**Exhibit 10(ak)**

 

 
| **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: 80644FB/129892** |

 

 

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 Master Agreementspecified below.

 

The definitions and provisionscontained in the 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 betweenthe Definitions and provisions in this confirmation, this Confirmation willgovern.

 

1.                                       ThisConfirmation constitutes a “Confirmation” as referred to in, and supplements,forms a part of and is subject to, the ISDA Master Agreement dated as of9//09/03, as amended and supplemented from time to time (the “Agreement”),between you and us. All provisions contained in the Agreement govern thisConfirmation except as expressly modified below.

 

2.                                       Theterms of the particular Transaction to which this Confirmation relates are asfollows:

 
| Trade Date       |   | Sep 09, 2003                                                                                             |
|------------------|--------|----------------------------------------------------------------------------------------------------------|
|             |   |                                                                                                     |
| Effective Date   |   | Sep 09, 2003                                                                                             |
|             |   |                                                                                                     |
| Termination Date |   | Jun 01, 2007 subject to  adjustment in accordance with the Modified Following Business Day Convention*.* |
|             |   |                                                                                                     |
| Notional Amount  |   | USD 8,740,000.00                                                                                         |

 

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NOTIONAL AMOUNT - FLOATING AMOUNTS SIDE

 
| **From Date** |   | **To Date** |   | **Ccy** |   | **Notional** |   |
|---------------|--------|-------------|--------|---------|--------|--------------|--------|
| Sep 09, 2003  |   | Dec 01,2003 |   | USD     |   | 8,740,000.00 |   |
| Dec 01, 2003  |   | Jun 01,2004 |   | USD     |   | 8,080,000.00 |   |
| Jun 01, 2004  |   | Dec 01,2004 |   | USD     |   | 7,375,000.00 |   |
| Dec 01, 2004  |   | Jun 01,2005 |   | USD     |   | 6,630,000.00 |   |
| Jun 01, 2005  |   | Dec 01,2005 |   | USD     |   | 5,840,000.00 |   |
| Dec 01, 2005  |   | Jun 01,2006 |   | USD     |   | 5,005,000.00 |   |
| Jun 01, 2006  |   | Dec 01,2006 |   | USD     |   | 4,115,000.00 |   |
| Dec 01, 2006  |   | Jun 01,2007 |   | USD     |   | 3,175,000.00 |   |

 

NOTIONAL AMOUNT - FIXED AMOUNTS SIDE

 
| **From Date** |   | **To Date**  |   | **Ccy** |   | **Notional** |   |
|---------------|--------|--------------|--------|---------|--------|--------------|--------|
| Sep 09, 2003  |   | Dec 01, 2003 |   | USD     |   | 8,740,000.00 |   |
| Dec 01, 2003  |   | Jun 01, 2004 |   | USD     |   | 8,080,000.00 |   |
| Jun 01, 2004  |   | Dec 01, 2004 |   | USD     |   | 7,375,000.00 |   |
| Dec 01, 2004  |   | Jun 01, 2005 |   | USD     |   | 6,630,000.00 |   |
| Jun 01, 2005  |   | Dec 01, 2005 |   | USD     |   | 5,840,000.00 |   |
| Dec 01, 2005  |   | Jun 01, 2006 |   | USD     |   | 5,005,000.00 |   |
| Jun 01, 2006  |   | Dec 01, 2006 |   | USD     |   | 4,115,000.00 |   |
| Dec 01, 2006  |   | Jun 01, 2007 |   | USD     |   | 3,175,000,00 |   |

 

Floating Amounts

 
| 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-LIBOR-BBA                                                                                                                                                             |
|                              |   |                                                                                                                                                                      |
| Designated  Maturity              |   | 1 month                                                                                                                                                                   |
|                              |   |                                                                                                                                                                      |
| 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 and  London                                                                                                                                                      |

 

