BAYCORP HOLDINGS LTD
INCENTIVE STOCK OPTION AGREEMENT
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<TYPE>EX-10
<SEQUENCE>7
<FILENAME>ex105q2-2003.txt
<DESCRIPTION>INCENTIVE STOCK OPTION AGREEMENT
<TEXT>
                                                             EXHIBIT 10.5

                          BAYCORP HOLDINGS, LTD.

                     INCENTIVE STOCK OPTION AGREEMENT
                     --------------------------------

1.     Grant of Option.  BayCorp Holdings, Ltd., a Delaware corporation
(the "Company"), hereby grants to Anthony M. Callendrello (the "Optionee"),
an option, pursuant to the Company's 1996 Stock Option Plan (the "Plan"),
to purchase an aggregate of 6,920 shares of Common Stock ("Common Stock")
of the Company at a price of $14.45 per share, purchasable as set forth in
and subject to the terms and conditions of this option and the Plan.
Except where the context otherwise requires, the term "Company" shall
include the parent and all present and future subsidiaries of the Company
as defined in Sections 424(e) and 424(f) of the Internal Revenue Code of
1986, as amended or replaced from time to time (the "Code").

2.     Incentive Stock Option.  This option is intended to qualify as an
incentive stock option ("Incentive Stock Option") within the meaning of
Section 422 of the Code.

3.     Exercise of Option and Provisions for Termination.

     (a)  Vesting Schedule.  Except as otherwise provided in this
Agreement, this option may be exercised on or after April 28, 2005, but
prior to the seventh anniversary of the date of grant (hereinafter the
"Expiration Date") in installments as to not more than the number of shares
set forth in the table below during the respective installment periods set
forth in the table below.  The right of exercise shall be cumulative so
that if the option is not exercised to the maximum extent permissible
during any exercise period, it shall be exercisable, in whole or in part,
with respect to all shares not so purchased at any time prior to the
Expiration Date or the earlier termination of this option.  This option may
not be exercised at any time on or after the Expiration Date.

     (b)  Exercise Procedure.  Subject to the conditions set forth in this
Agreement, this option shall be exercised by the Optionee's delivery of
written notice of exercise to the Treasurer of the Company, specifying the
number of shares to be purchased and the purchase price to be paid therefor
and accompanied by payment in full in accordance with Section 4.  Such
exercise shall be effective upon receipt by the Treasurer of the Company of
such written notice together with the required payment.  The Optionee may
purchase less than the number of shares covered hereby, provided that no
partial exercise of this option may be for any fractional share or for
fewer than ten whole shares.

     (c)  Continuous Employment Required.  Except as otherwise provided in
this Section 3, this option may not be exercised unless the Optionee, at
the time he or she exercises this option, is, and has been at all times
since the date of grant of this option, an employee of the Company.  For
all purposes of this option, (i) "employment" shall be defined in
accordance with the provisions of Section 1.421-7(h) of the Income Tax
Regulations or any successor regulations, and (ii) if this option shall be
assumed or a new option substituted therefor in a transaction to which
Section 424(a) of the Code applies, employment by such assuming or
substituting corporation (hereinafter called the "Successor Corporation")
shall be considered for all purposes of this option to be employment by the
Company.

     (d)  Exercise Period Upon Termination of Employment.  If the Optionee
ceases to be employed by the Company for any reason, then, except as
provided in paragraphs (e) and (f) below, the right to exercise this option
shall terminate one year after such cessation (but in no event after the
Expiration Date), provided that this option shall be exercisable only to
the extent that the Optionee was entitled to exercise this option on the
date of such cessation, and provided, further, that if such exercise is
subsequent to the period of three months after such cessation, this option
shall be treated as a non-statutory option which does not meet the
requirements of Section 422 of the Code.  The Company's obligation to
deliver shares upon the exercise of this option shall be subject to the
satisfaction of all applicable federal, state and local income and
employment tax withholding requirements, arising by reason of this option
being treated as a non-statutory option or otherwise.  Notwithstanding the
foregoing, if the Optionee, prior to the Expiration Date, materially
violates the non-competition or confidentiality provisions of any
employment contract, confidentiality and nondisclosure agreement or other
agreement between the Optionee and the Company, the right to exercise this
option shall terminate immediately upon written notice to the Optionee from
the Company describing such violation.

