**Exhibit 10(am)**

 

**THE BANK OF NEW YORK**

**NEW YORK’S FIRST BANK - FOUNDED 1784 BYALEXANDER HAMILTON**

 
|   | ONE WALL STREET, NEW YORK, N.Y. 10286 |
|--------|---------------------------------------|
|   |                                  |
|   | October 1, 2003                  |

 

Maine Public Service Company209 State StreetPresque Isle, Maine 04769-1209

Attn:                    Mr.Kurt A. Tomquist

Senior Vice President,

Chief Financial Officer and Treasurer

 

Re: Line of Credit

 

Ladies and Gentlemen:

 

 

The Bank of New York (the “Bank”) is pleased to confirm that it holdsavailable to Maine Public Service Company (the “Borrower”) a $3,000,000 line ofcredit. This letter sets forth the understanding between the Bank and theBorrower regarding the line of credit.

 

The line of credit shall be held available by the Bank untilMarch 29, 2004, unless cancelled earlier as provided in the last sentence ofthis paragraph. During the period the line of credit is held available, theBorrower may request the Bank to make advances to the Borrower in an aggregateprincipal amount not to exceed $3,000,000 outstanding at any one time. The lineof credit may be cancelled by either party at any time for any reason.

 

The making of any advance under the line of credit is in the Bank’ssole and absolute discretion and is subject to the Bank’s satisfaction with thecondition (financial and otherwise), business, prospects, properties, assets,management, ownership and operations of the Borrower, and the purpose of eachadvance. In furtherance of the foregoing, the Borrower shall furnish or causeto be furnished to the Bank such information regarding the Borrower as the Bankmay request from time to time.

 

Advances under the line of credit shall be evidenced by a masterpromissory note dated the date hereof and shall bear interest and be payable asprovided therein.

 

As long as the line of credit is held available, the Borrower shall payto the Bank an administrative fee equal to 0.50% per annum (calculated on thebasis of a 360 day year for the actual number of days elapsed) of theunutilized amount of the line of credit, payable quarterly in arrears on thelast day of each calendar quarter.

 

Prior to the making of any advances under the line of credit, the Bankshall have received the enclosed copy of this letter, the master promissorynote referred to above, a legal opinion from counsel to the Borrower in theform of the exhibit attached hereto, and such other instruments, certificatesand related documents as the Bank shall consider necessary or desirable inconnection

 

----

 

with the line of credit and the advances to be made under the line ofcredit, in each case duly executed by the appropriate persons and in form andsubstance satisfactory to the Bank.

 

This letter may not be amended, and compliance with its terms may notbe waived, orally or by course of dealing, but only by a writing signed by anauthorized officer of the Bank.

 

The Borrower agrees to pay all costs and expenses incurred by the Bankincidental to or in any way relating to enforcement of the Borrower’sobligations under this letter or the protection of the Bank’s rights inconnection with this letter, including, without limitation, reasonableattorneys’ fees and expenses, whether or not litigation is commenced.

 

This letter shall be construed and interpreted in accordance with thelaws of the State of New York.

 

The Borrower submits to the jurisdiction of stateand Federal courts located in the City and State of New York in personam andagrees that all actions and proceedings related directly or indirectly to thisletter shall be litigated only in said courts or courts located elsewhere asthe Bank may elect and that such courts are convenient forums.

 

**TheBorrower and the Bank waive the right to trial by jury in any action orproceeding based upon, arising out of or in any way connected to this letter.**

 

Please acknowledge the agreement of the Borrower with the foregoing byexecuting both copies of this letter in the space below and returning one copytogether with the duly executed master promissory note to the Bank.

 

 
|                         | Very truly yours,     |
|------------------------------|-----------------------|
|                         |                  |
|                         | THE BANK OF NEW YORK  |
|                         |                  |
|                         |                  |
|                         | By:                   | /s/ Charlotte Sohn Fuiks |
|                         | Name:                 | Charlotte Sohn Fuiks |
|                         | Title:                | Vice President |
|                         |                  |
|                         |                  |
| Acknowledged and Agreed to:  |                  |
|                         |                  |
| MAINE PUBLIC SERVICE COMPANY |                  |
|                         |                  |
|                         |                  |
| By:                          | /s/ Kurt A. Tornquist |   |   |
| Name:                        | Kurt A. Tornquist     |   |   |
| Title:                       | Senoir VP & CFO   |   |   |
|                              |                       |  |  |  |  |  |  |  |

 

2

----