Exhibit 10(al)

 

DATE:

 

Sep 10, 2003

 

 

 

TO:

 

MAINE PUBLIC SERVICE COMPANY, (Party B)

ATTN:

 

KURT A TORNQUIST

FAX:

 

207-764-6586

PHONE:

 

207-768-5811

 

 

 

 

 

 

FROM:

 

Fleet National Bank, (Party A)

ATTN:

 

Derivatives Confirmation Unit

FAX:

 

(617) 434-4284

PHONE:

 

(617) 434-4787 or (617) 434-7878

 

 

 

RE:

 

INTEREST RATE SWAP
Our Ref: 80643FB/129891

 

 

The purpose of this letter agreement is to set forth the terms and conditions of
the Transaction entered into between Fleet National Bank Party A and MAINE
PUBLIC SERVICE COMPANY Party B on the Trade Date specified below (the
“Transaction”). This letter constitutes a “Confirmation” as referred to in the
ISDA Master Agreement specified below.

 

The definitions and provisions contained in the 2000 ISDA Definitions (the
“Definitions”), as published by the international Swaps and Derivatives
Association, Inc. (“ISDA”), are incorporated into this Confirmation. In the
event of any inconsistency between the Definitions and provisions in this
Confirmation, this Confirmation will govern.

 

1.                                       This confirmation constitutes a
“Confirmation” as referred to in, and supplements, forms a part of and is
subject to, the ISDA Master Agreement dated as of 9//09/03, as amended and
supplemented from time to time (the “Agreement”), between you and us. All
provisions contained in the Agreement govern this confirmation except as
expressly modified below.

 

2.                                       The terms of the particular Transaction
to which this Confirmation relates are as follows:

 

Trade Date

 

Sep 09, 2003

 

 

 

Effective Date

 

Sep 09, 2003

 

 

 

Termination Date

 

Oct 01, 2025 subject to adjustment in accordance with the Modified  Following
Business Day convention.

 

 

 

Notional Amount

 

USD 9,000,000.00

 

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Floating Amounts

 

Floating Rate Payer

 

Fleet National Bank

 

 

 

Floating Rate Payment Dates

 

Monthly on the lst, commencing Oct 01, 2003 and ending on the Termination Date
subject to adjustment in accordance with the Modified Following Business Day
Convention.

 

 

 

Floating Rate Option

 

USD-BMA; meaning the rate in effect for a Reset Date shall be determined on the
basis of “The Bond Market Association Municipal swap Index”, a trademark of the
Bond Market Association and formerly named the PSA Municipal Swap Index,
announced by Municipal Market Data on Wednesday, or if the rate is not announced
on such day, the next succeeding Business bay on which the rate is announced;
provided, however, that Floating Rate for the initial Calculation Period shall
be the rate in effect for the immediately preceding date that would have been a
Reset Date for the relevant transaction. If for a Calculation Period the Bond
Market Association Municipal Swap Index for a Reset Date in that calculation
Period is not announced, the rate for such Reset Date shall be determined as if
the parties had specified “USD-JJKENNY” (as defined herein below) as the
applicable Floating Rate Option. The rate so determined will be deemed USD-BMA
for the purpose of this transaction. “USD-JJKENNY”; meaning the rate in effect
for a Reset Date shall be determined on the basis of the “Kenny S&P 7-day High
Grade Index” (the “Kenny Index”) announced by Kenny S&P Evaluation Services at
the beginning of business on Tuesday, or if the rate is not announced on such
day, the next succeeding Business Day on which the rate is announced; provided,
however, the Floating Rate for the initial Calculation Period shall be the rate
in effect for the immediately preceding date that would have been a Reset Date
for the

 

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relevant transaction. If, at any time, both the Kenny Index and USD-BMA are no
longer determined and announced or are materially modified a comparable
alternative index mutually agreed upon by both parties shall be used. The rate
so determined will be deemed USD-BMA for the purpose of this Transaction,

 

 

 

Designated Maturity

 

1 week

 

 

 

Spread

 

None

 

 

 

Floating Rate Day Count Fraction

 

ACTUAL / ACTUAL

 

 

 

Floating Rate Reset Dates

 

The last Business Day of each Calculation Period

 

 

 

Compounding

 

Inapplicable

 

 

 

Method of Averaging

 

Weighted Average

 

 

 

Business Days

 

New York

 

Fixed Amounts

 

Fixed Rate Payer

 

MAINE PUBLIC SERVICE COMPANY

 

 

 

Fixed Rate Payment Dates

 

Monthly on the 1st, commencing Oct 01, 2003 and ending on the Termination Date
subject to adjustment in accordance with the Modified Following Business Day
Convention.

 

 

 

Fixed Rate

 

4.530000%

 

 

 

Fixed Rate Day Count Fraction

 

ACTUAL /360

 

 

 

Business Days

 

New York

 

 

 

Calculation Agent

 

Fleet National Bank

 

 

 

Governing Law

 

New York law

 

 

 

Documentation

 

ISDA Master Agreement to be provided by Fleet National Bank

 

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3.                                       Relationship Between Parties

 

Each party represents to the other party that:

 

(a) Non-Reliance. It is acting for its own account, and it has made its own
independent decisions to enter this Transaction and as to whether this
Transaction is appropriate or proper for it based upon its own judgment and upon
advice from such advisors as it has deemed necessary. It is not relying on any
communication (written or oral) from the other party as investment advice or as
a recommendation to enter into this Transaction; it being understood that
information and explanations related to the terms and conditions of this
Transaction shall not be considered investment advice or a recommendation to
enter into this Transaction. It has not received from the other party any
assurance or guarantee as to the expected results of this Transaction.

