Lender, PROVIDED such Participant agrees to be subject to SECTION 2.07 as though it were a Lender.  (e) LIMITATIONS UPON PARTICIPANT RIGHTS. A Participant shall not be entitled to receive any greater payment under SECTION 3.01 or 3.02 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with Borrower's prior written consent.  (f) CERTAIN PLEDGES. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; PROVIDED that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.  (g) ELECTRONIC EXECUTION OF ASSIGNMENTS. The words "execution," "signed," "signature," and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.  (h) DEEMED CONSENT OF BORROWER. If the consent of Borrower to an assignment to an Eligible Assignee is required hereunder (including a consent to an assignment which does not meet the minimum assignment threshold specified in clause (i) of the proviso to the first sentence of SECTION 10.06(b)), Borrower shall be deemed to have given its consent five Business Days after the date notice thereof has been delivered to Borrower by the assigning Lender (through Agent) unless such consent is expressly refused by Borrower prior to such fifth Business Day.  (i) RESIGNATION AS L/C ISSUER. Notwithstanding anything to the contrary contained herein, if at any time Bank of America assigns all of its Commitment pursuant to subsection (b) above, Bank of America may, upon 30 days' notice to Borrower and the Lenders, resign as L/C Issuer. In the event of any such resignation as L/C Issuer, Borrower shall be entitled to appoint from among Lenders a successor L/C Issuer hereunder; PROVIDED, HOWEVER, that no failure by Borrower to appoint any such successor shall affect the resignation of Bank of America as L/C Issuer, as the case may be. If Bank of America resigns as L/C Issuer, it shall retain all the rights, powers, privileges and duties of the L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with respect thereto (including the right to require the Lenders to fund risk participations in Unreimbursed Amounts pursuant to SECTION 2.01(c)). Upon the appointment of a successor L/C Issuer, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer, and (b) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to Bank of America to effectively assume the obligations of Bank of America with respect to such Letters of Credit.            10.07 TREATMENT OF CERTAIN INFORMATION; CONFIDENTIALITY. Each of Agent, Lenders and the L/C Issuer agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates' respective partners, directors, officers, employees, agents, advisors and representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority, purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any Collateral Document or any action or proceeding relating to this Agreement or any other Loan Document or any Collateral Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to Borrower and its obligations, (g) with the consent of Borrower or (h) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to Agent, any Lender, the L/C Issuer or any of their respective Affiliates on a nonconfidential basis from a source other than Borrower. For purposes of this Section, "INFORMATION" means all information received from Borrower or any Subsidiary relating to Borrower or any Subsidiary or any of their respective businesses, other than any such information that is available to Agent, any Lender or the L/C Issuer on a nonconfidential basis prior to disclosure by Borrower or any Subsidiary, PROVIDED that, in the case of information received from                                         45   Borrower or any Subsidiary after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. Each of Agent, the Lenders and the L/C Issuer acknowledges that (a) the Information may include material non-public information concerning the Borrower or a Subsidiary, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable Law, including Federal and state securities Laws.            10.08 RIGHT OF SETOFF. If an Event of Default shall have occurred and be continuing, each Lender, the L/C Issuer and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender, the L/C Issuer or any such Affiliate to or for the credit or the account of Borrower or any other Loan Party against any and all of the obligations of Borrower or such Loan Party now or hereafter existing under this Agreement or any other Loan Document to such Lender or the L/C Issuer or any such Affiliate, irrespective of whether or not such Lender or the L/C Issuer shall have made any demand under this Agreement or any other Loan Document and although such obligations of Borrower or such Loan Party may be contingent or unmatured or are owed to a branch or office of such Lender or the L/C Issuer different from the branch or office holding such deposit or obligated on such indebtedness. The rights of each Lender, the L/C Issuer and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, the L/C Issuer or their respective Affiliates may have. Each Lender and the L/C Issuer agrees to notify Borrower and Agent promptly after any such setoff and application, PROVIDED that the failure to give such notice shall not affect the validity of such setoff and application.            10.09 INTEREST RATE LIMITATION. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the "MAXIMUM RATE"). If Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the L/C Obligations or, if it exceeds such unpaid principal, refunded to Borrower. In determining whether the interest contracted for, charged, or received by Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.            10.10 COUNTERPARTS ; INTEGRATION; EFFECTIVENESS. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in SECTION 4.01, this Agreement shall become effective when it shall have been executed by Agent and when Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.            10.11 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by Agent, the L/C Issuer and each Lender, regardless of any investigation made by Agent, the L/C Issuer or any Lender or on their behalf and notwithstanding that Agent or any Lender may have had notice or knowledge of any Default at the time of any L/C Credit Extension, and shall continue in full force and effect as long as any Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.            10.12 SEVERABILITY. If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.                                         46             10.13 GOVERNING LAW; JURISDICTION; ETC. (a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF MAINE.  (b)       SUBMISSION TO JURISDICTION. THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF MAINE SITTING IN CUMBERLAND COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE STATE OF MAINE, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH MAINE STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT AGENT, ANY LENDER OR THE L/C ISSUER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.            (c)       WAIVER OF VENUE. THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.            (d)       SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.            10.14 WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.            10.15 USA PATRIOT ACT NOTICE. Each Lender that is subject to the Act (as hereinafter defined) and Agent (for itself and not on behalf of any Lender) hereby notifies Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the "Act"), it is required to obtain, verify and record information that identifies Borrower, which information includes the name and address of Borrower and other information that will allow such Lender or Agent, as applicable, to identify Borrower in accordance with the Act.            10.16 TIME OF THE ESSENCE. Time is of the essence of the Loan Documents.            10.17. MAINE NOTICE. By signing below, the Borrower agrees and acknowledges that, under Maine law, no promise, contract, or agreement to lend money, extend credit, forbear from collection of debt or make any other accommodation for the repayment of a debt for more than Two Hundred Fifty Thousand Dollars ($250,000) may be enforced against a Lender or L/C                                         47   Issuer unless the promise, contract, or agreement (or some memorandum or note thereof) is in writing and signed by such Lender or L/C Issuer. The Borrower executed this Agreement as of the date stated at the top of the first page, intending to create an instrument executed under seal.   IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written intending to create an instrument executed under seal.                                 MAINE PUBLIC SERVICE COMPANY                                By:                                   ---------------------------------------------                               Name:                               Title:                                 And By:                                       -----------------------------------------                               Name:                               Title:                                 BANK OF AMERICA, N.A., as                               Administrative Agent                                By:                                   ---------------------------------------------                               Name: Stephen P. deCastro                               Title: Vice President                                 BANK OF AMERICA, N.A., as a Lender and L/C Issuer                                By:                                   ---------------------------------------------                               Name: Stephen P. deCastro                               Title: Vice President                                 KEY BANK, N.A., as a Lender                                By:                                   ---------------------------------------------                               Name: Neil Buitenhuys                               Title: Senior Vice President                                         48                                                                      SCHEDULE 2.01                                     COMMITMENTS                            AND APPLICABLE PERCENTAGES            LENDER                   COMMITMENT                   APPLICABLE                                                               PERCENTAGE - -----------------------------------------------------------------------------    Bank of America, N.A.          $ 7,916,333.70                  55%  Key Bank, N.A.                 $ 6,477,000.30                  45%  Total                          $   14,393,334                  100.000000000%                                                                       SCHEDULE 5.06                                     LITIGATION                                        NONE.                                                                       SCHEDULE 5.09                                ENVIRONMENTAL MATTERS                                        NONE.                                                                       SCHEDULE 5.13                                    SUBSIDIARIES                           AND OTHER EQUITY INVESTMENTS                         AND EQUITY INTERESTS IN BORROWER  Part (a). SUBSIDIARIES.  Maine & New Brunswick Electrical Power Company, Ltd  Part (b). OTHER EQUITY INVESTMENTS.  Borrower owns 5% of the common stock of Maine Yankee Atomic Power Company ("Maine Yankee"), a jointly-owned nuclear electric power company, and 7.49% of the common stock of the Maine Electric Power Company ("MEPCO,") a jointly-owned electric transmission company.  Part (c). OWNERS OF EQUITY INTERESTS IN BORROWER.  Parent owns all 1,636,137 shares of Borrower common stock.                                                                       SCHEDULE 7.01                                   EXISTING LIENS  Liens created under the Indenture of Mortgage and Deed of Trust dated as of October 1, 1945, as amended, between Borrower and U.S. Bank National Association (formerly named U.S. Bank Trust National Association and successor to Continental Illinois National Bank and Trust Company of Chicago), as Trustee, relating to the issuance of First Mortgage and Collateral Trust Bonds.  Liens created under the Indenture of Mortgage and Deed of Trust dated as of October 1, 1985, as amended, between Borrower and The Bank of New York Trust Company, N.A.( as successor to J. Henry Schroder Bank and Trust Company), as Trustee, relating to the issuance of Second Mortgage and Collateral Trust Bonds.                                                                       SCHEDULE 7.03                                EXISTING INDEBTEDNESS                                                                                          AMOUNTS AS OF 11-30-05                                                                                              ($000'S)                                                                                              --------         Maine Public Utility Financing Bank, Public Utility Revenue       Bonds:         Refunding Series 1996:  Due 2021 - Variable Interest        payable Monthly                                                                          $     13,600        (2.1% as of December 31, 2004)        Series 2000:  Due 2025 - Variable Interest Payable Monthly                                      9,000        (2.1% as of December 31, 2004)       Finance Authority of Maine:        1998 Taxable Electric Rate Stabilization        Revenue Notes:  Due 2008 - Variable Interest Payable        Monthly  (2.4% as of December 31, 2004)                                                         5,840       Bank of America, N.A. (Successor by merger to Fleet National Bank):        $6,000,000, 7 Year Term Loan         Due November 1, 2011 - Variable         Interest Payable Monthly ($4,050,000 at 3.84% and $1,900,000 at         3.91%)                                                                                         5,450        Bank of America, N.A., as Administrative Agent, L/C Issuer and Lender, and Key Bank, N.A., as Lender under Credit Agreement dated as of October 7, 2005                                                                                                  10,000                                                                      SCHEDULE 10.02                           ADMINISTRATIVE AGENT'S OFFICE,                           CERTAIN ADDRESSES FOR NOTICES  BORROWER: Maine Public Service Company 209 State Street Presque Isle, ME 04769  Attention: Chief Financial Officer Telephone: 207-760-2445 Telecopier: 207-760-2421 Electronic Mail: ktornquist@maineandmaritimes.com Website Address:  www.maineandmaritimes.com  ADMINISTRATIVE AGENT:  ADMINISTRATIVE AGENT'S OFFICE (FOR PAYMENTS AND REQUESTS FOR CREDIT EXTENSIONS): Bank of America, N.A. Kathy Mumpower Credit Services Representative Bank of America, N.A. Mail Code: NC1-001-15-04 One Independence Center 101 N. Tryon St. Charlotte, NC 28255-0001 Phone: 704-386-0482 Fax: 704-409-0700 Email: kathy.mumpower@bankofamerica.com  Account No.:  136-621-225-0600 Attn:  Credit Services Ref: Maine Public Service ABA#  026-009-593  OTHER NOTICES AS ADMINISTRATIVE AGENT: Bank of America, N.A. Agency Management Tamisha Eason Agency Management Officer Bank of America, N.A. Mail Code: MA5-100-11-02 100 Federal Street Boston, MA  02110 Telephone:  617-434-9205 Fax:   617-790-1284 Email: tamisha.u.eason@bankofamerica.com  L/C ISSUER: STANDBY LETTERS OF CREDIT:                           Form of Compliance Certificate                                         A-1   Bank of America, N.A. Trade Operations One Fleet Way Mail Code: PA6-580-02-30 Scranton, PA  18507 Attention:  Alfonso (Al) Malave             Telephone: 570.330.4212             Telecopier: 570.330.4186             Electronic Mail: alfonso.malave@bankofamerica.com   COMMERCIAL LETTERS OF CREDIT                                     Bank of America, N.A.                                   Trade Operations-Scranton                                   1 Fleet Way                                   Mail Code: PA6-580-02-30                                   Scranton, PA 18507                                   Attention:   Robert D. Morgan                                                Telephone:  570.330.4570                                                Telecopier:  800.755.8740                                                Electronic Mail:                                                robert.d.morgan@bankofamerica.com   BANKERS ACCEPTANCE  Bank of America, N.A. Trade Operations-Los Angeles 333 S. Beaudry Avenue, 19th Floor Mail Code:  CA9-703-19-15 Los Angeles, CA 90017-1466 Attention:  Frantz Bellevue             Vice President             Telephone: 213.345.6616             Telecopier: 213.345.9665             Electronic Mail:             frantz.bellevue@bankofamerica.com                           Form of Compliance Certificate                                         A-2                                                                           EXHIBIT A                           FORM OF COMPLIANCE CERTIFICATE                                               Financial Statement Date: ________,   To:  Bank of America, N.A., as Administrative Agent  Ladies and Gentlemen:       Reference is made to that certain Letter of Credit and Reimbursement Agreement, dated as of January 31, 2006 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "AGREEMENT;" the terms defined therein being used herein as therein defined), among MAINE PUBLIC SERVICE COMPANY, a Maine corporation ("BORROWER"), the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent and L/C Issuer.       The undersigned Responsible Officer hereby certifies as of the date hereof that he/she is the ________________________ of Borrower, and that, as such, he/she is authorized to execute and deliver this Certificate to Agent on the behalf of Borrower, and that:        [USE FOLLOWING PARAGRAPH 1 FOR FISCAL YEAR-END FINANCIAL STATEMENTS]       1.   Attached hereto as SCHEDULE 1 are the year-end audited financial statements and other reporting and certifications as required by SECTION 6.01(a) of the Agreement for the fiscal year ended as of the above date.       [USE FOLLOWING PARAGRAPH 1 FOR FISCAL QUARTER-END FINANCIAL STATEMENTS]       1.   Attached hereto as SCHEDULE 1 are the unaudited financial statements and other reporting and certifications as required by SECTION 6.01(b) of the Agreement for the fiscal quarter ended as of the above date.       2.   The undersigned has reviewed and is familiar with the terms of the Agreement and has made, or has caused to be made under his/her supervision, a detailed review of the transactions and condition (financial or otherwise) of Borrower during the accounting period covered by the attached financial statements.       3.   A review of the activities of Borrower during such fiscal period has been made under the supervision of the undersigned with a view to determining whether during such fiscal period Borrower performed and observed all its Obligations under the Loan Documents, and                                    [SELECT ONE:]       [TO THE BEST KNOWLEDGE OF THE UNDERSIGNED DURING SUCH FISCAL PERIOD, BORROWER PERFORMED AND OBSERVED EACH COVENANT AND CONDITION OF THE LOAN DOCUMENTS APPLICABLE TO IT, AND NO DEFAULT HAS OCCURRED AND IS CONTINUING.]                                       --OR--            [THE FOLLOWING COVENANTS OR CONDITIONS HAVE NOT BEEN PERFORMED OR      OBSERVED AND THE FOLLOWING IS A LIST OF EACH SUCH DEFAULT AND ITS NATURE      AND STATUS:]       4.   The representations and warranties of Borrower contained in ARTICLE V of the Agreement, and/or any representations and warranties of Borrower or any other Loan Party that are contained in any document furnished at any time under or in connection with the Loan Documents, are true and correct on and as of the date hereof, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date.       5.   The financial covenant analyses and information set forth on SCHEDULE 2 attached hereto are true and accurate on and as of the date of this Certificate.                           Form of Compliance Certificate                                         A-3             IN WITNESS WHEREOF, the undersigned has executed this Certificate as      of __________________, __________________.                                           MAINE PUBLIC SERVICE COMPANY                                           By:                                              -----------------------------------                                          Name:                                                ---------------------------------                                          Title:                                                 --------------------------------                           Form of Compliance Certificate                                         A-4                   For the Quarter/Year ended ___________________("STATEMENT DATE")                                     SCHEDULE 2                           to the Compliance Certificate                                   ($ in 000's)     I.        SECTION 6.12(a) TANGIBLE NET WORTH.            A.        Tangible Net Worth at Statement Date:                      1.        Total Tangible Assets:                                  $__________________                      2.        Total Liabilities (minus non-current portion of                               Subordinated Liabilities):                              $__________________                      3.        Tangible Net Worth (Line II.A.1 less Line II.A.2):      $__________________             B.        Minimum Required Tangible Net Worth :                             $32,574,000            C.        Excess (deficient) for covenant compliance (Line I.A.3 less                     I.B):                                                             $__________________  II.       SECTION 6.12(b) CONSOLIDATED TOTAL INDEBTEDNESS TO CONSOLIDATED           CAPITAL .            A.        Consolidated Total Indebtedness for Borrowed Money:               $__________________            B.        Consolidated Total Capital:                                       $__________________            C.        Percentage (Line II.A DIVIDED BY Line II.B):                      _____%            D.        Maximum Allowed:                                                  65%  III.      SECTION 6.12(c) DEBT SERVICE COVERAGE RATIO.            A.        Consolidated Net Income Available for Fixed Charges:              $__________________            B.        Consolidated Interest Expense:                                    $__________________            C.        Ratio (Line III.A DIVIDED BY Line III.B):                                                                                       ____________ to 1.0            D.        Minimum Required                                                  1.75:1.0                            Form of Compliance Certificate                                         A-5                                                                          EXHIBIT B                                        FORM                                        OF                             ASSIGNMENT AND ASSUMPTION            This Assignment and Assumption (this "ASSIGNMENT AND ASSUMPTION") is dated as of the Effective Date set forth below and is entered into by and between [INSERT NAME OF ASSIGNOR] (the "ASSIGNOR") and [INSERT NAME OF ASSIGNEE] (the "ASSIGNEE"). Capitalized terms used but not defined herein shall have the meanings given to them in the Letter of Credit and Reimbursement Agreement identified below (the "LETTER OF CREDIT AGREEMENT"), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.            For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Letter of Credit Agreement, as of the Effective Date inserted by Agent as contemplated below (i) all of the Assignor's rights and obligations as a Lender under the Letter of Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including, without limitation, the Letters of Credit included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Letter of Credit Agreement, any other documents or instruments delivered pursuant thereto or the transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as, the "ASSIGNED INTEREST"). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.  1.   Assignor:______________________________  2.   Assignee:     ______________________________ [AND IS AN AFFILIATE OF                                                   [IDENTIFY LENDER]]  3.   Borrower(s):  ______________________________  4.   Administrative Agent: Bank of America, N. A., as the administrative agent      under the Letter of Credit Agreement  5.   Letter of Credit Agreement: Letter of Credit and Reimbursement Agreement,      dated as of January 31, 2006, among Maine Public Service Company, the      Lenders from time to time party thereto, Bank of America, N.A., as      Administrative Agent and L/C Issuer  6.   Assigned Interest:                                     Aggregate                                  Amount of              Amount of             Percentage                                  Commitment             Commitment            Assigned of     Facility Assigned         for all Lenders*          Assigned*             Commitment              CUSIP No.     -----------------         ---------------           --------              ----------              ---------                _____________          $________________      $________________       ______________%         _____________        _____________          $________________      $________________       ______________%         _____________        _____________          $________________      $________________       ______________%         _____________   [7.  TRADE DATE:       __________________]                          Form of Assignment and Assumption                                         B-1   Effective Date: __________________, 20__ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]  The terms set forth in this Assignment and Assumption are hereby agreed to:                                                 ASSIGNOR                                                [NAME OF ASSIGNOR]                                                 By:                                                    -----------------------------                                                      Title:                                                 ASSIGNEE                                                [NAME OF ASSIGNEE]                                                 By:                                                    -----------------------------                                                      Title: [CONSENTED TO AND] Accepted:  Bank of America, N. A., as  Administrative Agent  By:     -------------------------------     Title:  [CONSENTED TO:]  By:     -------------------------------     Title:                          Form of Assignment and Assumption                                         B-2                                               ANNEX 1 TO ASSIGNMENT AND ASSUMPTION                          STANDARD TERMS AND CONDITIONS FOR                              ASSIGNMENT AND ASSUMPTION            1.        REPRESENTATIONS AND WARRANTIES.            1.1.      ASSIGNOR. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Letter of Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.            1.2.      ASSIGNEE. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Letter of Credit Agreement, (ii) it meets all requirements of an Eligible Assignee under the Credit Agreement (subject to receipt of such consents as may be required under the Letter of Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Letter of Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, and (iv) it has received a copy of the Letter of Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section [__] thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on Agent or any other Lender; and (b) agrees that (i) it will, independently and without reliance on Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.            2.        PAYMENTS. From and after the Effective Date, Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.            3.        GENERAL PROVISIONS. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of Maine.                          Form of Assignment and Assumption                                         B-3   ================================================================================                                                                           (2000)                    LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT                            Dated as of January 31, 2006                                       among                           MAINE PUBLIC SERVICE COMPANY,                                   as Borrower,                              BANK OF AMERICA, N.A.,                            as Administrative Agent and                                    L/C Issuer,                                        and                          The Other Lenders Party Hereto   ================================================================================                                    TABLE OF CONTENTS    Section                                                                                                     Page - -------                                                                                                     ----   ARTICLE I.         