Exhibit 10.1

      THE  SECURITY  REPRESENTED HEREBY HAS NOT  BEEN  REGISTERED
UNDER  THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR  ANY
APPLICABLE   STATE  SECURITIES  LAWS,  AND  MAY  NOT   BE   SOLD,
TRANSFERRED,  ASSIGNED  OR  HYPOTHECATED  UNLESS  THERE   IS   AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR ANY APPLICABLE
STATE  SECURITIES LAWS COVERING SUCH SECURITIES OR  THE  SALE  IS
MADE  IN  ACCORDANCE  WITH AN EXEMPTION UNDER  THE  ACT  AND  ANY
APPLICABLE  STATE  SECURITIES  LAWS,  AND  HOLDINGS  RECEIVES  AN
OPINION  OF  COUNSEL  FOR  HOLDER  OF  THIS  SECURITY  REASONABLY
SATISFACTORY  TO  HOLDINGS  STATING  THAT  SUCH  SALE,  TRANSFER,
ASSIGNMENT  OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION  AND
PROSPECTUS  DELIVERY REQUIREMENTS OF SUCH ACT AND ANY  APPLICABLE
STATE SECURITIES LAWS.


                        CONVERTIBLE NOTE

$10,000,000.00                            Date:  May 24, 2005


      FOR  VALUE  RECEIVED, BAYCORP HOLDINGS,  LTD.,  a  Delaware
corporation  ("Holdings"), GREAT BAY  POWER  MARKETING,  INC.,  a
Maine  corporation ("GB Power"), GREAT BAY HYDRO  CORPORATION,  a
New Hampshire corporation ("GB Hydro"), BAYCORP VENTURES, LLC,  a
Delaware   limited   liability  company   ("BayCorp   Ventures"),
NACOGDOCHES POWER, LLC, a New Hampshire limited liability company
("NAC  Power"),  NACOGDOCHES GAS, LLC, a  New  Hampshire  limited
liability  company  ("NAC Gas"), GREAT BAY HYDRO  MAINE,  LLC,  a
Maine  limited liability company ("GB Maine") and GREAT BAY HYDRO
BENTON,  LLC,  a  Maine limited liability company  ("GB  Benton";
together with Holdings, GB Power, GB Hydro, BayCorp Ventures, NAC
Power,  NAC Gas, GB Maine and GB Benton, the "Borrowers"), hereby
unconditionally  promise to pay to SLOAN GROUP  LTD.,  a  Bahamas
corporation,  at  its offices located at Cay House,  Box  N-7776,
E.P.  Taylor  Drive, Lyford Cay, New Providence,  Bahamas,  Attn:
Suzanne  Karsten  (hereafter, together with  any  holder  hereof,
called  "Holder"),  or  at such other place  as  the  Holder  may
designate  in writing to Holdings, in lawful money of the  United
States  of  America,  and  in immediately  available  funds,  the
principal sum of TEN MILLION AND NO/100 Dollars ($10,000,000.00),
or  such  lesser amount as may be the aggregate principal  amount
outstanding  hereunder, together with interest on  the  principal
balance  from  time  to time outstanding hereunder,  as  provided
below.

1.   General

     1.1   Interest  on the outstanding principal balance  hereof
shall  accrue (computed on the basis of a 360-day year and actual
number  of  days  elapsed) at a per annum  rate  equal  to  eight
percent (8.0%).  Accrued interest shall be due and payable on any
date  on  which the principal balance hereof is due  (whether  by
acceleration, maturity or otherwise).  Interest shall  accrue  on
any  amount  past due hereunder at a rate equal  to  two  percent
(2.0%) per annum in excess of the interest rate otherwise payable
hereunder (the "Post Default Rate").

<Page>

     1.2   Unless  this Note is fully converted into  Shares  (as
defined below) at the option of the Holder pursuant to Section 2,
the  entire  principal  balance of this Note  shall  be  due  and
payable  in  full on December 15, 2005 (the "Maturity  Date")  or
such  earlier date as the principal amount is due hereunder as  a
result  of  acceleration or otherwise.  The outstanding principal
balance  of  this Note and accrued interest thereon  may  not  be
prepaid  in whole or in part at any time.  The Borrowers may  not
reborrow  the  principal amount hereunder  after  such  principal
amount has been repaid.

     1.3   The Borrowers shall give the Holder written notice  of
each  borrowing  hereunder, such notice to contain  the  proposed
amount of such borrowing, the account at which the Holder  is  to
make the proceeds of such borrowing available , the proposed date
of  such  borrowing and a certification by an authorized  officer
that  the proceeds of such borrowing will be used solely for  the
funding  of  projects  described  on  Exhibit  A  hereto  in  the
approximate  amounts allocated for such projects as described  on
Exhibit  A, and for such other purposes as the Holder may consent
to  in writing in its sole discretion.  Each such borrowing shall
be  in  the minimum amount of $50,000 plus integral multiples  of
$10,000 in excess thereof.   Each such notice of borrowing  shall
be  delivered to the Holder before 10:00 a.m. on the  date  three
Business Days prior to the proposed date of such borrowing.  Each
such  notice  of  borrowing shall be irrevocable once  given  and
binding  on the Borrowers.  No later than 3:00 p.m. on  the  date
specified  in  such  notice of borrowing, the  Holder  will  make
available the proceeds of such borrowing at the account specified
by the Borrowers in such notice of borrowing

     1.4   (a)   EACH BORROWER, AND THE HOLDER BY ACCEPTING  THIS
NOTE, AGREES AND STIPULATES THAT THE ONLY CHARGE IMPOSED UPON THE
BORROWERS  FOR THE USE OF MONEY IN CONNECTION WITH THIS  NOTE  IS
AND  SHALL  BE  THE  INTEREST DESCRIBED IN THE  SECOND  PARAGRAPH
HEREOF,  AND FURTHER AGREES AND STIPULATES THAT ALL OTHER CHARGES
IMPOSED  BY THE HOLDER ON THE BORROWERS IN CONNECTION  WITH  THIS
NOTE, ALL DEFAULT CHARGES, LATE CHARGES, AND ATTORNEYS' FEES, ARE
CHARGES  MADE  TO  COMPENSATE  THE  HOLDER  FOR  UNDERWRITING  OR
ADMINISTRATIVE  SERVICES  AND  COSTS  OR  LOSSES   PERFORMED   OR
INCURRED,  AND  TO  BE PERFORMED OR INCURRED, BY  THE  HOLDER  IN
CONNECTION  WITH  THIS NOTE AND SHALL UNDER NO  CIRCUMSTANCES  BE
DEEMED TO BE CHARGES FOR THE USE OF MONEY. ALL CHARGES OTHER THAN
CHARGES  FOR  THE  USE  OF  MONEY  SHALL  BE  FULLY  EARNED   AND
NONREFUNDABLE WHEN DUE.

      (b)   Notwithstanding  any terms  or  provisions  contained
herein  or  elsewhere, in no event shall the aggregate amount  of
Interest  (as  defined below) contracted for, reserved,  charged,
collected, taken or received by the Holder pursuant to this  Note
exceed the maximum amount permissible (the "Maximum Rate")  under
the  Usury Laws (as defined below).  Neither the exercise by  the
Holder of its rights to accelerate the payment or the maturity of
any indebtedness evidenced by this Note, nor the occurrence of


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<Page>

any  other  event  or contingency whatsoever, shall  entitle  the
Holder  to charge, collect or receive Interest in excess  of  the
Maximum Rate and in no event shall the Borrowers be obligated  to
pay   Interest  exceeding  the  Maximum  Rate.   All  agreements,
conditions  or stipulations, if any, which may in  any  event  or
contingency operate to bind, obligate or compel the Borrowers  to
pay  Interest exceeding the Maximum Rate shall be without binding
force  or effect, at law or in equity, but only to the extent  of
the  excess of Interest over such Maximum Rate.  If any  Interest
is  contracted  for,  charged, collected, taken  or  received  in
excess of the Maximum Rate ("Excess"), each Borrower acknowledges
and  agrees  that  any  such obligation,  charge,  collection  or
receipt  shall  be  the  result of a bona fide  error,  and  such
Excess, to the extent received, shall be applied first to  reduce
the  principal  hereof and the balance of such  Excess,  if  any,
shall  be returned to the Borrowers; it being the express  intent
of  each  Borrower and the Holder that the Borrowers not pay  and
the   Holder   not  receive,  charge  or  collect,  directly   or
indirectly,  interest  in excess of the  Maximum  Rate.   By  the
execution  of this Note, each Borrower covenants and agrees  that
(i)  the  credit  or  return of any Excess shall  constitute  the
acceptance by the Borrowers of such Excess, and (ii) no  Borrower
shall  seek  or  pursue (and hereby waives to the fullest  extent
permitted  by law) any other remedy, legal or equitable,  against
the  Holder,  based  in  whole or in part upon  contracting  for,
charging, collecting or receiving any Interest in excess  of  the
Maximum Rate.  For the purpose of determining whether or not  any
Excess has been contracted for, charged, collected or received by
the  Holder,  all Interest at any time contracted  for,  charged,
collected  or received from any Borrower in connection  with  the
indebtedness  evidenced  by  this  Note  shall,  to  the   extent
permitted  by  the Usury Laws, be amortized, prorated,  allocated
and  spread in equal parts throughout the full term of this Note.
Each  Borrower  and  the  Holder agree,  to  the  maximum  extent
permitted  under  the  Usury Laws, to (i) characterize  any  non-
principal  payment  as  an expense rather than  as  Interest  and
(ii) exclude voluntary prepayments and the effects thereof.   For
purposes  hereof,  the term "Interest" shall  mean  any  and  all
interest, fees, premiums and other charges for the use  of  money
or  the extension of credit and shall include any "interest"  (or
any  amount or sum deemed to be "interest") under and as  defined
in  the  Usury  Laws; and the term "Usury Laws"  shall  mean  any
applicable  laws,  statutes,  rules,  regulations  or  ordinances
limiting, governing or otherwise regulating the rate or amount of
Interest or the manner which Interest may be calculated, charged,
collected, paid, contracted for or disclosed.

     1.5   The Borrowers' indebtedness evidenced by this Note  is
secured  by  that  certain  Pledge  Agreement  executed  by  each
Borrower in favor of the Holder.

2.   Conversion

     2.1   Subject to and upon compliance with the provisions  of
this  Section 2, the Holder shall have the right to  convert,  in
lieu of accepting payment for principal and interest, all, or any
part, of the outstanding principal balance of, this Note together
with all accrued but unpaid interest on such principal then to be
converted at any time between November 15, 2005 and December  15,
2005 (provided, however, that the Holder shall have the right  to
convert  pursuant  to  this Section  2  at  any  time  after  the
occurrence  and  during the continuance of a  material  Event  of
Default),  in  whole, or in part, into that number of  shares  of
Holdings'  Common  Stock, $0.01 par value  (the  "Common  Stock")
equal  to,  the product obtained by dividing (a) the  outstanding
principal and accrued but unpaid interest then being converted by


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<Page>

(b)  $14.04  (such  amounts  to be  adjusted  for  stock  splits,
dividends,  recapitalizations  and  similar  transactions)   (the
shares  of  the  Common  Stock  issuable  upon  conversion  being
referred  to  herein  as  the "Shares").   Once  Holder  provides
Holdings written notice of its election to convert this Note into
equity,  the  Borrowers  shall not be  entitled  to  prevent  the
conversion by repaying the principal and interest due under  this
Note.

     2.2   Before the Holder converts this Note into Shares,  the
Holder (i) shall give five (5) days written notice to Holdings of
the  election  to convert this Note pursuant to this  Section  2;
(ii)  shall  state  therein the amount of principal  and  accrued
interest  so being converted and the name or names in  which  the
certificate  or certificates for the number of shares  of  Shares
are  to  be  issued; and (iii) shall surrender this Note  at  the
office  of  Holdings.  Holdings shall, as promptly as practicable
after  each surrender, but in no event later than ten  (10)  days
after  the  later of such surrender or approval of  any  required
stock  exchange supplemental listings, and at its expense,  issue
and  deliver  to  or  upon the written  order  of  the  Holder  a
certificate  or  certificates for the full number  of  Shares  to
which the Holder is entitled and a check or cash with respect  to
any  fractional  interest in Shares as provided in  Section  2.3.
Such  conversion  shall be deemed to have been  made  immediately
prior  to  the close of business on the date of the surrender  of
this  Note, and the person or persons entitled to receive  shares
of  Shares issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares of Shares
as  of  such  date.  Upon any partial conversion  of  this  Note,
Holdings  shall, and shall cause each of the other Borrowers,  in
addition  to,  and concurrently with, the certificate  evidencing
such  Shares issued upon such partial conversion, deliver to  the
Holder  a  new  Note,  substantially in the  form  hereof,  in  a
principal  amount  equal to the outstanding  (whether  principal,
interest  or  any other amounts) amount under this  Note  not  so
converted.

     2.3    No  fractional  shares  shall  be  issued  upon   any
conversion  of  this Note.  In lieu of any fractional  shares  to
which the Holder would otherwise be entitled, Holdings shall  pay
cash  equal  to  the product of such fraction multiplied  by  the
price used to determine the number of Shares into which this Note
is  converted  (such  amounts to be adjusted  for  stock  splits,
dividends, recapitalizations and similar transactions).

     2.4   Holdings shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock for the
purpose  of effecting the conversion of this Note such number  of
Common  Stock as shall from time to time be sufficient to  effect
the  conversion of this Note; and if at any time  the  number  of
authorized  but  unissued shares of Common  Stock  shall  not  be
sufficient  to effect the conversion of the entire principal  and
interest  amount of this Note, in addition to such other remedies
as  shall be available to the Holder, Holdings will use its  best
efforts  to take such corporate action as may, in the opinion  of
its counsel, be necessary to increase its authorized but unissued
shares  of  Common  Stock to such number of shares  as  shall  be
sufficient for such purposes.

     2.5  In the event there is any United States withholding tax
applicable to the interest on this Note for Holder, the Borrowers
shall  reimburse  Holder  for all such withholding  tax  paid  by
Holder with respect to this Note.


                                4

<Page>

3.   Registration  of the Shares; Compliance with the  Securities
     Act.

     3.1  (a)  Demand Registration.

          (i)   Holder may request Holdings to register under the
     Securities  Act  all or any portion of the  Shares  held  by
     Holder  in  the manner specified in such request.   Holdings
     will  use  its  best  efforts to  expeditiously  effect  the
     registration  of  all Shares under the Securities  Act,  but
     only  to the extent provided for in the following provisions
     of  this Note; provided, however, that Holdings shall not be
     required to effect registration pursuant to a request  under
     this  Section 3 more than one (1) time for Holder,  and  may
     register the Shares on Form S-3 under the Securities Act  if
     available.    Notwithstanding  anything  to   the   contrary
     contained herein, no request may be made under this  Section
     3(a)(i)  within  180  days after the  effective  date  of  a
     registration  statement filed by Holdings  covering  a  firm
     commitment underwritten public offering in which the holders
     of  Shares  shall have been entitled to join  and  in  which
     there  shall have been effectively registered all Shares  as
     to which registration shall have been requested.