2

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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                     |   | 2.790000%                                                                                                                                                                 |
|                           |   |                                                                                                                                                                      |
| Fixed Rate Day Count  Fraction |   | ACTUAL /360                                                                                                                                                               |
|                           |   |                                                                                                                                                                      |
| Business Days                  |   | New York and London                                                                                                                                                       |
|                           |   |                                                                                                                                                                      |
| Calculation Agent              |   | Fleet National Bank                                                                                                                                                       |
|                           |   |                                                                                                                                                                      |
| *Governing*****Law             |   | New York law                                                                                                                                                              |
|                           |   |                                                                                                                                                                      |
| Documentation                  |   | ISDA Master Agreement to be  provided by Fleet National Bank                                                                                                              |

 

3.                                       RelationshipBetween Parties

 

Each party represents to the other party that:

 

(a) Non-Reliance. It is acting forits own account, and it has made its own independent decisions to enter thisTransaction and as to whether this Transaction is appropriate or proper for itbased upon its own judgment and upon advice from such advisors as it has deemednecessary. It is not relying on any communication (written or oral) from theother party as investment advice or am 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 and Understanding. It iscapable of evaluating and understanding (on its own behalf or throughindependent professional advice), and understands and accepts, the terms,conditions and risks****of this Transaction. It is also capable ofassuming, and assumes, the financial and other risks of this Transaction.

 

(c) Status of Parties. The other party is notacting as a fiduciary or an advisor for it in****respect of this Transaction.

 

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

 

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

 

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4.**                                      **AdditionalTermination Event****will apply.

 

(i)                                     Theoccurrence of any of the following shall constitute an Additional TerminationEvent with respect to Party B for which Party B will be the Affected Party:

 

(1)                                  PartyA in****nolonger party to any or all of the Credit Support Documents identified in Part4(f)(ii) of the Schedule to the Agreement, as such documents are amended,modified, or supplemented from time to time.

 

(2)                                  Anyor all of the Credit Support Documents identified in Part 4(f)(ii) *of the*scheduleto the 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

 

(ii)                                  Notwithstandingsection 6(b) of the Agreement or any other provision of the Agreement, Party Ashall not initially have the right to designate an Early Termination Date uponthe occurrence of an Additional Termination Event. In lieu of the right todesignate an Early Termination Date, Party A grants Party B the rights specifiedin the following subparts (1) or (2) to assign, as applicable, either Party Aor Party B’s rights and obligation under this 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 anEarly Termination Date under Section 6(b) of the Agreement and this AdditionalTermination Event if this Transaction is not assigned pursuant within twenty(20) Business Days from the date the Additional Termination Event occurs.

 

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5.                                       Acknowledgement

 

MAINE PUBLIC SERVICE COMPANYacknowledges and agrees that:

 

(a)*                                 **absent*anexpress written agreement to the contrary, an agreement by the parties tovoluntarily terminate the Transaction before its scheduled termination date iscontingent upon the payment by one party to the other of the costs associatedwith terminating the Transaction. Such costs shall include, but may not belimited to, the aggregate difference between the market value of the terminatedportion of the Transaction and the market value of a similar transactionexecuted on the termination date with a notional amount and term equal to theterminated portion of the Transaction. Any**termination cost paid by MAINE PUBLICSERVICE COMPANY to terminate the Transaction is in addition to and not part ofany yield maintenance fee, prepayment penalty or other expense that MAINEPUBLIC SERVICE COMPANY may pay in connection with the prepayment of a loantransaction with Fleet National Bank or its affiliate; and

 

(b)                                 this acknowledgement or the provision by FleetNational Bank of a valuation or indicative termination price does notconstitute a commitment by Fleet National Bank to terminate the Transaction atsuch price, or otherwise, prior to its scheduled termination date. The priceand terms at which the Transaction may be terminated will be individuallynegotiated and, accordingly, may vary from the price and terms offered by otherfinancial institutions. Any commitment to terminate the Transaction shall notbe binding upon the parties unless expressly agreed to by Fleet National Bank.

 

6.                                       SettlementInstructions

 

**Payments toMAINE 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.                                       contactInstructions

 
| Fleet National Bank: |   | Tel: 617-434-7953 |
|----------------------|--------|-------------------|
| Resets/Payments      |   |              |
|                 |   | Fax: 617-431-3588 |
|                 |   |              |
| 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.

80644FB

 

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