<Page>
Exhibit 10.ai
MASTER LOAN AGREEMENT
by and between
FLEET NATIONAL BANK
"Bank"
and
MAINE PUBLIC SERVICE COMPANY
"Borrower"
Dated as of November 22, 2004
<Page>
TABLE OF CONTENTS
<Table>
<S>
<C>
1.
INTRODUCTION.............................................................3
2.
OBLIGATIONS..............................................................3
3. BORROWER'S PLACES
OF BUSINESS............................................3
4. BORROWER'S
REPRESENTATIONS AND WARRANTIES................................4
5. LOAN
FACILITIES..........................................................6
6. BANK'S
REPORTS..........................................................11
7. SET OFF;
EXPENSES.......................................................11
8. BORROWER'S
REPORTS......................................................12
9. GENERAL AGREEMENTS
OF BORROWER..........................................13
10. BORROWER'S NEGATIVE
COVENANTS...........................................17
11. BORROWER'S FINANCIAL
COVENANTS..........................................17
12.
DEFAULT.................................................................20
13. JURY TRIAL
WAIVER.......................................................23
14. CONSENT TO
JURISDICTION.................................................24
15. TERMINATION AND EXPIRATION NOT TO AFFECT BANK'S
RIGHTS..................24
16.
MISCELLANEOUS...........................................................24
</Table>
SCHEDULES
EXHIBIT
<Page>
FLEET NATIONAL BANK
MASTER LOAN AGREEMENT
Portland, Maine
Dated as of November 22, 2004
1.
INTRODUCTION. MAINE
PUBLIC SERVICE COMPANY, a Maine corporation with
its principal place of business in Presque Isle, Maine,
(hereinafter called
"BORROWER") for valuable consideration, the receipt and sufficiency
of which are
hereby acknowledged, hereby enters into this Master Loan Agreement
with FLEET
NATIONAL BANK, a Bank of America company with a place of business
at Two
Portland Square, Portland, Maine 04101 (hereinafter, together with
its
successors and assigns hereunder, called the "BANK").
2.
OBLIGATIONS. This
Agreement applies to payment and performance of all
debts, liabilities and obligations of the Borrower to the Bank
hereunder and
also any and all other debts, liabilities and obligations of the
Borrower to the
Bank of every kind and description, direct or indirect, absolute or
contingent,
primary or secondary, due or to become due, now existing or
hereafter arising,
that are related to the transactions described in this Agreement,
including all
obligations to perform acts and refrain from taking action as well
as all
obligations to pay money, specifically including all obligations to
pay
interest, fees, charges, expenses and overdrafts, and also
including, without
limitation, all obligations and liabilities which the Bank may
incur or become
liable for, on account of, as a result of, or in connection with
the
transactions between the Bank and the Borrower for which the
Borrower is
responsible under this Agreement, including, without limitation,
any which may
arise out of any letter of credit, banker's acceptance or similar
instrument or
obligation issued or incurred by the Bank for the account of the
Borrower, and
further including any obligations arising under any credit card
receivables,
currency swap, electronic fund transfers (whether through automated
clearing
houses or otherwise) provisional credit, check cashing, foreign
exchange
contracts, interest rate swap, cap, floor or hedging agreements, or
similar
agreements and all obligations of the Borrower to the Bank arising
out of or in
connection with any Automated Clearing House ("ACH") agreements
relating to the
processing of ACH transactions, together with all fees, expenses,
charges and
other amounts owing by or chargeable to the Borrower under any ACH
agreements
(all of the foregoing are hereinafter collectively called
"OBLIGATIONS").
3.
BORROWER'S PLACES OF
BUSINESS. Borrower represents and warrants that it
has no places of business outside the State of Maine, except as
otherwise
disclosed herein. Borrower represents and warrants that its only
place of
business (or, if it has more than one, its chief executive office)
and the
office where it keeps its records, is the place indicated at the
end of
3
<Page>
this Agreement. Borrower will promptly notify Bank in writing of
any change in
the location of its chief executive office, or of any place of
business or
office where its records are kept.
4.