          (ii)  Whenever  a  requested registration  pursuant  to
     Section 3(a)(i) above is for an underwritten offering,  only
     Shares  which are to be included in the underwriting may  be
     included   in   the  registration,  and,  if  the   managing
     underwriter of such offering determines in good  faith  that
     the number of Shares so included which are to be sold by the
     holders  of  the  Shares  should be limited  due  to  market
     conditions  and/or  the  necessity  of  including  in   such
     underwriting or registration securities to be sold  for  the
     account of Holdings, then Holdings may reduce the number  of
     securities  to  be  included in such offering  to  a  number
     deemed  satisfactory by the managing underwriter  on  a  pro
     rata  basis.   Notwithstanding the foregoing, in  the  event
     that the underwriter or underwriters cut back the number  of
     Shares  required to be included by the Holder in such demand
     registration  by more than 20%, then such registration  will
     not  be  deemed to be a demand registration for purposes  of
     this   Section  3.   Holdings  may  not  cause   any   other
     registration  of  securities for sale for  its  own  account
     (other  than a registration effected solely to implement  an
     employee benefit plan or a transaction to which Rule 145  of
     the  Commission is applicable) to become effective less than
     ninety   (90)   days  after  the  effective  date   of   any
     registration required pursuant to this Section 3.

          (b)  Piggyback Registrations.

          If  Holdings, at any time proposes to register  any  of
     its  securities under the Securities Act (including pursuant
     to  a  demand  of  any  stockholder of  Holdings  exercising
     registration  rights) for sale to the  public  (except  with
     respect  to registration statements on Forms S-4 or  S-8  or
     another  form not available for registering the  Shares  for
     sale  to  the  public), each such time it will give  written
     notice  to the Holder of its intention to do so.   Upon  the
     written  request  of Holder given within twenty  days  after
     receipt by Holder of such notice, Holdings will, subject  to
     the limits contained in this Section 3, use its best efforts
     to  cause  all  such Shares of the Holder to  be  registered
     under  the  Securities Act and qualified for sale under  any
     state blue sky law, all to the extent requisite to permit


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<Page>

     such  sale or other disposition by such holder of the Shares
     so  registered;  provided,  however,  that  if  Holdings  is
     advised in writing in good faith by any managing underwriter
     of  Holdings' securities being offered in a public  offering
     pursuant  to such registration statement that the amount  to
     be  sold  by  persons  other  than  Holdings  (collectively,
     "Selling Stockholders") is greater than the amount which can
     be  offered  without adversely affecting the offering,  then
     Holdings  may reduce the amount offered for the accounts  of
     Selling  Stockholders (including holders  of  Shares)  to  a
     number deemed satisfactory by such managing underwriter.

          Notwithstanding the foregoing provisions, Holdings  may
     withdraw   any   registration  statement  referred   to   in
     Section  3(c)  without thereby incurring  any  liability  to
     Holder.

          (c)  Registration Procedures.

               (i)   Holdings  shall  use  its  best  efforts  to
     prepare   and   file  with  the  SEC  such  amendments   and
     supplements  to its registration statements and prospectuses
     pursuant  to  which Shares are registered (the "Registration
     Statements")  as may be necessary to keep such  registration
     statements current and effective for a period ending on  the
     earlier  of  (i)  the date on which Holder may  sell  Shares
     pursuant  to paragraph (k) of Rule 144 under the  Securities
     Act or any successor rule ("Rule 144") or (ii) such time  as
     all Shares converted hereunder have been sold pursuant to  a
     registration  statement or Rule 144, and  to  notify  Holder
     promptly  upon  the registration statement, and  each  post-
     effective amendment thereto, being declared effective by the
     SEC;

               (ii)  Holdings shall furnish to Holder such number
     of   copies   of  the  Registration  Statements   (including
     supplemental prospectuses) as Holder may reasonably  request
     in  order to facilitate the public sale or other disposition
     of all or any of the Shares by Holder;

               (iii)      Holdings shall file documents  required
     of   Holdings  for  normal  blue  sky  clearance  in  states
     specified  in  writing  by Holder; provided,  however,  that
     Holdings shall not be required to qualify to do business  or
     consent  to service of process in any jurisdiction in  which
     it is not now so qualified or has not so consented;

               (iv)  Holdings shall bear all expenses (other than
     underwriting   discounts  and  commissions,   if   any)   in
     connection  with  the  procedures in paragraph  (a)  through
     (c)(iii)  of  this  Section 3 and the  registration  of  the
     Shares;

               (v)   Holdings shall advise Holder, promptly after
     it  shall receive notice or obtain knowledge of the issuance
     of  any  stop  order by the SEC delaying or  suspending  the
     effectiveness  of any of the Registration Statements  or  of
     the  initiation of any proceeding for that purpose;  and  it
     will  promptly  use its commercially reasonable  efforts  to
     prevent  the  issuance of any stop order or  to  obtain  its
     withdrawal  at  the earliest possible moment  if  such  stop
     order should be issued; and


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<Page>


               (vi) With a view to making available to Holder the
     benefits of Rule 144 and any other rule or regulation of the
     SEC that may at any time permit Holder to sell Shares to the
     public  without registration, Holdings covenants and  agrees
     to  use  its  best  efforts to: (i)  make  and  keep  public
     information  available, as those terms  are  understood  and
     defined  in Rule 144, until the earlier of (A) such date  as
     all of Holder's Shares may be resold pursuant to Rule 144(k)
     or  any other rule of similar effect or (B) such date as all
     of  Holder's Shares shall have been resold; (ii)  file  with
     the  SEC  in a timely manner all reports and other documents
     required  of  Holdings under the Securities Act;  and  (iii)
     furnish  to Holder upon request, as long as Holder owns  any
     Shares,  (A)  a written statement by Holdings  that  it  has
     complied  with the reporting requirements of the  Securities
     Act  and  the  Securities Act, (B) a copy of Holdings'  most
     recent  Annual  Report on Form 10-K or Quarterly  Report  on
     Form  10-Q,  and  (C)  such  other  information  as  may  be
     reasonably requested in order to avail Holder of any rule or
     regulation of the SEC that permits the selling of  any  such
     Shares without registration.

               It   shall  be  a  condition  precedent   to   the
     obligations of Holdings to take any action pursuant to  this
     Section  3  that  Holder  shall  furnish  to  Holdings  such
     information  regarding itself, the  Shares  to  be  sold  by
     Holder,  and  the  intended method of  disposition  of  such
     securities  as shall be required to effect the  registration
     of the Shares.

               Holdings  understands that Holder disclaims  being
     an underwriter, but acknowledges that a determination by the
     SEC  that Holder is deemed an underwriter shall not  relieve
     Holdings of any obligations it has hereunder.

     3.2  Transfer of Shares After Registration; Suspension.

          (a)    Holder  agrees  that  it  will  not  effect  any
     disposition  of  the  Shares or its right  to  purchase  the
     Shares  that would constitute a sale within the  meaning  of
     the  Securities Act other than transactions exempt from  the
     registration   requirements  of  the  Securities   Act,   as
     contemplated in the registration statement and as  described
     below,  and  that  it will promptly notify Holdings  of  any
     material  changes  in  the  information  set  forth  in  the
     registration  statement regarding  Holder  or  its  plan  of
     distribution.

          (b)   Except  in  the  event that paragraph  (c)  below
     applies,   Holdings  shall:  (i)  if  deemed  necessary   by
     Holdings, prepare and file from time to time with the SEC  a
     post-effective amendment to the registration statement or  a
     supplement  to  the related prospectus or  a  supplement  or
     amendment  to any document incorporated therein by reference
     or   file   any  other  required  document  so   that   such
     registration statement will not contain an untrue  statement
     of a material fact or omit to state a material fact required
     to  be  stated  therein or necessary to make the  statements
     therein not misleading, and so that, as thereafter delivered
     to  purchasers  of  the Shares being sold  thereunder,  such
     prospectus  will  not  contain  an  untrue  statement  of  a
     material  fact or omit to state a material fact required  to
     be  stated  therein  or  necessary to  make  the  statements
     therein, in light of the circumstances under which they were


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<Page>

     made,  not  misleading; (ii) provide Holder  copies  of  any
     documents   filed   pursuant  to  Section   3.2(b)(i);   and
     (iii) upon request, inform Holder that Holdings has complied
     with  its  obligations  in Section 3.2(b)(i)  (or  that,  if
     Holdings  has  filed  a  post-effective  amendment  to   the
     registration  statement  which has  not  yet  been  declared
     effective, Holdings will notify Holder to that effect,  will
     use  its  best efforts to secure the effectiveness  of  such
     post-effective  amendment as promptly as possible  and  will
     promptly notify Holder pursuant to Section 3.2(b)(i)  hereof
     when the amendment has become effective).

          (c)   Subject to paragraph (d) below, in the event: (i)
     of  any  request by the SEC or any  other federal  or  state
     governmental authority during the period of effectiveness of
     the registration statement for amendments or supplements  to
     the  registration  statement or related  prospectus  or  for
     additional information; (ii) of the issuance by the  SEC  or
     any  other  federal or state governmental authority  of  any
     stop  order suspending the effectiveness of the registration
     statement  or  the  initiation of any proceedings  for  that
     purpose;   (iii)   of  the  receipt  by  Holdings   of   any
     notification   with  respect  to  the  suspension   of   the
     qualification or exemption from qualification of any of  the
     Shares for sale in any jurisdiction or the initiation of any
     proceeding  for  such  purpose; or  (iv)  of  any  event  or
     circumstance which necessitates the making of any changes in
     the  registration statement or prospectus, or  any  document
     incorporated  or  deemed  to  be  incorporated  therein   by
     reference,   so  that,  in  the  case  of  the  registration
     statement,  it  will not contain any untrue statement  of  a
     material  fact or omit to state a material fact required  to
     be  stated  therein  or  necessary to  make  the  statements
     therein  not  misleading,  and  that  in  the  case  of  the
     prospectus,  it will not contain any untrue statement  of  a
     material  fact or omit to state a material fact required  to
     be  stated  therein  or  necessary to  make  the  statements
     therein, in the light of the circumstances under which  they
     were  made,  not  misleading, then Holdings  shall  promptly
     deliver  a certificate in writing to Holder (the "Suspension
     Notice") to the effect of the foregoing and, upon receipt of
     such Suspension Notice, Holder will refrain from selling any
     Shares   pursuant   to   the   registration   statement   (a
     "Suspension") until Holder is advised in writing by Holdings
     that  the  current prospectus may be used, and has  received
     copies  of any additional or supplemental filings  that  are
     incorporated or deemed incorporated by reference in any such
     prospectus.  In the event of any Suspension,  Holdings  will
     use  its  reasonable best efforts to cause the  use  of  the
     prospectus  so suspended to be resumed as soon as reasonably
     practicable after delivery of a Suspension Notice to Holder.
     In  addition  to  and  without limiting any  other  remedies
     (including,  without  limitation,  at  law  or  at   equity)
     available  to Holder, Holder shall be entitled  to  specific
     performance in the event that Holdings fails to comply  with
     the provisions of this Section 3.

          (d)   Notwithstanding the foregoing paragraphs of  this
     Section  3,  Holdings shall use its best efforts  to  ensure
     that  Holder  shall  not be prohibited from  selling  Shares
     under  the registration statement as a result of Suspensions
     on  more  than  two occasions, such occasions not  to  occur
     within  two  weeks of one another, of not more  than  thirty
     (30)  days in any twelve month period, unless, in  the  good
     faith  judgment of Holdings' Board of Directors, upon advice
     of  counsel,  the  sale  of Shares  under  the  registration
     statement would be reasonably likely to cause a violation of
     the  Securities  Act  or  the Exchange  Act  and  result  in
     potential liability to Holdings.


                                8

<Page>

          (e)   If a Suspension is not then in effect, Holder may
     sell  Shares under the registration statement, provided that
     it   complies   with  any  applicable  prospectus   delivery
     requirements.  Upon receipt of a request therefor,  Holdings
     will  provide an adequate number of current prospectuses  to
     Holder and to any other parties requiring such prospectuses.

          (f)  In the event of a sale of Shares by Holder, unless
     such  requirement is waived by Holdings in  writing,  Holder
     must  also deliver to Holdings' transfer agent, with a  copy
     to  Holdings, a Certificate of Subsequent Sale substantially
     in the form attached hereto as Exhibit B, so that the Shares
     may be properly transferred.

          (g)   Holdings agrees that it shall, immediately  prior
     to  the  registration  statement being  declared  effective,
     deliver  to its transfer agent an opinion letter of counsel,
     opining  that  at  any  time the registration  statement  is
     effective,  the  transfer agent shall issue,  in  connection
     with  the sale of the Shares, certificates representing such
     Shares  without restrictive legend, provided the Shares  are
     to  be  sold  pursuant to the prospectus  contained  in  the
     registration  statement and the transfer  agent  receives  a
     Certificate  of Subsequent Sale in the form attached  hereto
     as  Exhibit B.  Upon receipt of such opinion, Holdings shall
     cause  the  transfer agent to confirm, for  the  benefit  of
     Holder,  that no further opinion of counsel is  required  at
     the  time of transfer in order to issue such Shares  without
     restrictive legend.

     Holdings  shall  cause  its  transfer  agent  to   issue   a
     certificate without any restrictive legend to a purchaser of
     any  such Shares from Holder, if (a) the sale of such Shares
     is  registered  under the registration statement  (including
     registration pursuant to Rule 415 under the Securities  Act)
     and Holder has delivered a Certificate of Subsequent Sale to
     the  transfer  agent; (b) the Holder has  provided  Holdings
     with  an  opinion of counsel, in form, substance  and  scope
     customary    for   opinions   of   counsel   in   comparable
     transactions, to the effect that a public sale  or  transfer
     of  such  Shares may be made without registration under  the
     Securities  Act; or (c) such Shares are sold  in  compliance
     with Rule 144 under the Securities Act.

     3.3  Indemnification.

          For the purpose of this Section 3:

          (a)   the term "Selling Shareholder" shall mean  Holder
     and  each  person,  if any, who controls Holder  within  the
     meaning of Section 15 of the Securities Act or Section 20 of
     the Exchange Act;

          (b)   the  term "Registration Statement" shall  include
     any  final  prospectus,  exhibit,  supplement  or  amendment
     included in or relating to, and any document incorporated by
     reference in, the Registration Statement (or deemed to be  a
     part thereof) referred to in Section 3.1; and


                                9

<Page>


          (c)   the term "Untrue Statement" shall mean any untrue
     statement  or alleged untrue statement, or any  omission  or
     alleged  omission to state in the Registration  Statement  a
     material fact required to be stated therein or necessary  to
     make   the   statements  therein,  in  the  light   of   the
     circumstances under which they were made, not misleading.

          (d)    (i)   Holdings  agrees  to  indemnify  and  hold
     harmless  each  Selling Shareholder  from  and  against  any
     losses, claims, damages or liabilities to which such Selling
     Shareholder may become subject (under the Securities Act  or
     otherwise)  insofar  as  such  losses,  claims,  damages  or
     liabilities  (or actions or proceedings in respect  thereof)
     arise out of, or are based upon (i) any untrue statement  or
     omission  of  a material fact contained in the  Registration
     Statement   or  the  prospectus  or  in  any  amendment   or
     supplement   thereto,   (ii)   any   inaccuracy    in    the
     representations and warranties of Holdings contained in  the
     Agreement  or  the  failure  of  Holdings  to  perform   its
     obligations  hereunder or (iii) any failure by  Holdings  to
     fulfill   any   undertaking  included  in  the  Registration
     Statement,   and  Holdings  will  reimburse   such   Selling
     Shareholder for any reasonable legal expense or other actual
     accountable  out of pocket expenses reasonably  incurred  in
     investigating,  defending or preparing to  defend  any  such
     action,   proceeding  or  claim;  provided,  however,   that
     Holdings shall not be liable in any such case to the  extent
     that such loss, claim, damage or liability arises out of, or
     is  based upon, an untrue statement made in the Registration
     Statements  in reliance upon and in conformity with  written
     information  furnished to Holdings by or on behalf  of  such
     Selling  Shareholder specifically for use in preparation  of
     the   Registration   Statements,  or   any   inaccuracy   in
     representations  made by such Selling  Shareholder  in  this
     Note  or  the failure of such Selling Shareholder to  comply
     with   its   representations,  warranties,   covenants   and
     agreements  contained in Sections 3.2  and  5  (except  5.2)
     hereof  or any statement or omission in any prospectus  that
     is corrected in any subsequent prospectus that was delivered
     to  the  Selling Shareholder prior to the pertinent sale  or
     sales by the Selling Shareholder.