DEFINITIONS AND ACCOUNTING TERMS............................................................1          1.01      Defined Terms...............................................................................1          1.02      Other Interpretive Provisions..............................................................12          1.03      Accounting Terms...........................................................................13          1.04      Rounding...................................................................................13          1.05      Times of Day...............................................................................13          1.06      Letter of Credit Amounts...................................................................13  ARTICLE II.        THE COMMITMENTS AND CREDIT EXTENSIONS......................................................13          2.01      Letters of Credit..........................................................................13          2.02      Termination or Reduction of Commitments....................................................18          2.03      Repayment of L/C Borrowings; Interest......................................................19          2.04      Fees.......................................................................................19          2.05      Computation of Interest and Fees...........................................................19          2.06      Payments Generally; Agent's Clawback.......................................................19          2.07      Sharing of Payments........................................................................20  ARTICLE III.       TAXES, YIELD PROTECTION AND ILLEGALITY.....................................................20          3.01      Taxes......................................................................................20          3.02      Increased Costs............................................................................21          3.03      Mitigation Obligations.....................................................................22          3.04      Survival...................................................................................22  ARTICLE IV.        CONDITIONS PRECEDENT TO L/C CREDIT EXTENSIONS..............................................22          4.01      Conditions of Initial L/C Credit Extension.................................................22          4.02      Conditions to all L/C Credit Extensions....................................................24  ARTICLE V.         REPRESENTATIONS AND WARRANTIES.............................................................24          5.01      Existence, Qualification and Power; Compliance with Laws...................................24          5.02      Authorization; No Contravention............................................................24          5.03      Governmental Authorization; Other Consents.................................................25          5.04      Binding Effect.............................................................................25          5.05      Financial Statements; No Material Adverse Effect; No Internal Control Event................25          5.06      Litigation.................................................................................25          5.07      No Default.................................................................................25          5.08      Ownership of Property; Liens...............................................................26          5.09      Environmental Compliance...................................................................26          5.10      Insurance..................................................................................26          5.11      Taxes......................................................................................26          5.12      ERISA Compliance...........................................................................26          5.13      Subsidiaries...............................................................................26          5.14      Margin Regulations; Investment Company Act; Public Utility Holding Company Act.............27          5.15      Disclosure.................................................................................27          5.16      Compliance with Laws.......................................................................27          5.17      Intellectual Property; Licenses, Etc.......................................................27          5.18      Rights in Collateral; Priority of Liens....................................................27  ARTICLE VI.        AFFIRMATIVE COVENANTS......................................................................28          6.01      Financial Statements.......................................................................28          6.02      Certificates; Other Information............................................................29          6.03      Notices....................................................................................30          6.04      Payment of Obligations.....................................................................30          6.05      Preservation of Existence, Etc.............................................................30          6.06      Maintenance of Properties..................................................................30          6.07      Maintenance of Insurance...................................................................30                                           i              6.08      Compliance with Laws.......................................................................30          6.09      Books and Records..........................................................................31          6.10      Inspection Rights..........................................................................31          6.11      Use of Proceeds............................................................................31          6.12      Financial Covenants........................................................................31          6.13      Collateral Records.........................................................................31          6.14      Security Interests.........................................................................31  ARTICLE VII.       NEGATIVE COVENANTS.........................................................................31          7.01      Liens......................................................................................31          7.02      Investments................................................................................32          7.03      Indebtedness...............................................................................32          7.04      Fundamental Changes........................................................................33          7.05      Dispositions...............................................................................33          7.06      Restricted Payments........................................................................33          7.07      Change in Nature of Business...............................................................34          7.08      Transactions with Affiliates...............................................................34          7.09      Burdensome Agreements......................................................................34          7.10      Use of Proceeds............................................................................34  ARTICLE VIII.      EVENTS OF DEFAULT AND REMEDIES.............................................................34          8.01      Events of Default..........................................................................34          8.02      Remedies Upon Event of Default.............................................................35          8.03      Application of Funds.......................................................................36  ARTICLE IX.        ADMINISTRATIVE AGENT.......................................................................37          9.01      Appointment and Authorization of Administrative Agent......................................37          9.02      Rights as a Lender.........................................................................37          9.03      Exculpatory Provisions.....................................................................37          9.04      Reliance by Administrative Agent...........................................................38          9.05      Delegation of Duties.......................................................................38          9.06      Resignation of Agent.......................................................................38          9.07      Non-Reliance on Agent and Other Lenders....................................................39          9.08      No Other Duties, Etc.......................................................................39          9.09      Administrative Agent May File Proofs of Claim..............................................39          9.10      Collateral Matters.........................................................................39  ARTICLE X.         MISCELLANEOUS..............................................................................40          10.01     Amendments, Etc............................................................................40          10.02     Notices; Effectiveness; Electronic Communications..........................................41          10.03     No Waiver; Cumulative Remedies.............................................................42          10.04     Expenses; Indemnity: Damage Waiver.........................................................42          10.05     Payments Set Aside.........................................................................43          10.06     Successors and Assigns.....................................................................44          10.07     Treatment of Certain Information; Confidentiality..........................................45          10.08     Right of Setoff............................................................................46          10.09     Interest Rate Limitation...................................................................46          10.10     Counterparts; Integration; Effectiveness...................................................46          10.11     Survival of Representations and Warranties.................................................46          10.12     Severability...............................................................................47          10.13     Governing Law; Jurisdiction; Etc...........................................................47          10.14     Waiver of Right to Trial by Jury...........................................................47          10.15     USA Patriot Act Notice.....................................................................48          10.16     Time of the Essence........................................................................48          10.17     Maine Notice...............................................................................48                                          ii   SCHEDULES           2.01      Commitments and Applicable Percentages          5.06      Litigation          5.09      Environmental Matters          5.13      Subsidiaries and Other Equity Investments          7.01      Existing Liens          7.03      Existing Indebtedness          10.02     Administrative Agent's Office, Certain Addresses for Notices  EXHIBITS          FORM OF          A         Compliance Certificate          B         Assignment and Assumption                                         iii                     LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT  LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT (this "AGREEMENT") is entered into as of January 31, 2006, among MAINE PUBLIC SERVICE COMPANY, a Maine corporation ("BORROWER"), each lender from time to time party hereto (collectively, the "LENDERS" and individually, a "LENDER"), and BANK OF AMERICA, N.A., as Administrative Agent and L/C Issuer. This Agreement memorializes the replacement of Borrower's Letter of Credit and Reimbursement Agreement dated as of October 1, 2000, with The Bank of New York as Agent and Issuing Bank, as the same has been amended to date, which is being terminated in connection with Borrower's execution and delivery of this Agreement, and as such the Letter of Credit to be issued hereunder is an "Alternate Credit Facility" as such term is used in the MPUFB Indenture and this Agreement is intended to be the "Reimbursement Agreement" and to evidence "Reimbursement Agreement Obligations" as such terms are used in each of the First Mortgage Indenture and the Second Mortgage Indenture (as defined below). As collateral for the Borrower's obligations hereunder the Borrower has pledged its First Mortgage and Collateral Trust Bonds, Series 2025, in the principal amount of $5,000,000 (the "FIRST MORTGAGE BONDS"), originally issued under and secured by the Twentieth Supplemental Indenture dated as of October 1, 2000 (the "FIRST MORTGAGE SUPPLEMENTAL INDENTURE") which supplemented the Indenture of Mortgage and Deed of Trust, dated as of October 1, 1945, between Borrower and U.S. Bank National Association, successor trustee as Trustee (the "FIRST MORTGAGE TRUSTEE") (as it has been or may be supplemented, amended or otherwise modified from time to time, the "FIRST MORTGAGE INDENTURE") and its Second Mortgage and Collateral Trust Bonds, Series 2025, in the principal amount of $4,525,000 (the "SECOND MORTGAGE BONDS"), originally issued under and secured by the Fifth Supplemental Indenture dated as of October 1, 2000 (the "SECOND MORTGAGE SUPPLEMENTAL INDENTURE"), which supplemented the Indenture of Second Mortgage and Deed of Trust, dated as of October 1, 1985, between the Borrower and The Bank of New York Trust Company, N.A., successor trustee as Trustee (the "SECOND MORTGAGE TRUSTEE") (as it has been or may be supplemented, amended or otherwise modified from time to time, the "SECOND MORTGAGE INDENTURE").  Borrower has requested that Lenders provide a revolving credit facility for the issuance of letters of credit, and Lenders are willing to do so on the terms and conditions set forth herein. In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:  ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS            1.01 DEFINED TERMS. As used in this Agreement, the following terms shall have the meanings set forth below:  "ADMINISTRATIVE AGENT" or "AGENT" means Bank of America in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.  "ADMINISTRATIVE AGENT'S OFFICE" means Agent's address and, as appropriate, account as set forth on SCHEDULE 10.02, or such other address or account as Agent may from time to time notify Borrower and Lenders.  "ADMINISTRATIVE QUESTIONNAIRE" means an Administrative Questionnaire in a form supplied by Agent.  "AFFILIATE" means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.  "AGENT FEE LETTER" has the meaning specified in Section 2.04(b).  "AGGREGATE COMMITMENTS" means the Commitments of all Lenders.  "AGREEMENT" means this Letter of Credit and Reimbursement Agreement.  "APPLICABLE PERCENTAGE" means with respect to any Lender at any time, the percentage (carried out to the ninth decimal place) of the Aggregate Commitments represented by such Lender's Commitment at such time. If the obligation of the L/C Issuer to make L/C Credit Extensions have been terminated pursuant to SECTION 8.02 or if the Aggregate Commitments have expired, then the Applicable Percentage of each Lender shall be determined based on the Applicable Percentage of such Lender most recently in effect, giving effect to any subsequent assignments. The initial Applicable Percentage of each Lender is set forth opposite the name of such Lender on SCHEDULE 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.                                          1   "APPLICABLE RATE" means a per annum rate equal to:  (a)       with respect to Letters of Credit, 1.375%; and  (B)       with respect to the commitment fee, 0.25%.  "ASSIGNMENT AND ASSUMPTION" means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by SECTION 10.06(b), and accepted by Agent, in substantially the form of EXHIBIT B or any other form approved by Agent.  "ATTRIBUTABLE INDEBTEDNESS" means, on any date, (a) in respect of any capital lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease were accounted for as a capital lease.  "AUDITED FINANCIAL STATEMENTS" means the audited consolidated balance sheet of Parent and its subsidiaries for the fiscal year ended December 31, 2004, and the related consolidated statements of income or operations, shareholders' equity and cash flows for such fiscal year of Parent and its subsidiaries, including the notes thereto.  "BANK OF AMERICA" means Bank of America, N.A. and its successors.  "BASE RATE" means for any day a fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its "prime rate." The "prime rate" is a rate set by Bank of America based upon various factors including Bank of America's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.  "BORROWER" has the meaning specified in the introductory paragraph hereto.  "BORROWER FINANCIAL STATEMENTS" has the meaning specified in Section 6.01(a)(ii)  "BORROWER MATERIALS" has the meaning specified in Section 6.02.  "BUSINESS DAY" means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where Administrative Agent's Office is located.  "CASH COLLATERALIZE" has the meaning specified in Section 2.01(h).  CHANGE IN LAW" means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority.  "CHANGE OF CONTROL" means, with respect to any Person, an event or series of events by which:  (a)       any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have "beneficial ownership" of all securities that such person or group has the right to acquire (such right, an "option right"), whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 25% or more of the equity securities of such Person                                          2   entitled to vote for members of the board of directors or equivalent governing body of such Person on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right);  (b)       during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of such Person cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body (excluding, in the case of both clause (ii) and clause (iii), any individual whose initial nomination for, or assumption of office as, a member of that board or equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the board of directors); or  (c)       any individual(s) or entity(s) acting in concert shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation thereof, will result in its or their acquisition of the power to exercise, directly or indirectly, a controlling influence over the management or policies of such Person, or control over the equity securities of such Person entitled to vote for members of the board of directors or equivalent governing body of such Person on a fully-diluted basis (and taking into account all such securities that such individual(s) or entity(s) or group has the right to acquire pursuant to any option right) representing 25% or more of the combined voting power of such securities.  "CLOSING DATE" means the first date all the conditions precedent in SECTION 4.01 are satisfied or waived in accordance with SECTION 10.01.  "CODE" means the Internal Revenue Code of 1986, as amended.  "COLLATERAL" shall mean the First Mortgage Bonds and the Second Mortgage Bonds.  "COLLATERAL DOCUMENTS" means the First Mortgage Bonds, the First Mortgage Supplemental Indenture, the Second Mortgage Bonds, the Second Mortgage Supplemental Indenture and all agreements, instruments and documents now or hereafter executed and delivered in connection with this Agreement pursuant to which Liens are granted or purported to be granted to Agent in Collateral securing all or part of the Obligations each in form and substance satisfactory to Agent.  "COMMITMENT" means, as to each Lender, its obligation to purchase participations in L/C Obligations, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender's name on SCHEDULE 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.  "COMPLIANCE CERTIFICATE" means a certificate substantially in the form of EXHIBIT A.  "CONSOLIDATED INTEREST EXPENSE" means, for any specified period, the total consolidated interest charges of the Borrower and its Subsidiaries for such period, determined in accordance with GAAP, plus (i) the allowance for borrowed funds used during construction for such period, minus (ii) interest on customer deposits for such period.  "CONSOLIDATED NET INCOME AVAILABLE FOR FIXED CHARGES" means, for any specified period, the consolidated income or loss before extraordinary items of the Borrower and its Subsidiaries for such period, determined in accordance with GAAP, plus (i) Consolidated Interest Expense for such period, plus (ii) the provision for income taxes for such period, minus (iii) the allowance for equity funds used during construction for such period.  "CONSOLIDATED TOTAL CAPITAL" means, at a particular date, the total of the amounts that, in conformity with GAAP, would be included on a consolidated balance sheet of the Borrower and its Subsidiaries as of such date in respect of (i) Consolidated Indebtedness for Borrowed Money (excluding Indebtedness of other Persons guaranteed by the Borrower or a Subsidiary), (ii) preferred and preference stock, and (iii) Common Shareholders' Equity.  "CONSOLIDATED TOTAL INDEBTEDNESS FOR BORROWED MONEY" means at any particular date, the total amount of (i) Indebtedness of the Borrower and its Subsidiaries, excluding intercompany items, that, in conformity with GAAP, would be included on a consolidated                                          3   balance sheet of the Borrower and its Subsidiaries (a) in respect of money borrowed, (b) in respect of obligations evidenced by a note, bond, debenture or other like written obligation to pay money, (c) in respect of obligations under Capital Leases, and (d) in respect of obligations under conditional sales or other title retention agreements, and (ii) Indebtedness of other Persons of the nature described in clauses (a) through (d) above which is guaranteed by the Borrower or a Subsidiary or with respect to which the Borrower or a Subsidiary is contingently liable.  "CONTRACTUAL OBLIGATION" means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.  "CONTROL" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. "CONTROLLING" and "CONTROLLED" have meanings correlative thereto.  "DEBTOR RELIEF LAWS" means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.  "DEBT SERVICE COVERAGE RATIO" means the ratio computed in accordance with Section 6.12(c).  "DEFAULT" means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.  "DEFAULT RATE" means (a) when used with respect to Obligations other than L/C Fees an interest rate equal to (i) the Base Rate PLUS (ii) 4% per annum, and (b) when used with respect to L/C Fees, a rate equal to the Applicable Rate plus 4% per annum.  "DEFAULTING LENDER" means any Lender that (a) has failed to fund any portion of participations in L/C Obligations required to be funded by it hereunder within one Business Day of the date required to be funded by it hereunder, (b) has otherwise failed to pay over to Agent or any other Lender any other amount required to be paid by it hereunder within one Business Day of the date when due, unless the subject of a good faith dispute, or (c) has been deemed insolvent or become the subject of a bankruptcy or insolvency proceeding.  "DETERMINATION OF TAXABILITY" means (a) a Determination of Taxability under the MPUFB Indenture or (b) a determination that the interest income on any of the MPUFB Bonds is includable in gross income for federal income tax purposes (except for any determination that as a result of interest on the MPUFB Bonds being included as an item of tax preference or otherwise being taken into account in determining alternative minimum taxable income under the Code)(each such exception being a "TAX CODE EXCEPTION"), which determination shall be deemed to have been made upon the occurrence of the first to occur of the following (in each case not including any such matter as a result of a Tax Code Exception): (i) the day on which Borrower or MPUFB is advised in writing by the Commissioner or any District Director of the Internal Revenue Service that, based upon any filings of Borrower or MPUFB or upon any other grounds whatsoever, the interest on the MPUFB Bonds is includable in the gross income for federal income tax purposes of any holder or former holder thereof; (ii) the day on which Borrower receives notice from the Agent that the Agent has been advised by nationally recognized bond counsel, in response to a request by the Agent, that interest on the MPUFB Bonds by any holder or former holder is includable in the gross income for federal income tax purposes of such holder; (iii) the day on which Borrower, MPUFB, the Agent, the First Mortgage Trustee or the Second Mortgage Trustee receives notice in writing from any holder or former holder of a MPUFB Bond that the Internal Revenue Service has issued a statutory notice of deficiency or similar notice to such holder or former holder that asserts in effect that interest on the MPUFB Bonds received by such holder or former holder is includable in the gross income for federal income tax purposes of such holder; (iv) the day on which Borrower or MPUFB is advised in writing by the Commissioner or any District Director of the Internal Revenue Service that there has been issued a public or private ruling of the Internal Revenue Service or a technical advice memorandum issued by the National Office of the Internal Revenue Service that the interest on the MPUFB Bonds is includable in the gross income for federal income tax purposes of any holder or former holder of a MPUFB Bond; (v) the day on which Borrower or MPUFB is advised in writing that a final determination, from which no further right of appeal exists, has been made by a court of competent jurisdiction in the United States of America in a proceeding with respect to which Borrower or MPUFB has been given written notice and an opportunity to participate and defend that the interest on the MPUFB Bonds is includable in the gross income for federal income tax purposes of any holder or former holder of a MPUFB Bond; or (vi) the effective date of any legislation, judicial decision, decree, or order, ruling ,regulation or official statement of the Department of the Treasury or                                          4   Internal Revenue Service, of general application that results in the interest on the MPUFB Bonds being includable in the gross income for federal income tax purposes of any holder or former holder thereof; provided, however, that no Determination of Taxability shall occur under subparagraph (i), (ii), (iii), (iv) or (vi) of this definition unless Borrower has been afforded the opportunity, at its expense, to contest any such conclusion and/or assessment and, further, no Determination of Taxability shall occur until such contest, if made, has been finally determined. Borrower shall be deemed to have been afforded the opportunity to contest the occurrence of a Determination of Taxability if it shall have been permitted to commence and maintain any action in the name of any holder or former holder of a MPUFB Bond to judgment and through any appeals therefrom or other proceedings related thereto.  "DISPOSITION" or "DISPOSE" means the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.  "DOLLAR" and "$" mean lawful money of the United States.  "ELIGIBLE ASSIGNEE" means (a) a Lender; (b) an Affiliate of a Lender; and (c) any other Person (other than a natural person) approved by (i) Agent and the L/C Issuer, and (ii) unless an Event of Default has occurred and is continuing, Borrower (each such approval not to be unreasonably withheld or delayed); PROVIDED that notwithstanding the foregoing, "Eligible Assignee" shall not include Borrower or any of Borrower's Affiliates or Subsidiaries.  "ENVIRONMENTAL LAWS" means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.  "ENVIRONMENTAL LIABILITY" means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of Borrower, any other Loan Party or any of their respective Subsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.  "EQUITY INTERESTS" means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.  "ERISA" means the Employee Retirement Income Security Act of 1974.  "ERISA AFFILIATE" means any trade or business (whether or not incorporated) under common control with Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).  "ERISA EVENT" means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon Borrower or any ERISA Affiliate.                                          5   "EVENT OF DEFAULT" has the meaning specified in SECTION 8.01.  "EXCLUDED TAXES" means, with respect to Agent, any Lender, the L/C Issuer or any other recipient of any payment to be made by or on account of any obligation of Borrower hereunder, (a) taxes imposed on or measured by its overall net income (however denominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable Lending Office is located, and (b) any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction in which Borrower is located.  "FEDERAL FUNDS RATE" means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; PROVIDED that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by Agent.  "FIRST MORTGAGE BONDS" has the meaning set forth in the first paragraph of this Agreement.  "FIRST MORTGAGE INDENTURE" has the meaning set forth in the first paragraph of this Agreement.  "FIRST MORTGAGE SUPPLEMENTAL INDENTURE" has the meaning set forth in the first paragraph of this Agreement.  "FIRST MORTGAGE TRUSTEE" has the meaning set forth in the first paragraph of this Agreement.  "FRB" means the Board of Governors of the Federal Reserve System of the United States.  "GAAP" means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.  "GOVERNMENTAL AUTHORITY" means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank). ..  "GUARANTEE" means, as to any Person, any (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the "primary obligor") in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term "Guarantee" as a verb has a corresponding meaning.                                          6   "GUARANTOR" means a Person that gives a Guarantee to the Agent for the benefit of the Lenders and/or the L/C Issuer.  "HAZARDOUS MATERIALS" means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.  "INDEBTEDNESS" means, as to any Person at a particular time, without duplication (for example, Borrower's letters of credit securing other Indebtedness shall not count as Indebtedness independent of the Indebtedness being secured), all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:            (a) all obligations of such Person for borrowed money and all           obligations of such Person evidenced by bonds, debentures, notes, loan           agreements or other similar instruments;            (b) all direct or contingent obligations of such Person arising under           letters of credit (including standby and commercial), bankers'           acceptances, bank guaranties, surety bonds and similar instruments;            (c) net obligations of such Person under any Swap Contract;            (d) all obligations of such Person to pay the deferred purchase price           of property or services (other than trade accounts payable in the           ordinary course of business and, in each case, not past due for more           than 60 days after the date on which such trade account payable was           created);            (e) indebtedness (excluding prepaid interest thereon) secured by a           Lien on property owned or being purchased by such Person (including           indebtedness arising under conditional sales or other title retention           agreements), whether or not such indebtedness shall have been assumed           by such Person or is limited in recourse;            (f) capital leases and Synthetic Lease Obligations;            (g) all obligations of such Person to purchase, redeem, retire,           defease or otherwise make any payment in respect of any Equity           Interest in such Person or any other Person, valued, in the case of a           redeemable preferred interest, at the greater of its voluntary or           involuntary liquidation preference PLUS accrued and unpaid dividends;           and (h) all Guarantees of such Person in respect of any of the           foregoing.  For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person. The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date. The amount of any capital lease or Synthetic Lease Obligation as of any date shall be deemed to be the amount of Attributable Indebtedness in respect thereof as of such date.  "INDEMNIFIED TAXES" means Taxes other than Excluded Taxes.  "INDEMNITEES" has the meaning specified in SECTION 10.04(b).  "INFORMATION" has the meaning specified in SECTION 10.07.  "INTERNAL CONTROL EVENT" means a material weakness in, or fraud that involves management or other employees who have a significant role in, Borrower's internal controls over financial reporting, in each case as described in the Securities Laws and when relevant requirements become effective as to Borrower under regulations promulgated under the Securities Laws.  "INVESTMENT" means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of capital stock or other securities of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase or other acquisition of any other debt or equity participation or interest in,                                          7   another Person, including any partnership or joint venture interest in such other Person and any arrangement pursuant to which the investor Guarantees Indebtedness of such other Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.  "IRS" means the United States Internal Revenue Service.  "ISP" means, with respect to any Letter of Credit, the "International Standby Practices 1998" published by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance).  "ISSUER DOCUMENTS" means with respect to any Letter of Credit (but not the Letter of Credit itself), the L/C Application, and any other document, agreement and instrument entered into by the L/C Issuer and Borrower (or any Subsidiary) or in favor of the L/C Issuer and relating to any such Letter of Credit.  "LAWS" means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.  "L/C ADVANCE" means, with respect to each Lender, such Lender's funding of its participation in any L/C Borrowing in accordance with its Applicable Percentage.  "L/C APPLICATION" means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by the L/C Issuer.  "L/C BORROWING" means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made.  "L/C CREDIT EXTENSION" means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.  "L/C EXPIRATION DATE" means the day that is thirty days prior to the Maturity Date then in effect (or, if such day is not a Business Day, the next preceding Business Day).  "L/C FEE" has the meaning specified in Section 2.01(j).  "L/C ISSUER" means Bank of America in its capacity as issuer of Letters of Credit hereunder, or any successor issuer of Letters of Credit hereunder.  "L/C OBLIGATIONS" means, as at any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit PLUS the aggregate of all Unreimbursed Amounts, including all L/C Borrowings. For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with SECTION 1.06. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be "outstanding" in the amount so remaining available to be drawn.  "LENDER" has the meaning specified in the introductory paragraph hereto.  "LENDING OFFICE" means, as to any Lender, the office or offices of such Lender described as such in such Lender's Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify Borrower and Agent.  "LETTER OF CREDIT" means any letter of credit issued hereunder. A Letter of Credit may be a commercial letter of credit or a standby letter of credit.                                          8   "LIEN" means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).  "LOAN DOCUMENTS" means this Agreement, each Issuer Document and the Agent Fee Letter.  "LOAN PARTIES" means, collectively, Borrower and each Person (other than Agent, the L/C Issuer, or any Lender) executing a Loan Document.  "MATERIAL ADVERSE EFFECT" means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, liabilities (actual or contingent), condition (financial or otherwise) or prospects of Borrower or Borrower and its Subsidiaries taken as a whole; (b) a material impairment of the ability of any Loan Party to perform its obligations under any Loan Document to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party.  "MATURITY DATE" means January 31, 2009.  "MPUFB" means the Maine Public Utility Financing Bank.  "MPUFB BONDS" means the Maine Public Utility Financing Bank Public Utility Revenue Bonds, Series 2000 (Maine Public Service Company Project) in the original principal amount of $9,000,000, issued pursuant to the MPUFB Indenture.  "MPUFB INDENTURE" means the Indenture of Trust, dated as of October 1, 2000, between MPUFB, as Issuer, and U.S. Bank National Association (successor to State Street Bank and Trust Company), as Trustee, as the same has been and may be amended from time to time.  "MPUFB LOAN AGREEMENT" means the Loan Agreement, dated as of October 1, 2000, between Borrower andMPUFB, as the same has been and may be amended from time to time.  "MPUFB TRUSTEE" means the Trustee under the MPUFB Indenture.  "MULTIEMPLOYER PLAN" means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.  "OBLIGATIONS" means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with respect to any Letter of Credit, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.  "ORGANIZATION DOCUMENTS" means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.  "OTHER TAXES" means all present or future stamp, intangible or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Document or any Collateral Document or                                          9   from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document or any Collateral Document.  "OUTSTANDING AMOUNT" means on any date, the amount of L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements by Borrower of Unreimbursed Amounts.  "PARENT" means Maine & Maritimes Corporation, a Maine corporation which owns 100% of the issued and outstanding capital stock of the Borrower.  "PARTICIPANT" has the meaning specified in SECTION 10.06(d).  "PBGC" means the Pension Benefit Guaranty Corporation.  "PENSION PLAN" means any "employee pension benefit plan" (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by Borrower or any ERISA Affiliate or to which Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years.  "PERSON" means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.   "PLAN" means any "employee benefit plan" (as such term is defined in Section 3(3) of ERISA) established by Borrower or, with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.  "PLATFORM" has the meaning specified in SECTION 6.02.  "PLEDGE AGREEMENT" means the Pledge and Security Agreement dated as of October 1, 2000, among Borrower, Administrative Agent and Tender Agent, as the same has been and may be amended from time to time.  "PUC" means the Maine Public Utilities Commission.  "REGISTER" has the meaning specified in SECTION 10.06(c).  "REGISTERED PUBLIC ACCOUNTING FIRM" has the meaning specified in the Securities Laws and shall be independent of Borrower as prescribed by the Securities Laws.  "RELATED DOCUMENTS" means any Letter of Credit, the First Mortgage Supplemental Indenture, the First Mortgage Bonds, the Second Mortgage Supplemental Indenture, the Second Mortgage Bonds, the MPUFB Indenture, the MPUFB Bonds, the Tender Agreement, the MPUFB Loan Agreement, the Pledge Agreement , the Remarketing Agreement and any other agreement or instrument relating to any of the foregoing.  "RELATED PARTIES" means, with respect to any Person, such Person's Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person's Affiliates.  "REMARKETING AGENT" means Banc of America Securities LLC, successor to BNY Capital Markets, Inc..  "REMARKETING AGREEMENT" means the Remarketing Agreement dated as of October 1, 2000 between Borrower and the Remarketing Agent, as the same has been or may be amended from time to time.  "REPORTABLE EVENT" means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived.                                         10   "REQUIRED LENDERS" means, as of any date of determination, Lenders having more than 50% of the Aggregate Commitments or, if the obligation of the L/C Issuer to make L/C Credit Extensions has been terminated pursuant to SECTION 8.02, Lenders holding in the aggregate more than 50% of the Total Outstandings (with the aggregate amount of each Lender's risk participation and funded participation in L/C Obligations being deemed "held" by such Lender for purposes of this definition); PROVIDED that the Commitment of, and the portion of the Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.  "RESPONSIBLE OFFICER" means the chief executive officer, president, chief financial officer, chief accounting officer, treasurer or assistant treasurer of a Loan Party. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.  "RESTRICTED PAYMENT" means any dividend or other distribution (whether in cash, securities or other property) with respect to any capital stock or other Equity Interest of Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such capital stock or other Equity Interest or on account of any return of capital to Borrower's stockholders, partners or members (or the equivalent Person thereof).  "SARBANES-OXLEY" means the Sarbanes-Oxley Act of 2002.  "SEC" means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.  "SECOND MORTGAGE BONDS" has the meaning set forth in the first paragraph of this Agreement.  "SECOND MORTGAGE INDENTURE" has the meaning set forth in the first paragraph of this Agreement.  "SECOND MORTGAGE SUPPLEMENTAL INDENTURE" has the meaning set forth in the first paragraph of this Agreement.  "SECOND MORTGAGE TRUSTEE" has the meaning set forth in the first paragraph of this Agreement.  "SECURITIES LAWS" means the Securities Act of 1933, the Securities Exchange Act of 1934, Sarbanes-Oxley and the applicable accounting and auditing principles, rules, standards and practices promulgated, approved or incorporated by the SEC or the Public Company Accounting Oversight Board, as each of the foregoing may be amended and in effect on any applicable date hereunder.  "SUBORDINATED LIABILITIES" means liabilities subordinated to the Obligations in a manner acceptable to Agent in its sole discretion.  "SUBSIDIARY" of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a "Subsidiary" or to "Subsidiaries" shall refer to a Subsidiary or Subsidiaries of Borrower.  "SWAP CONTRACT" means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement                                         11   (any such master agreement, together with any related schedules, a "MASTER AGREEMENT"), including any such obligations or liabilities under any Master Agreement.  "SWAP TERMINATION VALUE" means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).  "SYNTHETIC LEASE OBLIGATION" means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).  "TANGIBLE NET WORTH" means the value of total assets (including leaseholds and leasehold improvements and reserves against assets but excluding goodwill, patents, trademarks, trade names, organization expense, unamortized debt discount and expense, capitalized or deferred research and development costs, deferred marketing expenses, and other like intangibles, and monies due from Affiliates, officers, directors, employees, shareholders, members or managers) less Total Liabilities, including but not limited to accrued and deferred income taxes, but excluding the non-current portion of Subordinated Liabilities.  "TAXES" means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.  "TENDER AGREEMENT" means the Tender Agreement dated as of October 1, 2000, among the MPUFB Trustee, the Tender Agent, the Borrower and the Remarketing Agent, as the same has been or may be amended from time to time.  "TENDER AGENT" means U.S. Bank National Association , successor to State Street Bank and Trust Company.  "THRESHOLD AMOUNT" means $1,000,000.  "TOTAL LIABILITIES" means the sum of current liabilities plus long term liabilities.  "TOTAL OUTSTANDINGS" means the aggregate Outstanding Amount of all L/C Obligations.  "UNFUNDED PENSION LIABILITY" means the excess of a Pension Plan's benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan's assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year.  "UNITED STATES" and "U.S." mean the United States of America.  "UNREIMBURSED AMOUNT" has the meaning specified in Section 2.01(c)(i).            1.02 OTHER INTERPRETIVE PROVISIONS. With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:            (a) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "INCLUDE," "INCLUDES" and "INCLUDING" shall be deemed to be followed by the phrase "without limitation." The word "WILL" shall be construed to have the same meaning and effect as the word "SHALL." Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person's successors and assigns, (iii) the words "HEREIN," "HEREOF" and "HEREUNDER," and words of similar import when used in any Loan Document, shall be construed to refer to such Loan                                         12   Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (vi) the words "ASSET" and "PROPERTY" shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.  (b) In the computation of periods of time from a specified date to a later specified date, the word "FROM" means "FROM AND INCLUDING;" the words "TO" and "UNTIL" each mean "TO BUT EXCLUDING;" and the word "THROUGH" means "TO AND INCLUDING."  (c) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.            1.03 ACCOUNTING TERMS. (a) GENERALLY. All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, EXCEPT as otherwise specifically prescribed herein.  (b) CHANGES IN GAAP. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either Borrower or the Required Lenders shall so request, Agent, Lenders and Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); PROVIDED THAT, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) Borrower shall provide to Agent and Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.  (c)       CONSOLIDATION OF VARIABLE INTEREST ENTITIES. All references herein to consolidated financial statements of Borrower and its Subsidiaries or to the determination of any amount for Borrower and its Subsidiaries on a consolidated basis or any similar reference shall, in each case, be deemed to include each variable interest entity that Borrower is required to consolidate pursuant to FASB Interpretation No. 46 - Consolidation of Variable Interest Entities: an interpretation of ARB No. 51 (January 2003) as if such variable interest entity were a Subsidiary as defined herein.            1.04 ROUNDING. Any financial ratios required to be maintained by Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).            1.05 TIMES OF DAY. Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).            1.06 LETTER OF CREDIT AMOUNTS. Unless otherwise specified herein the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; PROVIDED, HOWEVER, that with respect to any Letter of Credit that, by its terms or the terms of any Issuer Document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time and FURTHER PROVIDED, HOWEVER, that with respect to any Letter of Credit that, by its terms, provides for a different availability based on the applicable interest rate period for the bonds to which such Letter of Credit relates, then, for purposes of determining L/C Fees only, the stated amount shall be the aggregate principal amount together with the amount that would be available for the payment of interest if the weekly interest rate period or monthly interest rate period was then in effect, regardless of the actual then-prevailing interest rate period.  ARTICLE II. THE COMMITMENTS AND L/C CREDIT EXTENSIONS            2.01 LETTERS OF CREDIT. (a) THE LETTER OF CREDIT COMMITMENT.                                         13             (i) Subject to the terms and conditions set forth herein, (A) the L/C Issuer agrees, in reliance upon the agreements of the other Lenders set forth in this SECTION 2.01, (1) from time to time on any Business Day during the period from the Closing Date until the L/C Expiration Date, to issue Letters of Credit for the account of Borrower, and to amend or extend Letters of Credit previously issued by it, in accordance with subsection (b) below, and (2) to honor drawings under the Letters of Credit; and (B) the Lenders severally agree to participate in Letters of Credit issued for the account of Borrower and any drawings thereunder; PROVIDED that after giving effect to any L/C Credit Extension with respect to any Letter of Credit, (x) the Outstanding Amount of all L/C Obligations shall not exceed the Aggregate Commitments, and (y) the Applicable Percentage of the Outstanding Amount of all L/C Obligations of any Lender shall not exceed such Lender's Commitment. Each request by Borrower for the issuance or amendment of a Letter of Credit shall be deemed to be a representation by Borrower that the L/C Credit Extension so requested complies with the conditions set forth in the proviso to the preceding sentence. Within the foregoing limits, and subject to the terms and conditions hereof, Borrower's ability to obtain Letters of Credit shall be fully revolving, and accordingly Borrower may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed.            (ii) The L/C Issuer shall not issue any Letter of Credit, if:  (A)       subject to Section 2.01(b)(iv), the expiry date of such requested Letter of Credit would occur more than twelve months after the date of issuance or last extension, unless the Required Lenders have approved such expiry date; or  (B)       the expiry date of such requested Letter of Credit would occur after the L/C Expiration Date, unless all the Lenders have approved such expiry date.            (iii) The L/C Issuer shall be under no obligation to issue any Letter of Credit if:  (A) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the L/C Issuer from issuing such Letter of Credit, or any Law applicable to the L/C Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the L/C Issuer shall prohibit, or request that the L/C Issuer refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the L/C Issuer with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which the L/C Issuer in good faith deems material to it;  (B) the issuance of such Letter of Credit would violate one or more policies of the L/C Issuer;  (C) except as otherwise agreed by Agent and the L/C Issuer, such Letter of Credit is in an initial stated amount less than $100,000, in the case of a commercial Letter of Credit, or $500,000, in the case of a standby Letter of Credit;  (D) such Letter of Credit is to be denominated in a currency other than Dollars;  (E) a default of any Lender's obligations to fund under Section 2.01(c) exists or any Lender is at such time a Defaulting Lender hereunder, unless the L/C Issuer has entered into satisfactory arrangements with Borrower or such Lender to eliminate the L/C Issuer's risk with respect to such Lender; or  (F) unless specifically provided for in this Agreement, such Letter of Credit contains any provisions for automatic reinstatement of the stated amount after any drawing thereunder.            (iv) The L/C Issuer shall not amend any Letter of Credit if the L/C Issuer would not be permitted at such time to issue such Letter of Credit in its amended form under the terms hereof.            (v) The L/C Issuer shall be under no obligation to amend any Letter of Credit if (A) the L/C Issuer would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.            (vi) The L/C Issuer shall act on behalf of the Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and the L/C Issuer shall have all of the benefits and immunities (A) provided to Agent in ARTICLE IX with respect to any acts taken or omissions suffered by the L/C Issuer in connection with Letters of Credit issued by it or                                         14   proposed to be issued by it and Issuer Documents pertaining to such Letters of Credit as fully as if the term "Administrative Agent" or "Agent" as used in ARTICLE IX included the L/C Issuer with respect to such acts or omissions, and (B) as additionally provided herein with respect to the L/C Issuer.  (b)       PROCEDURES FOR ISSUANCE AND AMENDMENT OF LETTERS OF CREDIT; AUTO-EXTENSION LETTERS OF CREDIT.            (i) Each Letter of Credit shall be issued or amended, as the case may be, upon the request of Borrower delivered to the L/C Issuer (with a copy to Agent) in the form of a L/C Application, appropriately completed and signed by a Responsible Officer of Borrower. Such L/C Application must be received by the L/C Issuer and Agent not later than 11:00 a.m. at least two Business Days (or such later date and time as Agent and the L/C Issuer may agree in a particular instance in their sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request for an initial issuance of a Letter of Credit, such L/C Application shall specify in form and detail satisfactory to the L/C Issuer: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; and (G) such other matters as the L/C Issuer may require. In the case of a request for an amendment of any outstanding Letter of Credit, such L/C Application shall specify in form and detail satisfactory to the L/C Issuer (A) the Letter of Credit to be amended; (B) the proposed date of amendment thereof (which shall be a Business Day); (C) the nature of the proposed amendment; and (D) such other matters as the L/C Issuer may require. Additionally, Borrower shall furnish to the L/C Issuer and Agent such other documents and information pertaining to such requested Letter of Credit issuance or amendment, including any Issuer Documents, as the L/C Issuer or Agent may require.            (ii) Promptly after receipt of any L/C Application at the address set forth in SCHEDULE 10.02 for receiving L/C Applications and related correspondence, the L/C Issuer will confirm with Agent (by telephone or in writing) that Agent has received a copy of such L/C Application from Borrower and, if not, the L/C Issuer will provide Agent with a copy thereof. Unless the L/C Issuer has received written notice from any Lender, Agent or any Loan Party, at least one Business Day prior to the requested date of issuance or amendment of the applicable Letter of Credit, that one or more applicable conditions in ARTICLE IV shall not then be satisfied, then, subject to the terms and conditions hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of Borrower or enter into the applicable amendment, as the case may be, in each case in accordance with the L/C Issuer's usual and customary business practices. Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the L/C Issuer a risk participation in such Letter of Credit in an amount equal to the product of such Lender's Applicable Percentage TIMES the amount of such Letter of Credit.            (iii) Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the L/C Issuer will also deliver to Borrower and Agent a true and complete copy of such Letter of Credit or amendment.            (iv) If Borrower so requests in any applicable L/C Application, the L/C Issuer may, in its sole and absolute discretion, agree to issue a Letter of Credit that has automatic extension provisions (each, an "AUTO-EXTENSION LETTER OF CREDIT"); provided that any such Auto-Extension Letter of Credit must permit the L/C Issuer to prevent any such extension at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the "NON-EXTENSION NOTICE DATE") in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the L/C Issuer, Borrower shall not be required to make a specific request to the L/C Issuer for any such extension. Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the L/C Issuer to permit the extension of such Letter of Credit at any time to an expiry date not later than the L/C Expiration Date; provided, however, that the L/C Issuer shall not permit any such extension if (A) the L/C Issuer has determined that it would not be permitted, or would have no obligation, at such time to issue such Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of clause (ii) or (iii) of SECTION 2.01(a) or otherwise), or (B) it has received notice (which may be by telephone or in writing) on or before the day that is five Business Days before the Non-Extension Notice Date (1) from Agent that the Required Lenders have elected not to permit such extension or (2) from Agent, any Lender or Borrower that one or more of the applicable conditions specified in Section 4.02 is not then satisfied, and in each such case directing the L/C Issuer not to permit such extension.            (v) If Borrower so requests in any applicable Letter of Credit Application, the L/C Issuer may, in its sole and absolute discretion, agree to issue a Letter of Credit that permits the automatic reinstatement of all or a portion of the stated amount                                         15   thereof after any drawing thereunder (each, an "AUTO-REINSTATEMENT LETTER OF CREDIT"). Unless otherwise directed by the L/C Issuer, Borrower shall not be required to make a specific request to the L/C Issuer to permit such reinstatement. Once an Auto-Reinstatement Letter of Credit has been issued, except as provided in the following sentence, the Lenders shall be deemed to have authorized (but may not require) the L/C Issuer to reinstate all or a portion of the stated amount thereof in accordance with the provisions of such Letter of Credit. Notwithstanding the foregoing, if such Auto-Reinstatement Letter of Credit permits the L/C Issuer to decline to reinstate all or any portion of the stated amount thereof after a drawing thereunder by giving notice of such non-reinstatement within a specified number of days after such drawing (the "NON-REINSTATEMENT DEADLINE"), the L/C Issuer shall not permit such reinstatement if it has received a notice (which may be by telephone or in writing) on or before the day that is five Business Days before the Non-Reinstatement Deadline (A) from Agent that the Required Lenders have elected not to permit such reinstatement or (B) from Agent, any Lender or Borrower that one or more of the applicable conditions specified in SECTION 4.02 is not then satisfied (treating such reinstatement as an L/C Credit Extension for purposes of this clause) and, in each case, directing the L/C Issuer not to permit such reinstatement.  (c)       DRAWINGS AND REIMBURSEMENTS; FUNDING OF PARTICIPATIONS.            (i) Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the L/C Issuer shall notify Borrower and Agent thereof. Not later than 11:00 a.m. on the date of any payment by the L/C Issuer under a Letter of Credit (each such date, an "HONOR DATE"), Borrower shall reimburse the L/C Issuer through Agent in an amount equal to the amount of such drawing. If Borrower fails to so reimburse the L/C Issuer by such time, Borrower shall be deemed to have incurred from the L/C Issuer an L/C Borrowing in the amount of the unreimbursed drawing (the "UNREIMBURSED AMOUNT") which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate. Agent shall promptly notify each Lender of the Honor Date, the Unreimbursed Amount, and the amount of such Lender's Applicable Percentage thereof. Any notice given by the L/C Issuer or Agent pursuant to this SECTION 2.01(c)(i) may be given by telephone if immediately confirmed in writing; PROVIDED that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.            (ii) Each Lender shall upon any notice pursuant to SECTION 2.01(c)(i) make funds available to Agent for the account of the L/C Issuer at the Administrative Agent's Office in an amount equal to its Applicable Percentage of the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in such notice by Agent. Each Lender's payment to Agent for the account of the L/C Issuer pursuant to this SECTION 2.01(c)(ii) shall be deemed payment in respect of its participation in the applicable L/C Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its participation obligation under this SECTION 2.01. Agent shall remit the funds so received to the L/C Issuer.            (iii) Until each Lender funds its L/C Advance pursuant to this SECTION 2.01(c) to reimburse the L/C Issuer for any amount drawn under any Letter of Credit, interest in respect of such Lender's Applicable Percentage of such amount shall be solely for the account of the L/C Issuer.            (iv) Each Lender's obligation to make L/C Advances to reimburse the L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this SECTION 2.01(c), shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the L/C Issuer, Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing. No such making of an L/C Advance shall relieve or otherwise impair the obligation of Borrower to reimburse the L/C Issuer for the amount of any payment made by the L/C Issuer under any Letter of Credit, together with interest as provided herein.            (v) If any Lender fails to make available to Agent for the account of the L/C Issuer any amount required to be paid by such Lender pursuant to the foregoing provisions of this SECTION 2.01(c) by the time specified in SECTION 2.01(c)(ii), the L/C Issuer shall be entitled to recover from such Lender (acting through Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the L/C Issuer at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by the L/C Issuer in accordance with banking industry rules on interbank compensation, PLUS any administrative, processing or similar fees customarily charged by the L/C Issuer in connection with the foregoing. A certificate of the L/C Issuer submitted to any Lender (through Agent) with respect to any amounts owing under this clause (v) shall be conclusive absent manifest error.                                         16   (d)       REPAYMENT OF PARTICIPATIONS.            (i) At any time after the L/C Issuer has made a payment under any Letter of Credit and has received from any Lender such Lender's L/C Advance in respect of such payment in accordance with SECTION 2.01(c), if Agent receives for the account of the L/C Issuer any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from Borrower or otherwise, including proceeds of Cash Collateral applied thereto by Agent), Agent will distribute to such Lender its Applicable Percentage thereof (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender's L/C Advance was outstanding) in the same funds as those received by Agent.            (ii) If any payment received by Agent for the account of the L/C Issuer pursuant to SECTION 2.01(c)(i) is required to be returned under any of the circumstances described in SECTION 10.05 (including pursuant to any settlement entered into by the L/C Issuer in its discretion), each Lender shall pay to Agent for the account of the L/C Issuer its Applicable Percentage thereof on demand of Agent, plus interest thereon from the date of such demand to the date such amount is returned by such Lender, at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.  (e)       OBLIGATIONS ABSOLUTE. The obligation of Borrower to reimburse the L/C Issuer for each drawing under each Letter of Credit and to repay each L/C Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:            (i) any lack of validity or enforceability of such Letter of Credit, this Agreement, any other Loan Document or any Collateral Document;            (ii) the existence of any claim, counterclaim, setoff, defense or other right that Borrower or any Subsidiary may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the L/C Issuer or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;            (iii) any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;            (iv) any payment by the L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by the L/C Issuer under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law; or            (v) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, Borrower or any Subsidiary.  Borrower shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with Borrower's instructions or other irregularity, Borrower will immediately notify the L/C Issuer. Borrower shall be conclusively deemed to have waived any such claim against the L/C Issuer and its correspondents unless such notice is given as aforesaid.  (f) RECORDS. Each Lender and Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit. In the event of any conflict between the accounts and records maintained by Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of Agent shall control in the absence of manifest error.  (g) ROLE OF L/C ISSUER. Each Lender and Borrower agree that, in paying any drawing under a Letter of Credit, the L/C Issuer shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of the L/C Issuer, Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in                                         17   connection herewith at the request or with the approval of Lenders or the Required Lenders, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Issuer Document. Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; PROVIDED, HOWEVER, that this assumption is not intended to, and shall not, preclude Borrower's pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of the L/C Issuer, Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer, shall be liable or responsible for any of the matters described in clauses (i) through (v) of SECTION 2.01(e); PROVIDED, HOWEVER, that anything in such clauses to the contrary notwithstanding, Borrower may have a claim against the L/C Issuer, and the L/C Issuer may be liable to Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by Borrower which Borrower proves were caused by the L/C Issuer's willful misconduct or gross negligence or the L/C Issuer's willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, the L/C Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and the L/C Issuer shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.  (h)       CASH COLLATERAL. Upon the request of Agent, if, as of the L/C Expiration Date, any L/C Obligation for any reason remains outstanding, Borrower shall, immediately Cash Collateralize the then Outstanding Amount of all L/C Obligations. Section 8.02(c) sets forth certain additional requirements to deliver Cash Collateral hereunder. In addition, if for any reason, the Total Outstandings at any time exceeds the Aggregate Commitment then in effect, Borrower shall immediately Cash Collateralize the L/C Obligations in an amount equal to such excess. For purposes hereof, "CASH COLLATERALIZE" means to pledge and deposit with or deliver to Agent, for the benefit of the L/C Issuer and the Lenders, as collateral for the L/C Obligations, cash or deposit account balances pursuant to documentation in form and substance satisfactory to Agent and the L/C Issuer (which documents are hereby consented to by Lenders). Derivatives of such term have corresponding meanings. Borrower hereby grants to Agent, for the benefit of the L/C Issuer and Lenders, a security interest in all such cash, deposit accounts and all balances therein and all proceeds of the foregoing. Cash collateral shall be maintained in blocked, non-interest bearing deposit accounts at Bank of America.  (i)       APPLICABILITY OF ISP AND UCP. Unless otherwise expressly agreed by the L/C Issuer and Borrower when a Letter of Credit is issued, (i) the rules of the ISP shall apply to each standby Letter of Credit, and (ii) the rules of the Uniform Customs and Practice for Documentary Credits, as most recently published by the International Chamber of Commerce (the "ICC") at the time of issuance shall apply to each commercial Letter of Credit.  (j)       L/C FEES. Borrower shall pay to Agent for the account of each Lender in accordance with its Applicable Percentage a L/C fee (the "L/C FEE") for each Letter of Credit equal to the Applicable Rate TIMES the daily amount available to be drawn under such Letter of Credit. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with SECTION 1.06. L/C Fees shall be (i) computed on a quarterly basis in arrears and (ii) due and payable on the first Business Day after the end of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of Credit, on the L/C Expiration Date and thereafter on demand. Notwithstanding anything to the contrary contained herein, upon the request of the Required Lenders, while any Event of Default exists, all L/C Fees shall accrue at the Default Rate.  (k)       CONFLICT WITH ISSUER DOCUMENTS. In the event of any conflict between the terms hereof and the terms of any Issuer Documents, the terms hereof shall control.            2.02 TERMINATION OR REDUCTION OF COMMITMENTS. Borrower may, upon notice to Agent, terminate the Aggregate Commitments, or from time to time permanently reduce the Aggregate Commitments; PROVIDED that (i) any such notice shall be received by Agent not later than 11:00 a.m. five Business Days prior to the date of termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of $1,000,000 or any whole multiple of $1,000,000 in excess thereof, (iii) Borrower shall not terminate or reduce the Aggregate Commitments if, after giving effect thereto, the Outstanding Amount of all L/C Obligations would exceed the Aggregate Commitments. Agent will promptly notify the Lenders of any such notice of termination or reduction of the Aggregate Commitments. Any reduction of the Aggregate Commitments shall be applied to the Commitment of each Lender according to its Applicable Percentage. All fees accrued until the effective date of any termination of the Aggregate Commitments shall be paid on the effective date of such termination.                                         18             2.03 REPAYMENT OF L/C BORROWINGS; INTEREST. Each L/C Borrowing is due and payable on demand. Each L/C Borrowing and, upon the request of the Required Lenders, any other amount payable by Borrower under any Loan Document that is not paid when due (without regard to any applicable grace periods), whether at stated maturity, upon demand, by acceleration or otherwise, shall bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws. Accrued and unpaid interest as set forth above (including interest on past due interest) shall be due and payable upon demand. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.            2.04 FEES. In addition to certain fees described in subsection (j) of SECTION 2.01:  (a)       COMMITMENT FEE. Borrower shall pay to Agent for the account of each Lender in accordance with its Applicable Percentage, a commitment fee equal to the Applicable Rate TIMES the actual daily amount by which the Aggregate Commitments exceed the Outstanding Amount of L/C Obligations. The commitment fee shall accrue at all times from the Closing Date until the Maturity Date, including at any time during which one or more of the conditions in ARTICLE IV is not met, and shall be due and payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing with the first such date to occur after the Closing Date, and on the Maturity Date. The commitment fee shall be calculated quarterly in arrears, and if there is any change in the Applicable Rate during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect.  (b)       AGENT'S FEES. Borrower shall pay to Agent for Agent's own account, fees in the amounts and at the times specified in the letter agreement, dated October 3, 2005 (the "AGENT FEE LETTER"), between Borrower and Agent. Such fees shall be fully earned when paid and shall be nonrefundable for any reason whatsoever.  (c)       LENDERS' UPFRONT FEE. On the Closing Date, Borrower shall pay to Agent, for the account of each Lender in accordance with their respective Applicable Percentages, an upfront fee in an amount of 1/4 of 1% of the Commitment of such Lender. Such upfront fees are for the credit facilities committed by Lenders under this Agreement and are fully earned on the date paid. The upfront fee paid to each Lender is solely for its own account and is nonrefundable for any reason whatsoever.  (d)       DRAW FEE AND AMENDMENT FEE. Borrower shall pay to the Agent for the account of each Lender in accordance with its Applicable Percentage, a fee for each draw request made on a Letter of Credit and for each amendment made to a Letter of Credit; such fees are currently $175 and $250, respectively, and are subject to change from time to time. In addition, Borrower shall pay directly to the L/C Issuer for its own account the customary issuance, presentation and other processing fees, and other standard costs and charges, of the L/C Issuer relating to letters of credit as from time to time in effect. All such fees, costs and charges are due and payable on demand and are nonrefundable.            2.05 COMPUTATION OF INTEREST AND FEES. All computations of interest when the Base Rate is determined by Bank of America's "prime rate" shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year). Interest shall accrue on each L/C Borrowing for the day on which the L/C Borrowing is made, and shall not accrue on a L/C Borrowing, or any portion thereof, for the day on which the L/C Borrowing or such portion is paid, PROVIDED that any L/C Borrowing that is repaid on the same day on which it is made shall, subject to SECTION 2.06(a), bear interest for one day. Each determination by Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.            2.06 PAYMENTS GENERALLY; AGENT'S CLAWBACK. (a)(i) GENERAL. All payments to be made by Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by Borrower hereunder shall be made to Agent, for the account of L/C Issuer or the respective Lenders to which such payment is owed, at the Administrative Agent's Office in Dollars and in immediately available funds not later than 12:00 noon on the date specified herein. Agent will promptly distribute to each Lender its Applicable Percentage(or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender's Lending Office. All payments received by Agent after 12:00 noon shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. If any payment to be made by Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.                                         19   (ii)      On each date when the payment of any principal, interest or fees are due hereunder or under any other Loan Document, Borrower agrees to maintain on deposit in an ordinary checking account maintained by Borrower with Agent (as such account shall be designated by Borrower in a written notice to Agent from time to time, the "BORROWER ACCOUNT") an amount sufficient to pay such principal, interest or fees in full on such date. Borrower hereby authorizes Agent (A) to deduct automatically all principal, interest or fees when due hereunder from the Borrower Account, and (B) if and to the extent any payment of principal, interest or fees under this Agreement is not made when due to deduct any such amount from any or all of the accounts of Borrower maintained at Agent. Agent agrees to provide written notice to Borrower of any automatic deduction made pursuant to this SECTION 2.06(a)(ii) showing in reasonable detail the amounts of such deduction. Lenders agree to reimburse Borrower based on their Applicable Percentage for any amounts deducted from such accounts in excess of amount due hereunder and under any other Loan Documents.  (b)       PAYMENTS BY BORROWER; PRESUMPTIONS BY AGENT. Unless Agent shall have received notice from Borrower prior to the date on which any payment is due to Agent for the account of the Lenders or the L/C Issuer hereunder that Borrower will not make such payment, Agent may assume that Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to Lenders or the L/C Issuer, as the case may be, the amount due. In such event, if Borrower has not in fact made such payment, then each of Lenders or the L/C Issuer, as the case may be, severally agrees to repay to Agent forthwith on demand the amount so distributed to such Lender or the L/C Issuer, in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to Agent, at the greater of the Federal Funds Rate and a rate determined by Agent in accordance with banking industry rules on interbank compensation. A notice of Agent to any Lender or Borrower with respect to any amount owing under this subsection (b) shall be conclusive, absent manifest error.  (c)       OBLIGATIONS OF LENDERS SEVERAL. The obligations of Lenders hereunder to fund participations in Letters of Credit and to make payments under SECTION 10.04(c) are several and not joint. The failure of any Lender to make any L/C Advance, to fund any such participation or to make any payment under SECTION 10.04(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its L/C Advance, purchase its participation or to make its payment under SECTION 10.04(c):            2.07 SHARING OF PAYMENTS. If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of the participations in L/C Obligations held by it resulting in such Lender's receiving payment of a proportion of the aggregate amount of such participations and accrued interest thereon greater than its PRO RATA share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify Agent of such fact, and (b) purchase (for cash at face value) subparticipations in L/C Obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective L/C Advances and other amounts owing them, PROVIDED that:            (i)       if any such subparticipations are purchased and all or any           portion of the payment giving rise thereto is recovered, such           subparticipations shall be rescinded and the purchase price restored           to the extent of such recovery, without interest; and            (ii)      the provisions of this Section shall not be construed to           apply to (x) any payment made by Borrower pursuant to and in           accordance with the express terms of this Agreement or (y) any payment           obtained by a Lender as consideration for subparticipations in L/C           Obligations to any assignee or participant, other than to Borrower or           any Subsidiary thereof (as to which the provisions of this Section           shall apply).  Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Loan Party in the amount of such participation.  ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY            3.01 TAXES. (a) PAYMENTS FREE OF TAXES. Any and all payments by Borrower to or on account of any obligation of Borrower hereunder or under any other Loan Document shall be made free and clear of and without reduction or withholding for any Indemnified Taxes or Other Taxes, provided that if Borrower shall be required by any applicable law to deduct any                                         20   Indemnified Taxes (including any Other Taxes) from such payments, then, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section), Agent, Lender or L/C Issuer, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) Borrower shall make such deductions, and (iii) Borrower shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law.  (b) PAYMENT OF OTHER TAXES BY BORROWER. Without limiting the provisions of subsection (a) above, Borrower shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.  (c) INDEMNIFICATION BY BORROWER. Borrower shall indemnify Agent, each Lender and the L/C Issuer, within 10 days after demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by Agent, such Lender or the L/C Issuer, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to Borrower by a Lender or the L/C Issuer (with a copy to Agent), or by Agent on its own behalf or on behalf of a Lender or the L/C Issuer, shall be conclusive absent manifest error.  (d) EVIDENCE OF PAYMENTS. As soon as practicable after any payment of Indemnified Taxes or Other Taxes by Borrower to a Governmental Authority, Borrower shall deliver to Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to Agent.  (e) STATUS OF LENDERS. Any Lender, if requested by Borrower or Agent, shall deliver such documentation prescribed by applicable law or reasonably requested by Borrower or Agent as will enable the Borrower or Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.  (f) TREATMENT OF CERTAIN REFUNDS. If Agent, any Lender or the L/C Issuer determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by Borrower or with respect to which Borrower has paid additional amounts pursuant to this Section, it shall pay to Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by Borrower under this Section with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of Agent, such Lender or the L/C Issuer, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), PROVIDED that Borrower, upon the request of Agent, such Lender or the L/C Issuer, agrees to repay the amount paid over to Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to Agent, such Lender or the L/C Issuer in the event Agent, such Lender or the L/C Issuer is required to repay such refund to such Governmental Authority. This subsection shall not be construed to require Agent, any Lender or the L/C Issuer to make available its tax returns (or any other information relating to its taxes that it deems confidential) to Borrower or any other Person.            3.02 INCREASED COSTS (a) INCREASED COSTS GENERALLY. If any Change in Law shall:            (i)       impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender or the L/C Issuer;            (ii)      subject any Lender or the L/C Issuer to any tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, or any participation in a Letter of Credit, or change the basis of taxation of payments to such Lender or the L/C Issuer in respect thereof (except for Indemnified Taxes or Other Taxes covered by SECTION 3.01 and the imposition of, or any change in the rate of, any Excluded Tax payable by such Lender or the L/C Issuer); or            (iii)     impose on any Lender or the L/C Issuer any other condition, cost or expense affecting this Agreement or any Letter of Credit or participation therein;  and the result of any of the foregoing shall be to increase the cost to such Lender or the L/C Issuer of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the                                         21   amount of any sum received or receivable by such Lender or the L/C Issuer hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or the L/C Issuer, Borrower will pay to such Lender or the L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or the L/C Issuer, as the case may be, for such additional costs incurred or reduction suffered.  (b)       CAPITAL REQUIREMENTS. If any Lender or the L/C Issuer determines that any Change in Law affecting such Lender or the L/C Issuer or any Lending Office of such Lender or such Lender's or the L/C Issuer's holding company, if any, regarding capital requirements has or would have the effect of reducing the rate of return on such Lender's or the L/C Issuer's capital or on the capital of such Lender's or the L/C Issuer's holding company, if any, as a consequence of this Agreement, the Commitments of such Lender, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the L/C Issuer, to a level below that which such Lender or the L/C Issuer or such Lender's or the L/C Issuer's holding company could have achieved but for such Change in Law (taking into consideration such Lender's or the L/C Issuer's policies and the policies of such Lender's or the L/C Issuer's holding company with respect to capital adequacy), then from time to time Borrower will pay to such Lender or the L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or the L/C Issuer or such Lender's or the L/C Issuer's holding company for any such reduction suffered. If Borrower becomes obligated to make any material amount of recurring payments under this subsection, then Borrower shall have the right to find another issuer of an appropriate letter of credit, and, upon closing with such issuer and the return to the Agent of any Letters of Credit outstanding hereunder and payment of any amounts due hereunder, terminate this Agreement, provided however that no such termination shall affect Borrower's obligations to the Lenders, the Agent, and the L/C Issuer for matters arising during the period this Agreement was in effect and payment of their reasonable out-of-pocket costs, including reasonable attorneys' fees, in connection with such termination.  (c)       CERTIFICATES FOR REIMBURSEMENT. A certificate of a Lender or the L/C Issuer setting forth the amount or amounts necessary to compensate such Lender or the L/C Issuer or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to Borrower shall be conclusive absent manifest error. Borrower shall pay such Lender or the L/C Issuer, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.  (d)       DELAY IN REQUESTS. Failure or delay on the part of any Lender or the L/C Issuer to demand compensation pursuant to the foregoing provisions of this Section shall not constitute a waiver of such Lender's or the L/C Issuer's right to demand such compensation, PROVIDED that Borrower shall not be required to compensate a Lender or the L/C Issuer pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than nine months prior to the date that such Lender or the L/C Issuer, as the case may be, notifies Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender's or the L/C Issuer's intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).            3.03 MITIGATION OBLIGATIONS. If any Lender requests compensation under SECTION 3.02, or Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to SECTION 3.01, then such Lender shall use reasonable efforts to designate a different Lending Office or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to SECTION 3.01 or 3.02, as the case may be, in the future, and (ii) in each case, would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.            3.04 SURVIVAL. All of Borrower's obligations under this ARTICLE III shall survive termination of the Aggregate Commitments and repayment of all other Obligations hereunder.  