 

(b) Evaluation and Understanding. It is capable of evaluating and understanding
Con its own behalf or through independent professional advice), and understands
and accepts, the terms, conditions and risks of this Transaction. It is also
capable of assuming, and assumes, the financial and other risks of this
Transaction.

 

(c) Status of Parties. The other party is not acting as a fiduciary or an
advisor for it in respect of this Transaction.

 

(d) Risk Management. It has entered into this Transaction for the purpose of (i)
managing its borrowings or investments, (ii) hedging its underlying assets or
liabilities or (iii) in connection with its line of business.

 

(e) It is an “eligible contract participant” as defined in Section la(12) of the
Commodity Exchange Act.

 

4.                                       Additional Termination Event will
apply.

 

(i)                                     The occurrence of any of the following
shall constitute an Additional Termination Event with respect to Party B for
which Party B will be the Affected Party:

 

(1)                                  Party A is no longer party to any or all of
the Credit Support Documents identified in Part 4(f)(ii) of the Schedule to the
Agreement, as such documents are amended, modified, or supplemented from time to
time.

 

(2)                                  Any or all of the Credit Support Documents
identified in Part 4(f)(ii) of the Schedule to the Agreement, as such documents
are amended, modified, or supplemented from time to time, are terminated or
ceases to exist for any reason prior to the satisfaction of the obligations of
this Transaction.

 

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(ii)                                  Notwithstanding Section 6(b) of the
Agreement or any other provision of the Agreement, Party A shall not initially
have the right to designate an Early Termination Date upon the occurrence of an
Additional Termination Event. In lieu of the right to designate an Early
Termination Date, Party A grants Party B the rights specified in the following
subparts (1) or (2) to assign, as applicable, either Party A or Party B’s rights
and obligation under this Transaction.

 

(1)                                  Party B shall be permitted to instruct
Party A to assign Part A’s rights and obligation under the Agreement to a
substitute swap provider reasonably acceptable to Party A and Party B
(“Substitute swap Provider”), provided the Substitute Swap Provider expressly
assumes Party A’s rights and obligations under this Agreement in a writing
reasonably satisfactory to Party A and Party B.

 

(2)                                  Party B shall be permitted to assign its
rights and obligations under the Agreement to a Substitute Swap Provider,
provided the Substitute Swap Provider expressly assumes Party B’s rights and
obligations under this Agreement in a writing reasonably satisfactory to Party A
and Party B.

 

Party A shall have the right to designate an Early Termination Date under
Section 6(b) of the Agreement and this Additional Termination Event if this
Transaction is not assigned pursuant within twenty (20) Business Days from the
date the Additional Termination Event occurs.

 

5.                                 Acknowledgement

 

MAINE PUBLIC SERVICE COMPANY acknowledges and agrees that:

 

(a)                                  absent an express written agreement to the
contrary, an agreement by the parties to voluntarily terminate the Transaction
before its scheduled termination date is contingent upon the payment by one
party to the other of the costs associated with terminating the Transaction.
Such costs shall include, but may not be limited to, the aggregate difference
between the market value of the terminated portion of the Transaction and the
market value of a similar transaction executed on the termination date with a
notional amount and term equal to the terminated portion of the Transaction. Any
termination cost paid by MAINE PUBLIC SERVICE COMPANY to terminate the
Transaction is in addition to and not part of any yield maintenance fee,
prepayment penalty or other expense that MAINE PUBLIC SERVICE COMPANY  may pay
in connection with the prepayment of a loan transaction with Fleet National Bank
or its affiliate; and

 

(b)                                 this acknowledgement or the provision by
Fleet National Bank of a valuation or indicative termination price does not
constitute a commitment by Fleet National Bank to terminate the Transaction at
such price, or otherwise, prior to its scheduled termination date. The price and
terms at which the Transaction may be terminated will be individually negotiated
and, accordingly, may vary from the price and terms offered by other financial
institutions. Any commitment to terminate the Transaction shall not be binding
upon the parties unless expressly agreed to by Fleet National Bank.

 

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6.                                       Settlement Instructions

 

Payments to MAINE PUBLIC SERVICE COMPANY in USD

 

***  Payment Instructions To Be Advised  ***

 

Payments to Fleet National Bank in USD

 

To

 

Fleet National Bank ABA: 011000138

Favor Of

 

Fleet National Bank

Account Number

 

1026103-29480

 

7. Contact Instructions

 

Fleet National Bank:

 

Tel: 617-434-7953

Resets/Payments

 

 

 

 

Fax: 617-434-3588

Confirmations

 

Tel: 617-434-4787

 

 

Fax: 617-434-4284

 

 

 

 

 

 

MAINE PUBLIC SERVICE COMPANY:

 

Tel:  207-768-5811

 

 

Fax: 207-764-6586

 

Very truly yours,

 

Fleet National Bank,

 

By:

/s/ [ILLEGIBLE]

 

By:

/s/ [ILLEGIBLE]

 

Name:

Name:

Title:

Title:

 

Agreed and accepted as of the date first above written:

 

MAINE PUBLIC SERVICE COMPANY

 

By:

/s/ Kurt A. Tornquist

 

 

 

 

Name:  Kurt A. Tornquist

 

Title: Senior VP & CFO

 

 

PLEASE COUNTERSIGN AND FAX TO: (617) 434-4284

ATTN: Derivatives Confirmations

REQUEST CORRECTIONS: (617) 434-4787

Please be advised telephone calls may be recorded to ensure
transaction accuracy.

80643FB

 

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