               (ii)  Holder agrees to indemnify and hold harmless
     Holdings  (and  each person, if any, who  controls  Holdings
     within the meaning of Section 15 of the Securities Act, each
     officer of Holdings who signs the Registration Statement and
     each  director  of  Holdings) from and against  any  losses,
     claims,  damages  or liabilities to which Holdings  (or  any
     such  officer,  director or controlling person)  may  become
     subject (under the Securities Act or otherwise), insofar  as
     such  losses, claims, damages or liabilities (or actions  or
     proceedings in respect thereof) arise out of, or  are  based
     upon,  (i)  any  failure to comply with the representations,
     warranties,  covenants and agreements contained  in  Section
     3.2  and  5  (except 5.2) hereof or elsewhere  in  the  Loan
     Documents  or  any  inaccuracies  of  Holder  in  the   Loan
     Documents,  or (ii) any untrue statement of a material  fact
     contained  in  the Registration Statement if, and  only  if,
     such  untrue  statement was made in  reliance  upon  and  in
     conformity  with  written information  furnished  by  or  on
     behalf of Holder specifically for use in preparation of  the
     Registration  Statement, and Holder will reimburse  Holdings
     (or  such officer, director or controlling person),  as  the
     case  may  be,  for  any reasonable legal expense  or  other
     actual   accountable  out  of  pocket  expenses   reasonably
     incurred in investigating, defending or preparing to  defend
     any such action, proceeding or claim.  The obligation to


                               10

<Page>


     indemnify shall be limited to the net amount of the proceeds
     received  by Holder from the sale of the Shares pursuant  to
     the Registration Statement.

               (iii)       Promptly   after   receipt   by    any
     indemnified  person of a notice of a claim or the  beginning
     of  any action in respect of which indemnity is to be sought
     against an indemnifying person pursuant to this Section 3.3,
     such indemnified person shall notify the indemnifying person
     in  writing  of  such claim or of the commencement  of  such
     action, but the omission to so notify the indemnifying party
     will not relieve it from any liability which it may have  to
     any  indemnified party under this Section 3.3 (except to the
     extent  that such omission materially and adversely  affects
     the  indemnifying party's ability to defend such action)  or
     from  any  liability otherwise than under this Section  3.3.
     Subject  to the provisions hereinafter stated, in  case  any
     such  action shall be brought against an indemnified person,
     the  indemnifying  person shall be entitled  to  participate
     therein,  and, to the extent that it shall elect by  written
     notice  delivered  to the indemnified party  promptly  after
     receiving the aforesaid notice from such indemnified  party,
     shall  be  entitled  to  assume the  defense  thereof,  with
     counsel  reasonably satisfactory to such indemnified person.
     After   notice   from  the  indemnifying  person   to   such
     indemnified  person  of its election to assume  the  defense
     thereof  (unless it has failed to assume the defense thereof
     and   appoint   counsel  reasonably  satisfactory   to   the
     indemnified  party), such indemnifying person shall  not  be
     liable  to  such  indemnified person for any legal  expenses
     subsequently   incurred  by  such  indemnified   person   in
     connection with the defense thereof; provided, however, that
     if  there exists or shall exist a conflict of interest  that
     would  make  it inappropriate, in the reasonable opinion  of
     counsel  to the indemnified person, for the same counsel  to
     represent  both the indemnified person and such indemnifying
     person   or   any  affiliate  or  associate   thereof,   the
     indemnified  person  shall be entitled  to  retain  its  own
     counsel   at  the  expense  of  such  indemnifying   person;
     provided,  however,  that no indemnifying  person  shall  be
     responsible  for  the fees and expenses  of  more  than  one
     separate  counsel (together with appropriate local  counsel)
     for   all  indemnified  parties.   In  no  event  shall  any
     indemnifying person be liable in respect of any amounts paid
     in  settlement of any action unless the indemnifying  person
     shall  have approved the terms of such settlement;  provided
     that  such  consent shall not be unreasonably withheld.   No
     indemnifying person shall, without the prior written consent
     of  the  indemnified person, effect any  settlement  of  any
     pending  or  threatened proceeding in respect of  which  any
     indemnified person is or could reasonably have been a  party
     and indemnification could have been sought hereunder by such
     indemnified  person,  unless  such  settlement  includes  an
     unconditional  release of such indemnified person  from  all
     liability  on  claims that are the subject  matter  of  such
     proceeding.

               (iv)  If the indemnification provided for in  this
     Section  3.3  is  unavailable to  or  insufficient  to  hold
     harmless  an  indemnified party under subsection  (d)(i)  or
     (d)(ii)  above in respect of any losses, claims, damages  or
     liabilities  (or actions or proceedings in respect  thereof)
     referred  to  therein,  then each indemnifying  party  shall
     contribute to the amount paid or payable by such indemnified


                               11

<Page>

     party  as  a  result  of  such losses,  claims,  damages  or
     liabilities  (or  actions  in  respect  thereof)   in   such
     proportion  as is appropriate to reflect the relative  fault
     of  Holdings  on  the one hand and Holder on  the  other  in
     connection with the statements or omissions or other matters
     which   resulted   in  such  losses,  claims,   damages   or
     liabilities (or actions in respect thereof), as well as  any
     other relevant equitable considerations.  The relative fault
     shall be determined by reference to, among other things,  in
     the   case  of  an  untrue  statement,  whether  the  untrue
     statement relates to information supplied by Holdings on the
     one  hand  or Holder on the other and the parties'  relative
     intent, knowledge, access to information and opportunity  to
     correct  or  prevent  such untrue statement.   Holdings  and
     Holder  agree  that it would not be just  and  equitable  if
     contribution pursuant to this subsection (d) were determined
     by  pro rata allocation (even if Holder were treated as  one
     entity  for  such  purpose)  or  by  any  other  method   of
     allocation  which does not take into account  the  equitable
     considerations  referred to above in  this  subsection  (d).
     The  amount  paid or payable by an indemnified  party  as  a
     result  of  the  losses, claims, damages or liabilities  (or
     actions  in  respect  thereof) referred  to  above  in  this
     subsection (d) shall be deemed to include any legal or other
     expenses  reasonably incurred by such indemnified  party  in
     connection  with investigating or defending any such  action
     or claim.  Notwithstanding the provisions of this subsection
     (d),  Holder shall not be required to contribute any  amount
     in  excess of the amount by which the gross amount  received
     by  Holder  from the sale of the Shares to which  such  loss
     relates  exceeds the amount of any damages which Holder  has
     otherwise  been  required to pay by reason  of  such  untrue
     statement.  No person guilty of fraudulent misrepresentation
     (within the meaning of Section 11(f) of the Securities  Act)
     shall  be entitled to contribution from any person  who  was
     not guilty of such fraudulent misrepresentation.

     The  parties to this Note hereby acknowledge that  they  are
     sophisticated  business  persons  who  were  represented  by
     counsel  during  the negotiations regarding  the  provisions
     hereof including, without limitation, the provisions of this
     Section 3, and are fully informed regarding said provisions.
     They further acknowledge that the provisions of this Section
     3  fairly allocate the risks in light of the ability of  the
     parties to investigate Holdings and its business in order to
     assure  that adequate disclosure is made in the Registration
     Statement as required by the Securities Act and the Exchange
     Act.

     3.4   Termination  of  Conditions. The conditions  precedent
imposed by this Section 3 upon the transferability of the  Shares
shall  cease  and terminate as to any particular  number  of  the
Shares   when   such  Shares  (i)  shall  have  been  effectively
registered  under  the  Securities  Act  and  sold  or  otherwise
disposed of in accordance with the intended method of disposition
set  forth  in  the registration statement covering such  Shares,
(ii)  are eligible for sale under Rule 144 or (iii) at such  time
as an opinion of counsel satisfactory to Holdings shall have been
rendered to the effect that such conditions are not necessary  in
order to comply with the Securities Act.

     3.5   Information  Available. So long  as  the  registration
statement  is  effective covering the resale of Shares  owned  by
Holder, Holdings will furnish (or, to the extent such information
is  available electronically through Holdings' filings  with  the
SEC, Holdings will make available) to Holder:


                               12

<Page>


          (a)   as soon as practicable after it is available, one
     copy  of (i) its Annual Report to Shareholders (which Annual
     Report   shall  contain  financial  statements  audited   in
     accordance  with  generally accepted accounting  principles)
     and  (ii) if not included in substance in the Annual  Report
     to  Shareholders,  its  Annual  Report  on  Form  10-K  (the
     foregoing, in each case, excluding exhibits);

          (b)    upon  the  reasonable  request  of  Holder,  all
     exhibits  excluded  by  the  parenthetical  to  subparagraph
     (a)(ii)  of this Section 3.5 as filed with the SEC  and  all
     other  information that is made available  to  shareholders;
     and

          (c)  upon the reasonable request of Holder, an adequate
     number of copies of the prospectuses to supply to any  other
     party  requiring such prospectuses; and Holdings,  upon  the
     reasonable  request of Holder, will meet with  Holder  or  a
     representative  thereof  at  Holdings'  headquarters  during
     Holdings'  normal business hours to discuss all  information
     relevant   for  disclosure  in  the  registration  statement
     covering  the Shares and will otherwise reasonably cooperate
     with  Holder conducting an investigation for the purpose  of
     reducing or eliminating Holder's exposure to liability under
     the  Securities Act, including the reasonable production  of
     information   at  Holdings'  headquarters;  provided,   that
     Holdings  shall not be required to disclose any confidential
     information to or meet at its headquarters with Holder until
     and  unless Holder shall have entered into a confidentiality
     agreement  in form and substance reasonably satisfactory  to
     Holdings with Holdings with respect thereto.

     3.6    Limits  on  Additional  Issuances.   Except  for  the
issuance of stock options under Holdings' stock option plans, the
issuance  of  common stock upon exercise of outstanding  options,
and  the  conversion contemplated hereby and under  that  certain
Convertible  Note  dated  as of March  15,  2005  (the  "Existing
Convertible  Note")  in the original stated principal  amount  of
$10,250,000,  Holdings  will not, for  a  period  of  six  months
following  the  Effective  Date,  offer  for  sale  or  sell  any
securities  unless,  in  the opinion of Holdings'  counsel,  such
offer  or sale does not jeopardize the availability of exemptions
from   the  registration  and  qualification  requirements  under
applicable  securities laws.  The foregoing shall  not  apply  to
securities  issued in connection with any acquisition,  including
by  way  of  merger, or purchase of stock or all or substantially
all of the assets of any third party.  Except for the issuance of
stock options under Holdings' stock option plans, the issuance of
common stock under Holdings' employee stock purchase plan or upon
exercise  of  outstanding options and warrants, the  issuance  of
common stock purchase warrants, and the transactions contemplated
hereby and under the Existing Convertible Note, Holdings has  not
engaged  in any offering of its equity securities during the  six
months  prior to the date of this Note. The foregoing  provisions
shall  not  prevent  Holdings from filing a "shelf"  registration
statement pursuant to Rule 415 under the Securities Act, but  the
foregoing  provisions  shall apply  to  any  sale  of  securities
thereunder.

4.     Representations and Warranties of the Borrowers

     4.1   Holdings  is  a  corporation duly  organized,  validly
existing  and  in good standing under the laws of  the  State  of
Delaware.  GB Power is a corporation duly organized, validly


                               13

<Page>

existing  and  in good standing under the laws of  the  State  of
Maine.   GB  Hydro  is  a  corporation  duly  organized,  validly
existing and in good standing under the laws of the State of  New
Hampshire.  BayCorp Ventures is a limited liability company  duly
organized, validly existing and in good standing under  the  laws
of  the State of Delaware.  Each of GB Maine and GB Benton  is  a
limited liability company duly organized, validly existing and in
good standing under the laws of the State of Maine.  Each of  NAC
Power  and NAC Gas is a limited liability company duly organized,
validly existing and in good standing under the laws of the State
of New Hampshire.

     4.2   Each  Borrower has all requisite corporate or  limited
liability  company  power and authority to own  and  operate  its
properties and assets, and to carry on its business as  presently
conducted and as proposed to be conducted.  Each Borrower is duly
qualified  and  authorized to transact business and  is  in  good
standing as a foreign corporation or limited liability company in
each jurisdiction in which the failure so to qualify would have a
material  adverse effect on the business, properties,  prospects,
or financial condition of the Borrowers taken as a whole.

     4.3  Each Borrower has all requisite legal and corporate  or
limited liability company power and authority to execute, deliver
and perform its obligations under this Note, and the issuance and
sale of this Note (and, with respect to Holdings, the Shares)  by
each  Borrower  has  been  duly and  validly  authorized  by  all
requisite  corporate or limited liability company proceedings  on
the part of such Borrower.  This Note when executed and delivered
by  each  Borrower  is  a valid and binding  obligation  of  each
Borrower,  enforceable against such Borrower in  accordance  with
its  terms,  subject to laws of general application  relating  to
bankruptcy, insolvency and the relief of debtors and rules of law
governing  specific  performance,  injunctive  relief  or   other
equitable remedies.  The execution and delivery of this Note  and
the  transactions contemplated hereby and thereby, including  but
not limited to the Borrowers' incurrence of the obligations under
this  Note  and the granting of security interests to secure  the
Borrowers'  obligations under this Note, will not  result  in  or
constitute:

          (a)   a  default, breach or violation of or  under  the
     certificate  of  incorporation,  certificate  of  formation,
     bylaws or operating agreement of any Borrower,

          (b)   a  default, breach or violation of or  under  any
     mortgage,  deed  of trust, indenture, note,  bond,  license,
     lease agreement or other agreement, instrument or obligation
     to  which  any Borrower is a party or by which  any  of  the
     properties or assets of such Borrower are bound,

          (c)   a  violation  of any statute,  rule,  regulation,
     order,  judgment  or  decree of any court,  public  body  or
     authority by which any Borrower or any of its properties  or
     assets are bound,

          (d)   an event which (with the notice or lapse of  time
     or  both)  would  permit any Person (as  defined  below)  to
     terminate,  accelerate  the  performance  required   by   or
     accelerate the maturity of any indebtedness or obligation of
     any  Borrower is bound or by which any of its properties  or
     assets are bound,


                               14

<Page>

          (e)   except as contemplated by the Loan Documents, the
     creation or imposition of any lien, charge or encumbrance on
     any  property  of  any  Borrower  under  any  agreement   or
     commitment  to which such Borrower is a party  or  by  which
     such  Borrower  is bound or by which any of  its  respective
     properties or assets are bound, or

          (f)  an event which would require any consent under any
     agreement to which any Borrower is a party or by which  such
     Borrower  is  bound  or  by  which  any  of  its  respective
     properties or assets are bound.