ARTICLE IV. CONDITIONS PRECEDENT TO L/C CREDIT EXTENSIONS            4.01 CONDITIONS OF INITIAL L/C CREDIT EXTENSION. The obligation of the L/C Issuer to make the initial L/C Credit Extension hereunder is subject to satisfaction of the following conditions precedent:  (a) Agent's receipt of the following, each of which shall be originals or telecopies (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing Loan Party, each dated the Closing Date (or,                                         22   in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance satisfactory to Agent and each of the Lenders:            (i) executed counterparts of this Agreement sufficient in number for           distribution to Agent, each Lender and Borrower, together with           originals of the applicable Issuer Documents to be delivered to the           L/C Issuer and all Collateral Documents, with the original First           Mortgage Bonds and the Second Mortgage Bonds, to be delivered to the           Agent;            (ii) such certificates of resolutions or other action, incumbency           certificates and/or other certificates of Responsible Officers of each           Loan Party as Agent may require evidencing the identity, authority and           capacity of each Responsible Officer thereof authorized to act as a           Responsible Officer in connection with this Agreement and the other           Loan Documents to which such Loan Party is a party;            (iii) such documents and certifications as Agent may reasonably           require to evidence that each Loan Party is duly organized or formed,           and that each Loan Party is validly existing, in good standing and           qualified to engage in business in each jurisdiction where its           ownership, lease or operation of properties or the conduct of its           business requires such qualification, except to the extent that           failure to do so could not reasonably be expected to have a Material           Adverse Effect;            (iv) a favorable opinion of counsel to the Loan Parties acceptable to           Agent addressed to Agent and each Lender, as to the matters set forth           concerning the Loan Parties and the Loan Documents in form and           substance satisfactory to Agent;            (v) a certificate of a Responsible Officer of each Loan Party either           (A) attaching copies of all consents, licenses and approvals required           in connection with the execution, delivery and performance by such           Loan Party and the validity against such Loan Party of the Loan           Documents to which it is a party, and stating that such consents,           licenses and approvals shall be in full force and effect, or (B)           stating that no such consents, licenses or approvals are so required;            (vi) a certificate signed by a Responsible Officer of Borrower           certifying (A) that the conditions specified in SECTIONS 4.02(a) and           (b) have been satisfied, and (B) that there has been no event or           circumstance since the date of the Borrower Financial Statements that           has had or could be reasonably expected to have, either individually           or in the aggregate, a Material Adverse Effect;            (vii) evidence that all insurance required to be maintained pursuant           to the Loan Documents has been obtained and is in effect;            (viii) a duly completed Compliance Certificate as of the last day of           the fiscal quarter of Borrower most recently ended prior to the           Closing Date, signed by a Responsible Officer of Borrower;            (ix) evidence that all commitments under the Letter of Credit and           Reimbursement Agreement dated as of October 1, 2000, with The Bank of           New York as Agent and Issuing Bank, as the same has been amended to           date (the "EXISTING CREDIT AGREEMENT") have been or concurrently with           the Closing Date are being terminated, and all outstanding amounts           thereunder paid in full and all Liens securing obligations under the           Existing Credit Agreement have been or concurrently with the Closing           Date are being released;            (x) evidence that the Letter of Credit to be issued hereunder has been           accepted as an "Alternate Credit Facility" by the Trustee under the           MPUFB Indenture;            (xi) true and complete copies of each of the following, as amended to           date, shall be provided to the Agent: the MPUFB Loan Agreement, the           MPUFB Indenture, the First Mortgage Supplemental Indenture, the Second           Mortgage Supplemental Indenture, the Pledge Agreement, the Tender           Agreement and the Remarketing Agreement; and            (xii) such other assurances, certificates, documents, consents or           opinions as Agent, the L/C Issuer or the Required Lenders reasonably           may require.  (b)       Any fees required to be paid on or before the Closing Date shall have been paid.                                         23   (c)       Unless waived by Agent, Borrower shall have paid all fees, charges and disbursements of counsel to Agent to the extent invoiced prior to or on the Closing Date, plus such additional amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final settling of accounts between Borrower and Agent).  (d)       The Closing Date shall have occurred on or before February 28, 2006.  Without limiting the generality of the provisions of SECTION 9.04, for purposes of determining compliance with the conditions specified in this SECTION 4.01, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.            4.02 CONDITIONS TO ALL L/C CREDIT EXTENSIONS. The obligation of the L/C Issuer to honor any request for a L/C Credit Extension is subject to the following conditions precedent:  (a) The representations and warranties of Borrower and each other Loan Party contained in ARTICLE V or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct on and as of the date of such L/C Credit Extension, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date, and except that for purposes of this SECTION 4.02, the representations and warranties contained in subsections (a) and (b) of SECTION 5.05 shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of SECTION 6.01.  (b) No Default shall exist, or would result from such proposed L/C Credit Extension or from the application of the proceeds thereof.  (c) Agent and the L/C Issuer shall have received the L/C Application in accordance with the requirements hereof.  (d) Agent shall have received, in form and substance satisfactory to it, such other assurances, certificates, documents or consents related to the foregoing as Agent, the L/C Issuer or the Required Lenders reasonably may require.  Each L/C Application submitted by Borrower shall be deemed to be a representation and warranty that the conditions specified in SECTIONS 4.02(a) and (b) have been satisfied on and as of the date of the applicable L/C Credit Extension.  ARTICLE V. REPRESENTATIONS AND WARRANTIES  Borrower represents and warrants to Agent and the Lenders that:            5.01 EXISTENCE, QUALIFICATION AND POWER; COMPLIANCE WITH LAWS. Each Loan Party and each Subsidiary thereof (a) is duly organized or formed, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents and the Collateral Documents to which it is a party, (c) is duly qualified and is licensed and in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license, and (d) is in compliance with all Laws; except in each case referred to in clause (b)(i), (c) or (d), to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.            5.02 AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and performance by each Loan Party of each Loan Document and each Collateral Document to which such Person is party, have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of any of such Person's Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, or require any payment to be made under (i) any Contractual Obligation to which such Person is a party or affecting such Person or the properties of such Person or any of its Subsidiaries or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (c) violate any Law. Each Loan Party and each Subsidiary thereof is in compliance with                                         24   all Contractual Obligations referred to in clause (b)(i), except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.            5.03 GOVERNMENTAL AUTHORIZATION; OTHER CONSENTS. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document or any Collateral Document except that any action requiring a sale of any material part of the Borrower's assets will require PUC approval.            5.04 BINDING EFFECT. This Agreement has been, and each other Loan Document and each Collateral Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto. This Agreement constitutes, and each other Loan Document and each Collateral Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms.            5.05 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE EFFECT; NO INTERNAL CONTROL EVENT. (a) The Borrower Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present the financial condition of Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show all material indebtedness and other liabilities, direct or contingent, of Borrower and its Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Indebtedness.  (b) The unaudited consolidated and consolidating balance sheets of Borrower and its Subsidiaries dated September 30, 2005, and the related consolidated and consolidating statements of income or operations, shareholders' equity and cash flows for the fiscal quarter ended on that date (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present the financial condition of Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby, subject, in the case of clauses (i) and (ii), to the absence of footnotes and to normal year-end audit adjustments.  (c) Since the date of the Borrower Financial Statements, there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect.  (d) Since the date of the Borrower Financial Statements, no Internal Control Event has occurred.  (e) Subject to the second sentence of this subsection, the consolidated pro forma balance sheets of Borrower and its Subsidiaries as at December 31, 2005, and the related consolidated pro forma statements of income and cash flows of Borrower and its Subsidiaries for the twelve months then ended, certified by the chief financial officer of Borrower, copies of which have been furnished to each Lender, fairly present the consolidated pro forma financial condition of Borrower and its Subsidiaries as at such date and the consolidated pro forma results of operations of Borrower and its Subsidiaries for the period ended on such date, all in accordance with GAAP. The consolidated forecasted balance sheet and statements of income and cash flows of the Borrower and its Subsidiaries were prepared in good faith on the basis of the assumptions stated therein, which assumptions were fair in light of the conditions existing at the time of delivery of such forecasts, and represented, at the time of delivery, the Borrower's best estimate of its future financial performance.            5.06 LITIGATION. There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of Borrower after due and diligent investigation, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against Borrower or any of its Subsidiaries or against any of their properties or revenues that (a) purport to affect or pertain to this Agreement or any other Loan Document or any Collateral Document, or any of the transactions contemplated hereby, or (b) except as specifically disclosed in SCHEDULE 5.06, either individually or in the aggregate, if determined adversely, could reasonably be expected to have a Material Adverse Effect, and there has been no adverse change in the status, or financial effect on any Loan Party or any Subsidiary thereof, of the matters described on SCHEDULE 5.06.            5.07 NO DEFAULT. Neither Borrower nor any Subsidiary is in default under or with respect to any Contractual Obligation that could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. No Default has                                         25   occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.            5.08 OWNERSHIP OF PROPERTY; LIENS. Each of Borrower and each Subsidiary has good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business, except for such defects in title as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The property of Borrower and its Subsidiaries is subject to no Liens, other than Liens permitted by SECTION 7.01.            5.09 ENVIRONMENTAL COMPLIANCE. Borrower and its Subsidiaries conduct in the ordinary course of business a review of the effect of existing Environmental Laws and claims alleging potential liability or responsibility for violation of any Environmental Law on their respective businesses, operations and properties, and as a result thereof Borrower has reasonably concluded that, except as specifically disclosed in SCHEDULE 5.09, such Environmental Laws and claims could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.            5.10 INSURANCE. The properties of Borrower and its Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of Borrower, in such amounts (after giving effect to any self-insurance compatible with the following standards), with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where Borrower or the applicable Subsidiary operates.            5.11 TAXES. Borrower and its Subsidiaries have filed all Federal, state and other material tax returns and reports required to be filed, and have paid all Federal, state and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP. There is no proposed tax assessment against Borrower or any Subsidiary that would, if made, have a Material Adverse Effect.            5.12 ERISA COMPLIANCE. (a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state Laws. Each Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto and, to the best knowledge of Borrower, nothing has occurred which would prevent, or cause the loss of, such qualification. Borrower and each ERISA Affiliate have made all required contributions to each Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan.  (b) There are no pending or, to the best knowledge of Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could be reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Effect.  (c) (i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Sections 4069 or 4212(c) of ERISA.            5.13 SUBSIDIARIES. As of the Closing Date, Borrower has no Subsidiaries other than those specifically disclosed in Part (a) of SCHEDULE 5.13, and all of the outstanding Equity Interests in such Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by a Loan Party in the amounts specified on Part (a) of Schedule 5.13 free and clear of all Liens. Borrower has no equity investments in any other corporation or entity other than those specifically disclosed in Part(b) of SCHEDULE 5.13. All of the outstanding Equity Interests in Borrower have been validly issued and are fully paid and nonassessable and are owned by Maine & Maritimes Corporation in the amounts specified on Part (c) of SCHEDULE 5.13 free and clear of all Liens.                                         26             5.14 MARGIN REGULATIONS; INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT. (a) Borrower is not engaged and will not engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock. Following the application of the drawing under each Letter of Credit, not more than 25% of the value of the assets (either of Borrower only or of Borrower and its Subsidiaries on a consolidated basis) subject to the provisions of SECTION 7.01 or SECTION 7.05 or subject to any restriction contained in any agreement or instrument between Borrower and any Lender or any Affiliate of any Lender relating to Indebtedness and within the scope of SECTION 8.01(e) will be margin stock.  (b) None of Borrower, any Person Controlling Borrower, or any Subsidiary is or is required to be registered as an "investment company" under the Investment Company Act of 1940.  (c) The Parent and each of its subsidiaries, including the Borrower, have been exempted as a "holding company" and a "subsidiary", respectively, under the Public Utility Holding Company Act of 1935 (repealed effective February 8, 2006) pursuant to annual filings made with the SEC on Form U-3A-2, the most recent of which is now in full force and effect and has not been revoked, modified or amended. While the Parent meets the definition of a "holding company" under the Public Utility Holding Company Act of 2005, and the Borrower meets the definition of a "subsidiary" under such Act, (a) the only applicable requirements under such Act are state and federal government access to books and records of holding companies and their subsidiaries for other regulatory purposes, and (b) either the Parent or the Borrower, or both, may come under the terms of exemptions under regulations yet to be promulgated under such Act by the Federal Energy Regulatory Commission. The provisions of the Federal Power Act giving jurisdiction over securities issued by certain utilities does not extend to the securities and other obligations of the Borrower issued or incurred under this Agreement, since it is organized and operating in a state under the laws of which the security issues and other obligations under this Agreement are regulated by a state commission. The Borrower is subject to the jurisdiction of the PUC, which is vested with comprehensive powers of supervision, regulation and control over various matters, including the issuance of securities.            5.15 DISCLOSURE. Borrower has disclosed to Agent and Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. No report, financial statement, certificate or other information furnished (whether in writing or orally) by or on behalf of any Loan Party to Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other Loan Document (in each case, as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; PROVIDED that, with respect to projected financial information, Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.            5.16 COMPLIANCE WITH LAWS. Each of Borrower and each Subsidiary is in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.            5.17 INTELLECTUAL PROPERTY; LICENSES, ETC. Borrower and its Subsidiaries own, or possess the right to use, all of the trademarks, service marks, trade names, copyrights, patents, patent rights, franchises, licenses and other intellectual property rights that are reasonably necessary for the operation of their respective businesses, without conflict with the rights of any other Person. To the best knowledge of Borrower, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by Borrower or any Subsidiary infringes upon any rights held by any other Person. No claim or litigation regarding any of the foregoing is pending or, to the best knowledge of Borrower, threatened, which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.            5.18 RIGHTS IN COLLATERAL; PRIORITY OF LIENS. Borrower and each other Loan Party have caused the First Mortgage Bonds and the Second Mortgage Bonds to be duly executed and delivered in accordance with the terms of the Collateral Documents, as collateral security for Borrower's obligations hereunder, and the Letter of Credit to be issued under this Agreement is an "Alternate Credit Facility" as defined in the MPUFB Indenture. The First Mortgage Bonds constitute valid and enforceable first priority perfected Liens on the property of Borrower, as described in the First Mortgage Indenture, in favor of Agent, for the ratable benefit of Agent, L/C Issuer and Lenders. The Second Mortgage Bonds constitute valid and enforceable                                         27   second priority perfected Liens on the property of Borrower, as described in the Second Mortgage Indenture, in favor of Agent, for the ratable benefit of Agent, L/C Issuer and Lenders.  ARTICLE VI. AFFIRMATIVE COVENANTS  So long as any Lender shall have any Commitment hereunder, any Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, Borrower shall, and shall (except in the case of the covenants set forth in SECTIONS 6.01, 6.02, and 6.03) cause each Subsidiary to:            6.01 FINANCIAL STATEMENTS. Deliver to Agent a sufficient number of copies for delivery by Agent to each Lender, in form and detail satisfactory to Agent and the Required Lenders:  (a) as soon as available, but in any event within 120 days after the end of each fiscal year of Borrower,  (i) a consolidated and consolidating balance sheet of Parent and its subsidiaries as at the end of such fiscal year, and the related consolidated and consolidating statements of income or operations, shareholders' equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, such consolidated statements to be audited and accompanied by (i) a report and opinion of Vitale, Caturano and Co., Ltd. or another Registered Public Accounting Firm of nationally recognized standing reasonably acceptable to the Required Lenders, which report and opinion shall be prepared in accordance with generally accepted auditing standards and applicable Securities Laws and shall not be subject to any "going concern" or like qualification or exception or any qualification or exception as to the scope of such audit and (ii) when and to the extent required by the SEC an attestation report of such Registered Public Accounting Firm as to the Parent's internal controls pursuant to Section 404 of Sarbanes-Oxley expressing a conclusion to which the Required Lenders do not object and such consolidating statements to be certified by a Responsible Officer of Parent to the effect that such statements are fairly stated in all material respects when considered in relation to the consolidated financial statements of Parent and its subsidiaries, provided, however, that so long as Parent is subject to section 13 of the Securities Exchange Act of 1934, as amended, this requirement shall be satisfied with respect to Parent by delivery within such 120-day period of the annual report of Parent on Form 10-K for such fiscal year, together with all documents from the preceding fiscal year which are incorporated therein by reference, and have theretofore not been delivered, as filed by Parent with the SEC; and  (ii) a consolidated and consolidating balance sheet of Borrower and its Subsidiaries as at the end of such fiscal year, and the related consolidated and consolidating statements of income or operations, shareholders' equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, and such consolidating statements to be certified by a Responsible Officer of Borrower to the effect that such statements are fairly stated in all material respects when considered in relation to the consolidated financial statements of Borrower and its Subsidiaries (the "Borrower Financial Statements");  (b) as soon as available, but in any event within 60 days after the end of each of the first three fiscal quarters of each fiscal year of Borrower,  (i) a consolidated and consolidating balance sheet of Parent and its subsidiaries as at the end of such fiscal quarter, and the related consolidated and consolidating statements of income or operations, shareholders' equity and cash flows for such fiscal quarter and for the portion of Parent's fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail, such consolidated statements to be certified by a Responsible Officer of Parent as fairly presenting the financial condition, results of operations, shareholders' equity and cash flows of Parent and its subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes and such consolidating statements to be certified by a Responsible Officer of Parent to the effect that such statements are fairly stated in all material respects when considered in relation to the consolidated financial statements of the Parent and its subsidiaries, provided, however, that so long as Parent is subject to section 13 of the Securities Exchange Act of 1934, as amended, this requirement shall be satisfied with respect to Parent by delivery within such 60-day period of the annual report of Parent on Form 10-Q for such quarter, as filed by Parent with the SEC; and  (ii) a consolidated and consolidating balance sheet of Borrower and its Subsidiaries as at the end of such fiscal quarter, and the related consolidated and consolidating statements of income or operations, shareholders' equity and cash flows for such fiscal quarter and for the portion of Borrower's fiscal year then ended, setting forth in each case in comparative form the figures for the                                         28   corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail, such consolidated statements to be certified by a Responsible Officer of Borrower as fairly presenting the financial condition, results of operations, shareholders' equity and cash flows of Borrower and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes and such consolidating statements to be certified by a Responsible Officer of Borrower to the effect that such statements are fairly stated in all material respects when considered in relation to the consolidated financial statements of the Borrower and its Subsidiaries; and  (c) as soon as available, but in any event at least 60 days after the end of each fiscal year of Borrower, forecasts prepared by management of Borrower, in form satisfactory to Agent and the Required Lenders, of consolidated balance sheets and statements of income or operations and cash flows of Borrower and its Subsidiaries on a monthly basis for the immediately following fiscal year (including the fiscal year in which the Maturity Date occurs).            6.02 CERTIFICATES; OTHER INFORMATION. Deliver to Agent a sufficient number of copies for delivery by Agent to each Lender, in form and detail satisfactory to Agent and the Required Lenders:  (a) concurrently with the delivery of the financial statements referred to in SECTION 6.01(a), a certificate of its independent certified public accountants certifying such financial statements and stating that in making the examination necessary therefor no knowledge was obtained of any Default or, if any such Default shall exist, stating the nature and status of such event;  (b) concurrently with the delivery of the financial statements referred to in SECTIONS 6.01(a) and (b), a duly completed Compliance Certificate signed by a Responsible Officer of Borrower;  (c) promptly after any request by Agent or any Lender, copies of any detailed audit reports, management letters or recommendations submitted to the board of directors (or the audit committee of the board of directors) of Borrower by independent accountants in connection with the accounts or books of Borrower or any Subsidiary, or any audit of any of them;  (d) promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of Borrower, and copies of all annual, regular, periodic and special reports and registration statements which Borrower may file or be required to file with the Securities and Exchange Commission under Section 13 or 15(d) of the Securities Exchange Act of 1934, and not otherwise required to be delivered to Agent pursuant hereto;  (e) promptly after the furnishing thereof, copies of any statement or report furnished to any holder of debt securities of any Loan Party or any Subsidiary thereof pursuant to the terms of any indenture, loan or credit or similar agreement and not otherwise required to be furnished to the Lenders pursuant to Section 6.01 or any other clause of this Section 6.02;  (f) promptly, and in any event within five Business Days after receipt thereof by any Loan Party or any Subsidiary thereof, copies of each notice or other correspondence received from the Securities and Exchange Commission (or comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation or possible investigation or other inquiry by such agency regarding financial or other operational results of any Loan Party or any Subsidiary thereof; and  (g) promptly, such additional information regarding the business, financial or corporate affairs of Borrower or any Subsidiary, or compliance with the terms of the Loan Documents and the Collateral Documents, as Agent or any Lender may from time to time reasonably request.  Borrower hereby acknowledges that (a) Agent will make available to Lenders and the L/C Issuer materials and/or information provided by or on behalf of Borrower hereunder (collectively, "BORROWER MATERIALS") by posting Borrower Materials on IntraLinks or another similar electronic system (the "PLATFORM") and (b) certain of the Lenders may be "public-side" Lenders (I.E., Lenders that do not wish to receive material non-public information with respect to Borrower or its securities) (each, a "PUBLIC LENDER"). Borrower hereby agrees that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked "PUBLIC" so long as Borrower is the issuer of any outstanding debt or equity securities that are registered or issued pursuant to a private offering or is actively contemplating issuing any such securities which, at a minimum, shall mean that the word "PUBLIC" shall appear prominently on the first page thereof; (x) by marking Borrower Materials "PUBLIC," Borrower shall be deemed to have authorized Agent, the L/C Issuer and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to Borrower or its securities for purposes of United States Federal and state securities laws (provided, however, that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 10.07); (y) all Borrower Materials marked "PUBLIC" are permitted to be made available through a portion of the Platform designated                                         29   "Public Investor;" and (z) Agent shall be entitled to treat any Borrower Materials that are not marked "PUBLIC" as being suitable only for posting on a portion of the Platform not designated "Public Investor". Notwithstanding the foregoing, the Borrower shall be under no obligation to mark any Borrower Materials "PUBLIC."            