BORROWER'S
REPRESENTATIONS AND WARRANTIES. Borrower represents and
warrants that:
(a)
It is a
regulated utility and a corporation duly organized, validly
existing and in good standing under the laws of the State of Maine
and shall
hereafter remain in good standing as a corporation in that state,
and is duly
qualified and in good standing in every other jurisdiction in which
the nature
or location of its assets or operations may require such
qualification, other
than any jurisdiction where the failure to so qualify will not have
a material
adverse effect on its financial condition, business or prospects,
which other
jurisdictions are listed on SCHEDULE A, annexed hereto, and shall
hereafter
remain duly qualified and in good standing in every such other
jurisdiction.
Borrower has identified on SCHEDULE B, annexed hereto, all of its
subsidiaries
and their respective jurisdictions of organization, addresses and
the percentage
of ownership. Each of Borrower's subsidiaries is a corporation duly
organized,
validly existing and in good standing under the laws of its
jurisdiction of
incorporation and shall hereafter remain in good standing as a
corporation in
that jurisdiction, and is duly qualified and in good standing in
every other
jurisdiction in which, by reason of the nature or location of such
subsidiary's
assets or operations, such qualification may be necessary, which
other
jurisdictions are listed on SCHEDULE B, annexed hereto, and shall
hereafter
remain duly qualified and in good standing in such other
jurisdictions. None of
Borrower's subsidiaries has any subsidiaries.
(b)
Borrower's
exact legal name is as set forth in this Agreement and
Borrower will not change its legal name, without giving Bank at
least thirty
(30) days' prior written notice of the same. Borrower represents
that it does
not conduct business under any other name, and will not do so
without giving
Bank at least thirty (30) days' prior written notice of the same.
THE BORROWER'S
CORPORATE CHARTER NUMBER IN THE STATE OF MAINE IS 19170013D.
(c)
The
execution, delivery and performance of this Agreement, and of
any other documents executed in connection herewith, are within
Borrower's
corporate powers, have been duly authorized, are not in
contravention of law or
the terms of its articles of incorporation, bylaws or other
governance
documents, or of any indenture, agreement or undertaking to which
it is a party
or by which it or any of its properties may be bound.
(d)
The
Articles of Incorporation of Borrower, and all amendments
thereto, have been duly filed and are in proper order. All of
Borrower's books
and records including but not limited to its minute books, stock
register and
books of account, are all materially accurate and up to date and
will be so
maintained. All of Borrower's issued and outstanding stock
interests were duly
issued and are fully paid and non-assessable; the Borrower is a
wholly-owned
subsidiary of Maine & Maritimes Corporation, a Maine
corporation.
4
<Page>
(e)
Borrower
owns all of the assets reflected in its most recent
financial statements provided to Bank, except leased assets or
assets sold,
transferred or otherwise disposed of, in the ordinary course of
business since
the date thereof, and such assets together with any assets acquired
since such
date, are free and clear of any lien, pledge, security interest,
charge,
mortgage or encumbrance of any nature whatsoever, except only the
following
(collectively, the "PERMITTED LIENS"): (i) the liens, security
interests and
other encumbrances listed on SCHEDULE C annexed hereto, (ii) those
leases (if
any) set forth on SCHEDULE D annexed hereto in which Borrower is
lessor, (iii)
landlords', carriers', warehousemen's and other similar liens
arising by
operation of law in the ordinary course of its business, but only
if the bills
to which they relate are paid in the ordinary course or are the
subject of good
faith dispute; (iv) liens arising out of pledge or deposits under
worker's
compensation, unemployment insurance, old age pension, social
security,
retirement benefits or other similar legislation; and (v) liens and
security
interests in favor of Bank or consented to in writing by Bank .
Borrower leases
no material amount of real or personal property as lessee, except
for the leases
described on SCHEDULE D; in each case such lease is in full force
and effect and
Borrower is not in material default thereunder.
(f) Borrower has made or
filed all tax returns, reports and declarations
relating to any material tax liability required by any jurisdiction
to which it
is subject; has paid all taxes shown or determined to be due
thereon except
those being diligently contested in good faith and which it has,
prior to the
date of such contest, identified in writing to Bank as being
contested; and has
made adequate provision for the payment of all taxes so contested,
and has also
made adequate provision for taxes due in respect of subsequent
periods.