     4.4   Immediately  prior  to any  conversion  of  this  Note
pursuant  to Section 2 hereof, the Shares will be duly authorized
by  all  necessary corporate action on the part of  Holdings  and
will  have been duly reserved for issuance.  When the Shares  are
issued such shares will be validly issued and outstanding,  fully
paid  and nonassessable and the issuance of such Shares will  not
be  subject to preemptive or other similar contractual rights  of
any other stockholder of Holdings.

     4.5    Holdings  has  complied  and  will  comply  with  all
applicable  federal and state securities laws in connection  with
the  issuance  of  this Note and the Shares  hereunder.   Neither
Holdings nor anyone acting on its behalf has or will sell,  offer
to  sell or solicit offers to buy the Notes or similar securities
to,  or  solicit offers with respect thereto, from or enter  into
any  preliminary  conversations or negotiations relating  thereto
with,  any  Person, so as to bring the issuance and sale  of  the
Notes under the registration provisions of the Securities Act and
applicable state securities laws.  Holdings has timely filed with
all  relevant  Governmental Authorities and listing agencies  all
reports required under all applicable laws and regulation, except
where the failure to so file could not reasonably be expected  to
have  a  Material Adverse Effect.  Holdings has received all  any
and  all stockholder approvals required under all applicable laws
and regulations, including any requirements of applicable listing
agencies,  in connection with the issuance of this Note  and  the
Existing Convertible Note.

     4.6  None  of  the  Borrowers or any of their  Subsidiaries:
(i)  is  a  Person  named  on the list  of  Specially  Designated
Nationals or Blocked Persons maintained by the U.S. Department of
the  Treasury's Office of Foreign Assets Control (the "OFAC")  as
published  from  time to time; or (ii) is (A) an  agency  of  the
government  of  a  country, (B) an organization controlled  by  a
country, or (C) a Person resident in a country that is subject to
a sanctions program identified on the list maintained by the OFAC
and  published  from  time  to  time,  as  such  program  may  be
applicable   to   such  agency,  organization   or   Person;   or
(iii)  derives  more than 15% of its assets or  operating  income
from  investments  in  or  transactions with  any  such  country,
agency, organization or Person.

     4.7   The  outstanding  capital  stock  of  Holdings  as  of
December  31, 2004 is as described in Holdings' Annual Report  on
Form  10-K for the fiscal year ended December 31, 2004.  Holdings
has  not  issued any capital stock since December 31, 2004  other
than  pursuant to the purchase of shares under Holdings' employee
stock  purchase plan and the exercise of outstanding warrants  or
stock options, in each case as disclosed in the SEC Reports.  The


                               15

<Page>

Shares  to  be  sold pursuant to the Agreements  have  been  duly
authorized, and when issued and paid for in accordance  with  the
terms  of the Agreements, will be duly and validly issued,  fully
paid  and nonassessable, subject to no lien, claim or encumbrance
(except for any such lien, claim or encumbrance created, directly
or  indirectly,  by Holder).  The outstanding shares  of  capital
stock of Holdings have been duly and validly issued and are fully
paid  and nonassessable, have been issued in compliance with  the
registration  requirements of federal and state securities  laws,
and  were  not  issued in violation of any preemptive  rights  or
similar  rights  to subscribe for or purchase securities.   There
are   no   outstanding  rights  (including,  without  limitation,
preemptive   rights),  warrants  or  options   to   acquire,   or
instruments  convertible into or exchangeable for,  any  unissued
shares  of capital stock or other equity interest in Holdings  or
its  Subsidiaries, other than this Note, the Existing Convertible
Note  and  options under Holdings stock incentive plans,  or  any
contract, commitment, agreement, understanding or arrangement  of
any  kind to which Holdings or any of its Subsidiaries is a party
and  providing for the issuance or sale of any capital  stock  of
Holdings  or of any of its Subsidiaries, any such convertible  or
exchangeable securities or any such rights, warrants or  options.
Without limiting the foregoing, except as provided in this  Note,
the  Existing  Convertible  Note and  the  Pledge  Agreement,  no
preemptive  right, co-sale right, registration  right,  right  of
first  refusal or other similar right exists with respect to  the
issuance  and  sale  of the Shares.  There are  no  shareholders'
agreements,  voting agreements or other similar  agreements  with
respect to the Common Stock to which Holdings is a party.

     4.8   There  is no material legal or governmental proceeding
pending,  or to the knowledge of Holdings, threatened,  to  which
Holdings  or any of its Subsidiaries is a party or of  which  the
business  or  property of Holdings or any of its Subsidiaries  is
subject  that  is required to be disclosed and  that  is  not  so
disclosed  in the SEC Reports.  Neither Holdings nor any  of  its
Subsidiaries  is subject to any injunction, judgment,  decree  or
order  of  any court, regulatory body, administrative  agency  or
other government body.

     4.9   Neither  Holdings nor any of its  Subsidiaries  is  in
violation  of its Certificate of Incorporation, bylaws  or  other
organizational documents, as amended, or in violation of any law,
administrative  regulation, ordinance or order of  any  court  or
governmental agency, arbitration panel or authority applicable to
Holdings,  which violation, individually or in the aggregate,  is
reasonably likely to have a Material Adverse Effect, and  neither
Holdings nor its Subsidiaries is in default (and there exists  no
condition  which,  with the passage of time or  otherwise,  would
constitute  a default) in the performance of any bond, debenture,
note  or  any  other evidence of indebtedness or  any  indenture,
mortgage,  deed  of  trust  or any other  material  agreement  or
instrument  to  which Holdings or any of its  Subsidiaries  is  a
party   or  by  which  Holdings  or  its  Subsidiaries  or  their
respective  properties  are bound, which  default  is  reasonably
likely to have a Material Adverse Effect.

     4.10  Holdings and its Subsidiaries have good and marketable
title to all the properties and assets reflected as owned by them
in  the  consolidated financial statements included  in  the  SEC
Reports,  subject  to  no  lien,  mortgage,  pledge,  charge   or
encumbrance  of any kind except (i) those, if any,  reflected  in
such  consolidated financial statements or (ii) those  which  are
not  material in amount and do not have a Material Adverse Effect
on  the  use  made  and intended to be made of such  property  by
Holdings or its Subsidiaries.  Holdings or its Subsidiaries  hold
their  respective  leased  properties  under  valid  and  binding
leases, with such exceptions as are not materially significant in
relation to the business of Holdings and its Subsidiaries,  taken
as a whole. Except as disclosed in the SEC Reports, Holdings and


                               16

<Page>

its  Subsidiaries  own  or  lease  all  such  properties  as  are
necessary to its operations as now conducted.

     4.11 Each of Holdings and its Subsidiaries has all necessary
franchises, licenses, certificates and other authorizations  from
any  foreign,  federal, state or local government or governmental
agency,  department or body that are currently necessary for  the
operation  of  the business of Holdings and its  Subsidiaries  as
currently  conducted,  except  where  the  failure  to  currently
possess   such  franchises,  licenses,  certificates  and   other
authorizations  is  not  reasonably likely  to  have  a  Material
Adverse Effect.

     4.12  The  financial statements of Holdings and the  related
notes  contained in the SEC Reports present fairly and accurately
in all material respects the financial position of Holdings as of
the  dates  therein indicated, and the results of its operations,
cash  flows  and  the  changes in shareholders'  equity  for  the
periods  therein  specified, subject, in the  case  of  unaudited
financial  statements  for interim periods,  to  normal  year-end
audit  adjustments.   Such  financial statements  (including  the
related  notes)  have been prepared in accordance with  generally
accepted  accounting principles applied on a consistent basis  at
the  times  and throughout the periods therein specified,  except
that unaudited financial statements may not contain all footnotes
required by generally accepted accounting principles.

     4.13  Except as disclosed in the SEC Reports or in any press
release  issued by Holdings at least two (2) Business Days  prior
to  the date of this Note, since December 31, 2004, there has not
been  (i)  an event, circumstance or change that has  had  or  is
reasonably  likely to have a Material Adverse  Effect,  (ii)  any
obligation  incurred  by  Holdings or any  of  its  Subsidiaries,
direct  or  contingent, that is material to Holdings,  (iii)  any
dividend  or distribution of any kind declared, paid or  made  on
the  capital  stock  of  Holdings, or (iv)  any  loss  or  damage
(whether or not insured) to the physical property of Holdings  or
any of its Subsidiaries which has had a Material Adverse Effect.

     4.14  Holdings'  Common  Stock  is  registered  pursuant  to
Section  12(b)  of the Securities Act of 1933,  as  amended  (the
"Act"),  and  is listed on the American Stock Exchange  ("AMEX"),
and,  except as disclosed in the SEC Reports, Holdings has  taken
no  action  intended to, or which to its knowledge is  likely  to
have  the  effect of, terminating the registration of the  Common
Stock under the Securities Act or delisting the Common Stock from
the  Amex  Stock  Market.  The issuance of the  Shares  does  not
require  shareholder  approval,  including,  without  limitation,
pursuant  to  Section 713 of the Listing Standards, Policies  and
Requirements of AMEX.

     4.15 Holdings has timely made all filings required under the
Securities Act during the twelve (12) months preceding  the  date
of this Note, and all of those documents complied in all material
respects  with  the  SEC's requirements as  of  their  respective
filing  dates, and the information contained therein  as  of  the
respective dates thereof did not contain an untrue statement of a
material  fact  or omit to state a material fact required  to  be
stated  therein  or necessary to make the statements  therein  in
light  of  the  circumstances under  which  they  were  made  not
misleading.


                               17

<Page>

     4.16  Holdings  has not taken and will not take  any  action
designed  to  or that might reasonably be expected  to  cause  or
result  in  an unlawful manipulation of the price of  the  Common
Stock to facilitate the sale or resale of the Shares.  Other than
with  respect  to  the  information related to  the  transactions
contemplated  by  this  Note and the Existing  Convertible  Note,
Holdings has not disclosed any material non-public information to
the Holder.

     4.17  Vitale,  Caturano & Company P.C., who expressed  their
opinion with respect to the consolidated financial statements  in
Holdings' Annual Report on Form 10-K for the year ended  December
31,  2004,  have  advised Holdings that  they  are,  and  to  the
knowledge  of  Holdings  they  are,  independent  accountants  as
required  by  the  Securities Act and the rules  and  regulations
promulgated thereunder.

     4.18  Except for matters which are not reasonably likely  to
have  a  Material  Adverse Effect and those  contracts  that  are
substantially or fully performed or expired by their  terms,  the
contracts  listed as exhibits to or described in the SEC  Reports
that are material to Holdings and all amendments thereto, are  in
full  force  and effect on the date hereof, and neither  Holdings
nor, to Holdings' knowledge, any other party to such contracts is
in breach of or default under any of such contracts.

     4.19  Except  for  matters which are described  in  the  SEC
Reports  or are not reasonably likely to have a Material  Adverse
Effect,  each  of  Holdings and its Subsidiaries  has  filed  all
necessary  federal, state and foreign income  and  franchise  tax
returns  and has paid or accrued all taxes shown as due  thereon,
and  Holdings has no knowledge of a tax deficiency which has been
asserted or threatened against Holdings or the Subsidiaries  that
has not been resolved.

     4.20   Holdings  is  not  an  "investment  company"  or   an
"affiliated  person" of, or "promoter" or "principal underwriter"
for  an  investment company, within the meaning of the Investment
Company  Act  of  1940, as amended, and will  not  be  deemed  an
"investment company" as a result of the transactions contemplated
by this Note.

     4.21   Each  of  Holdings  and  its  Subsidiaries  maintains
insurance  of  the  types  and  in  the  amounts  that   Holdings
reasonably  believes  is adequate for its businesses,  including,
but not limited to, insurance covering real and personal property
owned  or  leased by Holdings or the Subsidiaries against  theft,
damage,  destruction,  acts  of vandalism  and  all  other  risks
customarily insured against by similarly situated companies,  all
of which insurance is in full force and effect.

     4.22 Neither Holdings nor any person acting on its behalf or
at  its direction has in the past or will in the future take  any
action  to  sell,  offer for sale or solicit offers  to  buy  any
securities of Holdings that would (i) bring the offer or sale  of
the Shares as contemplated by this Note within the provisions  of
Section  5 of the Securities Act or (ii) cause the offer or  sale
of  the Shares as contemplated by this Note to be integrated with
prior  offerings  by  Holdings for  purposes  of  any  applicable
stockholder  approval provisions, including, without  limitation,
the  rules and regulations of any exchange or automated quotation
system  on which any of the securities of Holdings are listed  or
designated.


                               18

<Page>

     4.23 Prior to the conversion pursuant to Section 2, Holdings
shall comply with the requirements of the American Stock Exchange
with  respect to the issuance of the Shares and, at such time  as
the  Shares  may  be  registered under the  Securities  Act,  the
listing thereof on the American Stock Exchange.

     4.24  No  transaction has occurred between or among Holdings
or  any  of  its  affiliates, officers or directors  or,  to  the
knowledge  of Holdings, any affiliate or affiliates of  any  such
officer  or  director  that with the  passage  of  time  will  be
required to be disclosed pursuant to Sections 13, 14 or 15(d)  of
the Securities Act.

     4.25  No  person or entity will be entitled to  receive  any
brokerage  commission, finder's fee, fee for  financial  advisory
services   or  similar  compensation  in  connection   with   the
transactions contemplated by this Note based on any contract made
by or on behalf of Holdings.

     4.26  The books, records and accounts of Holdings accurately
and  fairly  reflect, in reasonable detail, the transactions  in,
and  dispositions  of,  the assets of,  and  the  operations  of,
Holdings.   Holdings  maintains a system of  internal  accounting
controls  sufficient  to provide reasonable assurances  that  (i)
transactions are executed in accordance with management's general
or  specific  authorizations, (ii) transactions are  recorded  as
necessary  to  permit  preparation  of  financial  statements  in
accordance with generally accepted accounting principles  and  to
maintain   asset  accountability,  (iii)  access  to  assets   is
permitted  only  in  accordance  with  management's  general   or
specific  authorization and (iv) the recorded accountability  for
assets  is  compared  with  the  existing  assets  at  reasonable
intervals  and  appropriate action is taken with respect  to  any
differences.    Holdings   maintains  disclosure   controls   and
procedures  (as  such term is defined in Rule  13a-14  under  the
Securities Exchange Act of 1934, as amended (the "Exchange Act"))
that  are effective in ensuring that information required  to  be
disclosed  by  Holdings in the reports that it files  or  submits
under  the Securities Act is recorded, processed, summarized  and
reported,  within  the time periods specified in  the  rules  and
forms   of   the  Securities  and  Exchange  Commission  ("SEC"),
including,  without limitation, controls and procedures  designed
to  ensure that information required to be disclosed by  Holdings
in  the reports that it files or submits under the Securities Act
is   accumulated   and  communicated  to  Holdings'   management,
including  its  principal executive officer or officers  and  its
principal financial officer or officers, as appropriate to  allow
timely decisions regarding required disclosure.

     4.27 Subject to the accuracy of the Holder's representations
and  warranties  in Section 5 of this Note, the offer,  sale  and
issuance of the Shares in conformity with the terms of this  Note
constitute transactions exempt from the registration requirements
of  Section 5 of the Securities Act and from the registration  or
qualification requirements of the laws of any applicable state or
United States jurisdiction.

