**Exhibit 10(aj)**

 

 

 
| **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  Hank,           (Party  *A)*** |   |          |
| **ATTN:**  |   | **Derivatives Confirmation Unit**                                                                       |   |          |
| **FAX:**   |   | **(617) 434-4284**                                                                                      |   |          |
| **PHONE:** |   | **(617) 434-4787 or (617) 434-7878**                                                                    |   |          |
|       |   |                                                                                                    |   |          |
| **RE:**    |   | **INTEREST RATE SWAP  Our Ref: 80642FB/129890**                                                         |   |          |

 

 

The purpose of this letteragreement is to set forth the terms and conditions of the Transaction enteredinto between Fleet National Bank Party A and MAINE PUBLIC SERVICE COMPANY PartyB, on the Trade Date specified below (the “Transaction”). This letterconstitutes a “Confirmation”**as referred to in the ISDA MasterAgreement specified below.

 

The definitions and provisions contained inthe 2000 ISDA Definitions (the “Definitions”), as published by theInternational Swaps and Derivatives Association, Inc. (“ISDA”), areincorporated into this confirmation. In****the event of any inconsistency between theDefinitions and provisions in this Confirmation, this Confirmation will govern.

 

1.                                       This****confirmationconstitutes a “Confirmation” as referred to in, and supplements, forms a partof and is subject to, the ISDA Master Agreement dated as of 9//09/03, asamended and supplemented from time to time (the “Agreement”), between you andus. All provisions contained in the Agreement govern this Confirmation exceptas expressly modified below.

 

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

 
| Trade Date       |   | Sep 09, 2003                                                                                            |
|------------------|--------|---------------------------------------------------------------------------------------------------------|
|             |   |                                                                                                    |
| Effective Date   |   | *Sep 09, 2003*                                                                                          |
|             |   |                                                                                                    |
| Termination Date |   | Apr *01, 2021*subject to  adjustment in accordance with the Modified Following Business Day Convention. |
|             |   |                                                                                                    |
| Notional Amount  |   | USD 13,600,000.00                                                                                       |

 

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FloatingAmounts

 
| Floating Rate Payer         |   | Fleet  National Bank                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|-----------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Floating 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 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 Day 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                     |   | 4.420000%                                                                                                                                                                 |
|                           |   |                                                                                                                                                                      |
| 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.                                     Relationshipbetween Parties

 

Each party represents to the other partythat:

 

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

 

(b)  Evaluation andUnderstanding. It is capable of evaluating and understanding (on its own behalfor through independent professional advice), and understands and accepts, theterms, conditions and risks of this Transaction. It is also capable ofassuming, and assumes, the financial and other risks of this Transaction.

 

(c) Statue of Parties. The other party is not acting as a fiduciary or anadvisor 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 assetsor liabilities or (iii) in connection with its line of business.

 

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

 

 

4.                                       AdditionalTermination Event will apply.

 

(i)             The occurrence of any of the following shallconstitute an Additional Termination *Event*with respect to Party B for whichParty B will be the Affected Party:

 

(1)                             Party A isno longer party to any or all of the credit support Documents identified inPart 4(f)(ii) of the Schedule to the Agreement, as such documents are amended,modified, or supplemented from time to time.

 

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

 

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(ii)          NotwithstandingSection 6(b) of the Agreement or any other provision of the Agreement, Party Ashall not initially have the right to designatean Early Termination Date upon the occurrence of an Additional TerminationEvent. In lieu of the right to designate an Early Termination Date, Party Agrants Party B the rights specified in the following subparts (1) or (2) toassign, as applicable, either Party A or Party B’s rights and obligation underthis Transaction.

 

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

 

(2)                             PartyB shall be permitted to assign its rights and obligations under the Agreementto a Substitute Swap Provider, provided the Substitute Swap Provider expresslyassumes Party B’s rights and obligations under this Agreement in a writingreasonably satisfactory to Party A and Party B.

 

 

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

 

 

5.                                       Acknowledgement

 

MAINE PUBLIC SERVICE COMPANYacknowledges and agrees that:

 

(a)                                  absent an expresswritten agreement to the contrary, an agreement by the parties to voluntarilyterminate the Transaction before its scheduled termination date is contingentupon the payment by one party to the other of the costs associated withterminating the Transaction. Such costs shall include, but may not be limitedto, the aggregate difference between the market value of the terminated portionof the Transaction and the market value of a similar transaction executed onthe termination date with a *notional*amount and term equal to theterminated portion of the Transaction. Any termination cost paid by MAINEPUBLIC SERVICE COMPANY to terminate the Transaction is in addition to and notpart of any yield maintenance fee, prepayment penalty or other expense thatMAINE PUBLIC SERVICE COMPANY may pay in connection with the prepayment of aloan transaction with Fleet National Bank or its affiliate; and

 

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(b)                                 this acknowledgementor the provision by Fleet National Bank of a valuation or indicativetermination price does not constitute a commitment by Fleet National Bank toterminate the Transaction at such price, or otherwise, prior to its scheduledtermination date. The price and terms at which the Transaction may beterminated will be individually negotiated and, accordingly, may vary from theprice and terms offered by other financial institutions. Any commitment toterminate the Transaction shall not be binding upon the parties unlessexpressly agreed to by Fleet National Bank.

 

6.                                       Settlement Instructions

 

Paymentsto MAINE PUBLIC SERVICE COMPANY in USD

 

****** Payment Instructions To BeAdvised ******

 

 

Paymentsto Fleet National Bank in USD

 
| To                |   | Fleet  National Bank ABA: 011000138 |
|-------------------|--------|-------------------------------------|
| Favor Of  Account |   | Fleet  National Bank                |
| 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 |

 

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| 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 thedate 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 telephonecalls may be recorded to ensuretransaction accuracy.

80642FB

 

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