     (e)  Exercise Period Upon Death or Disability.  If the Optionee dies
or becomes disabled (within the meaning of Section 22(e)(3) of the Code)
prior to the Expiration Date while he or she is an employee of the Company,
or if the Optionee dies within three months after the Optionee ceases to be
an employee of the Company (other than as the result of a discharge for
"cause" as specified in paragraph (f) below), this option shall be
exercisable, within the period of one year following the date of death or
disability of the Optionee (but in no event after the Expiration Date), by
the Optionee or by the person to whom this option is transferred by will or
the laws of descent and distribution, provided that this option shall be
exercisable only to the extent that this option was exercisable by the
Optionee on the date of his or her death or disability.  Except as
otherwise indicated by the context, the term "Optionee", as used in this
option, shall be deemed to include the estate of the Optionee or any person
who acquires the right to exercise this option by bequest or inheritance or
otherwise by reason of the death of the Optionee.

     (f)  Discharge for Cause.  If the Optionee, prior to the Expiration
Date, is discharged by the Company for "cause" (as defined below), the
right to exercise this option shall terminate immediately upon such
cessation of employment.  "Cause" shall mean willful misconduct in
connection with the Optionee's employment or willful failure to perform his
or her employment responsibilities in the best interests of the Company
(including, without limitation, breach by the Optionee of any provision of
any employment, nondisclosure, non-competition or other similar agreement
between the Optionee and the Company), as determined by the Company, which
determination shall be conclusive.  The Optionee shall be considered to
have been discharged "for cause" if the Company determines, within 30 days
after the Optionee's resignation, that discharge for cause was warranted.

4.     Payment of Purchase Price.

     (a)  Method of Payment.  Payment of the purchase price for shares
purchased upon exercise of this option shall be made  (i) by delivery to
the Company of cash or a check to the order of the Company in an amount
equal to the purchase price of such shares, (ii) subject to the consent of
the Company, by delivery to the Company of shares of Common Stock of the
Company then owned by the Optionee having a fair market value equal in
amount to the purchase price of such shares, (iii) by any other means which
the Board of Directors determines are consistent with the purpose of the
Plan and with applicable laws and regulations (including, without
limitation, the provisions of Rule 16b-3 under the Securities Exchange Act
of 1934 and Regulation T promulgated by the Federal Reserve Board), or
(iv) by any combination of such methods of payment.

     (b)  Valuation of Shares or Other Non-Cash Consideration Tendered in
Payment of Purchase Price.  For the purposes hereof, the fair market value
of any share of the Company's Common Stock or other non-cash consideration
which may be delivered to the Company in exercise of this option shall be
determined in good faith by the Board of Directors of the Company.

     (c)  Delivery of Shares Tendered in Payment of Purchase Price.  If the
Optionee exercises options by delivery of shares of Common Stock of the
Company, the certificate or certificates representing the shares of Common
Stock of the Company to be delivered shall be duly executed in blank by the
Optionee or shall be accompanied by a stock power duly executed in blank
suitable for purposes of transferring such shares to the Company.
Fractional shares of Common Stock of the Company will not be accepted in
payment of the purchase price of shares acquired upon exercise of this
option.

     (d)  Restrictions on Use of Option Stock.  Notwithstanding the
foregoing, no shares of Common Stock of the Company may be tendered in
payment of the purchase price of shares purchased upon exercise of this
option if the shares to be so tendered were acquired within twelve (12)
months before the date of such tender, through the exercise of an option
granted under the Plan or any other stock option or restricted stock plan
of the Company.

5.     Delivery of Shares; Compliance With Securities Laws, Etc.

     (a)  General.  The Company shall, upon payment of the option price for
the number of shares purchased and paid for, make prompt delivery of such
shares to the Optionee, provided that if any law or regulation requires the
Company to take any action with respect to such shares before the issuance
thereof, then the date of delivery of such shares shall be extended for the
period necessary to complete such action.

     (b)  Listing, Qualification, Etc.  This option shall be subject to the
requirement that if, at any time, counsel to the Company shall determine
that the listing, registration or qualification of the shares subject
hereto upon any securities exchange or under any state or federal law, or
the consent or approval of any governmental or regulatory body, or that the
disclosure of non-public information or the satisfaction of any other
condition is necessary as a condition of, or in connection with, the
issuance or purchase of shares hereunder, this option may not be exercised,
in whole or in part, unless such listing, registration, qualification,
consent or approval, disclosure or satisfaction of such other condition
shall have been effected or obtained on terms acceptable to the Board of
Directors.  Nothing herein shall be deemed to require the Company to apply
for, effect or obtain such listing, registration, qualification, or
disclosure, or to satisfy such other condition.

6.     Nontransferability of Option.  Except as provided in paragraph (e)
of Section 3, this option is personal and no rights granted hereunder may
be transferred, assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) nor shall any such rights be subject to
execution, attachment or similar process.  Upon any attempt to transfer,
assign, pledge, hypothecate or otherwise dispose of this option or of such
rights contrary to the provisions hereof, or upon the levy of any
attachment or similar process upon this option or such rights, this option
and such rights shall, at the election of the Company, become null and
void.

7.     No Special Employment Rights.  Nothing contained in the Plan or this
option shall be construed or deemed by any person under any circumstances
to bind the Company to continue the employment of the Optionee for the
period within which this option may be exercised.

8.     Rights as a Shareholder.  The Optionee shall have no rights as a
shareholder with respect to any shares which may be purchased by exercise
of this option (including, without limitation, any rights to receive
dividends or non-cash distributions with respect to such shares) unless and
until a certificate representing such shares is duly issued and delivered
to the Optionee.  No adjustment shall be made for dividends or other rights
for which the record date is prior to the date such stock certificate is
issued.

9.     Adjustment Provisions.

     (a)  General.  If, through, or as a result of, any merger,
consolidation, sale of all or substantially all of the assets of the
Company, reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split or other similar transaction,
(i) the outstanding shares of Common Stock are increased or decreased or
are exchanged for a different number or kind of shares or other securities
of the Company, or (ii) additional shares or new or different shares or
other securities of the Company or other non-cash assets are distributed
with respect to such shares of Common Stock or other securities, the
Optionee shall, with respect to this option or any unexercised portion
hereof, be entitled to the rights and benefits, and be subject to the
limitations, set forth in Section 15(a) of the Plan.

     (b)  Board Authority to Make Adjustments.  Any adjustments under this
Section 9 will be made by the Board of Directors, whose determination as to
what adjustments, if any, will be made and the extent thereof will be
final, binding and conclusive.  No fractional shares will be issued
pursuant to this option on account of any such adjustments.

     (c)  Limits on Adjustments.  No adjustment shall be made under this
Section 9 which would, within the meaning of any applicable provision of
the Code, constitute a modification, extension or renewal of this option or
a grant of additional benefits to the Optionee.

10.     Mergers, Consolidation, Distributions, Liquidations Etc.  In the
event of a consolidation or merger or sale of all or substantially all of
the assets of the Company in which outstanding shares of Common Stock are
exchanged for securities, cash or other property of any other corporation
or business entity, or in the event of a liquidation of the Company, prior
to the Expiration Date or termination of this option, the Optionee shall,
with respect to this option or any unexercised portion hereof, be entitled
to the rights and benefits, and be subject to the limitations, set forth in
Section 16(a) of the Plan.

11.     Withholding Taxes.  The Company's obligation to deliver shares upon
the exercise of this option shall be subject to the Optionee's satisfaction
of all applicable federal, state and local income and employment tax
withholding requirements.

12.     Limitations on Disposition of Incentive Stock Option Shares.  It is
understood and intended that this option shall qualify as an "incentive
stock option" as defined in Section 422 of the Code.  Accordingly, the
Optionee understands that in order to obtain the benefits of an incentive
stock option under Section 421 of the Code, no sale or other disposition
may be made of any shares acquired upon exercise of the option within one
year after the day of the transfer of such shares to him, nor within two
years after the grant of the option.  If the Optionee intends to dispose,
or does dispose (whether by sale, exchange, gift, transfer or otherwise),
of any such shares within said periods, he or she will notify the Company
in writing within ten days after such disposition.

13.     Investment Representations; Legends.

     (a)  Representations.  The Optionee represents, warrants and covenants
that:

          (i)  Any shares purchased upon exercise of this option
shall be acquired for the Optionee's account for investment only and
not with a view to, or for sale in connection with, any distribution
of the shares in violation of the Securities Act of 1933 (the
"Securities Act") or any rule or regulation under the Securities Act.

          (ii)  The Optionee has had such opportunity as he or she has
deemed adequate to obtain from representatives of the Company such
information as is necessary to permit the Optionee to evaluate the merits
and risks of his or her investment in the Company.

          (iii)  The Optionee is able to bear the economic risk of
holding shares acquired pursuant to the exercise of this option for
an indefinite period.

          (iv)  The Optionee understands that (A) the shares acquired
pursuant to the exercise of this option will not be registered under
the Securities Act and are "restricted securities" within the meaning
of Rule 144 under the Securities Act; (B) such shares cannot be sold,
transferred or otherwise disposed of unless they are subsequently
registered under the Securities Act or an exemption from registration
is then available; (C) in any event, an exemption from registration
under Rule 144 or otherwise under the Securities Act may not be
available for at least two years and even then will not be available
unless a public market then exists for the Common Stock, adequate
information concerning the Company is then available to the public
and other terms and conditions of Rule 144 are complied with; and
(D) there is now no registration statement on file with the
Securities and Exchange Commission with respect to any stock of the
Company and the Company has no obligation or current intention to
register any shares acquired pursuant to the exercise of this option
under the Securities Act.

          (v)  The Optionee agrees that, if the Company offers for
the first time any of its Common Stock for sale pursuant to a
registration statement under the Securities Act, the Optionee will
not, without the prior written consent of the Company, publicly
offer, sell, contract to sell or otherwise dispose of, directly or
indirectly, any shares purchased upon exercise of this option for a
period of 90 days after the effective date of such registration
statement.

By making payment upon exercise of this option, the Optionee shall be
deemed to have reaffirmed, as of the date of such payment, the
representations made in this Section 13.

     (b)  Legends on Stock Certificates.  All stock certificates
representing shares of Common Stock issued to the Optionee upon exercise of
this option shall have affixed thereto legends substantially in the
following forms, in addition to any other legends required by applicable
state law:

"The shares of stock represented by this
certificate have not been registered under the
Securities Act of 1933 and may not be transferred,
sold or otherwise disposed of in the absence of an
effective registration statement with respect to
the shares evidenced by this certificate, filed and
made effective under the Securities Act of 1933, or
an opinion of counsel satisfactory to the Company
to the effect that registration under such Act is
not required."

"The shares of stock represented by this
certificate are subject to certain restrictions on
transfer contained in an Option Agreement, a copy
of which will be furnished upon request by the
issuer."

14.     Miscellaneous.

     (a)  Except as provided herein, this option may not be amended or
otherwise modified unless evidenced in writing and signed by the Company
and the Optionee.

     (b)  All notices under this option shall be mailed or delivered by
hand to the parties at their respective addresses set forth beneath their
names below or at such other address as may be designated in writing by
either of the parties to one another.

     (c)  This option shall be governed by and construed in accordance with
the laws of the State of Delaware.



Date of Grant:                       BAYCORP HOLDINGS, LTD.

April 28, 2003

                                     By:   /s/ Frank W. Getman Jr.
                                        ------------------------------
                                     Name:    Frank W. Getman Jr.
                                     Title:   President
                                     Address: One New Hampshire Avenue
                                              Suite 125
                                              Portsmouth, NH  03801




<PAGE>

                            OPTIONEE'S ACCEPTANCE

The undersigned hereby accepts the foregoing option and agrees to the
terms and conditions thereof.  The undersigned hereby acknowledges receipt
of a copy of the Company's 1996 Stock Option Plan.


                                      OPTIONEE

                                       /s/ Anthony M. Callendrello
                                      ------------------------------
                                      Anthony M. Callendrello
                                      Address:  63 Old Town Farm Road
                                                Exeter, NH 03833



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