5.   Representations and Warranties of the Holder

     5.1  The  Holder acknowledges and understands that  (i)  the
issuance of the Common Stock has not been and will not be


                               19

<Page

registered  under  the Securities Act of 1933,  as  amended  (the
"Securities Act"); and (ii) the issuance of the Common  Stock  is
intended to be exempt from registration under the Securities  Act
by  virtue  of  certain exemptions thereunder, including  Section
4(2)  of  the  Securities Act and the provisions of Regulation  D
promulgated  thereunder, and, therefore,  the  Shares  cannot  be
resold  unless registered under the Securities Act or  unless  an
exemption from registration is available.

     5.2  The  Holder acknowledges that Holdings and its advisors
will  rely  on  the  representations  and  warranties  of  Holder
contained  in this Section 5 for purposes of determining  whether
the  issuance of the Shares is exempt from registration under the
Securities Act.

     5.3  The  Holder  understands that the Note and  the  Shares
will  be  characterized  as  "restricted  securities"  under  the
Securities  Act.  In this connection, the Holder represents  that
it  is  familiar  with Rule 144 promulgated under the  Securities
Act.

     5.4  The  Holder is acquiring the Note and will be acquiring
the Shares solely for its own account for investment purposes and
not with a view toward any distribution.

     5.5  The Holder has had an opportunity to review all  forms,
proxy  statements,  registration statements, reports,  schedules,
and  other documents filed or furnished by Holdings since  insert
date with the Securities and Exchange Commission.

     5.6  The  Holder (i) has the financial ability to  bear  the
economic risk of the investment in the Note and the Shares,  (ii)
has  adequate  means  for providing for  its  current  needs  and
contingencies,  (iii) has no need for liquidity with  respect  to
the investment in the Shares, and (iv) can afford a complete loss
of  the  investment  in  the Shares  at  this  time  and  in  the
foreseeable future.

     5.7  The  Holder  is capable of evaluating  the  merits  and
risks  of an investment in the Note and the Shares and of  making
an informed investment decision with respect thereto.

     5.8  The Holder is an "accredited investor" as that term  is
defined  in  Rule  501(a) of Regulation D promulgated  under  the
Securities  Act.  Without in any way limiting the representations
set  forth  above,  the Holder further agrees  not  to  make  any
disposition of all or any portion of the Shares unless and  until
there  is  then  in  effect a registration  statement  under  the
Securities  Act  covering  such  proposed  disposition  and  such
disposition   is  made  in  accordance  with  such   registration
statement.

     5.9  The  Holder  acknowledges and agrees  that  any  Shares
shall bear substantially the following legend:

     THE  SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT  BEEN
     REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
     "SECURITIES ACT") AND ANY APPLICABLE STATE SECURITIES  LAWS,
     AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, OR HYPOTHECATED


                               20

<Page>

     UNLESS  (1)  THERE  IS AN EFFECTIVE REGISTRATION  UNDER  THE
     SECURITIES  ACT  AND  ANY APPLICABLE STATE  SECURITIES  LAWS
     COVERING SUCH SECURITIES OR (2) HOLDINGS RECEIVES AN OPINION
     OF  COUNSEL,  REASONABLY SATISFACTORY TO  HOLDINGS,  STATING
     THAT  SUCH  SALE,  TRANSFER, ASSIGNMENT OR HYPOTHECATION  IS
     EXEMPT  FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
     ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

6.   Affirmative Covenants

     6.1   Each  Borrower shall, and shall cause its Subsidiaries
to,  preserve  and  maintain  its respective  existence,  rights,
franchises,  licenses and privileges in the jurisdiction  of  its
incorporation  or formation and qualify and remain qualified  and
authorized  to  do  business in each jurisdiction  in  which  the
character  of  its  properties or  the  nature  of  its  business
requires  such  qualification  and authorization  and  where  the
failure  to  be  so authorized and qualified could reasonably  be
expected to have a Material Adverse Effect.

     6.2   Each  Borrower shall, and shall cause its Subsidiaries
to,  comply with (a) all Applicable Laws, including the obtaining
of  all  Governmental Approvals, the failure with which to comply
could  reasonably be expected to have a Material Adverse  Effect,
and  (b)  all  terms and conditions of all Material Contracts  to
which such Borrower is a party.

     6.3   Each  Borrower shall, and shall cause its Subsidiaries
to,  (a)  protect  and  preserve all of its  respective  material
properties,  including,  but  not limited  to,  all  intellectual
property,  and  maintain  in  good  repair,  working  order   and
condition  all  tangible  properties,  ordinary  wear  and   tear
excepted,  and  (b)   make or cause to be  made  all  needed  and
appropriate repairs, renewals, replacements and additions to such
properties,  so  that  the  business  carried  on  in  connection
therewith  may  be properly and advantageously conducted  at  all
times.

     Each  Borrower  shall, and shall cause its Subsidiaries  to,
maintain insurance (on a replacement cost basis) with financially
sound and reputable insurance companies against such risks and in
such  amounts as is customarily maintained by Persons engaged  in
similar  businesses or as may be required by Applicable Law,  and
from  time  to  time  deliver to the Holder upon  its  request  a
detailed  list,  together with copies  of  all  policies  of  the
insurance  then  in effect, stating the names  of  the  insurance
companies, the amounts and rates of the insurance, the  dates  of
the  expiration  thereof  and the properties  and  risks  covered
thereby.

     6.4   Each  Borrower shall, and shall cause its Subsidiaries
to,  pay  and  discharge when due (a) all taxes, assessments  and
governmental charges or levies imposed upon such Borrower or upon
its income or profits or upon any properties belonging to it, and
(b)  all  lawful  claims  of  materialmen,  mechanics,  carriers,
warehousemen  and  landlords for labor, materials,  supplies  and
rentals  which, if unpaid, might become a Lien on any  properties
of  such  Person; provided, however, that this Section shall  not
require the payment or discharge of any such tax, assessment,


                               21

<Page>

charge,  levy or claim which is being contested in good faith  by
appropriate  proceedings which operate to suspend the  collection
thereof and for which adequate reserves have been established  on
the books of such Borrower or such Subsidiary, as applicable,  in
accordance with GAAP.

     6.5   Each  Borrower shall, and shall cause its Subsidiaries
to, permit representatives or agents of the Holder, from time  to
time  after reasonable prior notice if no Event of Default  shall
be  in  existence, as often as may be reasonably  requested,  but
only  during normal business hours and at the expense  of  Holder
(unless a Default or Event of Default shall exist, in which  case
the exercise by Holder of its rights under this Section shall  be
at  the  expense  of  the Borrowers), as the  case  may  be,  to:
(a)  visit  and inspect all properties of such Borrower  or  such
Subsidiary  to the extent any such right to visit or  inspect  is
within  the control of such Person; (b) inspect and make extracts
from  their  respective  books and  records,  including  but  not
limited   to   management   letters   prepared   by   independent
accountants; and (c) discuss with its officers and employees, and
its  independent accountants, its business, properties, condition
(financial  or otherwise), results of operations and performance.
If  requested  by  the  Holder, each Borrower  shall  execute  an
authorization  letter  addressed to its  accountants  authorizing
Holder to discuss the financial affairs of such Borrower and  any
of its Subsidiaries with its accountants.

     6.6   Each  Borrower shall, and shall cause its Subsidiaries
to, comply with all environmental laws the failure with which  to
comply  could  reasonably be expected to have a Material  Adverse
Effect.   If  any  Borrower  or any  of  its  Subsidiaries  shall
(a)  receive  notice that any violation of any environmental  law
may  have  been  committed or is about to be  committed  by  such
Person,  (b)  receive notice that any administrative or  judicial
complaint or order has been filed or is about to be filed against
such  Borrower or any of its Subsidiaries alleging violations  of
any  environmental law or requiring such Borrower or any  of  its
Subsidiaries to take any action in connection with the release of
hazardous materials or (c) receive any notice from a Governmental
Authority or private party alleging that such Borrower or any  of
its   Subsidiaries  may  be  liable  or  responsible  for   costs
associated  with  a  response  to or  cleanup  of  a  release  of
hazardous  materials  or  any damages  caused  thereby,  and  the
matters  referred  to  in such notices, individually  or  in  the
aggregate,  could  reasonably  be expected  to  have  a  Material
Adverse  Effect,  such Borrower or any of its Subsidiaries  shall
provide  the Holder with a copy of such notice promptly,  and  in
any  event within 10 Business Days, after the receipt thereof  by
such  Borrower or any of its Subsidiaries.  Each Borrower  shall,
and  shall  cause its Subsidiaries to, take promptly all  actions
necessary to prevent the imposition of any Liens on any of  their
respective   properties  arising  out  of  or  related   to   any
environmental laws.

     6.7   Each  Borrower shall, and shall cause its Subsidiaries
to,  maintain  books  and records pertaining  to  its  respective
business  operations  in  such  detail,  form  and  scope  as  is
consistent  with  good business practice and in  accordance  with
GAAP.

     6.8   Each Borrower shall, at its sole cost and expense  and
upon  request of the Holder, execute and deliver or cause  to  be
executed  and  delivered, to the Holder such further instruments,
documents  and  certificates, and do and cause to  be  done  such
further acts that may be reasonably necessary or advisable in the
reasonable  opinion of the Holder to carry out  more  effectively
the  provisions  and  purposes of this Note and  the  other  Loan
Documents  or  to perfect more fully or to renew  the  rights  of
Holder with respect to the Collateral (or with respect to any


                               22

<Page>

additions  thereto or replacements or proceeds  thereof  or  with
respect to any other property or assets hereafter acquired by any
Borrower  or  any of its Subsidiaries which may be deemed  to  be
part of the Collateral) pursuant to any of the Loan Documents.

     6.9    Within  15  days  of  any  Borrower  or  any  of  its
Subsidiaries  acquiring any Equity Interest  in  the  Partnership
after  the  Effective  Date,  such Borrower  shall  cause  to  be
delivered  to  the  Holder  each of the  following  in  form  and
substance  satisfactory  to Holder: a supplement  to  the  Pledge
Agreement   subjecting  the  Equity  Interests  issued   by   the
Partnership  to the Lien of the Pledge Agreement and executed  by
such  Borrower and each of its Subsidiaries that owns any  Equity
Interests  in the Partnership, together with such other documents
and opinions as requested by the Holder.

     6.10  Holdings  shall  comply with the requirements  of  the
American  Stock  Exchange with respect to the  issuance  of  this
Note,  the Existing Convertible Note, the shares of common  stock
issuable upon conversion of the Existing Convertible Note and the
Shares  and,  at such time as the Shares may be registered  under
the  Securities  Act, the listing thereof on the  American  Stock
Exchange.

7.   Information

     7.1   As  soon as available and in any event within 45  days
after  the  end of each fiscal quarter of Holdings, the unaudited
consolidated balance sheet of Holdings and its Subsidiaries as at
the  end  of  such period and the related unaudited  consolidated
statements  of  income, shareholders' equity and  cash  flows  of
Holdings  and its Subsidiaries for such period, setting forth  in
each  case in comparative form the figures as of the end  of  and
for  the  corresponding periods of the previous fiscal  year  (if
any),  all  of  which shall be certified by the  chief  executive
officer  or  chief financial officer of Holdings, in his  or  her
opinion,  to present fairly, in accordance with GAAP and  in  all
material   respects,  the  consolidated  financial  position   of
Holdings  and  its Subsidiaries as at the date  thereof  and  the
results of operations for such period (subject to normal year-end
audit adjustments).

     7.2  Promptly upon receipt thereof, copies of all management
reports, if any, submitted to Holdings or its shareholders by its
independent public accountants.

     7.3   Promptly  upon the mailing thereof to the shareholders
of  Holdings  generally,  copies  of  all  financial  statements,
reports  and  proxy  statements so mailed and promptly  upon  the
issuance  thereof copies of all press releases issued by Holdings
or any of its Subsidiaries.

     7.4  To the extent any Borrower is aware of the same, prompt
notice of the commencement of any proceeding or investigation  by
or before any Governmental Authority and any action or proceeding
in  any  court or other tribunal or before any arbitrator against
or   in  any  other  way  relating  adversely  to,  or  adversely
affecting,  such Borrower or any of its Subsidiaries  or  any  of
their  respective  properties, assets or businesses  which  could
reasonably  be  expected to have a Material Adverse  Effect,  and
prompt  notice  of the receipt of notice that any  United  States
income tax returns of any Borrower or any of its Subsidiaries are
being audited.


                               23


<Page>

     7.5   A  copy  of  any  amendment  to  the  certificate   of
incorporation,  bylaws,  operating  agreement  or  other  similar
organizational  documents  of  any  Borrower  or   any   of   its
Subsidiaries promptly upon the Holder's request therefore.

     7.6  Prompt notice of any change in the senior management of
Holdings  and  any  change in the business, assets,  liabilities,
financial  condition, results of operations or business prospects
of any Borrower or any of its Subsidiaries which has had or could
reasonably be expected to have a Material Adverse Effect.

     7.7   Notice  of  the  occurrence of any  of  the  following
promptly   upon  a  responsible  officer  of  Holdings  obtaining
knowledge  thereof:  (i)  any Default  or  Event  of  Default  or
(ii) any default under the Pledge Agreement.

     7.8   Prompt  notice  of any order, judgment  or  decree  in
excess  of  $100,000 having been entered against any Borrower  or
any of its Subsidiaries or any of their respective properties  or
assets.

     7.9    Prompt  notice  if  any  Borrower  or  any   of   its
Subsidiaries shall receive any notification from any Governmental
Authority  alleging  a  violation of any Applicable  Law  or  any
inquiry  which, in either case, could reasonably be  expected  to
have a Material Adverse Effect.

     7.10  From time to time and promptly upon each request, such
data,  certificates,  reports, statements, opinions  of  counsel,
documents or further information regarding the business,  assets,
liabilities,  financial  condition,  results  of  operations   or
business prospects of any Borrower or any of its Subsidiaries  as
the Holder may reasonably request.

8.   Negative Covenants

     For  so  long as this Note is in effect, unless  the  Holder
shall  otherwise consent in writing, each Borrower  shall  comply
with the following covenants:

     8.1   No Borrower shall use the proceeds of the Note for any
purpose  other  than  for the funding of  projects  described  on
Exhibit  A  hereto  and for other purposes that  the  Holder  may
consent  to  in writing in its sole discretion.  No part  of  the
proceeds of this Note will be used (i) for the purpose of  buying
or  carrying "margin stock" within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System or to extend
credit  to  others for the purpose of purchasing or carrying  any
such  margin stock or (ii) to finance any operations, investments
or  activities in, or make any payments to, any country,  agency,
organization, or Person described in clause (ii) of Section 4.6.

     8.2   No  Borrower  shall, nor shall it permit  any  of  its
Subsidiaries  to, declare or make any Restricted  Payment  except
for:

          (a)   Restricted  Payments made  by  a  Borrower  to  a
     Borrower; and


                               24

<Page>

          (b)   Restricted  Payments from the  Partnership  to  a
     Borrower.

     8.3   No  Borrower shall, nor shall it permit any Subsidiary
to,  create,  incur,  assume, or permit or suffer  to  exist  any
Indebtedness, except the following:

          (a)  Indebtedness under the Loan Documents;

          (b)  Indebtedness evidenced by the Existing Convertible
     Note;

          (c)   Indebtedness existing on the Effective  Date  and
     described on Schedule 8.3(b); and

          (d)  Indebtedness incurred after the Effective Date  in
     an aggregate amount not to exceed $500,000.