6.03 NOTICES. Promptly notify Agent and each Lender:  (a) of the occurrence of any Default;  (b) of any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect, including (i) breach or non-performance of, or any default under, a Contractual Obligation of Borrower or any Subsidiary; (ii) any dispute, litigation, investigation, proceeding or suspension between Borrower or any Subsidiary and any Governmental Authority; or (iii) the commencement of, or any material development in, any litigation or proceeding affecting Borrower or any Subsidiary, including pursuant to any applicable Environmental Laws;  (c) of the occurrence of any ERISA Event; and  (d) of the occurrence of any Internal Control Event.  Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer of Borrower setting forth details of the occurrence referred to therein and stating what action Borrower has taken and proposes to take with respect thereto. Each notice pursuant to SECTION 6.03(a) shall describe with particularity any and all provisions of this Agreement and any other Loan Document or Collateral Document that have been breached.            6.04 PAYMENT OF OBLIGATIONS. Pay and discharge as the same shall become due and payable, all its obligations and liabilities, including (a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by Borrower or such Subsidiary; (b) all lawful claims which, if unpaid, would by law become a Lien upon its property; and (c) all Indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness.            6.05 PRESERVATION OF EXISTENCE, ETC. (a) Preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization except in a transaction permitted by SECTION 7.04 or 7.05; (b) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which could reasonably be expected to have a Material Adverse Effect.            6.06 MAINTENANCE OF PROPERTIES. (a) Maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted; (b) make all necessary repairs thereto and renewals and replacements thereof except where the failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) use the standard of care typical in the industry in the operation and maintenance of its facilities.            6.07 MAINTENANCE OF INSURANCE. Maintain with financially sound and reputable insurance companies not Affiliates of Borrower, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts (after giving effect to any self-insurance compatible with the following standards) as are customarily carried under similar circumstances by such other Persons and providing for not less than 30 days' prior notice to Agent of termination, lapse or cancellation of such insurance.            6.08 COMPLIANCE WITH LAWS. Comply in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (a) such requirement of Law or order, write, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (b) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.                                         30             6.09 BOOKS AND RECORDS. (a) Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of Borrower or such Subsidiary, as the case may be; and (b) maintain such books of record and account in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over Borrower or such Subsidiary, as the case may be. Borrower shall maintain, or cause to be maintained, at all times books and records pertaining to the Collateral in such detail, form and scope as Agent or any Lender shall reasonably require.            6.10 INSPECTION RIGHTS. Permit representatives and independent contractors of Agent and each Lender to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants, all at the expense of Borrower and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to Borrower; PROVIDED, HOWEVER, that when an Event of Default exists Agent or any Lender (or any of their respective representatives or independent contractors) may do any of the foregoing at the expense of Borrower at any time during normal business hours and without advance notice.            6.11 USE OF PROCEEDS. Use the Letters of Credit for credit enhancement for the MPUFB Bonds and not for any other purpose.            6.12 FINANCIAL COVENANTS.            (a) TANGIBLE NET WORTH. Maintain on a consolidated basis Tangible Net Worth equal to at least Thirty Two Million Five Hundred Seventy Four Thousand Dollars ($32,574,000).            (b) CONSOLIDATED TOTAL INDEBTEDNESS FOR BORROWED MONEY TO CONSOLIDATED TOTAL CAPITAL. Maintain Consolidated Total Indebtedness for Borrowed Money to an amount equal to or lesser than 65% of Consolidated Total Capital, calculated at the end of each quarter, using the results of the twelve-month period ending with that reporting period.            (c) DEBT SERVICE COVERAGE RATIO. Maintain a ratio of Consolidated Net Income Available for Fixed Charges to Consolidated Interest Expense of at least 1.75:1.0, calculated at the end of each quarter, using the results of the twelve-month period ending with that reporting period.            6.13      COLLATERAL RECORDS. To execute and deliver promptly, and to cause each other Loan Party to execute and deliver promptly, to Agent, from time to time, solely for Agent's convenience in maintaining a record of the Collateral, such written statements and schedules as Agent may reasonably require designating, identifying or describing the Collateral. The failure by Borrower or any other Loan Party, however, to promptly give Agent such statements or schedules shall not affect, diminish, modify or otherwise limit the Liens on the Collateral granted pursuant to the Collateral Documents.            6.14      SECURITY INTERESTS. To, and to cause each other Loan Party to, (a) defend the Collateral against all claims and demands of all Persons at any time claiming the same or any interest therein, and (b) do whatever Agent may reasonably request, from time to time, to effect the purposes of this Agreement and the other Loan Documents and Collateral Documents, including cooperating with Agent's representatives and paying claims which might, if unpaid, become a Lien on the Collateral.  ARTICLE VII. NEGATIVE COVENANTS  So long as any Lender shall have any Commitment hereunder, any Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, Borrower shall not, nor shall it permit any Subsidiary to, directly or indirectly:            7.01 LIENS. Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, other than the following:  (a) Liens pursuant to any Loan Document or any Collateral Document;  (b) Liens existing on the date hereof and listed on SCHEDULE 7.01 and any renewals or extensions thereof, PROVIDED that (i) the property covered thereby is not changed, (ii) the amount secured or benefited thereby is not increased, (iii) the direct or any                                         31   contingent obligor with respect thereto is not changed, and (iv) any renewal or extension of the obligations secured or benefited thereby is permitted by SECTION 7.03(b);  (c) Liens for taxes not yet due or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP;  (d) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 30 days or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person;  (e) pledges or deposits in the ordinary course of business in connection with workers' compensation, unemployment insurance and other social security legislation, other than any Lien imposed by ERISA;  (f) deposits to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;  (g) easements, rights-of-way, restrictions and other similar encumbrances affecting real property which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person;  (h) Liens securing judgments for the payment of money not constituting an Event of Default under SECTION 8.01(h); and  (i) Liens securing Indebtedness permitted under SECTION 7.03(e); PROVIDED that (i) such Liens do not at any time encumber any property other than the property financed by such Indebtedness and (ii) the Indebtedness secured thereby does not exceed the cost or fair market value, whichever is lower, of the property being acquired on the date of acquisition.            7.02 INVESTMENTS. Make any Investments, except:  (a) Investments held by Borrower or such Subsidiary in the form of cash equivalents or short-term marketable debt securities;  (b) advances to officers, directors and employees of Borrower and Subsidiaries in an aggregate amount not to exceed $50,000 at any time outstanding, for travel, entertainment, relocation and analogous ordinary business purposes;  (c) Investments of Borrower in any wholly-owned Subsidiary and Investments of any wholly-owned Subsidiary in Borrower or in another wholly-owned Subsidiary;  (d) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss; and  (e) Guarantees permitted by SECTION 7.03.            7.03 INDEBTEDNESS. Create, incur, assume or suffer to exist any Indebtedness, except:  (a) Indebtedness under the Loan Documents and Collateral Documents;  (b) Indebtedness outstanding on the date hereof and listed on SCHEDULE 7.03 and any refinancings, refundings, renewals or extensions thereof; PROVIDED that (i) the amount of such Indebtedness is not increased at the time of such refinancing, refunding, renewal or extension except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such refinancing and by an amount equal to any existing commitments unutilized thereunder and (ii) the terms relating to principal amount, amortization, maturity, collateral (if any) and subordination (if any), and other material terms taken as a whole, of any such refinancing, refunding, renewing or extending Indebtedness, and of any agreement entered into and of any instrument issued in connection therewith, are no less favorable in any material respect to the Loan Parties or Lenders than the terms of any agreement or instrument governing the Indebtedness being refinanced,                                         32   refunded, renewed or extended and the interest rate applicable to any such refinancing, refunding, renewing or extending Indebtedness does not exceed the then applicable market interest rate;  (c) Guarantees of Borrower or any Subsidiary in respect of Indebtedness otherwise permitted hereunder of Borrower or any wholly-owned Subsidiary;  (d) obligations (contingent or otherwise) of Borrower or any Subsidiary existing or arising under any Swap Contract, PROVIDED that (i) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments, investments, assets, or property held or reasonably anticipated by such Person, or changes in the value of securities issued by such Person, and not for purposes of speculation or taking a "market view;" and (ii) such Swap Contract does not contain any provision exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party; and  (e) Indebtedness in respect of capital leases, Synthetic Lease Obligations and purchase money obligations for fixed or capital assets within the limitations set forth in SECTION 7.01(i); PROVIDED, HOWEVER, that the cumulative amount of all such Indebtedness outstanding during the term of this Agreement shall not exceed $2,500,000.            7.04 FUNDAMENTAL CHANGES. Merge, dissolve, liquidate, consolidate with or into another Person, or Dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person, except that, so long as no Default exists or would result therefrom, Borrower's sole Subsidiary may be dissolved or otherwise terminate its existence, inasmuch as it has heretofore disposed of substantially all of its operating assets.            7.05 DISPOSITIONS. Make any Disposition or enter into any agreement to make any Disposition, except:  (a) Dispositions of obsolete or worn out property, whether now owned or hereafter acquired, in the ordinary course of business;  (b) Dispositions of inventory in the ordinary course of business;  (c) Dispositions of equipment or real property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property or (ii) the proceeds of such Disposition are reasonably promptly applied to the purchase price of such replacement property;  (d) Dispositions of property by any Subsidiary to Borrower or to a wholly-owned Subsidiary; PROVIDED that if the transferor of such property is a Guarantor, the transferee thereof must either be Borrower or a Guarantor; and  (e) Dispositions permitted by SECTION 7.04.  PROVIDED, HOWEVER, that any Disposition pursuant to clauses (a) through (e) shall be for fair market value.            7.06 RESTRICTED PAYMENTS. Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, or issue or sell any Equity Interests, except that, so long as no Default shall have occurred and be continuing at the time of any action described below or would result therefrom:  (a) each Subsidiary may make Restricted Payments to Borrower, Guarantors and any other Person that owns an Equity Interest in such Subsidiary, ratably according to their respective holdings of the type of Equity Interest in respect of which such Restricted Payment is being made;  (b) Borrower and each Subsidiary may declare and make dividend payments or other distributions payable solely in the common stock or other common Equity Interests of such Person;  (c) Borrower and each Subsidiary may purchase, redeem or otherwise acquire Equity Interests issued by it with the proceeds received from the substantially concurrent issue of new shares of its common stock or other common Equity Interests; and  (d) Borrower may pay dividends to Parent to the full extent permitted by the PUC.                                         33             7.07 CHANGE IN NATURE OF BUSINESS. Engage in any material line of business substantially different from those lines of business conducted by Borrower and its Subsidiaries on the date hereof or any business substantially related or incidental thereto.            7.08 TRANSACTIONS WITH AFFILIATES. Enter into any transaction of any kind with any Affiliate of Borrower, whether or not in the ordinary course of business, other than on fair and reasonable terms substantially as favorable to Borrower or such Subsidiary as would be obtainable by Borrower or such Subsidiary at the time in a comparable arm's length transaction with a Person other than an Affiliate, provided that (a) the foregoing restriction shall not apply to transactions between or among Borrower and any Guarantor or between and among Guarantors, and (b) transactions permitted by order of the PUC shall be conclusively presumed to meet the foregoing standard.            7.09 BURDENSOME AGREEMENTS. Enter into any Contractual Obligation (other than this Agreement or any other Loan Document or any Collateral Document) that (a) limits the ability (i) of any Subsidiary to make Restricted Payments to Borrower or to otherwise transfer property to Borrower, (ii) of any Subsidiary to Guarantee the Indebtedness of Borrower or (iii) of Borrower or any Subsidiary to create, incur, assume or suffer to exist Liens on property of such Person; PROVIDED, HOWEVER, that this clause (iii) shall not prohibit any negative pledge incurred or provided in favor of any holder of Indebtedness permitted under SECTION 7.03(e) solely to the extent any such negative pledge relates to the property financed by or the subject of such Indebtedness; or (b) requires the grant of a Lien to secure an obligation of such Person if a Lien is granted to secure another obligation of such Person.            7.10 USE OF PROCEEDS. Use the proceeds of any Letter of Credit, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the FRB) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose.  ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES            8.01 EVENTS OF DEFAULT. Any of the following shall constitute an Event of Default:  (a) NON-PAYMENT. Borrower or any other Loan Party fails to pay (i) when and as required to be paid herein any drawing under any Letter of Credit, any amount of principal of any L/C Obligation or any interest on any such drawing or L/C Obligation, or (ii) within three days after the same becomes due, any fee due hereunder, or (iii) within five days after the same becomes due, any other amount payable hereunder or under any other Loan Document or Collateral Document; or  (b) SPECIFIC COVENANTS. Borrower fails to perform or observe any term, covenant or agreement contained in any of SECTION 6.02(a) THROUGH (g) INCLUSIVE, 6.03, 6.05, 6.10, 6.11 or 6.12 or ARTICLE VII; or  (c) OTHER DEFAULTS. Any Loan Party fails to perform or observe any other covenant or agreement (not specified in subsection (a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for 30 days or any default or Event of Default occurs under any other Loan Document or any Collateral Document; or  (d) REPRESENTATIONS AND WARRANTIES. Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of Borrower or any other Loan Party herein, in any other Loan Document or any Collateral Document, or in any document delivered in connection herewith or therewith shall be incorrect or misleading when made or deemed made; or  (e) CROSS-DEFAULT. (i) Borrower or any Subsidiary (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee (other than Indebtedness hereunder and Indebtedness under Swap Contracts) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than the Threshold Amount, or (B) fails to observe or perform any other agreement or condition relating to any such Indebtedness or Guarantee or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateral in                                         34   respect thereof to be demanded; (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which Borrower or any Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which Borrower or any Subsidiary is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by Borrower or such Subsidiary as a result thereof is greater than the Threshold Amount; or (iii) causes or suffers to exist an event of default, beyond any applicable notice or cure period, under any Related Document; or  (f) INSOLVENCY PROCEEDINGS, ETC. Any Loan Party or any of its Subsidiaries institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for 60 calendar days, or an order for relief is entered in any such proceeding; or  (g) INABILITY TO PAY DEBTS; ATTACHMENT. (i) Borrower or any Subsidiary becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within 30 days after its issue or levy; or  (h) JUDGMENTS. There is entered against Borrower or any Subsidiary (i) a final judgment or order for the payment of money in an aggregate amount exceeding the Threshold Amount (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage), or (ii) any one or more non-monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of 10 consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or  (i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold Amount, or (ii) Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or  (j) INVALIDITY OF LOAN DOCUMENTS, COLLATERAL DOCUMENTS OR RELATED DOCUMENTS. Any Loan Document, Collateral Document or any of the other Related Documents or any provision thereof, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party or any other Person contests in any manner the validity or enforceability of any Loan Document, any Collateral Document or any of the other Related Documents or any provision thereof; or any Loan Party denies that it has any or further liability or obligation under any Loan Document, any Collateral Document or any of the other Related Documents, or purports to revoke, terminate or rescind any Loan Document, any Collateral Document or any of the other Related Documents or any provision thereof; or  (k) CHANGE OF CONTROL. There occurs any Change of Control with respect to Borrower without the prior written consent of the Required Lenders, such consent not to be unreasonably withheld, conditioned or delayed; or  (l) MATERIAL ADVERSE EFFECT. There occurs any event or circumstance that has a Material Adverse Effect; or  (m) DETERMINATION OF TAXABILITY. There occurs a Determination of Taxability; or  (n) LIENS OF FIRST MORTGAGE INDENTURE AND SECOND MORTGAGE INDENTURE. The Liens created by the First Mortgage Indenture or the Second Mortgage Indenture, respectively, shall for any reason cease to create valid, perfected Liens and/or security interests in favor of Agent, for the ratable benefit of Agent, L/C Issuer and Lenders.            8.02 REMEDIES UPON EVENT OF DEFAULT. If any Event of Default occurs and is continuing, Agent shall, at the request of, or may, with the consent of, the Required Lenders, take any or all of the following actions, and, if it does so, it shall give a                                         35   notice that an Event of Default hereunder has occurred and is continuing (i) to the MPUFB Trustee pursuant to Section 9.01(f) of the MPUFB Indenture, (ii) to the First Mortgage Trustee pursuant to Section 12.01(l) of the First Mortgage Indenture, and (iii) to the Second Mortgage Trustee pursuant to Section 12.01(m) of the Second Mortgage Indenture:  (a) declare any obligation of the L/C Issuer to make L/C Credit Extensions to be terminated, whereupon such commitments and obligation shall be terminated;  (b) declare the unpaid principal amount of all L/C Obligations and any reimbursement obligations arising from drawing under any Letter of Credit, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by Borrower;  (c) require that Borrower Cash Collateralize the L/C Obligations (in an amount up to an amount equal to the then Outstanding Amount thereof); and  (d) exercise on behalf of itself and the Lenders all rights and remedies available to it and the Lenders under the Loan Documents and all rights and remedies available to it and the Lenders under the Collateral Documents;  PROVIDED, HOWEVER, that upon the occurrence of an actual or deemed entry of an order for relief with respect to Borrower under the Bankruptcy Code of the United States, any obligation of the L/C Issuer to make L/C Credit Extensions shall automatically terminate, the unpaid principal amount of all outstanding L/C Obligations and any unpaid reimbursement obligations arising from drawing under any Letter of Credit and all interest and other amounts as aforesaid shall automatically become due and payable, and the obligation of Borrower to Cash Collateralize the L/C Obligations as aforesaid shall automatically become effective, in each case without further act of Agent or any Lender.            If an Event of Default shall have occurred and be continuing and there shall be outstanding all or any part of any unreimbursed Letter of Credit payment(s) or any other Obligations, Borrower agrees that Agent, on behalf of the L/C Issuer and Lenders, shall be subrogated to any and all rights of Borrower or any Subsidiary against the beneficiary of any Letter of Credit, and Borrower agrees that, upon request of Agent, Borrower will promptly do such further acts and execute, acknowledge and deliver such documents as Agent may reasonably request in order to implement the assignment to Agent of such rights of Borrower or any Subsidiary against the beneficiary of any Letter of Credit.            8.03 APPLICATION OF FUNDS. After the exercise of remedies provided for in SECTION 8.02 (or after the L/C Obligations and unreimbursed drawings have automatically become immediately due and payable and the L/C Obligations have automatically been required to be Cash Collateralized as set forth in the proviso to SECTION 8.02), any amounts received on account of the Obligations shall be applied by Agent in the following order:  FIRST, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to Agent (including fees and time charges for attorneys who may be employees of Agent) and amounts payable under ARTICLE III) payable to Agent in its capacity as such;  SECOND, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal, interest and L/C Fees) payable to Lenders and the L/C Issuer (including fees, charges and disbursements of counsel to the respective Lenders and the L/C Issuer (including fees and time charges for attorneys who may be employees of any Lender or the L/C Issuer) and amounts payable under ARTICLE III), ratably among them in proportion to the respective amounts described in this clause SECOND payable to them;  THIRD, to payment of that portion of the Obligations constituting accrued and unpaid L/C Fees and interest on L/C Borrowings and other Obligations, ratably among Lenders and the L/C Issuer in proportion to the respective amounts described in this clause THIRD payable to them;  FOURTH, to payment of that portion of the Obligations constituting unpaid principal of the L/C Borrowings and unpaid reimbursement obligation arising from the drawings under Letters of Credit, ratably among Lenders and the L/C Issuer in proportion to the respective amounts described in this clause FOURTH held by them;                                         36   FIFTH, to Agent for the account of the L/C Issuer, to Cash Collateralize that portion of L/C Obligations comprised of the aggregate undrawn amount of Letters of Credit; and  LAST, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to Borrower or as otherwise required by Law.  Subject to SECTION 2.01(c), amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause FIFTH above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above.  ARTICLE IX. ADMINISTRATIVE AGENT            9.01 APPOINTMENT AND AUTHORIZATION OF ADMINISTRATIVE AGENT. (a) Each of the Lenders and the L/C Issuer hereby irrevocably appoints Bank of America to act on its behalf as Administrative Agent hereunder and under the other Loan Documents and authorizes Agent to take such actions on its behalf and to exercise such powers as are delegated to Agent by the terms hereof and thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of Agent, the Lenders and the L/C Issuer, and neither the Borrower nor any other Loan Party shall have rights as a third party beneficiary of any of such provisions.            (b) Agent shall also act as the "collateral agent" under the Loan Documents, and each of the Lenders and the L/C Issuer hereby irrevocably appoints and authorizes Agent to act as the agent of such Lender and the L/C Issuer for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure any of the Obligations, together with such powers and discretion as are reasonably incidental thereto. In this connection, Agent, as "collateral agent" and any co-agents, sub-agents and attorneys-in-fact appointed by Agent pursuant to Section 9.05 for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Collateral Documents, or for exercising any rights and remedies thereunder at the direction of Agent), shall be entitled to the benefits of all provisions of this Article IX and Article X (as though such co-agents, sub-agents and attorneys-in-fact were the "collateral agent" under the Loan Documents) as if set forth in full herein with respect thereto.            9.02 RIGHTS AS A LENDER. The Person serving as Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not Agent and the term "Lender" or "Lenders" shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not Agent hereunder and without any duty to account therefor to Lenders.            9.03 EXCULPATORY PROVISIONS. Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, Agent:            (a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;            (b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), PROVIDED that Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose Agent to liability or that is contrary to any Loan Document or applicable Law; and            (c) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as Agent or any of its Affiliates in any capacity.                                         37             Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as Agent shall believe in good faith shall be necessary, under the circumstances as provided in SECTIONS 8.02 and 10.01) or (ii) in the absence of its own gross negligence or willful misconduct. Agent shall be deemed not to have knowledge of any Default unless and until written notice describing such Default is given to Agent by Borrower, a Lender or the L/C Issuer. Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any Collateral Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in ARTICLE IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to Agent.            9.04 RELIANCE BY ADMINISTRATIVE AGENT. Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the L/C Issuer, Agent may presume that such condition is satisfactory to such Lender or the L/C Issuer unless Agent shall have received notice to the contrary from such Lender or the L/C Issuer prior to the issuance of such Letter of Credit. Agent may consult with legal counsel (who may be counsel for Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.            9.05 DELEGATION OF DUTIES. Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by Agent. Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Agent.            9.06 RESIGNATION OF AGENT. Agent may at any time give notice of its resignation to Lenders, the L/C Issuer and Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation, then the retiring Agent may on behalf of Lenders and the L/C Issuer, appoint a successor Agent meeting the qualifications set forth above; PROVIDED that if Agent shall notify Borrower and Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (1) the retiring Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by Agent on behalf of Lenders or the L/C Issuer under any of the Loan Documents, the retiring Agent shall continue to hold such collateral security until such time as a successor Agent is appointed) and (2) all payments, communications and determinations provided to be made by, to or through Agent shall instead be made by or to each Lender and the L/C Issuer directly, until such time as the Required Lenders appoint a successor Agent as provided for above in this Section. Upon the acceptance of a successor's appointment as Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Agent, and the retiring Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section). The fees payable by Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between Borrower and such successor. After the retiring Agent's resignation hereunder and under the other Loan Documents, the provisions of this Article and SECTION 10.04 shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.                                         38   Any resignation by Bank of America as Agent pursuant to this Section shall also constitute its resignation as L/C Issuer. Upon the acceptance of a successor's appointment as Agent hereunder, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer, (b) the retiring L/C Issuer shall be discharged from all of their respective duties and obligations hereunder or under the other Loan Documents, and (c) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the retiring L/C Issuer to effectively assume the obligations of the retiring L/C Issuer with respect to such Letters of Credit.            9.07 NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender and the L/C Issuer acknowledges that it has, independently and without reliance upon Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and the L/C Issuer also acknowledges that it will, independently and without reliance upon Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.            9.08 NO OTHER DUTIES, ETC. Anything herein to the contrary notwithstanding, no Lender holding a title listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as Agent, a Lender or the L/C Issuer hereunder.            9.09 ADMINISTRATIVE AGENT MAY FILE PROOFS OF CLAIM. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to any Loan Party, Agent (irrespective of whether the principal of L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether Agent shall have made any demand on Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise            (a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of L/C Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of Lenders, the L/C Issuer and Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of Lenders, the L/C Issuer and Agent and their respective agents and counsel and all other amounts due Lenders, the L/C Issuer and Agent under SECTIONS 2.01(j) and (k), 2.05 and 10.04) allowed in such judicial proceeding; and            (b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;  and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and the L/C Issuer to make such payments to Agent and, in the event that Agent shall consent to the making of such payments directly to Lenders and the L/C Issuer, to pay to Agent any amount due for the reasonable compensation, expenses, disbursements and advances of Agent and its agents and counsel, and any other amounts due Agent under SECTIONS 2.04 and 10.04. Nothing contained herein shall be deemed to authorize Agent to authorize or consent to or accept or adopt on behalf of any Lender or the L/C Issuer any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to authorize Agent to vote in respect of the claim of any Lender in any such proceeding.            9.10 COLLATERAL MATTERS. (a) Each Lender and the L/C Issuer hereby irrevocably authorizes and directs Agent to accept the First Mortgage Bonds and the Second Mortgage Bonds on behalf of the Agent, the Lenders and the L/C Issuer and to enter into the Collateral Documents for the benefit of such Lender and the L/C Issuer. Each Lender and the L/C Issuer hereby agrees that, except as otherwise set forth in Section 10.01, any action taken by the Required Lenders, in accordance with the provisions of this Agreement or the Collateral Documents, and the exercise by the Required Lenders of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all of Lenders and the L/C Issuer. Agent is hereby authorized (but not obligated) on behalf of all of Lenders and the L/C Issuer, without the necessity of any notice to or further consent from any Lender or the L/C Issuer from time to time prior to, an Event of Default, to take any action with respect to any Collateral or Collateral Documents which may be necessary to perfect and maintain perfected the Liens upon the Collateral granted pursuant to the Collateral Documents.                                         39             (b) Each Lender and the L/C issuer hereby irrevocably authorize Agent, at its option and in its discretion,                      (i) to release any Lien on any property granted to or held by Agent under any Loan Document (A) upon termination of the Aggregate Commitments and payment in full of all Obligations (other than contingent indemnification obligations) and the expiration or termination of all Letters of Credit, (B) that is sold or to be sold as part of or in connection with any sale permitted hereunder or under any other Loan Document, (C) subject to SECTION 10.01, if approved, authorized or ratified in writing by the Required Lenders, or (D) in connection with any foreclosure sale or other disposition of Collateral after the occurrence of an Event of Default; and                      (ii) to subordinate any Lien on any property granted to or held by Agent under any Loan Document to the holder of any Lien on such property that is permitted by this Agreement or any other Loan Document.  Upon request by Agent at any time, each Lender and the L/C Issuer will confirm in writing Agent's authority to release or subordinate its interest in particular types or items of Collateral pursuant to this SECTION 9.10.            (c) Subject to (b) above, Agent shall (and is hereby irrevocably authorized by each Lender and the L/C Issuer to) execute such documents as may be necessary to evidence the release or subordination of the Liens granted to Agent for the benefit of Agent and Lenders and the L/C Issuer herein or pursuant hereto upon the applicable Collateral and/or the Collateral Documents; provided that (i) Agent shall not be required to execute any such document on terms which, in Agent's opinion, would expose Agent to or create any liability or entail any consequence other than the release or subordination of such Liens without recourse or warranty and (ii) such release or subordination shall not in any manner discharge, affect or impair the Obligations or any Liens upon (or obligations of Borrower or any other Loan Party in respect of) all interests retained by Borrower or any other Loan Party, including the proceeds of the sale, all of which shall continue to constitute part of the Collateral and/or the Collateral Documents. In the event of any sale or transfer of Collateral and/or the Collateral Documents, or any foreclosure with respect to any of the Collateral and/or the Collateral Documents, Agent shall be authorized to deduct all expenses reasonably incurred by Agent from the proceeds of any such sale, transfer or foreclosure.            (d) Agent shall have no obligation whatsoever to any Lender, the L/C Issuer or any other Person to assure that the Collateral exists or is owned by Borrower or any other Loan Party or is cared for, protected or insured or that the Liens granted to Agent herein or in any of the Collateral Documents or pursuant hereto or thereto have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise or to continue exercising at all or in any manner or under any duty of care, disclosure or fidelity any of the rights, authorities and powers granted or available to Agent in this SECTION 9.10 or in any of the Collateral Documents, it being understood and agreed that in respect of the Collateral and/or the Collateral Documents, or any act, omission or event related thereto, Agent may act in any manner it may deem appropriate, in its sole discretion, given Agent's own interest in the Collateral and/or the Collateral Documents as one of Lenders and that Agent shall have no duty or liability whatsoever to Lenders or the L/C Issuer.            (e) Each Lender and the L/C Issuer hereby appoints each other Lender as agent for the purpose of perfecting Lenders' and the L/C Issuer's security interest in assets which, in accordance with Article 9 of the UCC can be perfected only by possession. Should any Lender or the L/C Issuer (other than Agent) obtain possession of any such Collateral, such Lender or the L/C Issuer shall notify Agent thereof, and, promptly upon Agent's request therefor shall deliver such Collateral to Agent or in accordance with Agent's instructions.            (f) Agent agrees that it shall not release the Collateral or its interest in the Collateral without the prior written consent of each Lender.  ARTICLE X. MISCELLANEOUS            10.01 AMENDMENTS, ETC. No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by Borrower or any other Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders and Borrower or the applicable Loan Party, as the case may be, and acknowledged by Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; PROVIDED, HOWEVER, that no such amendment, waiver or consent shall:  (a) waive any condition set forth in SECTION 4.01(a) without the written consent of each Lender; PROVIDED, HOWEVER, in the sole discretion of Agent, only a waiver by Agent shall be required with respect to immaterial matters or items specified in SECTION                                         40   4.01(a) (iii) or (iv) with respect to which Borrower has given assurances satisfactory to Agent that such items shall be delivered promptly following the Closing Date;  (b) extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to SECTION 8.02) without the written consent of such Lender;  (c) postpone any date fixed by this Agreement or any other Loan Document for any payment (excluding mandatory prepayments) of principal, interest, fees or other amounts due to Lenders (or any of them) hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby;  (d) reduce the principal of, or the rate of interest specified herein on, any unreimbursed drawing under any Letter of Credit or L/C Borrowing, or (subject to clause (iii) of the second proviso to this SECTION 10.01) any fees or other amounts payable hereunder or under any other Loan Document, without the written consent of each Lender directly affected thereby; PROVIDED, HOWEVER, that only the consent of the Required Lenders shall be necessary to amend the definition of "Default Rate" or to waive any obligation of Borrower to pay interest or L/C Fees at the Default Rate;  (e) amend any financial covenant in Section 6.12 without written consent of each Lender;  (f) change SECTION 2.07 or SECTION 8.03 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender; or  (g) change any provision of this Section or the definition of "Required Lenders" or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender;  and, PROVIDED FURTHER, that (i) no amendment, waiver or consent shall, unless in writing and signed by the L/C Issuer in addition to the Lenders required above, affect the rights or duties of the L/C Issuer under this Agreement or any Issuer Document relating to any Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing and signed by Agent in addition to the Lenders required above, affect the rights or duties of Agent under this Agreement or any other Loan Document; and (iii) the Agent Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder, except that the Commitment of such Lender may not be increased or extended without the consent of such Lender.            10.02 NOTICES; EFFECTIVENESS; ELECTRONIC COMMUNICATIONS. (a) NOTICES GENERALLY. Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:            (i) if to Borrower, Agent or the L/C Issuer, to the address, telecopier number, electronic mail address or telephone number specified for such Person on SCHEDULE 10.02 ; and            (ii) if to any other Lender, to the address, telecopier number, electronic mail address or telephone number specified in its Administrative Questionnaire.  Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Notices delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as provided in such subsection (b).  (b) ELECTRONIC COMMUNICATIONS. Notices and other communications to Lenders and the L/C Issuer hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by Agent, provided that the foregoing shall not apply to notices to any Lender or the L/C Issuer pursuant to Article II if such Lender or the L/C Issuer, as applicable, has notified the Agent that it is incapable of receiving notices under such Article by electronic                                         41   communication. Agent or Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications. Unless Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender's receipt of an acknowledgement from the intended recipient (such as by the "return receipt requested" function, as available, return e-mail or other written acknowledgement), PROVIDED that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.  (c) THE PLATFORM. THE PLATFORM IS PROVIDED "AS IS" AND "AS AVAILABLE." THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall Agent or any of its Related Parties (collectively, the "Agent Parties") have any liability to Borrower, any Lender, the L/C Issuer or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of Borrower's or Agent's transmission of Borrower Materials through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party; provided, however, that in no event shall any Agent Party have any liability to Borrower, any Lender, the L/C Issuer or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages).  (d) CHANGE OF ADDRESS, ETC. Each of the Borrower, Agent and the L/C Issuer may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the other parties hereto. Each other Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to Borrower, Agent and, the L/C Issuer. IN ADDITION, EACH LENDER AGREES TO NOTIFY AGENT FROM TIME TO TIME TO ENSURE THAT AGENT HAS ON RECORD (i) AN EFFECTIVE ADDRESS, CONTACT NAME, TELEPHONE NUMBER, TELECOPIER NUMBER AND ELECTRONIC MAIL ADDRESS TO WHICH NOTICES AND OTHER COMMUNICATIONS MAY BE SENT AND (ii) ACCURATE WIRE INSTRUCTIONS FOR SUCH LENDER.  (d) RELIANCE BY AGENT. L/C ISSUER AND LENDERS. Agent, the L/C Issuer and Lenders shall be entitled to rely and act upon any notices purportedly given by or on behalf of Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. Borrower shall indemnify Agent, the L/C Issuer, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of Borrower. All telephonic notices to and other telephonic communications with Agent may be recorded by Agent, and each of the parties hereto hereby consents to such recording.            10.03 NO WAIVER; CUMULATIVE REMEDIES. No failure by any Lender, the L/C Issuer or Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.            10.04 EXPENSES; INDEMNITY; DAMAGE WAIVER. (a) COSTS AND EXPENSES. Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by Agent and its Affiliates (including the reasonable fees, charges and disbursements of counsel for Agent), in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by the L/C Issuer in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all out-of-pocket expenses incurred by Agent, any Lender or the L/C Issuer (including the fees, charges and disbursements of any counsel for Agent, any Lender or the L/C Issuer), and shall pay all fees and time charges for attorneys who may be employees of Agent, any                                         42   Lender or the L/C Issuer, in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with Letters of Credit issued hereunder and all L/C Obligations, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Letters of Credit and L/C Obligations.  (b) INDEMNIFICATION BY THE BORROWER. Borrower shall indemnify Agent (and any sub-agent thereof), each Lender and the L/C Issuer, and each Related Party of any of the foregoing Persons (each such Person being called an "INDEMNITEE") against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee), and shall indemnify and hold harmless each Indemnitee from all fees and time charges and disbursements for attorneys who may be employees of any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee by any third party or by Borrower or any other Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document, any Collateral Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder, or the consummation of the transactions contemplated hereby or thereby, or, in the case of Agent (and any sub-agent thereof) and its Related Parties only, the administration of this Agreement and the other Loan Documents, (ii) any Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the L/C Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower or any other Loan Party, and regardless of whether any Indemnitee is a party thereto, in all cases, whether or not caused by or arising, in whole or in part, out of the comparative, contributory or sole negligence of the Indemnitee; PROVIDED that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by Borrower or any other Loan Party against an Indemnitee for breach in bad faith of such Indemnitee's obligations hereunder or under any other Loan Document, if Borrower or such Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.  (c) REIMBURSEMENT BY LENDERS. To the extent that Borrower for any reason fails to indefeasibly pay any amount required under subsection (a) or (b) of this Section to be paid by it to Agent (or any sub-agent thereof), the L/C Issuer or any Related Party of any of the foregoing, each Lender severally agrees to pay to Agent (or any such sub-agent), the L/C Issuer or such Related Party, as the case may be, such Lender's Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, PROVIDED that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against Agent (or any such sub-agent) or the L/C Issuer in its capacity as such, or against any Related Party of any of the foregoing acting for Agent (or any such sub-agent) or L/C Issuer in connection with such capacity. The obligations of the Lenders under this subsection (c) are subject to the provisions of SECTION 2.06(c).  (d) WAIVER OF CONSEQUENTIAL DAMAGES, ETC. To the fullest extent permitted by applicable law, Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any L/C Obligation or Letter of Credit or the use of the proceeds thereof. No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.  (e) PAYMENTS. All amounts due under this Section shall be payable not later than ten Business Days after demand therefor.  (f) SURVIVAL. The agreements in this Section shall survive the resignation of Agent and the L/C Issuer, the replacement of any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations.            10.05 PAYMENTS SET ASIDE. To the extent that any payment by or on behalf of Borrower is made to Agent, the L/C Issuer or any Lender, or Agent, the L/C Issuer or any Lender exercises its right of setoff, and such payment or the proceeds of                                         43   such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by Agent, the L/C Issuer or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender and the L/C Issuer severally agrees to pay to Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Lenders and the L/C Issuer under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.       10.06 SUCCESSORS AND ASSIGNS. (a) SUCCESSORS AND ASSIGNS GENERALLY. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that neither Borrower nor any other Loan Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of Agent, the L/C Issuer and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of Agent, the L/C Issuer and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.  (b) ASSIGNMENTS BY LENDERS. Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment (including for purposes of this subsection (b), participations in L/C Obligations) at the time owing to it); PROVIDED that (i) except in the case of an assignment of the entire remaining amount of the assigning Lender's Commitment and its participations in L/C Obligations at the time owing to it or in the case of an assignment to a Lender or an Affiliate of a Lender, the aggregate amount of the Commitment (which for this purpose includes participation in L/C Obligations outstanding thereunder) or, if the Commitment is not then in effect, the principal outstanding balance of the L/C Obligations of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to Agent or, if "Trade Date" is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $2,500,000 unless each of Agent and, so long as no Event of Default has occurred and is continuing, Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed); (ii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations under this Agreement with respect to its participations in L/C Obligations or the Commitment assigned; (iii) any assignment of a Commitment must be approved by Agent and the L/C Issuer unless the Person that is the proposed assignee is itself a Lender (whether or not the proposed assignee would otherwise qualify as an Eligible Assignee); and (iv) the parties to each assignment shall execute and deliver to Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500 and the Eligible Assignee, if it shall not be a Lender, shall deliver to Agent an Administrative Questionnaire. Subject to acceptance and recording thereof by Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of SECTIONS 3.01, 3.02, and 10.04 with respect to facts and circumstances occurring prior to the effective date of such assignment. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.  (c) REGISTER. Agent, acting solely for this purpose as an agent of Borrower, shall maintain at Administrative Agent's Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the "REGISTER"). The entries in the Register shall be conclusive, and Borrower, Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by each of                                         44   Borrower and the L/C Issuer, at any reasonable time and from time to time upon reasonable prior notice. In addition, at any time that a request for a consent for a material or substantive change to the Loan Documents is pending, any Lender may request and receive from Agent a copy of the Register.  (d) PARTICIPATIONS. Any Lender may at any time, without the consent of, or notice to, Borrower or Agent, sell participations to any Person (other than a natural person or Borrower or any of Borrower's Affiliates or Subsidiaries) (each, a "PARTICIPANT") in all or a portion of such Lender's rights and/or obligations under this Agreement (including all or a portion of its Commitment and such Lender's participations in L/C Obligations owing to it); PROVIDED that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) Borrower, Agent, the L/C Issuer and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; PROVIDED that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to SECTION 10.01 that affects such Participant. Subject to subsection (e) of this Section, Borrower agrees that each Participant shall be entitled to the benefits of SECTIONS 3.01, and 3.02 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of SECTION 10.08 as though it were a Lender, PROVIDED such Participant agrees to be subject to SECTION 2.07 as though it were a Lender.  (e) LIMITATIONS UPON PARTICIPANT RIGHTS. A Participant shall not be entitled to receive any greater payment under SECTION 3.01 or 3.02 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with Borrower's prior written consent.  (f) CERTAIN PLEDGES. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; PROVIDED that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.  (g) ELECTRONIC EXECUTION OF ASSIGNMENTS. The words "execution," "signed," "signature," and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.  (h) DEEMED CONSENT OF BORROWER. If the consent of Borrower to an assignment to an Eligible Assignee is required hereunder (including a consent to an assignment which does not meet the minimum assignment threshold specified in clause (i) of the proviso to the first sentence of SECTION 10.06(b)), Borrower shall be deemed to have given its consent five Business Days after the date notice thereof has been delivered to Borrower by the assigning Lender (through Agent) unless such consent is expressly refused by Borrower prior to such fifth Business Day.  (i) RESIGNATION AS L/C ISSUER. Notwithstanding anything to the contrary contained herein, if at any time Bank of America assigns all of its Commitment pursuant to subsection (b) above, Bank of America may, upon 30 days' notice to Borrower and the Lenders, resign as L/C Issuer. In the event of any such resignation as L/C Issuer, Borrower shall be entitled to appoint from among Lenders a successor L/C Issuer hereunder; PROVIDED, HOWEVER, that no failure by Borrower to appoint any such successor shall affect the resignation of Bank of America as L/C Issuer, as the case may be. If Bank of America resigns as L/C Issuer, it shall retain all the rights, powers, privileges and duties of the L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with respect thereto (including the right to require the Lenders to fund risk participations in Unreimbursed Amounts pursuant to SECTION 2.01(c)). Upon the appointment of a successor L/C Issuer, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer, and (b) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to Bank of America to effectively assume the obligations of Bank of America with respect to such Letters of Credit.                                         45             10.07 TREATMENT OF CERTAIN INFORMATION; CONFIDENTIALITY. Each of Agent, Lenders and the L/C Issuer agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates' respective partners, directors, officers, employees, agents, advisors and representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority, purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any Collateral Document or any action or proceeding relating to this Agreement or any other Loan Document or any Collateral Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to Borrower and its obligations, (g) with the consent of Borrower or (h) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to Agent, any Lender, the L/C Issuer or any of their respective Affiliates on a nonconfidential basis from a source other than Borrower. For purposes of this Section, "INFORMATION" means all information received from Borrower or any Subsidiary relating to Borrower or any Subsidiary or any of their respective businesses, other than any such information that is available to Agent, any Lender or the L/C Issuer on a nonconfidential basis prior to disclosure by Borrower or any Subsidiary, PROVIDED that, in the case of information received from Borrower or any Subsidiary after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. Each of Agent, the Lenders and the L/C Issuer acknowledges that (a) the Information may include material non-public information concerning the Borrower or a Subsidiary, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable Law, including Federal and state securities Laws.            10.08 RIGHT OF SETOFF. If an Event of Default shall have occurred and be continuing, each Lender, the L/C Issuer and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender, the L/C Issuer or any such Affiliate to or for the credit or the account of Borrower or any other Loan Party against any and all of the obligations of Borrower or such Loan Party now or hereafter existing under this Agreement or any other Loan Document to such Lender or the L/C Issuer or any such Affiliate, irrespective of whether or not such Lender or the L/C Issuer shall have made any demand under this Agreement or any other Loan Document and although such obligations of Borrower or such Loan Party may be contingent or unmatured or are owed to a branch or office of such Lender or the L/C Issuer different from the branch or office holding such deposit or obligated on such indebtedness. The rights of each Lender, the L/C Issuer and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, the L/C Issuer or their respective Affiliates may have. Each Lender and the L/C Issuer agrees to notify Borrower and Agent promptly after any such setoff and application, PROVIDED that the failure to give such notice shall not affect the validity of such setoff and application.            10.09 INTEREST RATE LIMITATION. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the "MAXIMUM RATE"). If Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the L/C Obligations or, if it exceeds such unpaid principal, refunded to Borrower. In determining whether the interest contracted for, charged, or received by Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.            10.10 COUNTERPARTS ; INTEGRATION; EFFECTIVENESS. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in SECTION 4.01, this Agreement shall become effective when it shall have been executed by Agent and when Agent shall have received counterparts hereof that, when taken together, bear the signatures of                                         46   each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.            10.11 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by Agent, the L/C Issuer and each Lender, regardless of any investigation made by Agent, the L/C Issuer or any Lender or on their behalf and notwithstanding that Agent or any Lender may have had notice or knowledge of any Default at the time of any L/C Credit Extension, and shall continue in full force and effect as long as any Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.            10.12 SEVERABILITY. If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.            10.13 GOVERNING LAW; JURISDICTION; ETC. (a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF MAINE.  (b)       SUBMISSION TO JURISDICTION. THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF MAINE SITTING IN CUMBERLAND COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE STATE OF MAINE, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH MAINE STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT AGENT, ANY LENDER OR THE L/C ISSUER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.            (c)       WAIVER OF VENUE. THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.            (d)       SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.            10.14 WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON                                         47   CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.            10.15 USA PATRIOT ACT NOTICE. Each Lender that is subject to the Act (as hereinafter defined) and Agent (for itself and not on behalf of any Lender) hereby notifies Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the "Act"), it is required to obtain, verify and record information that identifies Borrower, which information includes the name and address of Borrower and other information that will allow such Lender or Agent, as applicable, to identify Borrower in accordance with the Act.            10.16 TIME OF THE ESSENCE. Time is of the essence of the Loan Documents.            10.17. MAINE NOTICE. By signing below, the Borrower agrees and acknowledges that, under Maine law, no promise, contract, or agreement to lend money, extend credit, forbear from collection of debt or make any other accommodation for the repayment of a debt for more than Two Hundred Fifty Thousand Dollars ($250,000) may be enforced against a Lender or L/C Issuer unless the promise, contract, or agreement (or some memorandum or note thereof) is in writing and signed by such Lender or L/C Issuer. The Borrower executed this Agreement as of the date stated at the top of the first page, intending to create an instrument executed under seal.                        [The next page is the signature page]                                         48   IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written intending to create an instrument executed under seal.                                 MAINE PUBLIC SERVICE COMPANY                                By:                                   ---------------------------------------------                               Name:                               Title:                                 And By:                                       -----------------------------------------                               Name:                               Title:                                 BANK OF AMERICA, N.A., as                               Administrative Agent                                By:                                   ---------------------------------------------                               Name: Stephen P. deCastro                               Title: Vice President                                 BANK OF AMERICA, N.A., as a Lender and L/C Issuer                                By:                                   ---------------------------------------------                               Name: Stephen P. deCastro                               Title: Vice President                                 KEY BANK, N.A., as a Lender                                By:                                   ---------------------------------------------                               Name: Neil Buitenhuys                               Title: Senior Vice President                                         49                                                                      SCHEDULE 2.01                                     COMMITMENTS                            AND APPLICABLE PERCENTAGES            LENDER                   COMMITMENT                   APPLICABLE                                                               PERCENTAGE - -----------------------------------------------------------------------------    Bank of America, N.A.          $ 5,238,750                     55%  Key Bank, N.A.                 $ 4,286,250                     45%  Total                          $ 9,525,000                     100.000000000%                                                                       SCHEDULE 5.06                                     LITIGATION                                        NONE.                                                                       SCHEDULE 5.09                                ENVIRONMENTAL MATTERS                                        NONE.                                                                       SCHEDULE 5.13                                    SUBSIDIARIES                           AND OTHER EQUITY INVESTMENTS                         AND EQUITY INTERESTS IN BORROWER  Part (a). SUBSIDIARIES.  Maine & New Brunswick Electrical Power Company, Ltd  Part (b). OTHER EQUITY INVESTMENTS.  Borrower owns 5% of the common stock of Maine Yankee Atomic Power Company ("Maine Yankee"), a jointly-owned nuclear electric power company, and 7.49% of the common stock of the Maine Electric Power Company ("MEPCO,") a jointly-owned electric transmission company.  Part (c). OWNERS OF EQUITY INTERESTS IN BORROWER.  Parent owns all 1,636,137 shares of Borrower common stock.                                                                       SCHEDULE 7.01                                   EXISTING LIENS  Liens created under the Indenture of Mortgage and Deed of Trust dated as of October 1, 1945, as amended, between Borrower and U.S. Bank National Association (formerly named U.S. Bank Trust National Association and successor to Continental Illinois National Bank and Trust Company of Chicago), as Trustee, relating to the issuance of First Mortgage and Collateral Trust Bonds.  Liens created under the Indenture of Mortgage and Deed of Trust dated as of October 1, 1985, as amended, between Borrower and The Bank of New York Trust Company, N.A.( as successor to J. Henry Schroder Bank and Trust Company), as Trustee, relating to the issuance of Second Mortgage and Collateral Trust Bonds.                                                                       SCHEDULE 7.03                                EXISTING INDEBTEDNESS                                                                                          AMOUNTS AS OF 11-30-05                                                                                              ($000'S)                                                                                              --------         Maine Public Utility Financing Bank, Public Utility Revenue       Bonds:         Refunding Series 1996:  Due 2021 - Variable Interest        payable Monthly                                                                          $     13,600        (2.1% as of December 31, 2004)        Series 2000:  Due 2025 - Variable Interest Payable Monthly                                      9,000        (2.1% as of December 31, 2004)       Finance Authority of Maine:        1998 Taxable Electric Rate Stabilization        Revenue Notes:  Due 2008 - Variable Interest Payable        Monthly  (2.4% as of December 31, 2004)                                                         5,840       Bank of America, N.A. (Successor by merger to Fleet National Bank):        $6,000,000, 7 Year Term Loan         Due November 1, 2011 - Variable         Interest Payable Monthly ($4,050,000 at 3.84% and $1,900,000 at         3.91%)                                                                                         5,450        Bank of America, N.A., as Administrative Agent, L/C Issuer and Lender, and Key Bank, N.A., as Lender under Credit Agreement dated as of October 7, 2005                                                                                                  10,000                                                                      SCHEDULE 10.02                           ADMINISTRATIVE AGENT'S OFFICE,                           CERTAIN ADDRESSES FOR NOTICES  BORROWER: Maine Public Service Company 209 State Street Presque Isle, ME 04769  Attention: Chief Financial Officer Telephone: 207-760-2445 Telecopier: 207-760-2421 Electronic Mail: ktornquist@maineandmaritimes.com Website Address:  www.maineandmaritimes.com  ADMINISTRATIVE AGENT:  ADMINISTRATIVE AGENT'S OFFICE (FOR PAYMENTS AND REQUESTS FOR CREDIT EXTENSIONS): Bank of America, N.A. Kathy Mumpower Credit Services Representative Bank of America, N.A. Mail Code: NC1-001-15-04 One Independence Center 101 N. Tryon St. Charlotte, NC 28255-0001 Phone: 704-386-0482 Fax: 704-409-0700 Email: kathy.mumpower@bankofamerica.com  Account No.:  136-621-225-0600 Attn:  Credit Services Ref: Maine Public Service ABA#  026-009-593  OTHER NOTICES AS ADMINISTRATIVE AGENT: Bank of America, N.A. Agency Management Tamisha Eason Agency Management Officer Bank of America, N.A. Mail Code: MA5-100-11-02 100 Federal Street Boston, MA  02110 Telephone:  617-434-9205 Fax:   617-790-1284 Email: tamisha.u.eason@bankofamerica.com  L/C ISSUER: STANDBY LETTERS OF CREDIT:                           Form of Compliance Certificate                                         A-1   Bank of America, N.A. Trade Operations One Fleet Way Mail Code: PA6-580-02-30 Scranton, PA  18507 Attention:  Alfonso (Al) Malave             Telephone: 570.330.4212             Telecopier: 570.330.4186             Electronic Mail: alfonso.malave@bankofamerica.com   COMMERCIAL LETTERS OF CREDIT                                     Bank of America, N.A.                                   Trade Operations-Scranton                                   1 Fleet Way                                   Mail Code: PA6-580-02-30                                   Scranton, PA 18507                                   Attention:   Robert D. Morgan                                                Telephone:  570.330.4570                                                Telecopier:  800.755.8740                                                Electronic Mail:                                                robert.d.morgan@bankofamerica.com   BANKERS ACCEPTANCE  Bank of America, N.A. Trade Operations-Los Angeles 333 S. Beaudry Avenue, 19th Floor Mail Code:  CA9-703-19-15 Los Angeles, CA 90017-1466 Attention:  Frantz Bellevue             Vice President             Telephone: 213.345.6616             Telecopier: 213.345.9665             Electronic Mail:             frantz.bellevue@bankofamerica.com                           Form of Compliance Certificate                                         A-2                                                                           EXHIBIT A                           FORM OF COMPLIANCE CERTIFICATE                                               Financial Statement Date: ________,   To:  Bank of America, N.A., as Administrative Agent  Ladies and Gentlemen:       Reference is made to that certain Letter of Credit and Reimbursement Agreement, dated as of January 31, 2006 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "AGREEMENT;" the terms defined therein being used herein as therein defined), among MAINE PUBLIC SERVICE COMPANY, a Maine corporation ("BORROWER"), the Lenders from time to time party thereto, and Bank of America, N.A., as Administrative Agent and L/C Issuer.       The undersigned Responsible Officer hereby certifies as of the date hereof that he/she is the ___________________ of Borrower, and that, as such, he/she is authorized to execute and deliver this Certificate to Agent on the behalf of Borrower, and that:        [USE FOLLOWING PARAGRAPH 1 FOR FISCAL YEAR-END FINANCIAL STATEMENTS]       1.   Attached hereto as SCHEDULE 1 are the year-end audited financial statements and other reporting and certifications as required by SECTION 6.01(a) of the Agreement for the fiscal year ended as of the above date.       [USE FOLLOWING PARAGRAPH 1 FOR FISCAL QUARTER-END FINANCIAL STATEMENTS]       1.   Attached hereto as SCHEDULE 1 are the unaudited financial statements and other reporting and certifications as required by SECTION 6.01(b) of the Agreement for the fiscal quarter ended as of the above date.       2.   The undersigned has reviewed and is familiar with the terms of the Agreement and has made, or has caused to be made under his/her supervision, a detailed review of the transactions and condition (financial or otherwise) of Borrower during the accounting period covered by the attached financial statements.       3.   A review of the activities of Borrower during such fiscal period has been made under the supervision of the undersigned with a view to determining whether during such fiscal period Borrower performed and observed all its Obligations under the Loan Documents, and                                    [SELECT ONE:]       [TO THE BEST KNOWLEDGE OF THE UNDERSIGNED DURING SUCH FISCAL PERIOD, BORROWER PERFORMED AND OBSERVED EACH COVENANT AND CONDITION OF THE LOAN DOCUMENTS APPLICABLE TO IT, AND NO DEFAULT HAS OCCURRED AND IS CONTINUING.]                                       --OR--            [THE FOLLOWING COVENANTS OR CONDITIONS HAVE NOT BEEN PERFORMED OR      OBSERVED AND THE FOLLOWING IS A LIST OF EACH SUCH DEFAULT AND ITS NATURE      AND STATUS:]       4.   The representations and warranties of Borrower contained in ARTICLE V of the Agreement, and/or any representations and warranties of Borrower or any other Loan Party that are contained in any document furnished at any time under or in connection with the Loan Documents, are true and correct on and as of the date hereof, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date.       5.   The financial covenant analyses and information set forth on SCHEDULE 2 attached hereto are true and accurate on and as of the date of this Certificate.                           Form of Compliance Certificate                                         A-3             IN WITNESS WHEREOF, the undersigned has executed this Certificate as of __________________, __________________.                                           MAINE PUBLIC SERVICE COMPANY                                           By:                                              -----------------------------------                                          Name:                                                ---------------------------------                                          Title:                                                 --------------------------------                           Form of Compliance Certificate                                         A-4                   For the Quarter/Year ended ___________________("STATEMENT DATE")                                     SCHEDULE 2                           to the Compliance Certificate                                   ($ in 000's)     I.        SECTION 6.12(a) TANGIBLE NET WORTH.            A.        Tangible Net Worth at Statement Date:                      1.        Total Tangible Assets:                                  $__________________                      2.        Total Liabilities (minus non-current portion of                               Subordinated Liabilities):                              $__________________                       3.        Tangible Net Worth (Line II.A.1 less Line II.A.2):      $__________________             B.        Minimum Required Tangible Net Worth :                             $32,574,000            C.        Excess (deficient) for covenant compliance (Line I.A.3 less                     I.B):                                                             $__________________  II.       SECTION 6.12(b) CONSOLIDATED TOTAL INDEBTEDNESS TO CONSOLIDATED           CAPITAL .            A.        Consolidated Total Indebtedness for Borrowed Money:               $__________________            B.        Consolidated Total Capital:                                       $__________________            C.        Percentage (Line II.A DIVIDED BY Line II.B):                      _____%            D.        Maximum Allowed:                                                  65%  III.      SECTION 6.12(c) DEBT SERVICE COVERAGE RATIO.            A.        Consolidated Net Income Available for Fixed Charges:              $__________________            B.        Consolidated Interest Expense:                                    $__________________            C.        Ratio (Line III.A DIVIDED BY Line III.B):                                                                                       ____________ to 1.0            D.        Minimum Required                                                  1.75:1.0                            Form of Compliance Certificate                                         A-5                                                                          EXHIBIT B                                        FORM                                        OF                             ASSIGNMENT AND ASSUMPTION            This Assignment and Assumption (this "ASSIGNMENT AND ASSUMPTION") is dated as of the Effective Date set forth below and is entered into by and between [INSERT NAME OF ASSIGNOR] (the "ASSIGNOR") and [INSERT NAME OF ASSIGNEE] (the "ASSIGNEE"). Capitalized terms used but not defined herein shall have the meanings given to them in the Letter of Credit and Reimbursement Agreement identified below (the "LETTER OF CREDIT AGREEMENT"), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full.            For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Letter of Credit Agreement, as of the Effective Date inserted by Agent as contemplated below (i) all of the Assignor's rights and obligations as a Lender under the Letter of Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including, without limitation, the Letters of Credit included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Letter of Credit Agreement, any other documents or instruments delivered pursuant thereto or the transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as, the "ASSIGNED INTEREST"). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.  1.   Assignor:______________________________  2.   Assignee:     ______________________________ [AND IS AN AFFILIATE OF                                                   [IDENTIFY LENDER]]  3.   Borrower(s):  ______________________________  4.   Administrative Agent: Bank of America, N. A., as the administrative agent      under the Letter of Credit Agreement  5.   Letter of Credit Agreement: Letter of Credit and Reimbursement Agreement,      dated as of January 31, 2006, among Maine Public Service Company, the      Lenders from time to time party thereto, Bank of America, N.A., as      Administrative Agent and L/C Issuer  6.   Assigned Interest:                                     Aggregate                                  Amount of              Amount of             Percentage                                  Commitment             Commitment            Assigned of     Facility Assigned         for all Lenders*          Assigned*             Commitment              CUSIP No.     -----------------         ---------------           --------              ----------              ---------                _____________          $________________      $________________       ______________%         _____________        _____________          $________________      $________________       ______________%         _____________        _____________          $________________      $________________       ______________%         _____________   [7.  TRADE DATE:       __________________]                          Form of Assignment and Assumption                                         B-1   Effective Date: __________________, 20__ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]  The terms set forth in this Assignment and Assumption are hereby agreed to:                                                 ASSIGNOR                                                [NAME OF ASSIGNOR]                                                 By:                                                    -----------------------------                                                      Title:                                                 ASSIGNEE                                                [NAME OF ASSIGNEE]                                                 By:                                                    -----------------------------                                                      Title: [CONSENTED TO AND] Accepted:  Bank of America, N. A., as  Administrative Agent  By:     -------------------------------     Title:  [CONSENTED TO:]  By:     -------------------------------     Title:                          Form of Assignment and Assumption                                         B-2                                               ANNEX 1 TO ASSIGNMENT AND ASSUMPTION                          STANDARD TERMS AND CONDITIONS FOR                              ASSIGNMENT AND ASSUMPTION            1.        REPRESENTATIONS AND WARRANTIES.            1.1.      ASSIGNOR. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Letter of Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.            1.2.      ASSIGNEE. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Letter of Credit Agreement, (ii) it meets all requirements of an Eligible Assignee under the Credit Agreement (subject to receipt of such consents as may be required under the Letter of Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Letter of Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, and (iv) it has received a copy of the Letter of Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section [__] thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on Agent or any other Lender; and (b) agrees that (i) it will, independently and without reliance on Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.            2.        PAYMENTS. From and after the Effective Date, Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.            3.        GENERAL PROVISIONS. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of Maine.                          Form of Assignment and Assumption                                         B-3    EX-21 12 a2168719zex-21.htm EXHIBIT 21       QuickLinks  -- Click here to rapidly navigate through this document      Exhibit 21      Subsidiaries of the Company (Maine & Maritimes Corporation)   Maine Public Service Company, a Maine corporation  Maine & New Brunswick Electrical Power Co, Ltd, a wholly-owned Canadian subsidiary of Maine Public Service Company  Energy Atlantic, LLC, a Maine limited liability company, currently inactive  The Maricor Group, formerly Maine & Maritimes Energy Services Company, a Maine corporation  The Maricor Group New England, formerly RES Engineering, Inc., a wholly-owned Massachusetts subsidiary of The Maricor Group  The Maricor Group, Canada Ltd, formerly Maricor Ltd., a wholly-owned Canadian subsidiary of The Maricor Group  Maricor Properties Ltd, a Canadian corporation  Mecel Properties Ltd, a wholly-owned Canadian subsidiary of Maricor Properties  Cornwallis Court Developments Ltd, a wholly-owned Canadian subsidiary of Maricor Properties  Maricor Technologies, Inc., a Maine corporation       QuickLinks  Exhibit 21         EX-23.1 13 a2168719zex-23_1.htm EXHIBIT 23.1       QuickLinks  -- Click here to rapidly navigate through this document      Exhibit 23.1      CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM           As independent registered public accountants, we hereby consent to the incorporation of our report dated March 24, 2006 relating to the consolidated financial statements of Maine & Maritimes Corporation for the year ended December 31, 2005 included in this Form 10-K, into the Company's previously filed Registration Statement on Form S-8 (File No. 333-103749).  /s/ VITALE, CATURANO & CO., LTD. Boston, Massachusetts March 24, 2006       QuickLinks  Exhibit 23.1         EX-23.2 14 a2168719zex-23_2.htm EXHIBIT 23.2       QuickLinks  -- Click here to rapidly navigate through this document      Exhibit 23.2      CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM           We hereby consent to the incorporation by reference into Post-Effective Amendment No. 1 to the Registration Statement of Maine & Maritimes Corporation on Form S-8 (Reg. No. 333-103749) of our report dated February 28, 2004 relating to the financial statements and financial statement schedule, which appears in the Annual Report on Form 10K of Maine Public Service Company for the year ended December 31, 2003.  PricewaterhouseCoopers LLP Boston, Massachusetts March 24, 2006       QuickLinks  Exhibit 23.2         EX-31.1 15 a2168719zex-31_1.htm EXHIBIT 31.1       QuickLinks  -- Click here to rapidly navigate through this document      Exhibit 31.1 Rule 13a-14(a)/15d-14(a)      CERTIFICATIONS   I, J. Nicholas Bayne, certify that:   1.I have reviewed this annual report on Form 10-K of Maine & Maritimes Corporation (the registrant); 2.Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3.Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:   a)designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b)evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and c)presented in this annual report conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;  5.The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors:   a)all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b)any fraud, whether or not material, that involves Management or other employees who have a significant role in the registrant's internal controls; and  6.The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.      Dated: March 24, 2006      /s/ J. NICHOLAS BAYNE J. Nicholas Bayne President and Chief Executive Officer            QuickLinks  Exhibit 31.1 Rule 13a-14(a)/15d-14(a)         EX-31.2 16 a2168719zex-31_2.htm EXHIBIT 31.2       QuickLinks  -- Click here to rapidly navigate through this document      Exhibit 31.2 Rule 13a-14(a)/15d-14(a)      I, Michael I. Williams, certify that:   1.I have reviewed this annual report on Form 10-K of Maine & Maritimes Corporation (the registrant); 2.Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3.Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:   a)designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b)evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and c)presented in this annual report conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;  5.The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors:   a)all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b)any fraud, whether or not material, that involves Management or other employees who have a significant role in the registrant's internal controls; and  6.The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.      Dated: March 24, 2006      /s/ MICHAEL I. WILLIAMS Michael I. Williams Vice President, Acting Chief Financial Officer,     Chief Accounting Officer and Controller            QuickLinks  Exhibit 31.2 Rule 13a-14(a)/15d-14(a)         EX-32 17 a2168719zex-32.htm EXHIBIT 32       QuickLinks  -- Click here to rapidly navigate through this document      Exhibit 32      Certification of Financial Reports Pursuant to 18 USC Section 1350           The undersigned hereby certify that the annual report on Form 10-K for the year ended December 31, 2005 fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d) and that information contained in that Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.     By: /s/ J. NICHOLAS BAYNE J. Nicholas Bayne President & Chief Executive Officer       /s/ MICHAEL I. WILLIAMS Michael I. Williams Vice President, Acting Chief Financial Officer,     Chief Accounting Officer and Controller    Dated: March 24, 2006            This certification is made solely for purposes of 18 USC Section 1350, subject to the knowledge standard contained therein, and not for any other purpose.       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