(g)
Except for
the restrictions, judgments, awards, decrees, orders,
rules and regulations of the Maine Public Utilities Commission that
are
applicable to the Borrower, the Borrower (i) is currently subject
to no charter
or other legal restriction, or any judgment, award, decree, order,
governmental
rule or regulation or contractual restriction which could have a
material
adverse effect on its financial condition, business or prospects,
and (ii) is in
compliance with its articles of incorporation, bylaws, all
contractual
requirements by which it or any of its properties may be bound and
all
applicable laws, rules and regulations (including without
limitation those
relating to environmental protection) other than laws, rules or
regulations (i)
the validity or applicability of which it is diligently contesting
in good faith
and which it has, prior to the date of such contest, identified in
writing to
Bank as being contested, or (ii) the failure to comply with which
cannot
reasonably be expected to materially adversely affect its financial
condition,
business or prospects.
(h)
There is
no action, suit, proceeding or investigation pending or, to
its knowledge, threatened against or affecting Borrower or any of
its assets
which, if determined adversely to it, would or could have a
material adverse
effect on its financial condition, business or prospects, except as
set forth on
SCHEDULE E.
(i)
Borrower
is in material compliance with ERISA with respect to any
Plan; no Reportable Event has occurred and is continuing with
respect to any
Plan; and it has no unfunded
5
<Page>
vested liability under any Plan. The word "PLAN" as used in this
Agreement means
any employee plan subject to Title IV of the Employee Retirement
Income Security
Act of 1974, as amended, ("ERISA") maintained for employees of
Borrower, any
subsidiary of Borrower or any other trade or business under common
control with
Borrower within the meaning of Section 414(c) of the Internal
Revenue Code of
1986, as amended, or any regulations thereunder.
(j)
Borrower
is in material compliance with all other applicable
federal, state and local laws and ordinances. Borrower shall
maintain at all
times all necessary licenses, permits and approvals to own and
operate its
business. If required by Bank, Borrower's counsel shall provide
written opinions
regarding these issues.
5.
LOAN FACILITIES.
(a)
TERM LOAN:
On the date hereof, Bank shall advance to Borrower Six
Million Dollars ($6,000,000) (the "TERM LOAN"); the Term Loan will
be due on
November 22, 2011, if not due sooner in accordance with the terms
hereof (the
"MATURITY DATE"). The Term Loan shall bear interest computed at a
fluctuating
interest rate equal to the rate from time to time announced by Bank
as its prime
lending rate (the "PRIME RATE"), SUBJECT TO CHANGE OF RATE in
accordance with
changes in the Prime Rate, such adjustments in rate to be made
automatically and
to be effective immediately with all changes in the Prime Rate
without notice or
demand of any kind. Bank's prime rate is a reference rate and does
not
necessarily represent the lowest or best rate being charged to any
customer. In
the event Bank shall cease to designate a prime rate and shall fail
to designate
a replacement therefor, then the term "Prime Rate" shall mean the
rate of
interest published in THE WALL STREET JOURNAL as the Prime Rate or
the base rate
on corporate loans posted by at least 75% of the nation's 30
largest banks, as
it may vary. The Term Loan shall be repaid in equal monthly
installments of
Scheduled Principal (as defined below), plus accrued interest,
commencing on
December 1, 2004 and continuing on the same day of each month
thereafter until
the Maturity Date when all amounts remaining unpaid with respect to
the Term
Loan shall be paid in full. The term "Scheduled Principal" shall
mean $50,000
for the monthly principal payments due December 1, 2004, through
November 1,
2007, inclusive; $80,000 for the monthly principal payments due
December 1, 2007
through November 1, 2009, inclusive; and $95,000 for the monthly
principal
payments due December1, 2009 through November 1, 2011, inclusive.
Borrower shall
execute and deliver to Bank at the Closing a promissory note with
respect to the
Term Loan.
(b)
USE OF
PROCEEDS: Borrower shall use loan proceeds of the Term Loan
to refinance existing indebtedness and for no other purposes.
6
<Page>
(c)
INTEREST
RATE OPTION:
(i) At the
option of the Borrower and subject to the terms and
conditions hereinafter set forth, the Borrower may elect from time
to time
to
have the interest rate applicable to one or more advances under the
Term
Loan
to be the LIBOR Rate, or to convert any outstanding Loan to a Loan
of
another Type, PROVIDED that (i) with respect to any such election,
or
conversion of a Loan to a LIBOR Loan, the Borrower shall give the
Bank
prior notice of such election (which notice must be received by
Bank prior
to
3:00 p.m. Portland, Maine time two Business Days before the date of
the
advance or conversion); and (ii) no such election of a LIBOR Loan
or
conversion to a LIBOR Loan may be made when any Event of Default
has
occurred and is continuing. All or any part of an outstanding Loan
of any
Type
may be converted as provided herein, PROVIDED that partial
conversions
shall be in an aggregate principal amount of at least $100,000.
There shall
be
no more than five LIBOR Loans outstanding at any one time. Each
request
relating to a LIBOR Loan shall be irrevocable by the Borrower.
(ii) Any Loans
of any Type may be continued as such upon the
expiration of an Interest Period with respect thereto by compliance
by the
Borrower with the notice provisions contained herein; PROVIDED that
no
LIBOR Loan may be continued as such when any Event of Default has
occurred
and
is continuing, but shall be automatically converted to a Prime
Rate
Loan
on the last day of the Interest Period relating thereto.
(iii) In the event
that the Borrower does not notify the Bank of
its
election hereunder with respect to any Loan at the expiration of
an
Interest Period, such
Loan shall be automatically renewed as a Loan of the
same
Type and for the same Interest Period (unless the Loan is a LIBOR
Loan
and
such a renewal would cause the expiration of the Interest Period
to
extend beyond the Maturity Date, in which case such LIBOR Loan
shall be
converted to a Prime Rate Loan).
(iv) Unless
sooner demanded after an Event of Default, all
interest on LIBOR Loans shall be paid monthly.
(v)
Borrower may provide notice of its election hereunder in
writing or by telephone, provided, however, that any telephonic
notice
shall follow such procedures as Bank may require and Bank shall
have no
duty
to confirm the authority of a person making a telephonic
request.
(d)
PREPAYMENT
OF LOANS: The Borrower shall have the right at any time
to prepay any Prime Rate Loan without premium or penalty, PROVIDED
that any
amount prepaid shall be accompanied by accrued interest on the
principal repaid
to the date of payment. To the extent that a Loan is a LIBOR Loan,
and unless
the Bank reasonably determines that current market conditions can
not
accommodate a prepayment request, then the Borrower shall have the
right to
prepay such Loan on or before the expiration of the applicable
Interest Period,
as a whole or in
7
<Page>
part, upon prior notice to the Bank, PROVIDED that such prepayment
shall be
accompanied by (a) accrued interest through the date of prepayment,
and (b) an
amount calculated in accordance with the Yield Maintenance Formula.
Such
optional prepayment privilege is in addition to, and not in
substitution of, any
repayment of principal required or otherwise contemplated under
this Agreement.
Any payment of a LIBOR Loan that occurs prior to the expiration of
the
applicable Interest Period shall be accompanied by an amount
calculated in
accordance with the Yield Maintenance Formula whether such payment
is payable
because of demand, default or otherwise. Borrower may provide
notice of its
election hereunder in writing or by telephone, provided, however,
that any
telephonic notice shall follow such procedures as Bank may require
and Bank
shall have no duty to confirm the authority of a person making a
telephonic
request.
(e)
LOAN
REQUEST PROCEDURE: Each request to convert some or all of the
Term Loan balance from one Type of Loan to another, shall
constitute a request
for a Loan pursuant to which these procedures shall apply. Amounts
repaid with
respect to the Term Loan may not be reborrowed. The Borrower may
request Loans
hereunder on any Business Day, provided there is then no Event of
Default
hereunder; and further provided that Borrower shall give Bank prior
notice
(which notice must be received by Bank prior to 3:00 p.m. Portland,
Maine time)
on the day (or, in the case of a LIBOR Loan, on the day that is two
Business
Days before the day) of the requested advance date specifying: (i)
the amount to
be borrowed, (ii) the requested borrowing date, (iii) whether the
borrowing is
to be a Prime Rate Loan or a LIBOR Loan or a combination thereof
(and if so, in
what proportions), and (iv) if the advance is to be entirely or
partly a LIBOR
Loan, the length of the Interest Period. Borrower may provide
notice of its
election hereunder in writing or by telephone, provided, however,
that any
telephonic notice shall follow such procedures as Bank may require
and Bank
shall have no duty to confirm the authority of a person making a
telephonic
request. If Borrower's request fails to specify whether a request
is for a LIBOR
Loan or a Prime Rate Loan, it shall be deemed a request for a Prime
Rate Loan.
If Borrower fails to request the maintenance of an existing LIBOR
Loan prior to
the end of the Interest Period for such LIBOR Loan in accordance
with the
procedure set forth herein, then such Loan shall be automatically
renewed as a
Loan of the same Type and for the same Interest Period (unless such
a renewal
would cause the expiration of the Interest Period to extend beyond
the Maturity
Date, in which case such LIBOR Loan shall be converted to a Prime
Rate Loan).
(f)
CERTAIN
DEFINITIONS: The following terms used herein, and in any
notes or other documents relating hereto, shall have the following
meanings:
"BUSINESS DAY" means any day, other than a Saturday, Sunday or day
which
shall be in the State of Maine a legal holiday, on which banks in
Portland,
Maine, are open for the conduct of a substantial part of their
commercial
banking business.
"INTEREST PERIOD" means, in the event that interest is calculated
at the
Prime Rate, the Interest Period shall be one (1) day, and in the
event that
interest is calculated at the LIBOR Rate, the Interest Period shall
be a period
commencing on the date so designated by the Borrower in its
8
<Page>
irrevocable written notice to Bank and ending 30, 60, or 90 days
thereafter, as
the Borrower may elect in such notice pursuant to Section 5(e);
provided that:
(i) any
Interest Period that would otherwise end on a day which
is
not a Business Day shall be extended to the next succeeding
Business Day
unless such Business Day falls in another calendar month, in which
case
such
Interest Period shall end on the immediately preceding Business
Day;
(ii)
any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding
day
in the calendar month at the end of such Interest Period) shall end
on
the
last Business Day of the calendar month at the end of such
Interest
Period; and
(iii) no
Interest Period may extend beyond the Maturity Date.
"LIBOR" means, as applicable to any LIBOR Loan, the rate per annum
as
determined on the basis of the offered rates for deposits in U.S.
Dollars, for a
period of time comparable to such LIBOR Loan which appears on the
Telerate page
3750 as of 11:00 a.m. London time on the day that is two London
Banking Days
preceding the first day of such LIBOR Advance; provided, however,
if the rate
described above does not appear on the Telerate System on any
applicable
interest determination date, the LIBOR rate shall be the rate
(rounded upward,
if necessary, to the nearest one hundred-thousandth of a percentage
point),
determined on the basis of the offered rates for deposits in U.S.
dollars for a
period of time comparable to such LIBOR Advance which are offered
by four major
banks in the London interbank market at approximately 11:00 a.m.
London time, on
the day that is two (2) London Banking Days preceding the first day
of such
LIBOR Loan as selected by Bank. The principal London office of each
of the four
major London banks will be requested to provide a quotation of its
U.S. Dollar
deposit offered rate. If at least two such quotations are provided,
the rate for
that date will be the arithmetic mean of the quotations. If fewer
than two
quotations are provided as requested, the rate for that date will
be determined
on the basis of the rates quoted for loans in U.S. dollars to
leading European
banks for a period of time comparable to such LIBOR Loan offered by
major banks
in New York City at approximately 11:00 a.m. New York City time, on
the day that
is two London Banking Days preceding the first day of such LIBOR
Loan. In the
event that Bank is unable to obtain any such quotation as provided
above, it
will be deemed that LIBOR pursuant to a LIBOR Loan cannot be
determined and only
Prime Rate Loans will be available hereunder until LIBOR quotations
again become
available to Bank. In the event that the Board of Governors of the
Federal
Reserve System shall impose a Reserve Percentage with respect to
LIBOR deposits
of Bank, then for any period during which such Reserve Percentage
shall apply,
LIBOR shall be equal to the amount determined above divided by an
amount equal
to 1 minus the Reserve Percentage. "Reserve Percentage" shall mean
the minimum
aggregate reserve requirement (including all basic, supplemental,
marginal and
other reserves) which is imposed on member banks of the Federal
Reserve System
against "Euro-currency Liabilities" as defined in Regulation D.
"Banking Day"
9
<Page>
shall mean, in respect of any city, any day on which commercial
banks are open
for business in that city.
"LIBOR LOANS" means any Loans for which the interest rate is the
LIBOR
Rate.
"LIBOR RATE" means a fixed annual rate of interest equal to LIBOR
plus One
and One Half Percent (1.5%).
"LOAN" means a loan, sometimes referred to herein as an advance,
made to
the Borrower by the Bank pursuant to Section 4 of this Agreement,
and "Loans"
means all of such loans, collectively.
"PRIME RATE LOANS" means any Loans for which the interest rate is
based on
the Prime Rate.
"SUBSIDIARY" means, with respect to any person (the "parent"),
any
corporation, association or other business entity of which
securities or other
ownership interests representing more than 50% of the ordinary
voting power are,
at the time as of which any determination is being made, owned or
controlled by
the parent or one or more subsidiaries of the parent, and shall
include any
entities designated as subsidiaries on the Borrower's audited
financial
statements.
"TYPE" means, with respect to any Loan, its nature as a Prime Rate
Loan or
a LIBOR Loan.
"YIELD MAINTENANCE FORMULA" shall be calculated as follows: the
published
rate of United States Treasury Notes or Bills (Bills on a
discounted basis shall
be converted to a bond equivalent) (as published weekly in the
Federal Reserve
Statistical Release in the issue of such publication most recently
preceding the
date of prepayment) with a maturity date that is the same as, or is
the nearest
date subsequent to, the last day of the Interest Period for the
Loan being
prepaid, shall be subtracted from the annual rate of interest
applicable to such
Loan. If the result is zero or a negative number, there shall be no
additional
amount due. If the result is a positive number, then the resulting
percentage
shall be multiplied by the amount of the principal balance being
prepaid. The
resulting amount will be divided by 360 and multiplied by the
number of days
remaining until the end of the applicable Interest Period. Said
amount shall be
reduced to present value, calculated by using the above referenced
applicable
United States Treasury Note or Bill rate and the number of days
remaining
between the date of the prepayment and the end of the applicable
Interest
Period.
(g)
INTEREST
RATE CALCULATIONS; LATE FEE. All computations of interest
shall be made on the basis of a three hundred sixty (360) day year
and the
actual number of days elapsed. If the entire amount of any required
principal
and/or interest is not paid in full within fifteen (15) days after
the same is
due, Borrower shall pay to Bank a late fee equal to five percent
(5%) of the
required payment.
10
<Page>
6.
BANK'S REPORTS. After
the end of each month, Bank will render to
Borrower a statement of Borrower's loan account with Bank
hereunder, showing all
applicable credits and debits. Each statement shall be considered
correct and to
have been accepted by Borrower and shall be conclusively binding
upon Borrower
in respect of all charges, debits and credits of whatsoever nature
contained
therein, and the closing balance shown therein, unless Borrower
notifies Bank in
writing of any discrepancy within sixty (60) days from the mailing
by Bank to
Borrower of any such monthly statement.
7.
SET OFF; EXPENSES.
(a)
Borrower
hereby acknowledges Bank's right of setoff as security for
all liabilities and obligations to Bank, whether now existing or
hereafter
arising, upon and against all deposits, credits, collateral and
property, now or
hereafter in the possession, custody, safekeeping or control of
Bank or any
entity under the control of Bank of America Corporation and its
successors and
assigns or in transit to any of them. At any time, without demand
or notice (any
such notice being expressly waived by Borrower), Bank may setoff
the same or any
part thereof and apply the same to any liability or obligation of
Borrower even
though unmatured and regardless of the adequacy of any other
collateral securing
the Loan. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS
OR REMEDIES
WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE LOAN, PRIOR
TO EXERCISING
ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER
PROPERTY OF
BORROWER, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY
WAIVED.
(b)
The
Borrower shall pay to Bank on demand any and all reasonable
counsel fees and other reasonable expenses incurred by Bank in
connection with
the preparation, interpretation, enforcement, administration or
amendment of
this Agreement or of any documents relating hereto, and any and all
expenses,
including, but not limited to all reasonable attorneys' fees and
expenses, which
may be expended by Bank to obtain or enforce payment in the
prosecution or
defense of any action or concerning any matter growing out of or
connected with
the subject matter of this Agreement, the Obligations or any of
Bank's rights or
interests therein or thereto, including, without limiting the
generality of the
foregoing, any reasonable counsel fees or expenses incurred in any
bankruptcy or
insolvency proceedings and all costs and expenses incurred or paid
by Bank in
connection with the administration, supervision, protection or
realization on
any security held by Bank for the debt secured hereby, whether such
security was
granted by Borrower or by any other person primarily or secondarily
liable (with
or without recourse) with respect to such debt, and all reasonable
costs and
expenses incurred by Bank in connection with the defense,
settlement or
satisfaction of any action, claim or demand asserted against Bank
in connection
with the debt secured hereby, all of which amounts shall be
considered advances
to protect Bank's security, and shall be secured hereby. After an
Event of
Default, and without limiting any other rights or remedies, Bank
may, upon
written notice, at any time pay or discharge any taxes, liens,
security
interests or other encumbrances at any time levied
11
<Page>
against or placed on any of the Borrower's facilities, and may
procure and pay
any premiums on any insurance required to be carried by Borrower,
and provide
for the maintenance and preservation of any of the Borrower's
facilities, and
otherwise take any action reasonably deemed necessary by Bank to
protect its
interests, and all amounts expended by Bank in connection with any
of the
foregoing matters, including reasonable attorneys' fees, shall be
considered
obligations of Borrower.
8.
BORROWER'S
REPORTS.
(a)
Borrower
shall deliver, or cause to be delivered, to Bank, all
documents listed below, as frequently as indicated below, or at
such other times
as Bank may reasonably request, and all other documents and
information
requested by Bank, whether or not the same are listed below, with
such frequency
as Bank may request:
<Table>
<Caption>
Document
Frequency Due
--------
-------------
<S>
<C>
Financial statements for Borrower
Quarterly, within 60 days
and Maine & Maritimes Corporation
after fiscal quarter-end
Annual audited financial reports
Annually, within 90 days
for Borrower and for
after fiscal year-end
Maine &Maritimes Corporation
An Officer's Certificate showing compliance Quarterly, within 60 days
with financial covenants, in form
after fiscal quarter-end
satisfactory to Bank
Annual projected income statement,
Annually, within 90 days
Based on budget, in form reasonably
after the beginning of
satisfactory to Bank and with
the fiscal year in question
monthly detail, for Borrower
</Table>
(b)
Quarterly
financials shall be prepared in accordance with generally
accepted accounting principles consistently applied ("GAAP") and
certified by
Borrower's chief financial officer.
(c)
Annual
audited financial reports shall be prepared in accordance
with generally accepted accounting principles consistently applied,
accompanied
by an opinion thereon, with no exceptions other than those that are
acceptable
to Bank, by a firm of independent public accountants selected by
the Borrower
and reasonably acceptable to Bank and with such independent public
accountant's
statement that they have reviewed the provisions of this Agreement
in accordance
with generally accepted accounting principles and that they have no
knowledge of
any event or condition which constitutes an Event of Default or
which, after
notice
12
<Page>
or expiration of any applicable grace period or both, would
constitute
such an Event of Default or, if they have such knowledge,
specifying the nature
and period of existence thereof, provided, however, that in issuing
such
statement, such accountants shall not be required to go beyond
normal procedures
conducted in connection with their audit.
(d)
In
addition to the foregoing, Borrower shall provide Bank promptly
with such other and additional information concerning Borrower, the
operation of
Borrower's business, and Borrower's financial condition, including
financial
reports and statements, as Bank may from time to time reasonably
request. All
financial information provided to Bank in connection with or
pursuant to this
Agreement shall be prepared in accordance with generally accepted
accounting or
auditing principles (as applicable) applied consistently in the
preparation
thereof and consistently with prior periods to fairly reflect the
financial
condition of Borrower at the close of, and its results of
operations for, the
periods in question.
9.
GENERAL AGREEMENTS OF
BORROWER.
(a)
Borrower
agrees to keep its facilities insured with coverage and in
amounts not less than that usually carried by one engaged in a like
business and
in any event not less than that reasonably required by Bank. In
addition,
Borrower shall maintain appropriate liability insurance and all
insurance
required by law, including any necessary workers' compensation
insurance. All
insurance required hereunder shall be provided by insurance
companies qualified
to do business in Maine, satisfactory to Bank, shall be in such
form and in such
amounts as Bank may reasonably require and, without limiting the
foregoing,
shall provide that such insurance shall not be canceled or modified
without at
least thirty (30) days prior notice to the Bank.
(b)
Borrower
shall, a