     8.4   (a)  Other than Liens created or incurred pursuant  to
the Pledge Agreement,  no Borrower shall, nor shall it permit any
Subsidiary  to,  create, assume, or incur any  Lien  (other  than
Permitted  Liens) upon any of its properties, assets,  income  or
profits of any character whether now owned or hereafter acquired.

          (b)   No  Borrower  shall,  nor  shall  it  permit  any
     Subsidiary to, enter into, assume or otherwise be  bound  by
     any  Negative Pledge except for a Negative Pledge  contained
     in  any agreement (i)(x) evidencing Indebtedness which  such
     Borrower  or such Subsidiary may create, incur,  assume,  or
     permit  or  suffer  to exist under Section  8.3;  (y)  which
     Indebtedness is secured by a Lien permitted to  exist  under
     this Note; and (z) which prohibits the creation of any other
     Lien  on only the property securing such Indebtedness as  of
     the  date such agreement was entered into; (ii) relating  to
     the  sale  of  a  Subsidiary or assets  pending  such  sale,
     provided  that in any such case the Negative Pledge  applies
     only to the Subsidiary or the assets that are the subject of
     such  sale;  or  (iii) relating to the Existing  Convertible
     Note.

          (c)   Other  than  under  or  in  connection  with  the
     Existing  Convertible Note, no Borrower shall, nor shall  it
     permit  any  Subsidiary  to, create or  otherwise  cause  or
     suffer   to   exist  or  become  effective  any   consensual
     encumbrance  or  restriction of any kind on the  ability  of
     such  Borrower or such Subsidiary to: (i) pay  dividends  or
     make  any other distribution on any of such Borrower or such
     Subsidiary's  capital stock or other equity interests  owned
     by  such  Borrower or any of its Subsidiaries; (ii) pay  any
     Indebtedness   owed  to  such  Borrower  or   any   of   its
     Subsidiaries; (iii) make loans or advances to  the  Borrower
     or  any Subsidiary; or (iv) transfer any of its property  or
     assets to the Borrower or any Subsidiary.

     8.5   No  Borrower shall, nor shall it permit any Subsidiary
to:  (a)  enter  into any transaction of merger or consolidation;
(b)  liquidate,  wind  up  or  dissolve  itself  (or  suffer  any
liquidation or dissolution); or (c) convey, sell, lease,


                               25

<Page>

sublease, transfer or otherwise dispose of, in one transaction or
a  series  of  transactions,  all or  substantially  all  of  its
business  or  assets,  whether now owned or  hereafter  acquired;
provided,  however, that: (i) any Subsidiary may merge  with  and
into a Borrower so long as (x) a Borrower is the survivor of such
merger  (and  in the case of a merger with Holdings, Holdings  is
the  survivor of such merger) and (y) immediately prior  to  such
merger,  and  immediately  thereafter  and  after  giving  effect
thereto,  no  Default  or Event of Default  is  or  would  be  in
existence; and (ii) the Borrower and its Subsidiaries  may  lease
and  sublease their respective assets, as lessor or sublessor (as
the case may be), in the ordinary course of their business.

     8.6   No Borrower shall change its fiscal year from that  in
effect as of the Effective Date.

     8.7   No  Borrower  shall, nor shall it permit  any  of  its
Subsidiaries  to, permit to exist or enter into, any  transaction
(including the purchase, sale, lease or exchange of any  property
or  the  rendering  of  any service) with any  Affiliate,  except
transactions  in  the  ordinary course of  and  pursuant  to  the
reasonable requirements of the business of the Borrowers  or  any
of  their  Subsidiaries and upon fair and reasonable terms  which
are  no  less favorable to the Borrowers or such Subsidiary  than
would be obtained in a comparable arm's length transaction with a
Person that is not an Affiliate.

     8.8   No  Borrower shall, nor shall it permit any Subsidiary
to, permit any of its respective assets to become or be deemed to
be  "plan  assets"  within the meaning  of  ERISA,  the  Internal
Revenue   Code   and   the  respective  regulations   promulgated
thereunder.

9.   Events of Default

     Each of the following conditions or events, shall constitute
an event of default ("Event of Default"):

     (a)   if  Borrowers  shall default in  the  payment  of  any
principal or interest on this Note when the same becomes due  and
payable, whether at maturity or on demand or otherwise; or

     (b)   if any representation or warranty made by or on behalf
of  Borrowers herein or in any instrument furnished in compliance
with  or in reference hereto or otherwise in connection with  the
transactions contemplated hereby shall prove to have  been  false
or  incorrect  in any material respect on the date  as  of  which
made; or

     (c)   any  Borrower or any Pledgor shall fail to perform  or
observe  any term, covenant, condition or agreement contained  in
this Note or the Pledge Agreement; or

     (d)   (i) a court or governmental agency having jurisdiction
in  the  premises  shall enter a decree or order  for  relief  in
respect  of  any  Borrower  in  an  involuntary  case  under  any
applicable  bankruptcy, insolvency or other similar  law  now  or
hereafter in effect, or appoint a receiver, liquidator, assignee,
custodian,  trustee,  sequestrator or  similar  official  of  any
Borrower


                               26

<Page>

or  for  any  substantial part of its property  or  ordering  the
winding  up  or  liquidation of its affairs, (ii) an  involuntary
case under any applicable bankruptcy, insolvency or other similar
law  now or hereafter in effect is commenced against any Borrower
and such petition remains unstayed and in effect for a period  of
60  consecutive  days,  (iii)  any  Borrower  shall  commence   a
voluntary  case  under any applicable bankruptcy,  insolvency  or
other  similar law now or hereafter in effect, or consent to  the
entry  of  an order for relief in an involuntary case  under  any
such law, or consent to the appointment or taking possession by a
receiver,  liquidator, assignee, custodian, trustee, sequestrator
or  similar official of any Borrower or any substantial  part  of
its  property or make any general assignment for the  benefit  of
creditors  or  (iv)  any  Borrower shall  admit  in  writing  its
inability  to pay its debts generally as they become due  or  any
action  shall be taken by any Borrower in furtherance of  any  of
the aforesaid purposes; or

     (e)  a default or event of default shall have occurred under
any document, instrument, contract or agreement (i) evidencing or
securing   indebtedness  of  any  Borrower  with  an  outstanding
principal  balance of at least $1,000,000, (ii) material  to  the
financial  condition  of  any  Borrower,  or  (iii)  between  any
Borrower and Holder; or

      (f)   any Borrower or any Pledgor shall disavow, revoke  or
terminate (or attempt to terminate) any Loan Document to which it
is a party or shall otherwise challenge or contest in any action,
suit  or  proceeding  in  any court or  before  any  Governmental
Authority the validity or enforceability of this Note, the Pledge
Agreement  or  any other Loan Document or this Note,  the  Pledge
Agreement  or any other Loan Document shall cease to be  in  full
force  and  effect  (except  as a result  of  the  express  terms
thereof); or

      (g)  a final judgment or order for the payment of money  or
for an injunction shall be entered against any Borrower or any of
their respective Subsidiaries, by any court or other tribunal and
(i) such judgment or order shall continue for a period of 30 days
without  being  paid,  stayed  or dismissed  through  appropriate
appellate  proceedings and (ii) either (A)  the  amount  of  such
judgment  or  order for which insurance has not been acknowledged
in  writing by the applicable insurance carrier (or the amount as
to  which the insurer has denied liability) exceeds, individually
or  together with all other such outstanding judgments or  orders
entered against any Borrower or any of its Subsidiaries, $500,000
or  (B)  in  the  case  of  an injunction or  other  non-monetary
judgment,  such judgment could reasonably be expected to  have  a
Material Adverse Effect; or

      (h)   a  warrant, writ of attachment, execution or  similar
process  shall  be issued against any material  property  of  any
Borrower  or  any  Subsidiary  which  exceeds,  individually   or
together  with  all  other such warrants, writs,  executions  and
processes,  $500,000 in amount and such warrant, writ,  execution
or process shall not be discharged, vacated, stayed or bonded for
a  period of 30 days; provided, however, that if a bond has  been
issued  in  favor of the claimant or other Person obtaining  such
warrant,  writ,  execution or process, the issuer  of  such  bond
shall  execute a waiver or subordination agreement  in  form  and
substance satisfactory to the Holder pursuant to which the issuer
of   such   bond   subordinates  its  right   of   reimbursement,
contribution  or  subrogation to the Obligations  and  waives  or
subordinates any Lien it may have on the assets of any  Borrower;
or


                               27

<Page>

      (i)   the  Holder shall cease to have a valid and perfected
first priority Lien in any material portion of the Collateral, in
each case, for any reason other than the failure of the Holder to
take any action within its control.


10.  Remedies Upon Default

     10.1 Upon the occurrence of any Event of Default, the Holder
of  this  Note may proceed to protect and enforce its  rights  by
suit in equity, action at law and/or other appropriate proceeding
either  for  specific performance of any covenant,  provision  or
condition contained in this Note or in aid of the exercise of any
power granted in this Note, and (unless there shall have occurred
an  Event of Default under Section 9(d), in which case the unpaid
balance  of this Note shall automatically become due and payable)
may  at  its option by notice to any Borrower declare all or  any
part of the unpaid principal amount of this Note then outstanding
to  be  forthwith  due  and payable, and  thereupon  such  unpaid
principal amount or part thereof, together with interest  accrued
thereon  and  all  other sums, if any, payable under  this  Note,
shall   become   so   due   and  payable  without   presentation,
presentment, protest or further demand or notice of any kind, all
of  which are hereby expressly waived, and such holder or holders
may proceed to enforce payment of such amount or part thereof  in
such manner as it or they may elect.

     10.2  An  Event  of Default shall not be  deemed  to  be  in
existence or to have occurred for any purpose of this Note  until
the  expiration of any grace period under this Note or if  Holder
of this Note shall have waived such event in writing or stated in
writing   that  the  same  has  been  cured  to  its   reasonable
satisfaction.  No  waiver  or  statement  of  satisfactory   cure
pursuant  to  this  Section 10.2 shall extend to  or  affect  any
subsequent  or other Event of Default not specifically identified
in such waiver or statement of satisfactory cure pursuant to this
Section  10.2 shall extend to or affect any subsequent  or  other
Event  of  Default not specifically identified in such waiver  or
statement of satisfactory cure or impair any of rights of  Holder
of any Note or Shares upon the occurrence thereof.

     10.3  Each  Borrower  hereby waives  (a)  all  presentments,
demands for performance, notice of nonperformance (except to  the
extent  specifically required by the provisions hereof), (b)  any
requirement of diligence or promptness on the part of any  Holder
in  the enforcement of its rights under this Note, (c) except  to
the extent required by other provisions of this Note, any and all
notices of every kind and description which may be required to be
given  by any statute or rule of law, and (d) any defense of  any
kind   which  it  may now or hereafter have with respect  to  its
liability under this Note.

     10.4 The Holder may exercise any and all of its rights under
any and all of the other Loan Documents.

     10.5  The  Holder may exercise all other rights and remedies
it may have under any Applicable Law.


                               28

<Page>

     10.6  To the extent permitted by Applicable Law, the  Holder
shall be entitled to the appointment of a receiver for the assets
and  properties of the Borrowers and their Subsidiaries,  without
notice  of any kind whatsoever and without regard to the adequacy
of  any security for the Obligations or the solvency of any party
bound  for its payment, to take possession of all or any  portion
of   the   business  operations  of  the  Borrowers   and   their
Subsidiaries and to exercise such power as the court shall confer
upon such receiver.

11.  Conditions Precedent.

      The  obligation  of  the Holder to make  the  loan  to  the
Borrowers is subject to the following conditions precedent:

          (a)   The  Holder  shall  have  received  each  of  the
     following, in form and substance satisfactory to the Holder:

               (i)  Counterparts of this Note executed by all  of
          the parties hereto;

               (ii) The Pledge Agreement executed by each Pledgor
          existing as of the Effective Date;

               (iii)     All certificates representing any shares
          of  Equity  Interests pledged pursuant  to  the  Pledge
          Agreement,  together with an undated  stock  power  for
          each  such  certificate executed in  blank  by  a  duly
          authorized  officer  of the Pledgor  thereof,  together
          with  an  Acknowledgment and Consent, substantially  in
          the  form  of Schedule 2 to the Pledge Agreement,  duly
          executed  by any issuer of any Equity Interest  pledged
          pursuant  to the Pledge Agreement that is not itself  a
          party to the Pledge Agreement;

               (iv)  An  opinion of counsel to the Borrowers  and
          the  Pledgors,  addressed  to  the  Holder,  reasonably
          satisfactory to the Holder and its counsel; and

               (v)    Such   other   documents,  agreements   and
          instruments as the Holder may reasonably request; and

          (b)  In the good faith judgment of the Holder:

               (i)  There shall not have occurred or become known
          to   the  Holder  a  material  adverse  change  in  the
          business,    condition   (financial   or    otherwise),
          operations,  performance, and properties,  taken  as  a
          whole, of the Borrowers and their subsidiaries taken as
          a whole since December 31, 2004;

               (ii) No litigation, action, suit, investigation or
          other  arbitral, administrative or judicial  proceeding
          shall  be  pending or threatened which could reasonably
          be  expected to (1) result in a Material Adverse Effect
          or (2) restrain or enjoin, impose materially burdensome


                               29

<Page>

          conditions  on, or otherwise materially  and  adversely
          affect  the ability of any Borrowers or any Pledgor  to
          fulfill  its  obligations under the Loan  Documents  to
          which it is a party; and

               (iii)       The  Borrowers  and  their  respective
          Subsidiaries   shall  have  received   all   approvals,
          consents and waivers, and shall have made or given  all
          necessary  filings and notices as shall be required  to
          consummate the transactions contemplated hereby without
          the  occurrence of any default under, conflict with  or
          violation  of  (1)  any  Applicable  Law  or  (2)   any
          agreement, document or instrument to which any Borrower
          or  any  Pledgor is a party or by which any of them  or
          their  respective properties is bound, except for  such
          approvals,  consents, waivers, filings and notices  the
          receipt, making or giving of which would not reasonably
          be  likely  to (A) have a Material Adverse  Effect,  or
          (B)  restrain  or enjoin, impose materially  burdensome
          conditions  on, or otherwise materially  and  adversely
          affect  the  ability of any Borrower or any Pledgor  to
          fulfill  its  obligations under the Loan  Documents  to
          which it is a party.

12.  Transfer and Substitution of this Note

     12.1 Upon receipt of evidence reasonably satisfactory to the
Borrowers  of the loss, theft, destruction or mutilation  of  any
Note  and,  in  the case of any such loss, theft or  destruction,
upon  delivery of an indemnity bond in such reasonable amount  as
the Borrowers may determine (or, in the case of any Note held  by
Holder  or any institutional investor, of any indemnity agreement
from  Holder or such other holder reasonably satisfactory to  the
Borrowers),  or  in  the case of any such  mutilation,  upon  the
surrender of such Note for cancellation to the Borrowers  at  its
principal office, the Borrowers at their expense will execute and
deliver,  in  lieu thereof, a new Note of the same class  and  of
like  tenor,  dated so that there will be no loss of interest  on
such  Note. Any Note in lieu of which any such new Note has  been
executed and delivered by the Borrowers shall not be deemed to be
an outstanding Note for any purpose hereof.

     12.2 Upon any assignment in whole of this Note by Holder  in
accordance  with  Section  16.10  hereof,  upon  notice  to   the
Borrowers by Holder of such assignment and surrender of this Note
to  the Borrowers, the Borrowers shall at their expense cause  to
be  executed  and  delivered a new  Note  in  the  name  of  such
assignee,  substantially in the form hereof, dated so that  there
will  be  no loss of interest on such Note. Any Note in  lieu  of
which  any such new Note has been executed and delivered by  each
Borrower  shall not be deemed to be an outstanding Note  for  any
purpose hereof.

     12.3  Upon any partial assignment of this Note by Holder  in
accordance  with  Section  16.10  hereof,  upon  notice  to   the
Borrowers by Holder of such assignment and the amount thereof and
surrender of this Note to the Borrowers, the Borrowers  shall  at
their  expense cause to be executed and delivered a new  Note  in
the  name  of  such assignee in a principal amount equal  to  the
principal amount so assigned and a new Note in favor of Holder in
a principal amount equal to the principal amount retained by such
Holder,  in  each case, otherwise in substantially  in  the  form
hereof  and  dated so that there will be no loss of  interest  on
such Note. Any Note in lieu of which any such new Note has been


                               30

<Page>

executed and delivered by each Borrower shall not be deemed to be
an outstanding Note for any purpose hereof.

13.  Joint and Several Liability.

      (a)   The obligations of the Borrowers hereunder and  under
the  other Loan Documents to which any Borrower is a party  shall
be  joint  and  several, and accordingly, each Borrower  confirms
that  it  is  liable  for the full amount of  the  "Obligations,"
regardless  of  whether incurred by such Borrower  or  any  other
Borrower, and all of the other obligations and liabilities of the
other Borrowers hereunder and under the other Loan Documents.

      (b)   Each of the Borrowers represents and warrants to  the
Holder  that  the Borrowers, though separate legal entities,  are
mutually  dependent  on  each  other  in  the  conduct  of  their
respective  businesses  as  an  integrated  operation  and   have
determined  it  to  be in their mutual best interests  to  obtain
financing from the Holder through their collective efforts.

      (c)   The Holder shall not be obligated or required  before
enforcing  any Loan Document against a Borrower: (a)   to  pursue
any  right  or  remedy  any of them may have  against  any  other
Borrower, any Pledgor or any other Person or commence any suit or
other  proceeding against any other Borrower, any Pledgor or  any
other  Person  in any court or other tribunal; (b)  to  make  any
claim  in a liquidation or bankruptcy of any other Borrower,  any
Pledgor  or any other Person; or (c) to make demand of any  other
Borrower, any Pledgor or any other Person or to enforce  or  seek
to  enforce or realize upon any collateral security held  by  the
Holder which may secure any of the Obligations.

      (d)   The  Holder may, at any time and from time  to  time,
without  the  consent of, or notice to, a Borrower,  and  without
discharging  such Borrower from its obligations  hereunder,  take
any  of  the  following  actions: (i)  amend,  modify,  alter  or
supplement  the  terms  of any of the Obligations  of  any  other
Borrower,  including, but not limited to, extending or shortening
the  time  of  payment of any such Obligations  or  changing  the
interest  rate  that  may  accrue on  any  of  such  Obligations;
(ii)  following an Event of Default, sell, exchange,  release  or
otherwise deal with all, or any part, of any collateral  securing
any  of  the  Obligations  and in which any  other  Borrower  has
rights;  (iii)  release any other Borrower, any  Pledgor  or  any
other  Person liable in any manner for the payment or  collection
of  the  Obligations; (iv) exercise, or refrain from  exercising,
any  rights against any other Borrower, any Pledgor or any  other
Person;  and  (v)  apply any sum, by whomsoever paid  or  however
realized,  to  the Obligations in such order as the Holder  shall
elect.

      (e)   It is the intent of each Borrower and the Holder that
in  any  proceeding  of the types described in  Section  9(d),  a
Borrower's  maximum  obligation hereunder shall  equal,  but  not
exceed,  the maximum amount which would not otherwise  cause  the
obligations  of such Borrower hereunder (or any other obligations
of  such Borrower to the Holder) to be avoidable or unenforceable
against  such  Borrower  in  such  proceeding  as  a  result   of
Applicable Law, including without limitation, (i) Section 548  of
the  Bankruptcy  Code and (ii) any state fraudulent  transfer  or
fraudulent  conveyance act or statute applied in such proceeding,
whether  by  virtue  of  Section 544 of the  Bankruptcy  Code  or
otherwise.  The Applicable Laws under which the possible


                               31

<Page>

avoidance or unenforceability of the obligations of such Borrower
hereunder  (or  any  other obligations of such  Borrower  to  the
Holder)  shall be determined in any such proceeding are  referred
to  as  the  "Avoidance Provisions".  Accordingly, to the  extent
that the obligations of any Borrower hereunder would otherwise be
subject  to avoidance under the Avoidance Provisions, the maximum
Obligations  for  which such Borrower shall be  liable  hereunder
shall be reduced to that amount which, as of the time any of  the
Obligations are deemed to have been incurred under the  Avoidance
Provisions,  would  not cause the obligations  of  such  Borrower
hereunder  (or  any  other obligations of such  Borrower  to  the
Holder),   to  be  subject  to  avoidance  under  the   Avoidance
Provisions.   This subsection is intended solely to preserve  the
rights  of the Holder hereunder to the maximum extent that  would
not cause the obligations of any Borrower hereunder to be subject
to  avoidance under the Avoidance Provisions, and no Borrower  or
any other Person shall have any right or claim under this Section
as  against  the Holder that would not otherwise be available  to
such Person under the Avoidance Provisions.

     (f)   Each Borrower assumes all responsibility for being and
keeping  itself informed of the financial condition of the  other
Borrowers  and  the  Pledgors, and  of  all  other  circumstances
bearing upon the risk of nonpayment of any of the Obligations and
the  nature,  scope  and extent of the risks that  such  Borrower
assumes  and  incurs hereunder, and agrees that the Holder  shall
not   have  any  duty  whatsoever  to  advise  any  Borrower   of
information regarding such circumstances or risks.

14.  Indemnification

     (a)   Each  Borrower shall and hereby agrees  to  indemnify,
defend and hold harmless the Holder, any affiliate of the Holder,
and  its directors, officers, shareholders, agents, employees and
counsel (each referred to herein as an "Indemnified Party")  from
and  against  any  and  all of the following  (collectively,  the
"Indemnified   Costs"):    losses,   costs,   claims,    damages,
liabilities,  deficiencies, judgments or reasonable  expenses  of
every  kind  and  nature (including, without limitation,  amounts
paid  in  settlement,  court costs and the  reasonable  fees  and
disbursements  of  counsel  incurred  in  connection   with   any
litigation,  investigation, claim or  proceeding  or  any  advice
rendered  in  connection therewith) incurred  by  an  Indemnified
Party  in connection with, arising out of, or by reason  of,  any
suit,  cause  of  action,  claim, arbitration,  investigation  or
settlement,  consent  decree or other proceeding  (the  foregoing
referred to herein as an "Indemnity Proceeding") which is in  any
way related directly or indirectly to: (i) this Note or any other
Loan Document or the transactions contemplated thereby; (ii)  the
making  of any loans hereunder; (iii) any actual or proposed  use
by the Borrowers of the proceeds of such loans; (iv) the Holder's
entering  into  this  Note;  (v) the fact  that  the  Holder  has
established the credit facility evidenced hereby in favor of  the
Borrowers;  (vi)  the fact that the Holder is a creditor  of  the
Borrowers and has or is alleged to have information regarding the
financial  condition, strategic plans or business  operations  of
the  Borrowers  and their Subsidiaries; (vii) the fact  that  the
Holder is a material creditor of the Borrowers and is alleged  to
influence  directly  or  indirectly  the  business  decisions  or
affairs  of  the  Borrowers  and  their  Subsidiaries  or   their
financial  condition; (viii) the exercise of any right or  remedy
the  Holder may have under this Note or the other Loan Documents;
or  (ix) any violation or non-compliance by the Borrowers or  any
of  their  Subsidiaries  of  any Applicable  Law  (including  any
environmental  law) including, but not limited to, any  Indemnity
Proceeding commenced by (A) the Internal Revenue Service or state


                               32

<Page>

taxing  authority  or  (B) any Governmental  Authority  or  other
Person  under  any  environmental law,  including  any  Indemnity
Proceeding commenced by a Governmental Authority or other  Person
seeking  remedial or other action to cause any  Borrower  or  its
Subsidiaries  (or its respective properties) (or  the  Holder  as
successor  to  such  Borrower) to  be  in  compliance  with  such
environmental  laws; provided, however, that the Borrowers  shall
not  be obligated to indemnify any Indemnified Party for (A)  any
acts  or  omissions of such Indemnified Party in connection  with
matters  described in this subsection to the extent arising  from
the  gross  negligence or willful misconduct of such  Indemnified
Party,  as determined by a court of competent jurisdiction  in  a
final,  non-appealable judgment or (B) Indemnified Costs  to  the
extent  arising directly out of or resulting directly from claims
of  one  or  more Indemnified Parties against another Indemnified
Party.

     (b)   The Borrowers' indemnification obligations under  this
Section shall apply to all Indemnity Proceedings arising out  of,
or  related to, the foregoing whether or not an Indemnified Party
is  a  named party in such Indemnity Proceeding.  In this regard,
this  indemnification shall cover all Indemnified  Costs  of  any
Indemnified  Party  in  connection with  any  deposition  of  any
Indemnified Party or compliance with any subpoena (including  any
subpoena   requesting   the  production  of   documents).    This
indemnification shall, among other things, apply to any Indemnity
Proceeding commenced by other creditors of any Borrower or any of
their  Subsidiaries, any shareholder of any Borrower  or  any  of
their  Subsidiaries (whether such shareholder(s) are  prosecuting
such  Indemnity  Proceeding  in  their  individual  capacity   or
derivatively on behalf of such Borrower), any account  debtor  of
any  Borrower or any of their Subsidiaries or by any Governmental
Authority.  If  indemnification is to be sought hereunder  by  an
Indemnified Party, then such Indemnified Party shall notify  such
Borrower   of  the  commencement  of  any  Indemnity  Proceeding;
provided,  however, that the failure to so notify  such  Borrower
shall  not relieve such Borrower from any liability that  it  may
have to such Indemnified Party pursuant to this Section.

     (c)   This  indemnification shall  apply  to  any  Indemnity
Proceeding   arising  during  the  pendency  of  any   bankruptcy
proceeding  filed by or against any Borrower and/or  any  of  its
Subsidiaries.

     (d)  An Indemnified Party may conduct at its own expense its
own  investigation  and  defense of, and may  formulate  its  own
strategy  with  respect to, any Indemnity Proceeding  covered  by
this  Section.   No action taken by legal counsel  chosen  by  an
Indemnified Party in investigating or defending against any  such
Indemnity  Proceeding  shall vitiate or in  any  way  impair  the
obligations  and duties of the Borrowers hereunder  to  indemnify
and hold harmless each such Indemnified Party; provided, however,
that  if (i) any Borrower is required to indemnify an Indemnified
Party  pursuant  hereto  and  (ii)  such  Borrower  has  provided
evidence  reasonably satisfactory to such Indemnified Party  that
such  Borrower  has the financial wherewithal to  reimburse  such
Indemnified  Party for any amount paid by such Indemnified  Party
with respect to such Indemnity Proceeding, such Indemnified Party
shall  not  settle  or  compromise any such Indemnity  Proceeding
without the prior written consent of such Borrower (which consent
shall  not  be unreasonably withheld or delayed). Notwithstanding
the  foregoing, an Indemnified Party may settle or compromise any
such  Indemnity Proceeding without the prior written  consent  of
the Borrowers where (x) no monetary relief is sought against such


                               33

<Page>

Indemnified Party in such Indemnity Proceeding or (y) there is an
allegation of a violation of law by such Indemnified Party.

     (e)   If  and  to  the  extent that the obligations  of  the
Borrowers  under this Section are unenforceable for  any  reason,
each  Borrower hereby agrees to make the maximum contribution  to
the  payment  and  satisfaction  of  such  obligations  which  is
permissible under Applicable Law.

     (f)   The  Borrowers' obligations under this  Section  shall
survive any termination of this Note and the other Loan Documents
and  the payment in full in cash of the Obligations, and  are  in
addition  to,  and  not in substitution of, any  other  of  their
obligations set forth in this Note or any other Loan Document  to
which it is a party.

15.  Definitions

     As used in this Note, the following terms have the following
meanings:

     "Affiliate"   means   any  Person   (other   than   Holder):
(a)  directly or indirectly controlling, controlled by, or  under
common  control  with, any Borrower; (b) directly  or  indirectly
owning  or  holding  five percent (5.0%) or more  of  any  Equity
Interest in any Borrower; or (c) five percent (5.0%) or  more  of
whose  voting  stock  or  other Equity Interest  is  directly  or
indirectly owned or held by any Borrower.  For purposes  of  this
definition,  "control" (including with correlative meanings,  the
terms  "controlling", "controlled by" and "under  common  control
with")  means the possession directly or indirectly of the  power
to  direct or cause the direction of the management and  policies
of  a  Person, whether through the ownership of voting securities
or  by  contract or otherwise.  The Affiliates of a Person  shall
include any officer or director of such Person.  For purposes  of
this  Note, in no event shall Holder be deemed to be an Affiliate
of the Borrower.

     "Applicable   Law"  means  all  applicable   provisions   of
constitutions, statutes, laws, rules, regulations and  orders  of
all  governmental bodies and all orders, rulings and  decrees  of
all courts and arbitrators.

     "Business  Day" means any day other than a Saturday,  Sunday
or  other day on which banks in New York, New York are authorized
or required to close.

     "Collateral" has the meaning given that term in the Pledge
Agreement.

     "Default" means any of the events specified in Section 9,
whether or not there has been satisfied any requirement for the
giving of notice, the lapse of time, or both.

     "Effective  Date"  means the later of: (a) the date  hereof;
and  (b)  the  date on which all of the conditions precedent  set
forth  in  Section  11  shall have been fulfilled  or  waived  in
writing by the Holder.

      "Equity  Interest" means, with respect to any  Person,  any
share of capital stock of (or other ownership or profit interests
in) such Person, any warrant, option or other right for the


                               34

<Page>

purchase  or other acquisition from such Person of any  share  of
capital stock of (or other ownership or profit interests in) such
Person,  any  security convertible into or exchangeable  for  any
share of capital stock of (or other ownership or profit interests
in)  such Person or warrant, right or option for the purchase  or
other  acquisition from such Person of such shares (or such other
interests),  and any other ownership or profit interest  in  such
Person  (including,  without limitation, partnership,  member  or
trust  interests  therein),  whether  voting  or  nonvoting,  and
whether  or  not  such  share, warrant, option,  right  or  other
interest  is  authorized or otherwise existing  on  any  date  of
determination.

      "Event  of  Default" has the meaning  given  that  term  in
Section 9.

      "Governmental Approval" means all authorizations, consents,
approvals, licenses and exemptions of, registrations and  filings
with, and reports to, all Governmental Authorities.

      "Governmental Authority" means any national, state or local
government   (whether   domestic  or  foreign),   any   political
subdivision     thereof     or    any     other     governmental,
quasi-governmental,     judicial,     public     or     statutory
instrumentality,  authority,  body, agency,  bureau,  commission,
board,  department  or  other  entity  or  any  arbitrator   with
authority to bind a party at law.

     "Indebtedness" means, without duplication, with  respect  to
any  Person  (i) obligations of such Person in respect  of  money
borrowed; (ii) obligations of such Person (other than trade  debt
incurred in the ordinary course of business), whether or not  for
money  borrowed  (A)  represented by  notes  payable,  or  drafts
accepted,  in  each  case  representing  extensions  of   credit,
(B) evidenced by bonds, debentures, notes or similar instruments,
or  (C)  constituting  purchase money  indebtedness,  conditional
sales  contracts,  title  retention  debt  instruments  or  other
similar  instruments, upon which interest charges are customarily
paid or that are issued or assumed as full or partial payment for
property;  (iii)  capitalized lease obligations of  such  Person;
(iv)  all  reimbursement obligations of  such  Person  under  any
letters  of credit or acceptances (whether or not the  same  have
been  presented  for  payment);  and  (v)  all  indebtedness  and
obligations of other Persons which (A) such Person has guaranteed
or is otherwise recourse to it or (B) is secured by a lien on any
property of such Person.

     "Lien"  means  any  security  interest,  lien,  encumbrance,
mortgage,  deed  to secure debt, deed of trust,  pledge,  charge,
conditional  sale  or other title retention agreement,  or  other
encumbrance of any kind covering any property of a Person.

     "Loan  Documents" means this Note, the Pledge Agreement  and
each  other document or instrument now or hereafter executed  and
delivered  by a Borrower or any of its Subsidiaries in connection
with, pursuant to or relating to this Note.

     "Material  Adverse Effect" means a material  adverse  effect
upon (i) the business or financial condition of Holdings and  its
Subsidiaries taken as a whole or (ii) the ability of Holdings  or
any  Borrower to perform its obligations under the Loan Documents
in any material respect.


                               35

<Page>

     "Material Contracts" means any contract or other arrangement
(other  than Loan Documents) to which any Borrower is a party  as
to  which the breach, nonperformance, cancellation or failure  to
renew by any party thereto could reasonably be expected to have a
Material Adverse Effect.

     "Negative Pledge" means, with respect to a given asset,  any
provision of a document, instrument or agreement (other than  any
Loan  Document)  which  prohibits or  purports  to  prohibit  the
creation or assumption of any Lien on such asset as security  for
Indebtedness of the Person owning such asset or any other Person.

     "Obligations"  means,  individually  and  collectively,  the
aggregate  principal  balance of,  and  all  accrued  and  unpaid
interest on all Indebtedness, liabilities and obligations of  the
Borrowers  and  their Subsidiaries owing to the Holder  of  every
kind, nature and description, under or in respect of this Note or
any  of  the other Loan Documents, including, without limitation,
indemnification obligations, whether direct or indirect, absolute
or   contingent,  due  or  not  due,  contractual  or   tortuous,
liquidated or unliquidated, and whether or not evidenced  by  any
promissory note.

     "Permitted Liens" means (i) Liens for taxes, assessments, or
similar  charges  either not yet due or being contested  in  good
faith,  (ii)  Liens of materialmen, mechanics,  warehousemen,  or
carriers,  or other like Liens arising in the ordinary course  of
business  and securing obligations which are not yet  delinquent,
(iii)  purchase money liens or purchase money security  interests
upon  or in any property acquired or held by any Borrower in  the
ordinary course of business to secure indebtedness incurred after
the  date  hereof  to the extent not prohibited  hereunder,  (iv)
Liens  consented to by the Holder in writing, and (v) those Liens
which in the aggregate constitute an immaterial and insignificant
monetary  amount with respect to the net value of the  Borrowers'
assets.

     "Person" means an individual, corporation, limited liability
company,  partnership,  joint  venture,  association,  trust   or
unincorporated  organization, or a government or  any  agency  or
political subdivision thereof.

     "Pledge Agreement" means the Amended and Restated Pledge
Agreement dated as of the date hereof made by the Pledgors in
favor of the Holder, as the same may be amended, restated,
supplemented or otherwise modified from time to time.

     "Pledgor" means each of Holdings, NAC Gas, GB Maine and GB
Benton.

     "Partnership" means Benton Falls Associates, L.P.

     "Restricted  Payment" means any payment, transfer  or  other
distribution to any holder of equity interests of any Borrower or
any  Affiliate of any Borrower including, without limitation, (1)
any  dividend  or  other  distribution, direct  or  indirect,  on
account  of,  or  in  respect of, any  equity  interest  of  such
Borrower  now  or  hereafter  outstanding,  (2)  any  redemption,
conversion,  exchange,  retirement,  sinking  fund   or   similar
payment,  purchase  or  other acquisition for  value,  direct  or
indirect, of any equity interest of such Borrower now or


                               36

<Page>

hereafter  outstanding, and (3) any payment of  management  fees,
transaction fees, consulting fees or similar fees to  any  holder
of its equity interests or any Affiliate thereof.

     "SEC   Reports"   means,  except  as  otherwise   described,
Holdings' Annual Report on Form 10-K for the year ended  December
31,  2004  (and  any amendments thereto filed at  least  two  (2)
Business  Days  prior  to  the  date  hereof),  Holdings'   Proxy
Statement for its 2004 Annual Meeting of Shareholders, or any  of
Holdings' Current Reports on Form 8-K filed since January 1, 2005
and at least two (2) Business Days prior to the date hereof.

     "Subsidiary"   means,  for  any  Person,  any   corporation,
partnership or other entity of which at least a majority  of  the
Equity  Interests  having  by the terms thereof  ordinary  voting
power  to  elect  a majority of the board of directors  or  other
individuals  performing similar functions  of  such  corporation,
partnership or other entity (without regard to the occurrence  of
any  contingency) is at the time directly or indirectly owned  or
controlled  by  such Person or one or more Subsidiaries  of  such
Person  or  by such Person and one or more Subsidiaries  of  such
Person,  and shall include all Persons the accounts of which  are
consolidated with those of such Person pursuant to GAAP.

16.  Miscellaneous

     16.1 Any notice, demand, request, waiver or other communication
required  by  any provision of this Note shall be in writing  and
may  be  delivered  by personal service, sent by  facsimile  with
confirmation   of  receipt,  sent  by  a  nationally   recognized
overnight  delivery services or sent by registered  or  certified
mail,  return  receipt  requested,  with  postage  thereon  fully
repaid.  All such communications shall be addressed as follows:

     To the Borrowers:   BayCorp Holdings, Ltd.
                         1 New Hampshire Avenue, Suite 125
                         Portsmouth, New Hampshire 03801
                         Attn:  Frank W. Getman, Jr., President
                         and CEO

                         With a copy to:

                         McLane, Graf, Raulerson & Middleton,
                            Professional Association
                         900 Elm Street, Box 326
                         Manchester, New Hampshire  03105-0326
                         Attn:   Richard A. Samuels

     To the Holder:      Sloan Group Ltd.
                         Cay House, Box N-7776
                         E.P. Taylor Drive
                         Lyford Cay
                         New Providence, Bahamas
                         Attn:   Suzanne Karsten



                                 37

     <Page>


                         With a copy to:

                         Alston & Bird LLP
                         1201 West Peachtree Street
                         Atlanta, Georgia 30309-3424
                         Attn:   Christopher D. Mangum, Esq.

     16.2 This Note, as such, shall not entitle any Holder to any
rights   as  a  shareholder  of  Holdings,  except  as  otherwise
specified herein.

     16.3  No  failure or delay on the part of any party to  this
Note  in  exercising any right, power or remedy  hereunder  shall
operate  as  a  waiver thereof; nor shall any single  or  partial
exercise  of any such right, power or remedy preclude  any  other
right,  power or remedy hereunder.  The remedies herein  provided
are  cumulative and not exclusive of any remedies provided  under
law.

     16.4  Any terms of this Note (including, without limitation,
the  Maturity  Date,  the  rate of interest  and  the  conversion
features)  may be waived or modified only in writing,  signed  by
the Borrowers and Holder.

     16.5 The Borrowers shall pay all expenses incurred by Holder
in  the  collection of this Note, including, without  limitation,
the fees and disbursements of counsel to Holder, if this Note  is
collected  by  or through an attorney-at-law.  Any  such  amounts
shall  be deemed to be outstanding under this Note, shall  accrue
interest at the Post Default Rate and shall be payable on demand.

     16.6 Time is of the essence of this Note.

     16.7  BORROWERS, AND HOLDER BY ACCEPTING THIS  NOTE,  HEREBY
WAIVE  PERSONAL  SERVICE OF THE SUMMONS AND COMPLAINT,  OR  OTHER
PROCESS  OR  PAPERS ISSUED THEREIN, AND AGREEING THAT SERVICE  OF
SUCH  SUMMONS  AND COMPLAINT, OR OTHER PROCESS OR PAPERS  MAY  BE
MADE  BY  REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT  REQUESTED
ADDRESSED  TO  SUCH BORROWER AT THE ADDRESS OF SUCH BORROWER  FOR
NOTICES SET FORTH HEREIN.

     EACH  BORROWER  AGREES THAT ALL OF ITS  PAYMENT  OBLIGATIONS
HEREUNDER SHALL BE ABSOLUTE, UNCONDITIONAL AND, FOR THE  PURPOSES
OF  MAKING  PAYMENTS HEREUNDER, EACH BORROWER HEREBY  WAIVES  ANY
RIGHT TO ASSERT ANY SETOFF, COUNTERCLAIM OR CROSS-CLAIM.

     THE  FOREGOING  WAIVERS HAVE BEEN MADE WITH  THE  ADVICE  OF
COUNSEL  AND  WITH A FULL UNDERSTANDING OF THE LEGAL CONSEQUENCES
THEREOF.


                               38

<Page>


     16.8  THIS  NOTE  SHALL  BE GOVERNED BY,  AND  CONSTRUED  IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

     16.9  All amendments to this Note, and any waiver or consent
of  Holder,  must  be in writing and signed  by  Holder  and  the
Borrowers.

     16.10     This Note shall be binding upon the successors and
permitted assigns of the Borrowers.  The Borrowers may not assign
any  of  their obligations hereunder to any person or entity.   A
Holder  of  this  Note,  subject  to  the  terms  and  conditions
contained herein, may assign or transfer this Note, in  whole  or
in  part, to any person or entity at any time without the consent
of  the  Borrowers.  Nothing contained herein shall  require  any
notice to the Borrowers of any participation in this Note granted
by Holder or consent by the Borrowers thereto.

     16.11     Acknowledgment and Consent Regarding Indebtedness.
Notwithstanding  anything  in  Section  8.3(d)  of  the  Existing
Convertible Note to the contrary, each of the Borrowers  and  the
Holder  acknowledge  and  agree  that  the  limitations  on   the
incurrence  of  Indebtedness set forth in Section  8.3(d)  hereof
shall supersede and replace in its entirety Section 8.3(d) of the
Existing  Convertible Note.  The Holder hereby  consents  to  the
incurrence  of  Indebtedness hereunder and waives  any  Event  of
Default that would otherwise occur under the Existing Convertible
Note  solely  as  a  result  of the incurrence  the  Indebtedness
hereunder.




                 [Signatures on Following Page]





                               39

<Page>

     IN WITNESS WHEREOF, each Borrower has executed and delivered
this  Convertible Note under seal as of the date and  year  first
written above.

                         BAYCORP HOLDINGS, LTD.


                         By:    /s/ Frank W. Getman Jr.
                              Name: Frank W. Getman Jr.
                              Title:   President


                         GREAT BAY POWER MARKETING, INC.


                         By:    /s/ Frank W. Getman Jr.
                              Name: Frank W. Getman Jr.
                              Title:   President


                         GREAT BAY HYDRO CORPORATION


                         By:    /s/ Frank W. Getman Jr.
                              Name: Frank W. Getman Jr.
                              Title:   President


                         BAYCORP VENTURES, LLC

                         By: BAYCORP HOLDINGS, LTD., its sole
                           member

                              By:  /s/ Frank W. Getman Jr.
                                   Name: Frank W. Getman Jr.
                                   Title:   President


                         NACOGDOCHES POWER, LLC


                         By:    /s/ Frank W. Getman Jr.
                              Name: Frank W. Getman Jr.
                              Title:   Manager





              [Signature Pages to Convertible Note]

<Page>


                         NACOGDOCHES GAS, LLC


                         By: /s/ Frank W. Getman Jr.
                              Name: Frank W. Getman Jr.
                              Title:   Manager


                         GREAT BAY HYDRO MAINE, LLC

                         By: BAYCORP HOLDINGS, LTD., its sole
                           member

                              By: /s/ Frank W. Getman Jr.
                                   Name:  Frank W. Getman Jr.
                                   Title: President



                         GREAT BAY HYDRO BENTON, LLC

                         By: BAYCORP HOLDINGS, LTD., its sole
                           member

                              By:    Frank W. Getman Jr.
                                   Name:  Frank W. Getman Jr.
                                   Title: President







              [Signature Pages to Convertible Note]

<Page>


Accepted:

SLOAN GROUP LTD.


By:  /s/ Joseph Lewis
       Name:   Joseph Lewis










              [Signature Pages to Convertible Note]

<Page>


                         SCHEDULE 8.3(b)


1.   Great Bay Power Marketing, Inc. ("GB Power") has a
  $2,500,000 letter of credit with Citizens bank.  The letter of
  credit is secured by a cash account GB Power has at Citizens in
  the approximate amount of $2,500,000.  There are no guaranties
  related to the letter of credit.




<Page>

                            Exhibit A

                     BayCorp Holdings. Ltd.
                Convertible Note Use of Proceeds
                            May 2005


Sources
Private Placement                   $10,000,000
BayCorp Operating Cash              $ 1,502,000
                                   ____________
               Total Sources        $11,502,000


Uses
Fund Looking Glass Well (1)       ($ 3,834,000)  (est)
Fund Thunder Chief Well (1)       ($ 3,834,000)  (est)
Fund Night Spirit Well (1)        ($ 3,834,000)  (est)
                                   ____________
                  Total Uses      ($11,502,000)


(1)  See attached First Optional Well Set Proposal from Sonerra
     Resources Corporation.



<Page>

                            EXHIBIT B

                     BayCorp Holdings, Ltd.

                 CERTIFICATE OF SUBSEQUENT SALE

[Transfer Agent]

______________________

______________________

Re:   Sale of Shares of Common Stock of BayCorp Holdings, Ltd.
      (the "Company") pursuant to the Company's prospectus dated
      _______________, 2005 (the "Prospectus")

Dear Sir/Madam:

      The undersigned hereby certifies, in connection with the
sale of shares of Common Stock of the Company included in the
Prospectus, that the undersigned has sold the Shares pursuant to
the Prospectus and in a manner described in the Prospectus and
that such sale complies with all applicable securities laws,
including without limitation, the Prospectus delivery
requirements of the Securities Act of 1933, as amended.

  Selling Shareholder (the beneficial owner):_________________

  Record Holder (e.g., if held in name of nominee):___________

  Restricted Stock Certificate No.(s):________________________

  Number of Shares Sold:________________________

  Date of Sale:_________________________________

      In the event that you receive a stock certificate(s)
representing more shares of Common Stock than have been sold by
the undersigned, then you should return to the undersigned a
newly issued certificate for such excess shares in the name of
the Record Holder and BEARING A RESTRICTIVE LEGEND.  Further, you
should place a stop transfer on your records with regard to such
certificate.


Dated: ___________       Very truly yours,


                         By: _________________________
                               Name:
                               Title: