SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR SECTION
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended JUNE 30, 1998 Commission File No. 0-505
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BANGOR HYDRO-ELECTRIC COMPANY
------------------------------------------------------
(Exact Name of Registrant as specified in its Charter
MAINE 01-0024370
- ------------------------------- --------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
33 STATE STREET, BANGOR, MAINE 04401
- ---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code 207-945-5621
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NONE
- -----------------------------------------------------------------------
Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report
Outstanding Common Stock, $5 Par Value - 7,363,424 Shares
June 30, 1998
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
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FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1998
PART I - FINANCIAL INFORMATION
PAGE
Cover Page 1
Index 2
Consolidated Statements of Income 3
Management's Discussion and Analysis of Results of
Operations and Financial Condition 4
Consolidated Balance Sheets - June 30, 1998 and
December 31, 1997 21
Consolidated Statements of Capitalization 23
Consolidated Statements of Cash Flows 24
Consolidated Statements of Common Stock Investment 25
Notes to the Consolidated Financial Statements 26
PART II - OTHER INFORMATION 38
Item 4 - Submission of Matters to a Vote of
Security Holders 39
Item 6 - Exhibits and Reports on Form 8-K 39
Signature Page 41
BANGOR HYDRO-ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF INCOME
000's Omitted Except Per Share Amounts
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1998 1997 1998 1997
---------------------------------------
ELECTRIC OPERATING REVENUES $ 46,601 $ 42,236 $ 95,701 $ 90,412
---------------------------------------
OPERATING EXPENSES:
Fuel for generation and purchased
power $ 20,045 $ 21,006 $ 41,404 $ 45,288
Other operation and maintenance 8,318 7,935 16,628 15,697
Depreciation and amortization 2,440 2,414 5,054 5,166
Amortization of Seabrook Nuclear
Unit 425 425 850 850
Amortization of contract buyouts 4,950 5,229 10,041 10,457
Taxes -
Property and payroll 1,278 1,411 2,813 2,823
State income 184 (282) 412 (562)
Federal income 955 (798) 2,083 (860)
---------------------------------------
$ 38,595 $ 37,340 $ 79,285 $ 78,859
---------------------------------------
OPERATING INCOME $ 8,006 $ 4,896 $ 16,416 $ 11,553
---------------------------------------
OTHER INCOME AND (DEDUCTIONS):
Allowance for equity funds used
during construction $ 109 $ 88 $ 178 $ 183
Other, net of applicable income
taxes 272 246 469 543
---------------------------------------
$ 381 $ 334 $ 647 $ 726
---------------------------------------
INCOME BEFORE INTEREST EXPENSE $ 8,387 $ 5,230 $ 17,063 $ 12,279
---------------------------------------
INTEREST EXPENSE:
Long-term debt $ 5,786 $ 5,722 $ 11,261 $ 11,477
Other 507 717 1,429 1,483
Allowance for borrowed funds used
during construction (173) (172) (302) (360)
---------------------------------------
$ 6,120 $ 6,267 $ 12,388 $ 12,600
---------------------------------------
NET INCOME (LOSS) $ 2,267 $ (1,037)$ 4,675 $ (321)
DIVIDENDS ON PREFERRED STOCK 311 344 623 689
---------------------------------------
EARNINGS (LOSS) APPLICABLE TO
COMMON STOCK $ 1,956 $ (1,381)$ 4,052 $ (1,010)
=======================================
WEIGHTED AVERAGE NUMBER OF SHARES 7,363 7,363 7,363 7,363
=======================================
EARNINGS (LOSS) PER COMMON SHARE,
Basic $ 0.27 $ 0.19 $ 0.55 $ 0.14
Diluted $ 0.26 $ 0.19 $ 0.55 $ 0.14
=======================================
DIVIDENDS DECLARED PER COMMON SHARE $ - $ - $ - $ -
============================== ========
See notes to the consolidated financial statements.
BANGOR HYDRO-ELECTRIC COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
Management's Discussion and Analysis of the Results of
Operations and Financial Condition contained in Bangor Hydro-Electric
Company's (the Company) Annual Report on Form 10-K for the year ended
December 31, 1997 (1997 Form 10-K) should be read in conjunction with the
comments below.
EARNINGS
The quarter ended June 30, 1998 resulted in earnings of $.27
per common share, compared to a loss of $.19 per common share for the quarter
ended June 30, 1997. The improvement in first quarter earnings is
attributable largely to the February 9, 1998 rate increase authorized by the
Maine Public Utilities Commission (MPUC) designed to increase annual revenues
by approximately $13.2 million.
IMPORTANT CURRENT ACTIVITIES-
PENOBSCOT ENERGY RECOVERY COMPANY - As previously reported the Company has
been working to restructure a power purchase contract with the Penobscot
Energy Recovery Company (PERC), its last remaining high-priced non-utility
generator contract that offers a potential for substantial savings. In June
1998 the Company successfully completed this major restructuring of its
obligations under various agreements with PERC.
The restructuring will result in a substantial savings for the
Company and will allow PERC to continue to meet the solid waste disposal
needs of Maine communities.
This major restructuring involves several separate components
including the following:
1) PERC refinanced $45 million in existing bonds with a remaining five year
term over a twenty year period using tax exempt bonds issued by the Finance
Authority of Maine under its Electric Rate Stabilization
Program.
2) PERC will share the net revenues generated by the facility on a pro rata
basis with the Company and the Municipal Review Committee (MRC) which
represents over 130 Maine municipalities receiving waste disposal service
from PERC.
3) The Company made a one-time payment of $6 million to PERC and will make
additional quarterly payments of $250,000 for four years totaling $4 million.
4) Bangor Hydro and PERC amended their existing power purchase agreement to
include the MRC as a party.
5) The MRC's constituent municipalities extended their contracts with PERC
by 15 years to supply solid waste to the facility through 2018.
6) Bangor Hydro issued two million warrants to purchase common stock, one
million each to PERC and the MRC. Each warrant entitles the warrant holder
to acquire one share of Bangor Hydro common stock at a price of $7 per share.
No warrants may be exercised within the first nine months after their
issuance, and they become exercisable in 500,000 share blocks following the
expiration of nine months, 21 months, 33 months, and 45 months from the
closing date.
Depending upon a number of assumptions, including the ultimate
cost of the warrants and markets for solid waste disposal, it is projected
that the restructuring will result in cost savings to Bangor Hydro over the
next twenty years with a net present value of $30-40 million. The
anticipated savings resulting from this transaction were used to reduce the
level of electric rates approved by the MPUC in the Company's recent general
rate case by approximately $3 million on an annual basis. With the
completion of the transaction, the Company will now begin realizing these
benefits.
The refinancing by PERC was made possible by the Maine
Legislature through an amendment to the Electric Rate Stabilization Program
that allowed PERC to qualify for such financing. Under the Program, the State
of Maine's "moral obligation" supports the new non-recourse debt.
The Company has deferred, as a regulatory asset, the $6
million payment to PERC, approximately $1.5 million in costs associated with
the contract restructuring, and $2 million for the estimated fair value of
the warrants. As discussed above, the Company is currently recovering PERC
restructuring costs in rates. The $2 million in warrants have also increased
additional paid-in capital.
AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT - As previously
reported, during 1997 the Company negotiated amendments to the credit
agreement with its lending banks in order to resolve potential violations of
certain financial covenants. As a result of those amendments, the Company
reported that during 1998 or beyond, future cash needs might exceed the
borrowing capacity under the credit facility, and accordingly, the Company
might be required to find new sources of financing.
On June 29, 1998, the Company entered into an Amended and
Restated Revolving Credit and Term Loan Agreement with a new group of lenders
that provides a two year term loan of $45 million and a revolving credit
commitment of $30 million. Under current projections of cash needs, the new
facilities should provide adequate borrowing capacity. The new credit
agreement contains financial covenants which are not significantly different
than the covenants contained in the previous credit agreement. The Company
was in compliance with all covenants associated with the new credit agreement
as of June 30, 1998.
The credit agreement also provides for the issuance of a
letter of credit required to support $4.2 million of the Company's Pollution
Control Revenue Bonds. To secure the existing letter of credit related to
the Pollution Control Revenue Bonds, until the new letter of credit could be
issued, the Company deposited approximately $4.6 million of the proceeds from
this financing with a third party trustee. This amount has been included
with Other Investments on the Company's Consolidated Balance Sheets at June
30, 1998.
REGULATORY MATTERS - The Company is preparing for the introduction of retail
electric competition on March 1, 2000, as required by a Maine legislative act
signed on May 29, 1997. That process includes complying with a state mandate
to divest generation-related assets. The Company's divestiture process
remains on schedule. Binding bids from a short list of bidders are expected
to be received in August 1998, with financial closing scheduled for the first
quarter of 1999.
Also in connection with the advent of retail competition, the
Company is engaged in a regulatory proceeding at the MPUC to determine the
revenue requirements of the stand-alone Bangor Hydro transmission and
distribution company and the manner of recovery of stranded costs.
MONETIZATION OF POWER SALE CONTRACT - As reported in the 1997 Form 10-K, the
Company had been negotiating a transaction for the monetization of a power
sale contract with UNITIL Power Corp. (UNITIL), a New Hampshire based
electric utility. The Company currently provides power to UNITIL at
significantly above-market rates, with the contract term ending in the year
2003. Based upon current projections of wholesale electricity markets, it is
expected that the rates charged under the UNITIL contract will remain at
above-market levels for the remainder of the contract term. Therefore, the
assignment of the Company's rights under the contract has a positive present
cash value. On March 31, 1998, the Company completed a transaction with a
financial institution that provided a loan of approximately $23 million in
net proceeds secured by the value of the UNITIL contract.
Also as previously reported, beginning in early 1997, the
Company failed to comply with certain financial covenants under its bank
lending agreements and received temporary waivers from the lending banks. By
using a portion of the proceeds of the UNITIL monetization to pay down a
portion of the bank obligations, the Company was able to negotiate permanent
waivers of the earlier financial covenant violations.
At the time the Company filed its 1997 Form 10-K, the
monetization of the UNITIL contract had not been completed and the financial
covenant violations had, therefore, not been waived permanently. As
discussed in the 1997 Form 10-K, all debt under the bank credit facilities,
including certain medium term notes, was classified as a current liability on
the Company's Consolidated Balance Sheets as of December 31, 1997. As a
result of the permanent waivers that became effective upon completion of the
UNITIL monetization, $22 million of medium term notes, previously classified
as a current liability, were reclassified as a long-term liability as of
March 31, 1998.
STORM DAMAGE - As discussed in the 1997 Form 10-K, the Company suffered
widespread damage throughout its service territory to its transmission and
distribution equipment during a major ice storm in January 1998. The
Company's incremental costs associated with the service restoration effort
were approximately $4.2 million, and additional incremental costs associated
with line clearance work are expected to be incurred in the future. The $4.2
million has been deferred and included in Other Deferred Charges on the
Company's Consolidated Balance Sheets as of June 30, 1998. The MPUC issued
an order authorizing the Company to defer incremental, non-capitalized storm
damage expenses for future recovery through the rates charged to customers.
MPUC proceedings on the recovery of the incremental ice storm costs have been
delayed, due to the possibility of federal funds being available to utilities
for ice storm property damage. The Company is uncertain whether any federal
funds will be received or the timing of MPUC proceedings. The Company
believes its storm damage costs were prudently incurred and it should,
therefore, be allowed to recover them in rates if it does not otherwise
receive publicly financed assistance.
BANGOR GAS JOINT VENTURE - In the second quarter of 1998, Bangor Gas Company,
LLC (Bangor Gas) received unconditional authority from the MPUC to provide
natural gas service to the greater Bangor area. For more discussion of the
Bangor Gas joint venture, see the 1997 Form 10-K.
REVENUES
Electric operating revenue increased by $4.4 million, or 10.3%
in the second quarter of 1998 due principally to the impact of the 3.8%
temporary rate increase effective on July 1, 1997 and the additional 5.83%
rate increase effective February 13, 1998. The electric operating revenue
increase was also affected by a $1.5 million increase in off-system sales in
the second quarter of 1998. Offsetting these increases was a 5.3% decrease
in total kilowatt hour (KWH) sales (excluding off-system sales) in the second
quarter of 1998 as compared to second quarter 1997 sales. The decrease in
KWH sales in the second quarter of 1998 was impacted by significantly warmer
weather as compared to the 1997 quarter.
EXPENSES
Fuel for generation and purchased power expense decreased
$961,000 or 4.6% in the second quarter of 1998 as compared to 1997. The
decreased expense was a result of several factors. The largest was reduced
expense associated with the permanent shutdown of the Maine Yankee nuclear
plant in 1998 as compared to maintaining the plant in an operating mode in
the first quarter of 1997. Also, in connection with the Company's recent
rate order (See the 1997 Form 10-K for discussion of the rate order), the
Company was ordered to defer, for future recovery, the excess of actual Maine
Yankee related costs incurred during 1998 over the Maine Yankee costs
included in the rate order. This deferral mechanism resulted in a reduction
in expense in the second quarter of 1998 of approximately $419,000. The
reduction in expense in the second quarter of 1998 was also impacted by the
previously mentioned 5.3% decrease in KWH sales. The Company also recorded a
$500,000 benefit in the second quarter of 1998 related to savings to be
realized from the previously discussed PERC contract restructuring. These
increases were offset by the previously mentioned $1.5 million increase in
off-system sales in the second quarter of 1998. Purchases from contracts
tied largely to the cost of oil decreased in 1998, and these decreases were
approximately offset by payouts under the Company's fuel hedging program.
Other operation and maintenance (O&M) expense increased by
$383,000 in the second quarter of 1998. O&M payroll expense increased by
$345,000 due principally to significantly less payroll charged to the
Company's capital program in the second quarter of 1998. Also affecting the
increased O&M payroll was a 3% union wage increase effective January 1, 1998.
These increases were offset to some extent by lower employee levels in 1998.
Depreciation and amortization expense increased $26,000 in the
second quarter of 1998 as compared to the 1997 quarter, due principally to
the impact of anticipated 1998 property additions. Effective February 13,
1998, in connection with the Company's most recent rate order, the Company
lengthened the depreciable lives of its large information system capital
projects from seven to ten years, and began amortizing its $3.6 million
overaccumulated depreciation reserve ($450,000 amortization in the second
quarter of 1998), thus reducing depreciation expense.
The $279,000 decrease in amortization of contract buyouts in
the 1998 quarter was also due principally to the recent rate order, whereby
the MPUC required the Company to reduce the amortization of the deferred
regulatory asset associated with the 1993 buyout of one of its high-priced
non-utility generator contracts by an annualized amount of approximately $1.1
million, effective February 13, 1998.
The decrease in property and other taxes in the second quarter
of 1998 was due principally to a reduction in property taxes associated with
the Company's 8.33% ownership in the oil-fired 600 megawatt Wyman Unit No.4
in Yarmouth, Maine. The Company records its proportionate share of the
direct expenses of this unit.
The increase in income taxes was principally a function of
greater earnings in the second quarter of 1998 as compared to the 1997
quarter. See Footnote 2 to the Consolidated Financial Statements for a
reconciliation of the Company's effective income tax rate.
Allowance for funds used during construction increased by
$27,000 in the 1998 quarter as compared to 1997. This increase was due
principally to carrying costs being recorded on deferred incremental Maine
Yankee and deferred incremental ice storm costs in the second quarter of
1998. These increases were offset, to some extent, by the effect of lower
levels of construction work in progress in the 1998 quarter.
Long-term debt interest expense increased $64,000 in the
second quarter of 1998 as compared to 1997 due principally to the previously
discussed $24.8 million in medium term notes issued on March 31, 1998, in
connection with the UNITIL purchased power contract monetization. Offsetting
this increase was $18 million in principal repayments in 1997 and 1998 on the
medium term notes associated with the Company's revolving credit facility,
sinking fund payments on the Company's 12.25% first mortgage bonds, and the
final maturity of $2.5 million of 6.75% series First Mortgage Bonds in March
1998.
Other interest expense, which is composed principally of
interest expense on short term borrowings, decreased due to a $13.5 million
decrease in weighted average short-term borrowings outstanding in the 1998
quarter as compared to 1997, offset somewhat by an increase in average short-
term interest rates in 1998.
SIX MONTHS OF 1998 AS COMPARED TO THE SIX MONTHS OF 1997
EARNINGS
Earnings for the six months ended June 30, 1998 were $.55 per
common share, compared to a loss of $.14 per common share for the 1997
period. As previously discussed, the increased earnings were principally a
result of the February 9, 1998 rate increase authorized by the MPUC.
Earnings in the 1997 period were positively affected by three
transactions that were nonrecurring in nature. The Company recorded $335,000
in revenues from the sale of air emission allowances to a coal fired
generating facility, and $350,000 in revenue was recognized under a shared
savings distribution agreement with another utility. Also, the Company
recorded a $204,000 state income tax benefit as the result of an IRS
examination of the Company's 1994 federal income tax return. Without the
impact of these one-time events benefitting earnings, the Company would have
incurred a $.22 loss per common share in the 1997 period.
REVENUES
The $5.3 million increase in electric operating revenues was
due primarily to the previously mentioned rate increases in July 1997 and
February 1998, as well as a $1.6 million increase in off-system sales in the
1998 period. Offsetting these increases, to some extent, were a 5.1%
reduction in total KWH sales (excluding off-system sales) in 1998 and the
impact of the previously discussed sale of air emission allowances and
revenue associated with the shared distribution savings with another utility
in 1997. The decrease in sales in 1998 was due to service interruption
during the ice storm in January 1998, as well as significantly warmer weather
in the winter and spring of 1998 as compared to 1997.
EXPENSES
Fuel for generation and purchased power expense decreased by
$3.9 million in the 1998 period as compared to 1997. The decrease in largely
attributable to the same reasons discussed above for the second quarter of
1998 as compared to the second quarter of 1997. The Maine Yankee deferral
mechanism resulted in an approximately $1.2 million reduction in expense in
the 1998 period.
Other O&M expense increased by $931,000 for the six months
ended June 1998 as compared to the 1997 period. O&M payroll expense
increased by $959,000 due principally to significantly less payroll charged
to the Company's capital program in the 1998 period. The lower capital labor
was primarily a result of service restoration efforts associated with the
January 1998 ice storm. The Company was ordered by the MPUC to defer
incremental non-capital costs related to the ice storm, but the non-
incremental labor costs were charged principally to other O&M in the first
quarter of 1998. The change from 1997 to 1998 was also affected by the
previously discussed wage increases and changes in employee levels.
Depreciation and amortization expense decreased $112,000 in
1998 as compared to 1997 due principally to the previously mentioned
lengthening of lives of information system capital assets and the
amortization of the overaccumulated depreciation reserve, offset by the
impact of 1998 property additions.
The decreases in amortization of contract buyouts and property
and other taxes and the increase in income taxes in 1998 were due principally
to the same reasons discussed above for the second quarter of 1998 as
compared to the second quarter of 1997.
The decrease in AFUDC was attributable to reductions in
construction expenditures in 1998 as compared to 1997, offset by $221,000 in
carrying costs recorded in connection with deferred incremental Maine Yankee
and deferred incremental ice storm costs in 1998.
Other income decreased by $74,000 in 1998 due principally to
incurring start-up costs associated with non-core business ventures.
The reduction in long-term debt interest expense in 1998 was
due primarily to the previously discussed principal repayments on various
long-term debt issues, offset by the issuance of the $24.8 million of medium
term notes on March 31, 1998.
Other interest expense decreased principally for the same
reasons discussed above for the second quarter of 1998 as compared to the
second quarter of 1997. The weighted average short-term borrowings
outstanding decreased by $5.4 million in the 1998 period as compared to the
1997 period.
LIQUIDITY AND CAPITAL RESOURCES
The Consolidated Statements of Cash Flows reflect events in
the first six months of 1998 and 1997 as they affect the Company's liquidity.
Net cash provided by operations was $8.8 million in 1998 as compared to $21.0
million in the 1997. Negatively impacting cash flows from operations in the
1998 period were the approximately $7.5 million in costs incurred to
restructure the PERC purchased power contract as well as approximately $4
million in incremental costs incurred in connection with the January 1998 ice
storm. Cash flows were also reduced by the effect of a large customer, who
prepaid its electric usage for a one-year period in the third quarter of
1997. Offsetting these cash flow reductions was the beneficial impact of the
3.8% temporary rate increase on July 1, 1997 and the 5.83% rate increase
effective February 13, 1998.
Due principally to costs incurred to rebuild a major
transmission line damaged in the January 1998 ice storm, construction
expenditures were $1.7 million higher in 1998 as compared to 1997.
Dividends paid on common stock were lower in 1998 due to the
suspension of the common dividend, beginning with the first quarter of 1997.
The reduction in preferred dividends paid resulted principally from a $1.5
million sinking fund payment made on the Company's 8.76% mandatory redeemable
preferred stock in December 1997.
The Company in each period made sinking fund payments on its
12.25% first mortgage bonds. In the first quarter of 1998 the Company made
the final $2.5 million payment on its 6.75% first mortgage bonds and made a
$4 million principal repayment on its medium term notes. In June 1998 the
Company made a $12.3 million principal payment on its Finance Authority of
Maine Revenue Notes. Also, as previously discussed, in connection with the
new credit agreement, the Company fully repaid its $30 million in outstanding
medium term notes in June 1998.
As previously discussed, in connection with the monetization
of the UNITIL contract, the Company issued $24.8 million in medium term notes
on March 31, 1998. The Company's net proceeds from this issuance were $23.3
million, due to the requirement to deposit $1.5 million in a capital reserve
fund for the final payment of principal and interest in 2002. Of the $23.3
million of proceeds received, the Company utilized $19 million to repay
borrowings outstanding under its revolving credit facility. The remaining
funds were utilized for the PERC purchased power contract restructuring
transaction discussed above.
As previously discussed, in June 1998 the Company entered into
an Amended and Restated Revolving Credit and Term Loan Agreement with a new
group of lenders that provides a two year term loan of $45 million and a
revolving credit commitment of $30 million. Under current projections of
cash needs, the new credit facilities should provide the Company with
adequate borrowing capacity. As previously discussed, in order secure the
existing letter of credit related to the Pollution Control Revenue Bonds,
until a new letter of credit could be issued, the Company deposited
approximately $4.6 million of the proceeds from this financing with a third
party trustee.
NEW ACCOUNTING PRONOUNCEMENT
In June 1998, the Financial Accounting Standards Board issued
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities" (FASB 133), and is effective for fiscal years beginning after
June 15, 1999. FASB 133 establishes accounting and reporting standards for
derivative instruments and for hedging activities. It requires that an
entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value.
The affects of the adoption of FASB 133 on the Company's financial statements
are currently not known.
OTHER
Management's Discussion and Analysis of Results of Operations
and Financial Condition contains items that are "forward-looking" as defined
in the Private Securities Litigation Reform Act of 1995. These statements are
subject to certain risks and uncertainties that could cause actual results to
differ materially from those anticipated in the forward-looking statements.
Readers should not place undue reliance on forward-looking statements, which
reflect management's view only as of the date hereof. The Company undertakes
no obligation to publicly revise these forward-looking statements to reflect
subsequent events or circumstances. Factors that might cause such differences
include, but are not limited to, future economic conditions, relationship
with lenders, earnings retention and dividend payout policies, electric
utility restructuring, developments in the legislative, regulatory and
competitive environments in which the Company operates, and other
circumstances that could affect revenues and costs.
BANGOR HYDRO-ELECTRIC COMPANY
CONSOLIDATED BALANCE SHEETS
000's Omitted
(Unaudited)
Jun.30, Dec. 31,
ASSETS 1998 1997
--------------------
INVESTMENT IN UTILITY PLANT:
Electric plant in service, at original cost $ 346,383 $ 341,009
Less - Accumulated depreciation and amortization 101,502 96,595
---------- ---------
$ 244,881 $ 244,414
Construction work in progress 15,626 12,011
---------- ---------
$ 260,507 $ 256,425
Investments in corporate joint ventures:
Maine Yankee Atomic Power Company $ 5,831 $ 5,532
Maine Electric Power Company, Inc. 360 326
---------- ---------
$ 266,698 $ 262,283
---------- ---------
OTHER INVESTMENTS, principally at cost $ 10,394 $ 5,274
---------- ---------
FUNDS HELD BY TRUSTEE, at cost $ 22,700 $ 21,196
---------- ---------
CURRENT ASSETS:
Cash and cash equivalents $ 1,460 $ 937
Accounts receivable, net of reserve 16,542 16,615
Unbilled revenue receivable 10,211 11,605
Inventories, at average cost:
Material and supplies 2,838 2,759
Fuel oil 416 35
Prepaid expenses 705 1,207
Deferred Maine Yankee refueling costs 0 286
---------- ---------
Total current assets $ 32,172 $ 33,444
---------- ---------
DEFERRED CHARGES:
Investment in Seabrook Nuclear Project, net of
accumulated amortization of $29,324 in 1998
and $28,474 in 1997 $ 29,518 $ 30,368
Costs to terminate/restructure power contracts,
net of accumulated amortization of $69,657
in 1998 and $59,616 in 1997 147,075 147,633
Maine Yankee decommissioning costs 56,509 60,924
Deferred regulatory assets 32,411 32,551
Demand-side management costs 1,242 1,705
Other 11,521 5,205
---------- ---------
Total deferred charges $ 278,276 $ 278,386
---------- ---------
Total assets $ 610,240 $ 600,583
========== ==========
See notes to the consolidated financial statements.
BANGOR HYDRO-ELECTRIC COMPANY
CONSOLIDATED BALANCE SHEETS
000's Omitted
(Unaudited)
Jun.30, Dec. 31,
STOCKHOLDERS' INVESTMENT AND LIABILITIES 1998 1997
--------------------
CAPITALIZATION:
Common stock investment $ 112,646 $ 106,558
Preferred stock 4,734 4,734
Preferred stock subject to mandatory redemption,
exclusive of current sinking fund requirements 9,168 9,137
Long-term debt, net of current portion 285,435 221,643
---------- ---------
Total capitalization $ 411,983 $ 342,072
---------- ---------
CURRENT LIABILITIES:
Notes payable - banks $ 22,000 $ 34,000
---------- ---------
Other current liabilities -
Current portion of long-term debt and sinking
fund requirements on preferred stock $ 7,992 $ 52,172
Accounts payable 11,936 13,171
Dividends payable 296 327
Accrued interest 3,172 3,667
Customers' deposits 287 297
Deferred revenue 193 1,571
Current income taxes payable 0 8
---------- ---------
Total other current liabilities $ 23,876 $ 71,213
---------- ---------
Total current liabilities $ 45,876 $ 105,213
---------- ---------
DEFERRED CREDITS AND RESERVES:
Deferred income taxes - Seabrook $ 15,323 $ 15,766
Other accumulated deferred income taxes 59,169 55,859
Maine Yankee decommissioning liability 56,511 60,926
Deferred regulatory liability 9,799 9,972
Unamortized investment tax credits 1,855 1,962
Accrued pension and postretirement benefit costs 7,412 7,034
Other 2,312 1,779
---------- ---------
Total deferred credits and reserves $ 152,381 $ 153,298
---------- ---------
Total Stockholders' Investment and Liabilities $ 610,240 $ 600,583
========== ========
See notes to the consolidated financial statements.
BANGOR HYDRO-ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF CAPITALIZATION
000's Omitted
(Unaudited)
Jun. 30, Dec. 31,
1998 1997
------------------
COMMON STOCK INVESTMENT
Common stock, par value $5 per share- $ 36,817 $ 36,817
Authorized -- 10,000,000 shares
Outstanding -- 7,363,424 shares in 1998 and 1997
Amounts paid in excess of par value 59,005 56,969
Retained earnings 16,824 12,772
------------------
Total common stock investment $ 112,646 $ 106,558
------------------
PREFERRED STOCK-Non participating, cumulative-
Par value $100 per share, authorized 600,000 shares
Not redeemable or redeemable solely at the option
of the issuer-
7%, Noncallable, 25,000 shares, authorized and
outstanding $ 2,500 $ 2,500
4.25%, Callable at $100, 4,840 shares, authorized
and outstanding 484 484
4%, Series A, Callable at $110, 17,500 shares,
authorized and outstanding 1,750 1,750
------------------
$ 4,734 $ 4,734
------------------
8.76%, Subject to mandatory redemption requirements-
Callable at 103.75% if called on or prior to
December 27, 1998,
150,000 shares authorized and 105,000 shares
outstanding in 1998 and 1997 $ 10,762 $ 10,731
Less: Sinking fund requirements 1,594 1,594
------------------
$ 9,168 $ 9,137
------------------
LONG-TERM DEBT
First Mortgage Bonds-
6.75% Series due 1998 $ 0 $ 2,500
10.25% Series due 2019 15,000 15,000
10.25% Series due 2020 30,000 30,000
8.98% Series due 2022 20,000 20,000
7.38% Series due 2002 20,000 20,000
7.30% Series due 2003 15,000 15,000
12.25% Series due 2001 4,509 5,521
------------------
$ 104,509 $ 108,021
Less: Current maturity in 1997 and sinking fund
requirements 1,579 4,278
------------------
Total first mortgage bonds $ 102,930 $ 103,743
------------------
Variable rate demand pollution control revenue bonds
Series 1983 due 2009 $ 4,200 $ 4,200
------------------
Other Long-Term Debt-
Finance Authority of Maine - Taxable Electric Rate
Stabilization Revenue Notes, 7.03% Series 1995A,
due 2005 $ 113,700 $ 126,000
Medium Term Notes, Variable interest rate- LIBO Rate
plus 2%, due 2000 (Fully repaid June 1998) 0 34,000
Medium Term Notes, Variable interest rate- LIBO Rate
plus 1.125%, due 2002 24,425 0
Medium Term Notes, Variable interest rate- LIBO Rate
plus 2%, due 2000 45,000 0
------------------
$ 183,125 $ 160,000
Less: Current portion of long-term debt 4,820 46,300
------------------
$ 178,305 $ 113,700
------------------
Total long-term debt $ 285,435 $ 221,643
------------------
Total Capitalization $ 411,983 $ 342,072
==================
See notes to the consolidated financial statements.
BANGOR HYDRO-ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
000's Omitted
(Unaudited)
1998 1997
---------- ----------
Cash Flows From Operations:
Net income (loss) $ 4,675 $ (321)
Adjustments to reconcile net income (loss) to
net cash
provided by(used in) operations:
Depreciation and amortization 5,054 5,166
Amortization of Seabrook Nuclear Project 850 850
Amortization of contract buyouts 10,041 10,457
Other amortizations 885 860
Costs to restructure purchased power contract (7,448) 0
Allowance for equity funds used during
construction (178) (183)
Deferred income tax provision and investment
tax credits 2,829 (1,286)
Changes in assets and liabilities:
Deferred incremental ice storm costs (4,042) 0
Deferred incremental Maine Yankee costs (1,240) 0
Deferred fuel revenue and Maine Yankee 286 (2,268)
refueling costs
Accounts receivable, net and unbilled revenue 1,467 5,738
Accounts payable (1,235) 1,656
Accrued interest (495) 77
Current and deferred income taxes (145) 201
Accrued postretirement benefit costs 323 201
Deferred revenue (1,378) 0
Other current assets and liabilities, net 32 920
Other, net 3,072 (1,035)
---------- ----------
Net Cash Provided By Operations $ 13,353 $ 21,033
---------- ----------
Cash Flows From Investing:
Construction expenditures $ (8,832)$ (7,167)
Allowance for borrowed funds used during
construction (302) (360)
---------- ----------
Net Cash Used In Investing $ (9,134)$ (7,527)
---------- ----------
Cash Flows From Financing:
Dividends on preferred stock $ (624)$ (691)
Dividends on common stock 0 (1,325)
Payments on long-term debt (50,188) (12,898)
Proceeds from issuance of long-term debt, net of
capital reserve fund requirements 68,300 0
Short-term debt, net (12,000) 500
Special deposit associated with securing letter
of credit (4,592) 0
---------- ----------
Net Cash Used In Financing $ 896 $ (14,414)
---------- ----------
Net Change in Cash and Cash Equivalents $ 5,115 $ (908)
Cash and Cash Equivalents at Beginning of Period 937 1,274
---------- ----------
Cash and Cash Equivalents at End of Period $ 6,052 $ 366
========== ==========
Cash Paid During the Six Months For:
Interest (Net of Amount Capitalized) $ 12,352 $ 12,049
Income Taxes 141 91
========== ==========
See notes to consolidated financial statements.
BANGOR HYDRO-ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF COMMON STOCK INVESTMENT
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
000's Omitted
(Unaudited)
Amounts Total
Paid in Common
Common Excess of Retained Stock
Stock Par Value Earnings Investment
BALANCE DECEMBER 31, 1996 $ 36,817 $ 56,969 $ 14,535 $ 108,321
Net loss - - (321) (321)
Cash dividends declared on-
Preferred stock - - (658) (658)
Other - - (31) (31)
---------- ---------- ---------------------
BALANCE JUNE 30, 1997 $ 36,817 $ 56,969 $ 13,525 107,311
========== ========== =====================
BALANCE DECEMBER 31, 1997 $ 36,817 $ 56,969 $ 12,772 $ 106,558
Net income - - 4,675 4,675
Cash dividends declared on-
Preferred stock - - (592) (592)
Other - - (31) (31)
Issuance of warrants - 2,036 - 2,036
---------- ---------- ---------------------
BALANCE JUNE 30, 1998 $ 36,817 $ 59,005 $ 16,824 $ 112,646
========== ========== =====================
See notes to the consolidated financial statements.
BANGOR HYDRO-ELECTRIC COMPANY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
-------------
(Unaudited)
(1) BASIS OF PRESENTATION AND ACCOUNTING POLICIES:
Certain information and footnote disclosures, normally included in
financial statements prepared in accordance with generally accepted
accounting principles, have been condensed or omitted in this Form 10-Q
pursuant to the Rules and Regulations of the Securities and Exchange
Commission. However, in the opinion of Bangor Hydro-Electric Company (the
Company), the disclosures contained in this Form 10-Q are adequate to make
the information presented not misleading. The year end condensed balance
sheet data was derived from audited consolidated financial statements but
does not include all disclosures required by generally accepted accounting
principles. These statements should be read in conjunction with the
consolidated financial statements, footnotes and all other information
included in the 1997 Form 10-K.
In the opinion of the Company, the accompanying unaudited consolidated
financial statements reflect all adjustments, including normal recurring
accruals, necessary to present fairly the financial position as of June 30,
1998 and the results of operations and cash flows for the periods ended June
30, 1998 and 1997.
The Company's significant accounting policies are described in the Notes
to the Consolidated Financial Statements included in its 1997 Form 10-K filed
with the Securities and Exchange Commission. For interim reporting purposes,
the Company follows these same basic accounting policies but considers each
interim period as an integral part of an annual period. Accordingly, certain
expenses are allocated to interim periods based upon estimates of such
expenses for the year.
(2) INCOME TAXES:
The following table reconciles a provision calculated by multi- plying
income before federal income taxes by the statutory federal income tax rate
to the federal income tax provision:
Six Months Ended June 30,
1998 1997
Amount % Amount %
(Dollars in Thousands)
Federal income tax provision
at statutory rate $2,552 35 $(461) (34)
Plus permanent reductions
in tax expense resulting
from statutory exclusions
from taxable income 33 - 52 4
------ --- ----- ---
Federal income tax provision before
effect of temporary differences
and investment tax credits $2,585 35 $(409) (30)
(Less)plus temporary differences that
are flowed through for rate-
making and accounting purposes (133) (2) 21 1
(Less) utilization and amortization
of investment tax credits (107) (2) (171) (12)
------ --- ----- ---
Federal income tax provision $2,345 31 $(559) (41)
====== === ===== ===
(3) INVESTMENT IN JOINTLY OWNED FACILITIES:
Condensed financial information for Maine Yankee Atomic Power Company
("Maine Yankee"), Maine Electric Power Company, Inc. ("MEPCO"), Bangor-
Pacific Hydro Associates ("BPHA") and Chester SVC
Partnership ("Chester") is as follows:
MAINE YANKEE MEPCO
(Dollars in Thousands)
(Unaudited)
Operations for Six Months Ended
-----------------------------------
Jun.30, Jun.30, Jun.30, Jun.30,
1998 1997 1998 1997
OPERATIONS: ------- -------- -------- -------
As reported by investee-
Operating revenues $66,538 $145,733 $ 1,610 $21,568
======= ======== ======= =======
Earnings applicable to
common stock $ 4,209 $ 3,624 $ 526 $ 545
======= ======== ======= =======
Company's reported equity-
Equity in net income $ 295 $ 254 $ 75 $ 77
Add(Deduct)-Effect of
adjusting Company's
estimate to actual 4 (5) (34) 41
-------- -------- ------- -------
Amounts reported by Company $ 299 $ 249 $ 41 $ 118
======== ======== ======= =======
MAINE YANKEE MEPCO
(Dollars in Thousands)
(Unaudited)
Financial Position at
----------------------------------------
Jun.30, Dec. 31, Jun.30, Dec. 31,
1998 1997 1998 1997
FINANCIAL POSITION: ---------- ---------- ------- --------
As reported by investee-
Total assets $1,266,731 $1,368,143 $ 4,743 $ 4,362
Less-
Preferred stock 16,800 17,400 - -
Long-term debt 85,000 143,665 320 420
Other liabilities and
deferred credits 1,081,773 1,128,128 1,581 1,578
---------- --------- ------- -------
Net assets $ 83,158 $ 78,950 $ 2,842 $ 2,364
========== ========== ======= =======
Company's reported equity-
Equity in net assets $ 5,821 $ 5,527 $ 404 $ 336
Add(Deduct)- Effect
of adjusting Company's
estimate to actual 10 5 (44) (10)
---------- ---------- ------- -------
Amounts reported by Co. $ 5,831 $ 5,532 $ 360 $ 326
========== ========== ======= =======
BPHA Chester
----------------- -----------------
(Dollars in Thousands)
(Unaudited)
Operations for Three Months Ended
-------------------------------------
Jun.30, Jun.30, Jun.30, Jun.30,
1998 1997 1998 1997
------- ------- -------- -------
OPERATIONS:
As reported by investee-
Operating revenues $ 3,951 $ 3,906 $ 2,194 $ 2,255
======= ======= ======= =======
Net Income $ 1,542 $ 1,346 $ - $ -
======= ======= ======= =======
Company's reported equity
in net income $ 771 $ 673 $ - $ -
======= ======= ======= =======
Financial Position at
Jun. 30, Dec. 31, Jun. 30, Dec. 31,
1998 1997 1998 1997
-------- -------- -------- --------
FINANCIAL POSITION:
As reported by investee-
Total assets $38,792 $39,013 $26,993 $27,633
Less-
Long-term debt 27,400 28,500 25,246 25,837
Other liabilities 2,463 2,425 1,747 1,796
------- ------- ------- -------
Net assets $ 8,929 $ 8,088 $ - $ -
======= ======= ======= =======
Company's reported equity
in net assets $ 4,465 $ 4,044 $ - $ -
======= ======= ======= =======
(4) EARNINGS PER SHARE -
The following table reconciles basic and diluted earnings per
common share assuming all stock warrants were converted to common shares in
accordance with Statement of Financial Accounting Standards No. 128,
"Earnings Per Share":
Amounts in 000's, except per share data.
For the Quarters For the Six Months
Ending Ending
------------------ ------------------
June 30, June 30, June 30, June 30,
1998 1997 1998 1997
-------- -------- -------- --------
Earnings (loss)
applicable to
common stock $1,956 $(1,382) $4,052 $(1,010)
------ ------- ------ -------
Average common
shares outstanding 7,363 7,363 7,363 7,363
Plus: incremental
shares from assumed
conversion 24 - 12 -
------ ------- ------ -------
Average common shares
outstanding plus
assumed warrants
converted 7,387 7,363 7,375 7,363
------ ------- ------ -------
Basic earnings (loss)
per common share $ .27 $ (.19) $ .55 $ (.14)
====== ======= ====== =======
Diluted earnings (loss)
per common share $ .26 $ (.19) $ .55 $ (.14)
====== ======= ====== =======
(5) MONETIZATION OF POWER SALE CONTRACT -
As reported in the 1997 Form 10-K, the Company had been
negotiating a transaction for the monetization of a contract with
UNITIL Power Corp. (UNITIL), a New Hampshire based electric utility. The
Company currently provides power to UNITIL at significantly above-market
rates, with the contract term ending in the year 2003. Based upon current
projections of wholesale electricity markets, it is expected that the rates
charged under the UNITIL contract will remain at above-market levels for
the remainder of the contract term. Therefore, the assignment of the
Company's rights under the contract has a positive present cash value. On
March 31, 1998, the Company completed a transaction with a financial
institution that provided loan proceeds of approximately $23.3 million, net
of a requirement to deposit $1.5 million of the proceeds in a debt service
reserve fund. The loan is secured by the value of the UNITIL contract.
Also as previously reported, beginning in early 1997, the
Company failed to comply with certain financial covenants under its bank
lending agreements and received temporary waivers from
the lending banks. By using a portion of the proceeds of the UNITIL
monetization to pay down a portion of the bank obligations, the Company was
able to negotiate permanent waivers of the earlier financial covenant
violations.
At the time the Company filed its 1997 Form 10-K, the
monetization of the UNITIL contract had not been completed and the
financial covenant violations referred to above had, therefore, not been
waived permanently. As discussed in the 1997 Form 10-K, all debt under the
bank credit facilities, including certain medium term notes, was classified
as a current liability on the Company's Consolidated Balance Sheets as of
December 31, 1997. As a result of the permanent waivers that became
effective upon completion of the UNITIL monetization, $22 million of medium
term notes, previously classified as a current liability, were reclassified
as a long-term liability as of March 31, 1998.
(6) STORM DAMAGE -
As discussed in the 1997 Form 10-K, the Company suffered
widespread damage throughout its service territory to its transmission and
distribution equipment during a major ice storm in January 1998. The
Company's incremental costs associated with the service restoration effort
were approximately $4.2 million, and additional incremental costs
associated with line clearance work are expected to be incurred in the
future. The $4.2 million has been recorded as a deferred asset on the
Company's Consolidated Balance Sheets as of June 30, 1998. The MPUC issued
an order authorizing the Company to defer incremental, non-capitalized
storm damage expenses for future recovery through the rates charged to
customers. MPUC proceedings on the recovery of the incremental ice storm
costs have been delayed, due to the possibility of federal funds being
available to utilities for ice storm property damage.
The Company is uncertain whether any federal funds will be
received or the timing of MPUC proceedings. The Company believes its storm
damage costs were prudently incurred and it should, therefore, be allowed
to recover them in rates if it does not otherwise receive publicly financed
assistance.
(7) PENOBSCOT ENERGY RECOVERY COMPANY -
As previously reported the Company has been working to
restructure a power purchase contract with the Penobscot Energy Recovery
Company (PERC), its last remaining high-priced non-utility generator
contract that offers a potential for substantial savings. In June 1998 the
Company successfully completed this major restructuring of its obligations
under various agreements with PERC.
The restructuring will result in a substantial savings for the
Company and will allow PERC to continue to meet the solid waste disposal
needs of Maine communities.
This major restructuring involves several separate components
including the following:
- - PERC refinanced $45 million in existing bonds with a remaining
five year term over a twenty year period using tax exempt bonds issued by
the Finance Authority of Maine under its Electric Rate Stabilization
Program.
- - PERC will share the net revenues generated by the facility on a
pro rata basis with the Company and the Municipal Review Committee (MRC)
which represents over 130 Maine municipalities receiving waste disposal
service from PERC.
- - The Company made a one-time payment of $6 million to PERC and
will make additional quarterly payments of $250,000 for four years totaling
$4 million.
- - Bangor Hydro and PERC amended their existing power purchase
agreement to include the MRC as a party.
- - The MRC's constituent municipalities extended their contracts with
PERC by 15 years to supply solid waste to the facility through 2018.
- - Bangor Hydro issued two million warrants to purchase common stock,
one million each to PERC and the MRC. Each warrant entitles the warrant
holder to acquire one share of Bangor Hydro common stock at a price of $7
per share. No warrants may be exercised within the first nine months after
their issuance, and they become exercisable in 500,000 share blocks
following the expiration of nine months, 21 months, 33 months, and 45
months from the closing date.
Depending upon a number of assumptions, including the ultimate
cost of the warrants and markets for solid waste disposal, it is projected
that the restructuring will result in cost savings to Bangor Hydro over the
next twenty years with a net present value of $30-40 million. The
anticipated savings resulting from this transaction were used to reduce the
level of electric rates approved by the MPUC in the Company's recent
general rate case by approximately $3 million on an annual basis. With the
completion of the transaction, the Company will now begin realizing these
benefits.
The refinancing by PERC was made possible by the Maine
Legislature through an amendment to the Electric Rate Stabilization Program
that allowed PERC to qualify for such financing. Under the Program, the
State of Maine's "moral obligation" supports the new non-recourse debt.
The Company has deferred, as a regulatory asset, the $6 million
payment to PERC, approximately $1.5 million in costs associated with the
contract restructuring, and $2 million for the estimated fair value of the
warrants. As discussed above, the Company is currently recovering PERC
restructuring costs in rates. The $2 million in warrants have also
increased additional paid-in capital.
(8) AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT -
As previously reported, during 1997 the Company negotiated
amendments to the credit agreement with its lending banks in order to
resolve potential violations of certain financial covenants. As a result
of those amendments, the Company reported that during 1998 or beyond,
future cash needs might exceed the borrowing capacity under the credit
facility, and accordingly, the Company might be required to find new
sources of financing.
On June 29, 1998, the Company entered into an Amended and
Restated Revolving Credit and Term Loan Agreement with a new group of
lenders that provides a two year term loan of $45 million and a
revolving credit commitment of $30 million. Under current projections of
cash needs, the new facilities should provide adequate borrowing capacity.
The new credit agreement contains financial covenants which are not
significantly different than the covenants contained in the previous credit
agreement. The Company was in compliance with all covenants associated
with the new credit agreement as of June 30, 1998.
The credit agreement also provides for the issuance of a letter
of credit required to support $4.2 million of the Company's Pollution
Control Revenue Bonds. To secure the existing letter of credit related to
the Pollution Control Revenue Bonds, until the new letter of credit could
be issued, the Company deposited approximately $4.6 million of the proceeds
from this financing with a third party trustee. This amount has been
included with Other Investments on the Company's Consolidated Balance
Sheets at June 30, 1998.
(9) NEW ACCOUNTING STANDARDS -
In June 1997 the FASB issued Statement No. 130, "Reporting
Comprehensive Income" (FAS 130), which establishes standards for reporting
and display of comprehensive income and its components (revenues, expenses,
gains and losses) in a full set of general-purpose financial statements.
This Statement requires that all items that are required to be recognized
under accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the same
prominence as other financial statements. This Statement is effective for
fiscal years beginning after December 15, 1997. There was no impact in
adopting FAS 130 on the Company's consolidated financial statements for the
quarter and six months ended June 30, 1998.
In June 1998, the Financial Accounting Standards Board issued
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities" (FAS 133), and is effective for fiscal years beginning after
June 15, 1999. FAS 133 establishes accounting and reporting standards for
derivative instruments and for hedging activities. It requires that an
entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair
value. The affects of the adoption of FAS 133 on the Company's financial
statements are currently not known.
(10) RECLASSIFICATIONS -
Certain 1997 amounts have been reclassified to conform with the
presentation used in Form 10-Q for the quarter ended June 30, 1998.
BANGOR HYDRO-ELECTRIC COMPANY
FORM 10-Q FOR PERIOD ENDING JUNE 30, 1998
PART II
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------ ---------------------------------------------------
The Company held its annual meeting of stockholders on May 13, 1998.
The only matter submitted to a vote was the election of three Class III
Directors for terms ending in 2001). The following persons were elected to
fill those positions pursuant to the corresponding tabulations of votes:
TOTAL VOTE FOR TOTAL VOTE AGAINST
-------------- ------------------
Jane J. Bush 492,489 18,265
David M. Carlisle 493,704 17,050
Carroll R. Lee 494,018 16,736
The terms of the following Directors, members of Class I and Class II,
continued after the annual meeting:
Robert S. Briggs
William C. Bullock, Jr.
Alton E. Cianchette
G. Clifton Eames
Marion M. Kane
Norman A. Ledwin
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------ --------------------------------
EXHIBITS:
- --------
4. INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS
---------------------------------------------------
4(a) Warrant to Purchase Common Stock Granted to the Municipal
Review Committee, Inc. on June 26, 1998
4(b) Warrant to Purchase Common Stock Dated Granted to PERC
Management Company Limited Partnership on June 26, 1998
4(c) Warrant to Purchase Common Stock Granted to Energy
National, Inc. on June 26, 1998
4(d) Supplemental Indenture Dated as of June 29, 1998 between the
Company and Citibank, N.A.
10. MATERIAL CONTRACTS
------------------
10(a) Surplus Cash Agreement dated as of June 26, 1998 among the
Company, Penobscot Energy Recovery Company Limited
Partnership and the Municipal Review Committee, Inc.
10(b) Guaranty Agreement dated as of June 1, 1998 between the
Company and The Chase Manhattan Bank
10(c) Amendment No. 2 to Purchase Power Agreement dated as of June
26, 1998 between the Company and Penobscot Energy Recovery
Company Limited Partnership
10(d) Amended and Restated Revolving Credit And Term Loan Agreement
dated as of June 19, 1998 between the Company and BankBoston,
N.A. and Fleet National Bank
REPORTS ON FORM 8-K
-------------------
A Current Report on Form 8-K, dated April 8, 1998, was filed in the
second quarter of 1998 regarding existing lending agreements and monetization
of a power sale contract with UNITIL Power Corp.
BANGOR HYDRO-ELECTRIC COMPANY
FORM 10-Q FOR PERIOD ENDED JUNE 30, 1998
The information furnished in this report reflects all adjustments which
are, in the opinion of management, necessary to a fair statement of the
results for the interim period.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BANGOR HYDRO-ELECTRIC COMPANY
-----------------------------
(Registrant)
Dated: August 13, 1998 /s/ Frederick S. Samp
-----------------------------
Frederick S. Samp
Vice President - Finance & Law
(Chief Financial Officer)
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from Bangor
Hydro-Electric Co. Form 10Q for 06/30/98 and is qualified in its entirety by
reference to such 10Q.
</LEGEND>
<CIK> 0000009548
<NAME> BANGOR HYDRO-ELECTRIC COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 244,881
<OTHER-PROPERTY-AND-INVEST> 54,911
<TOTAL-CURRENT-ASSETS> 32,172
<TOTAL-DEFERRED-CHARGES> 278,276
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 610,240
<COMMON> 36,817
<CAPITAL-SURPLUS-PAID-IN> 59,005
<RETAINED-EARNINGS> 16,824
<TOTAL-COMMON-STOCKHOLDERS-EQ> 112,646
9,168
4,734
<LONG-TERM-DEBT-NET> 285,435
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 22,000
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 6,398
1,594
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 168,265
<TOT-CAPITALIZATION-AND-LIAB> 610,240
<GROSS-OPERATING-REVENUE> 95,701
<INCOME-TAX-EXPENSE> 2,495
<OTHER-OPERATING-EXPENSES> 76,790
<TOTAL-OPERATING-EXPENSES> 79,285
<OPERATING-INCOME-LOSS> 16,416
<OTHER-INCOME-NET> 647
<INCOME-BEFORE-INTEREST-EXPEN> 17,063
<TOTAL-INTEREST-EXPENSE> 12,388
<NET-INCOME> 4,675
623
<EARNINGS-AVAILABLE-FOR-COMM> 4,052
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 22,785
<CASH-FLOW-OPERATIONS> 8,761
<EPS-PRIMARY> $0.55
<EPS-DILUTED> $0.55
</TABLE>
EXHIBIT 4(a)
THIS WARRANT MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
EXCEPT AS SPECIFIED IN SECTION 15 HEREOF. NEITHER THE RIGHTS
REPRESENTED BY THIS WARRANT NOR THE SHARES ISSUABLE UPON THE
EXERCISE THEREOF HAVE BEEN REGISTERED FOR OFFER OR SALE UNDER THE
SECURITIES ACT OF 1933. SUCH RIGHTS AND SHARES MAY NOT BE SOLD OR
OFFERED FOR SALE IN WHOLE OR IN PART EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 15 HEREOF.
BANGOR HYDRO-ELECTRIC COMPANY
WARRANT TO PURCHASE COMMON STOCK
--------------------------------
BANGOR HYDRO-ELECTRIC COMPANY, a Maine corporation (the "Company"),
hereby certifies that, for value received, Municipal Review Committee, Inc.,
a Maine nonprofit corporation and the registered holder hereof or its
registered assigns for the benefit of its members Amending Charter
Municipalities, is entitled, subject to the terms set forth below, to
purchase from the Company upon surrender of this Warrant, at any time or
times on or after JUNE 26, 1998 but not after 4:00 P.M., Eastern Prevailing
Time, on the Expiration Date, JUNE 26, 2008, one million (1,000,000) fully
paid nonassessable shares (the "Warrant Shares") of Common Stock, $5.00 par
value, of the Company (as adjusted from time to time as provided in this
Warrant) at an initial purchase price of $7.00 per share in lawful money of
the United States.
DEFINITIONS
-----------
SECTION 1. (a) DEFINITIONS. The following words and terms as used in
this Warrant shall have the following meanings:
"AFFILIATE" shall mean, with respect to a Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such first Person.
"AMENDING CHARTER MUNICIPALITIES" shall mean those Charter
Municipalities as each term is defined in the respective waste disposal
agreements with Penobscot Energy Recovery Company, Limited Partnership.
"BUSINESS DAY" shall mean, except as otherwise provided in the
definition of "Market Price", a day other than a Saturday, a Sunday or a day
on which banking institutions in Maine are authorized or obligated by law or
required by executive order to be closed.
"CHANGE OF CONTROL" shall mean (i) any merger, consolidation,
arrangement or reorganization of the Company with any Person whereby, after
such transaction, holders of Shares of Common Stock prior to the transaction,
do not continue to own, directly or indirectly, at least a majority,
determined on a fully-diluted basis, of the shares of the Voting Stock of the
Company or the surviving or resulting corporation, or (ii) any sale, lease or
exchange of 50% or more of the assets of the Company and its Subsidiaries,
taken as a whole, to any Person.
"COMMISSION" shall mean the United States Securities and Exchange
Commission or the principal United States agency administering the United
States securities laws.
"COMMON STOCK" shall mean with reference to the Common Stock for which
Warrants are exercisable, only Common Stock of the class existing on the date
hereof and any stock into which such Common Stock may thereafter have been
changed, and, when otherwise used herein, shall include also stock of the
Company of any other class, whether now or hereafter authorized, which ranks,
or is entitled to a participation, as to assets or dividends, substantially
on a parity with such existing Common Stock or other class of stock into
which such Common Stock have been changed.
"CONVERTIBLE SECURITIES" shall mean any securities issued by the Company
that are convertible into or exchangeable for, directly or indirectly, shares
of Common Stock.
"EXPIRATION DATE" shall mean JUNE 26, 2008.
"HOLDER" shall mean the Person in whose name the Warrant set forth
herein is registered on the books of the Company maintained for such purpose.
"MAJORITY HOLDERS" shall mean the holders of Warrants exercisable for
50% or more of the aggregate number of shares of Common Stock then
purchasable upon exercise of all Warrants.
"MARKET PRICE" shall mean (a) the higher of (i) the highest closing
sale price of the Common Stock on any domestic exchange on which the Common
Stock may be listed for the Business Day immediately preceding, or the last
Business Day that the Common Stock traded on such exchange prior to, the date
as to which "Market Price" is being determined and (ii) the average of the
closing prices of the Common Stock sales on all domestic exchanges on which
the Common Stock may at the time be listed or, if there shall have been no
sales on any such exchange on any day, the average of the reported bid prices
on all such exchanges at the end of such day or, if on any day the Common
Stock shall not be so listed, the average of the representative bid prices
quoted in the NASDAQ as of 3:30 P.M., New York prevailing time, or if on any
day the Common Stock shall not be quoted in the NASDAQ, the average of the
high and low bid prices on such day in the domestic over-the-counter market
as reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, in each such case averaged over a period of 10
consecutive Business Days (or other such period as shall be specified herein)
prior to the date as of which "Market Price" is being determined; provided,
however, that if the Common Stock is listed on any domestic exchange or the
NASDAQ the term "Business Day" as used in this definition shall mean any day
on which such exchange or the NASDAQ is open for trading or (b) in the event
the Common Stock is not Publicly Traded, the fair market value of the Common
Stock as determined in good faith by the Board of Directors of the Company;
provided, however, that such determination may be challenged by any Holders
and any dispute arising therefrom shall be resolved by an investment bank of
recognized standing selected by the Company and reasonably satisfactory to
such Holders whose determination of the fair market value of the Common Stock
shall be final and binding on the parties; and the fees and expenses incurred
by such investment bank in connection with its determination shall, in the
case it determines that the fair market value of the Common Stock is (i) 90%
or more of such determination of the Board of Directors, be borne by such
Holders, and (ii) less than 90% of such determination of the Board of
Directors, be borne by the Company.
"PERSON" shall mean an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock
company, government (or an agency or political subdivision thereof) or other
entity of any kind.
"PUBLIC OFFERING" shall mean a firm underwritten offering of Common
Stock registered under the Securities Act of 1933 on Form S-1, S-2 or S-3 (or
any successor form) and offered generally to the public.
"PUBLICLY TRADED" shall mean, with respect to any securities, listed on
a nationally recognized U.S. securities exchange or admitted for trading on
the NASDAQ.
"RULE 144" shall mean the rule of such number promulgated by the
Commission under the Securities Act and any successor rule thereto.
"VOTING STOCK" shall mean, as applied to the stock (or the equivalent
thereof) of any Person, stock (or such equivalent) of any class or classes,
however designated, having ordinary voting power for the election of at least
a majority of the board of directors (or other governing body) of such
Person, other than stock (or such equivalent) having such power only by
reason of the happening of a contingency.
"WARRANT EXERCISE PRICE" shall mean initially $7.00 per share and shall
be adjusted and readjusted from time to time as provided in this Warrant.
"WARRANTS" shall mean collectively the rights granted by this Warrant
and the rights granted by Warrants issued on June 26, 1998 to PERC Management
Company Limited Partnership and Energy National Inc.
(b) OTHER DEFINITIONAL PROVISIONS. (i) Except as otherwise specified
herein, all references herein (A) to any Person other than the Company shall
be deemed to include such Person's successors and assigns, (B) to the Company
shall be deemed to include the Company's successors and (C) to any applicable
law defined or referred to herein shall be deemed references to such
applicable law as the same may have been or may be amended or supplemented
from time to time.
(ii) When used in this Warrant, the words "herein", "hereof" and
"hereunder", and words of similar import, shall refer to this Warrant as a
whole and not to any provision of this Warrant, and the words "Section",
"Schedule" and "Exhibit" shall refer to Sections of, and Schedules and
Exhibits to, this Warrant unless otherwise specified.
(iii) Whenever the context so requires, the neuter gender includes the
masculine or feminine, and the singular number includes the plural, and vice
versa.
SECTION 2. EXERCISE OF WARRANT. Subject to the terms and conditions
hereof, this Warrant may be exercised, in whole or in part, at any time
during normal business hours on or after the opening of business on JUNE 26,
1998 and prior to 4:00 P.M., Eastern Prevailing Time, on the Expiration Date.
The rights represented by this Warrant may be exercised by the Holder, in
whole or in part (except that this Warrant shall not be exercisable as to a
fractional share), by (i) delivery of a written notice, in the form of the
Subscription Notice attached as Exhibit A, of the Holder's election to
exercise this Warrant, which notice shall specify the number of Warrant
Shares to be purchased, (ii) payment to the Company of an amount equal to the
Warrant Exercise Price multiplied by the number of Warrant Shares as to which
the Warrant is being exercised in cash or by certified or official bank
check, for the number of Warrant Shares as to which this Warrant shall have
been exercised, (iii) the surrender of this Warrant, properly endorsed, at
the principal office of the Company at 33 State Street, Bangor, Maine (or at
such other agency or office of the Company as the Company may designate by
notice to the Holder) and (iv) if the Warrant Shares issuable upon the
exercise of the rights represented by this Warrant have not been registered
under the Securities Act, delivery to the Company by the Holder of a letter
in the form of Exhibit B hereto [unless in the opinion of counsel to the
Holder reasonably acceptable to the Company (delivered to the Company)
delivery of such letter is not required]. If such Warrant Shares are to be
issued in any name other than that of the Holder or its nominee, such
issuance shall be deemed a transfer and the provisions of Section 15 shall be
applicable. In the event of any exercise of the rights represented by this
Warrant, a certificate or certificates for the Warrant Shares so purchased,
registered in the name of, or as directed by, the Holder, shall be delivered
to, or as directed by, Holder within a reasonable time, not exceeding five
days, after such rights shall have been so exercised. Unless the rights
represented by this Warrant shall have expired or have been fully exercised,
the Company shall issue a new Warrant identical in all respects to the
Warrant exercised except (A) it shall represent rights to purchase the number
of Warrant Shares purchasable immediately prior to such exercise under the
Warrant exercised, less the number of Warrant Shares with respect to which
such Warrant was exercised and (B) the Warrant Exercise Price thereof shall
be the Warrant Exercise Price of the Warrant exercised. The Person in whose
name any certificate for Warrant Shares is issued upon exercise of this
Warrant shall for all purposes be deemed to have become the holder of record
of such Warrant Shares immediately prior to the close of business on the date
on which the Warrant was surrendered and payment of the amount due in respect
of such exercise was made, irrespective of the date of delivery of such share
certificate, except that, if the date of such surrender and payment is a date
when the stock transfer books of the Company are properly closed, such Person
shall be deemed to have become the holder of such Warrant Shares at the
opening of business on the next succeeding date on which the stock transfer
books are open.
SECTION 3. COVENANTS AS TO COMMON STOCK. The Company covenants and
agrees that all Warrant Shares that may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be validly issued,
fully paid and nonassessable. The Company further covenants and agrees that
during the period within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized and reserved a
sufficient number of shares of Common Stock to provide for the exercise of
the rights then represented by this Warrant and that the par value of said
shares will at all times be less than the applicable Warrant Exercise Price.
SECTION 4. ADJUSTMENT OF WARRANT EXERCISE PRICE AND ADJUSTMENT OF
NUMBER OF SHARES. The number of shares and Warrant Exercise Price of Common
Stock issuable upon exercise of this Warrant shall be subject to adjustment
on a weighted average basis to prevent dilution, (a) in the event that the
Company issues additional Common Stock at less than the Market Price as of
the date of issue (other than pursuant to this Warrant), or rights, warrants,
or options to acquire Common Stock at less than the Market Price as of the
date of issue (other than shares reserved for issuance to employees or
directors); (b) in the event that the Company issues securities convertible
into or exchangeable for Common Stock at less than the equivalent Market
Price of the Common Stock as of the date of issue; (c) in the event that the
Company declares any cash distributions other than from current earnings; or
(d) upon stock splits, stock dividends, divisions, combinations,
reorganizations, reclassifications, or any other event which is similar in
effect to any of the events described in subsections (a) through (d) hereof.
SECTION 5. REORGANIZATIONS. (A) REORGANIZATION OR RECLASSIFICATION.
In case of any capital reorganization or of any reclassification of the
Capital Stock of the Company (other than a change in par value or from par
value to no par value or from no par value to par value), this Warrant shall,
upon such capital reorganization or reclassification, entitle the Holder to
purchase the kind and number of shares of stock or other securities or cash,
assets or other property of the Company to which the Holder would have been
entitled if the holder had held the Common Stock issuable upon the exercise
hereof immediately prior to such capital reorganization or reclassification.
(b) CHANGE OF CONTROL. In case of any Change of Control, this Warrant
shall entitle the holder, immediately and at all times thereafter until the
Expiration Date, to exercise this Warrant and to receive the kind and number
of shares of stock or other securities or cash, assets or other property of
the Person resulting from or surviving such Change of Control to which the
holder would have been entitled if the holder had held the Common Stock
issuable upon the exercise hereof immediately prior to such Change of
Control. The Company shall not effect any such Change of Control unless,
prior to or simultaneously with the consummation thereof, the successor
Person (if other than the Company) resulting from such Change of Control or
the corporation purchasing such assets shall assume by written instrument
executed and mailed or delivered to the holder the obligation to deliver to
the holder such shares of stock, securities, cash, assets or other property
as, in accordance with the foregoing provisions, such Holder may be entitled
to receive upon the exercise of this Warrant.
(c) APPLICABLE PROVISIONS. In case of either paragraph (a) or (b) of
this Section 5, appropriate provision shall be made with respect to the
rights and interests of the holder to the end that the provisions hereof
(including without limitation provisions for adjustment of the Warrant
Exercise Price and of the number of shares purchasable upon the exercise of
this Warrant) shall thereafter be applicable, as nearly as may be in relation
to any shares of stock, securities or assets thereafter deliverable upon the
exercise of the rights represented hereby.
SECTION 6. NOTICE OF WARRANT EXERCISE PRICE. The Company shall
annually give a notice to the Holder, which notice shall state the Warrant
Exercise Price in effect and the increase or decrease, if any, in the number
of shares purchasable at the Warrant Exercise Price upon the exercise of this
Warrant, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
SECTION 7. COMPUTATION OF ADJUSTMENTS. Upon each computation of an
adjustment to the Warrant Exercise Price and the number of shares that may be
subscribed for and purchased upon exercise of this Warrant, the Warrant
Exercise Price shall be computed to the nearest cent (i.e., fractions of 0.5
of a cent or greater, shall be rounded to the next highest cent) and the
number of shares that may be subscribed for and purchased upon exercise of
this Warrant shall be calculated to the nearest whole share (i.e., fractions
of less than one half of a share shall be disregarded and fractions of one
half of a share or greater shall be treated as being a whole share). No such
adjustment shall be made, however, if the change in the Warrant Exercise
Price would be less than $0.01 per share, but any such lesser adjustment
shall be made (i) at the time and together with the next subsequent
adjustment which, together with any adjustments carried forward, shall amount
to $0.01 per share or more, or (ii) if earlier, upon the third anniversary of
the event for which such adjustment is required.
SECTION 8. NOTICE OF CERTAIN EVENTS. In case at any time:
(a) the Company shall make any distribution in respect of its Common
Stock (other than the payment of a cash dividend from current earnings);
(b) the Company shall propose to register any of its Common Stock under
the Securities Act in connection with a public offering of such Common Stock
(other than with respect to a registration statement filed on Form S-8 or
other such similar form then in effect under the Securities Act);
(c) the Company shall offer for subscription pro rata to the holders of
its Common Stock any additional shares of stock of any class or other rights;
(d) there shall be any capital reorganization, or reclassification of
the capital stock, of the Company, or Change of Control; or
(e) there shall be a voluntary or involuntary dissolution, liquidation
or winding up of the Company;
then, in any one or more of said cases, the Company shall give notice to the
Holder of the date on which (i) the books of the Company shall close or a
record shall be taken for such distribution or subscription rights or (ii)
such reorganization, reclassification, Change of Control, dissolution,
liquidation or winding up shall take place, as the case may be. Such notice
shall be given not less than twenty-one (21) days prior to the record date or
the date on which the transfer books of the Company are to be closed in
respect thereto in the case of an action specified in clause (i) and at least
forty-five (45) days prior to the action in question in the case of an action
specified in clause (ii).
SECTION 9. NO CHANGE IN WARRANT TERMS ON ADJUSTMENT. Irrespective of
any adjustment in the Warrant Exercise Price or the number of shares of
Common Stock issuable upon exercise hereof, this Warrant, whether theretofore
or thereafter issued or reissued, may continue to express the same price and
number of shares as are stated herein and the Warrant Exercise Price and such
number of shares specified herein shall be deemed to have been so adjusted.
SECTION 10. LIMITATION ON RIGHT TO EXERCISE WARRANTS. Notwithstanding
the rights to exercise the Warrant granted herein, other than as provided in
Section 5, the Holder may exercise this Warrant only to the following extent:
(a) 25% of the Warrants initially granted hereunder may be exercised on or
after MARCH 26, 1999; (b) 50% of the Warrants initially granted hereunder may
be exercised on or after MARCH 26, 2000; (c) 75% of the Warrants initially
granted hereunder may be exercised on or after MARCH 26, 2001; (d) 100% of
the Warrants initially granted hereunder may be exercised on or after MARCH
26, 2002.
SECTION 11. REGISTRATION RIGHTS. (A) REQUIRED REGISTRATION. Upon
written request by Majority Holders, the Company shall use its best efforts
to register and to maintain in effect for a period of one year, pursuant to
the Securities Act of 1933, the Common Stock for which Warrants are
exercisable or have been exercised. The Company's Board of Directors may,
upon determining that there is a valid business reason for doing so, delay
filing a Registration Statement for up to 120 days after receipt of the
written request. Upon receipt of such written request, the Company shall
notify all holders of Warrants that such a request has been made and shall
provide all holders reasonable opportunity to include Common Stock in the
registration. If on the date of such written request the Company has filed
or notifies the Majority Holders it intends to file a Registration Statement
pursuant to the Securities Act of 1933 within 120 days, the requirements of
this subsection will be met by the inclusion of Common Stock within the
Registration Statement filed or to be filed. Upon filing a Registration
Statement pursuant to this subsection, the Company shall have no obligation
to file additional Registration Statements at the request of Majority Holders
for a period of one year.
(b) INCIDENTAL REGISTRATION. If the Company proposes to register any
of its common stock pursuant to the Securities Act of 1933 in connection with
a public distribution of that stock, other than pursuant to a merger or
acquisition for stock or pursuant to an employee benefits, option or
compensation plan (unless such plans in the aggregate provide for the
issuance of more than 10% of the Company's then outstanding common stock), it
shall give notice to all holders of Warrants and give them reasonable
opportunity to participate in the registration.
(c) TAG-ALONG RIGHTS. If the Company shall propose to issue and if any
single entity shall propose to acquire securities of the Company having
voting power equal to or more than the voting power of the then outstanding
shares of the Company, the Company may not accept the offer of such entity
unless such entity shall simultaneously make an offer to purchase this
warrant, or all of the shares underlying this warrant and all other warrants
of this class of warrant, or all of the shares underlying such warrants,
which is accepted by at least one of the holders of this class of warrants.
Such purchase must be simultaneous with the purchase of the securities to be
issued by the Company to such entity.
(d) COSTS OF REGISTRATION. All costs of registration shall be paid by
the Company.
SECTION 12. OPTIONS AT THE TIME OF EXERCISE. (A) COMPANY'S OPTION TO
PAY CASH IN LIEU OF ISSUING COMMON STOCK. Upon the exercise of this Warrant,
the Company may elect, at its option, to give the Holder immediate notice and
to pay the Holder within ten (10) business days a sum of cash in lieu of
Issuing Common Stock as provided in Section 2. The amount of cash payable
pursuant to this subsection shall be calculated by subtracting the Warrant
Exercise Price from the Market Price on the date of exercise and multiplying
the result by the number of shares of Common Stock as to which exercise is
being made. At the time of making any payment pursuant to this Section, the
Company shall repay to the Holder any amounts paid in connection with the
exercise of the Warrant pursuant to Section 2. The Company may exercise this
option only if in doing so it does not violate any material covenants
contained in any of its financing agreements that have not been waived.
(b) CASHLESS EXERCISE. At the time of exercise of this Warrant, the
Holder may elect to exercise the option provided in this subsection in lieu
of making the cash payment required by Section 2. Upon written notice of its
desire to exercise this option given at the same time and in the same manner
as the notice specified in Section 2, the Holder shall be entitled to the
issuance of Warrant Shares (in lieu of the Warrant Shares otherwise issuable
pursuant to Section 2), the number of which shall be calculated as follows:
the product of (x) the number of shares as to which the Warrant is being
exercised and (y) a fraction, the numerator of which is the Market Price of
the Common Stock minus the Warrant Exercise Price and the denominator of
which is the Market Price of the Common Stock.
SECTION 13. WARRANT HOLDER NOT DEEMED A SHAREHOLDER. Except as
provided in Section 8, no Holder, as such, shall be entitled to vote or
receive dividends or be deemed the holder of shares of the Company for any
purpose, nor shall anything contained in this Warrant be construed to confer
upon the Holder, as such, any of the rights of a shareholder of the Company
or any right to vote, give or withhold consent to any corporate action
(whether any reorganization, issue or reclassification of stock,
consolidation, merger, conveyance or otherwise), receive notice of meetings,
receive dividends or subscription rights, or otherwise, prior to the issuance
of record to the Holder of the Warrant Shares which it is then entitled to
receive upon the due exercise of this Warrant.
SECTION 14. NO LIMITATION ON CORPORATE ACTION; NO AVOIDANCE OF TERMS.
(a) No provisions of this Warrant and no right or option granted or
conferred hereunder shall in any way limit, affect or abridge the exercise by
the Company of any of its corporate rights or powers to recapitalize, amend
its charter, reorganize, consolidate or merge with or into another
corporation, or to transfer all or any part of its property or assets, or the
exercise of any other of its corporate rights and powers.
(b) The Company shall not by any action, including, without limitation,
amending its articles of incorporation or through any reorganization,
transfer of assets, consolidation, merger or arrangement, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms of this Warrant, but will
at all times in good faith assist in the carrying out of all such terms and
in the taking of all such actions as may be necessary or appropriate to
protect the rights of the Holder against impairment. Without limiting the
generality of the foregoing, the Company will take all such action as may be
necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of Common Stock upon the exercise
of this Warrant.
SECTION 15. TRANSFER; OPINIONS OF COUNSEL; RESTRICTIVE LEGENDS.
(a) Prior to any sale, transfer or other disposition of this Warrant or
the Warrant Shares, the Holder thereof will give seven (7) days' notice to
the Company of its intention to effect such transfer. Each such notice shall
describe the manner and circumstances of the proposed transfer and shall be
accompanied by an opinion of counsel for the Holder reasonably satisfactory
to the Company, addressed to the Company and reasonably satisfactory in form
and substance to it stating that, in the opinion of such counsel, such
transfer is a transaction exempt from registration under the Securities Act.
(b) If such sale, transfer or other disposition may, in the opinion of
such counsel, be effected without registration under the Securities Act, the
holder shall thereupon be entitled to transfer this Warrant and the Warrant
Shares in accordance with the terms of the notice delivered by the Holder to
the Company. If, in the opinion of such counsel, such transfer may not be
effected without registration under the Securities Act, the Holder shall not
be entitled to so transfer this Warrant or the Warrant Shares unless (i) the
Company elects to file a registration statement relating to such proposed
transfer and such registration statement has become effective under the
Securities Act or (ii) the provisions of Section 11 apply.
(c) Notwithstanding the provisions of this Section 15, the Holder may
at any time transfer this Warrant or the Warrant Shares to an Affiliate or an
Associate (as such term is defined in Section 12b-2 of the Securities
Exchange Act of 1934, as amended) of the Holder.
(d)(i) Except as otherwise provided in this Section 15, each
certificate for Warrant Shares initially issued upon the exercise of this
Warrant, and each certificate for Warrant Shares issued to any subsequent
transferee of any such certificate, shall be stamped or otherwise imprinted
with a legend stating that the shares represented by such certificate have
not been registered under the Securities Act of 1933 and may not be
transferred except in accordance with the provisions of the Securities Act of
1933 and Section 15 of this Warrant.
(ii) Except as otherwise provided in this Section 15, each Warrant
shall be stamped or otherwise imprinted with a legend stating that neither
the rights represented by the Warrant nor the shares issuable upon the
exercise thereof have been registered under the Securities Act of 1933 and
that such rights and shares may not be transferred except in accordance with
the provisions of the Securities Act of 1933 and Section 15 of this Warrant.
(e) TERMINATION OF RESTRICTIONS. The restrictions imposed by Section
15(a) and the legend requirements of Section 15(d) shall terminate as to any
particular Warrant or Warrant Share (i) when and so long as such security
shall have been effectively registered under the Securities Act of 1933 and
disposed of in a public sale or distribution pursuant thereto, (ii) when such
security shall have been disposed of in accordance with Rule 144 or (iii)
when the Company shall have received opinions of counsel reasonably
satisfactory to it, which opinions shall be satisfactory in substance and
form to the Company, to the effect that such restrictions on transfer
pursuant to the Securities Act of 1933 no longer apply. Whenever said
restrictions and legend requirements shall terminate as to this Warrant, as
hereinabove provided, the Holder shall be entitled to receive from the
Company, at the expense of the Company, a new Warrant bearing a legend in
place of the restrictive legend described in Section 15(d) stating that the
restrictions on transferability of the Warrant have been terminated.
Whenever the restrictions imposed by this Section 15 shall terminate as to
any Warrant Share, as hereinabove provided, the holder thereof shall be
entitled to receive from the Company, at the Company's expense, a new
certificate representing such Common Stock not bearing the restrictive legend
described in Section 15(d).
SECTION 16. EXCHANGE OF WARRANT. This Warrant is exchangeable upon the
surrender hereof by the Holder at the office or agency of the Company, for
new Warrants of like tenor representing in the aggregate the right to
subscribe for and purchase the number of shares which may be subscribed for
and purchased hereunder from time to time after giving effect to all the
provisions hereof, each of such new Warrants to represent the right to
subscribe for and purchase such number of shares as shall be designated by
the Holder hereof at the time of such surrender.
SECTION 17. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this
Warrant is lost, stolen, mutilated or destroyed, the Company shall, upon
receipt by it of indemnity satisfactory to it, issue a new Warrant of like
denomination and tenor as the Warrant so lost, stolen, mutilated or
destroyed. Any such new Warrant shall constitute an original contractual
obligation of the Company, whether or not the allegedly lost, stolen,
mutilated or destroyed Warrant shall be at any time enforceable by anyone.
SECTION 18. DIVISION AND COMBINATION. Subject to Section 15, this
Warrant may be divided or combined with other Warrants upon presentation
hereof at the office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be
issued, signed by the Holder or its agent or attorney. Subject to compliance
with Section 15, as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants
in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice. The Company shall prepare, issue and deliver at
its own expense the new Warrant or Warrants under each of Section 15 and this
Section 18.
SECTION 19. MAINTENANCE OF BOOKS. The Company agrees to maintain, at
its office or agency, books for the registration and the registration of
transfer of the Warrants.
SECTION 20. REPRESENTATION OF HOLDER. The Holder, by the acceptance
hereof, represents that it is acquiring this Warrant for the account of the
Amending Charter Municipalities for investment and not with a view to, or
sale in connection with, any distribution hereof or of any of the Warrant
Shares or other securities issuable upon the exercise thereof, nor with any
present intention of distributing any of the same; provided, however, that
the disposition of the Holder's property shall at all times be within its
control.
SECTION 21. NOTICE. All notices and other communications under this
Warrant shall (a) be in writing, (b) be (i) sent by registered or certified
mail, postage prepaid, return receipt requested or (ii) delivered by hand,
(c) be given at the following respective addresses and to the attention of
the following Persons:
(i) if to the Company, to it at:
Bangor Hydro-Electric Company
33 State Street
P.O. Box 932
Bangor, Maine 04402-0932
Attention: President
(ii) if to the initial Holder, to it at:
Municipal Review Committee, Inc.
Eastern Maine Development Corporation
One Cumberland Place
Bangor, Maine 04401
with a copy to:
Thomas Brown, Esq.
Eaton Peabody Bradford & Veague, P.A.
P. O. Box 1210
Bangor, Maine 04402-1210
or to such other address or to the attention of such other person as the
party to whom such information pertains may hereafter specify for the purpose
in a notice to the other specifically captioned "Notice of Change of Address"
and (d) be effective or deeded delivered or furnished (i) if given by mail,
on the fifth Business Day after such communication is deposited in the mail,
addressed as above provided and (ii) if given by hand delivery, when left
with an employee of the addressee at the address of the addressee addressed
as above provided, except that notices of a change of address shall not be
deemed furnished until received.
SECTION 22. MISCELLANEOUS. This Warrant and any term hereof may not be
changed, waived, discharged, or terminated except by an instrument in writing
signed by the party or holder hereof against which enforcement of such
change, waiver, discharge or termination is sought. The headings in this
Warrant are for purposes of reference only and shall not limit or otherwise
affect the meaning hereof.
SECTION 23. DATE. The date of this Warrant is JUNE 26, 1998. This
Warrant, in all events, shall be wholly void and of no effect after the close
of business on the Expiration Date, except that notwithstanding any other
provisions hereof, the provisions of Sections 11 and 15 shall continue in
full force and effect after such date as to any Warrant Shares or other
securities issued upon the exercise of this Warrant.
SECTION 24. GOVERNING LAW. This Warrant shall be construed in
accordance with and governed by the laws of the State of Maine, excluding
those applicable to choice of law.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its duly authorized officers as of this JUNE 26, 1998.
BANGOR HYDRO-ELECTRIC COMPANY
By:
Its: Vice President - Finance & Law
Exhibit A
to Warrant
SUBSCRIPTION NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER IF SUCH
HOLDER DESIRES TO EXERCISE THIS WARRANT
BANGOR HYDRO-ELECTRIC COMPANY
The undersigned hereby exercises the right to purchase Warrant Shares
covered by this Warrant according to the conditions thereof and herewith
makes payment of $------------------, the aggregate Warrant Exercise Price
of such Warrant Shares, in full.
[NAME OF HOLDER]
By:
Title:
Number of
Warrant Shares Being
Purchased
Dated: , 19[20]
Exhibit B
to Warrant
Attention:
Re: Exercise of Warrant, dated
Dear Sirs:
In connection with the undersigned's purchase of Common Stock of Bangor
Hydro-Electric Company upon exercise of a warrant therefor, the undersigned
confirms and agrees as follows:
1. As the purchaser of the shares of Common Stock in a private
placement not registered under the Securities Act of 1933, as amended
(the "Act"), the undersigned is purchasing such shares for its own
account for investment and (subject to the disposition of its property
being at all times within its control) not with a view to any resale,
distribution or other disposition thereof, and the undersigned is
proceeding on the assumption that it must bear the economic risk of the
investment for an indefinite period, since the shares of Common Stock
may not be sold except as provided in paragraph 2 below.
2. The undersigned agrees that, if in the future the undersigned
should decide to dispose of the shares of Common Stock (such disposition
not being presently foreseen or contemplated), the undersigned will not
offer, sell, transfer or exchange such shares of Common Stock, except
under conditions that would not violated the Act or any applicable
securities laws.
3. The undersigned is purchasing the shares of Common Stock
pursuant to an exemption from the registration requirements of the Act
and from registration or qualification requirements under applicable
state securities laws.
If administrative or legal proceedings are commenced or threatened in
connection with which this notice is or would be relevant, the undersigned
irrevocably authorizes Bangor Hydro-Electric Company to produce this notice
or a copy thereof to any interested party in such proceedings.
Date:
[NAME OF HOLDER]
By:
Title:
EXHIBIT 4(b)
THIS WARRANT MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
EXCEPT AS SPECIFIED IN SECTION 15 HEREOF. NEITHER THE RIGHTS
REPRESENTED BY THIS WARRANT NOR THE SHARES ISSUABLE UPON THE
EXERCISE THEREOF HAVE BEEN REGISTERED FOR OFFER OR SALE UNDER THE
SECURITIES ACT OF 1933. SUCH RIGHTS AND SHARES MAY NOT BE SOLD OR
OFFERED FOR SALE IN WHOLE OR IN PART EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 15 HEREOF.
BANGOR HYDRO-ELECTRIC COMPANY
WARRANT TO PURCHASE COMMON STOCK
---------------------------------
BANGOR HYDRO-ELECTRIC COMPANY, a Maine corporation (the "Company"),
hereby certifies that, for value received, PERC Management Company Limited
Partnership, a Maine limited partnership, is entitled, subject to the terms
set forth below, to purchase from the Company upon surrender of this Warrant,
at any time or times on or after JUNE 26, 1998 but not after 4:00 P.M.,
Eastern Prevailing Time, on the Expiration Date, JUNE 26, 2008, seven hundred
twelve thousand eight hundred and fifty-seven (712,857) fully paid
nonassessable shares (the "Warrant Shares") of Common Stock, $5.00 par value,
of the Company (as adjusted from time to time as provided in this Warrant) at
an initial purchase price of $7.00 per share in lawful money of the United
States.
DEFINITIONS
-----------
SECTION 1. (a) DEFINITIONS. The following words and terms as used in
this Warrant shall have the following meanings:
"AFFILIATE" shall mean, with respect to a Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such first Person.
"BUSINESS DAY" shall mean, except as otherwise provided in the
definition of "Market Price", a day other than a Saturday, a Sunday or a day
on which banking institutions in Maine are authorized or obligated by law or
required by executive order to be closed.
"CHANGE OF CONTROL" shall mean (i) any merger, consolidation,
arrangement or reorganization of the Company with any Person whereby, after
such transaction, holders of Shares of Common Stock prior to the transaction,
do not continue to own, directly or indirectly, at least a majority,
determined on a fully-diluted basis, of the shares of the Voting Stock of the
Company or the surviving or resulting corporation, or (ii) any sale, lease or
exchange of 50% or more of the assets of the Company and its Subsidiaries,
taken as a whole, to any Person.
"COMMISSION" shall mean the United States Securities and Exchange
Commission or the principal United States agency administering the United
States securities laws.
"COMMON STOCK" shall mean with reference to the Common Stock for which
Warrants are exercisable, only Common Stock of the class existing on the date
hereof and any stock into which such Common Stock may thereafter have been
changed, and, when otherwise used herein, shall include also stock of the
Company of any other class, whether now or hereafter authorized, which ranks,
or is entitled to a participation, as to assets or dividends, substantially
on a parity with such existing Common Stock or other class of stock into
which such Common Stock have been changed.
"CONVERTIBLE SECURITIES" shall mean any securities issued by the Company
that are convertible into or exchangeable for, directly or indirectly, shares
of Common Stock.
"EXPIRATION DATE" shall mean JUNE 26, 2008.
"HOLDER" shall mean the Person in whose name the Warrant set forth
herein is registered on the books of the Company maintained for such purpose.
"MAJORITY HOLDERS" shall mean the holders of Warrants exercisable for
50% or more of the aggregate number of shares of Common Stock then
purchasable upon exercise of all Warrants.
"MARKET PRICE" shall mean (a) the higher of (i) the highest closing
sale price of the Common Stock on any domestic exchange on which the Common
Stock may be listed for the Business Day immediately preceding, or the last
Business Day that the Common Stock traded on such exchange prior to, the date
as to which "Market Price" is being determined and (ii) the average of the
closing prices of the Common Stock sales on all domestic exchanges on which
the Common Stock may at the time be listed or, if there shall have been no
sales on any such exchange on any day, the average of the reported bid prices
on all such exchanges at the end of such day or, if on any day the Common
Stock shall not be so listed, the average of the representative bid prices
quoted in the NASDAQ as of 3:30 P.M., New York prevailing time, or if on any
day the Common Stock shall not be quoted in the NASDAQ, the average of the
high and low bid prices on such day in the domestic over-the-counter market
as reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, in each such case averaged over a period of 10
consecutive Business Days (or other such period as shall be specified herein)
prior to the date as of which "Market Price" is being determined; provided,
however, that if the Common Stock is listed on any domestic exchange or the
NASDAQ the term "Business Day" as used in this definition shall mean any day
on which such exchange or the NASDAQ is open for trading or (b) in the event
the Common Stock is not Publicly Traded, the fair market value of the Common
Stock as determined in good faith by the Board of Directors of the Company;
provided, however, that such determination may be challenged by any Holders
and any dispute arising therefrom shall be resolved by an investment bank of
recognized standing selected by the Company and reasonably satisfactory to
such Holders whose determination of the fair market value of the Common Stock
shall be final and binding on the parties; and the fees and expenses incurred
by such investment bank in connection with its determination shall, in the
case it determines that the fair market value of the Common Stock is (i) 90%
or more of such determination of the Board of Directors, be borne by such
Holders, and (ii) less than 90% of such determination of the Board of
Directors, be borne by the Company.
"PERSON" shall mean an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock
company, government (or an agency or political subdivision thereof) or other
entity of any kind.
"PUBLIC OFFERING" shall mean a firm underwritten offering of Common
Stock registered under the Securities Act of 1933 on Form S-1, S-2 or S-3 (or
any successor form) and offered generally to the public.
"PUBLICLY TRADED" shall mean, with respect to any securities, listed on
a nationally recognized U.S. securities exchange or admitted for trading on
the NASDAQ.
"RULE 144" shall mean the rule of such number promulgated by the
Commission under the Securities Act and any successor rule thereto.
"VOTING STOCK" shall mean, as applied to the stock (or the equivalent
thereof) of any Person, stock (or such equivalent) of any class or classes,
however designated, having ordinary voting power for the election of at least
a majority of the board of directors (or other governing body) of such
Person, other than stock (or such equivalent) having such power only by
reason of the happening of a contingency.
"WARRANT EXERCISE PRICE" shall mean initially $7.00 per share and shall
be adjusted and readjusted from time to time as provided in this Warrant.
"WARRANTS" shall mean collectively the rights granted by this Warrant
and the rights granted by Warrants issued on JUNE 26, 1998 to Municipal
Review Committee, Inc. and Energy National Inc.
(b) OTHER DEFINITIONAL PROVISIONS. (i) Except as otherwise specified
herein, all references herein (A) to any Person other than the Company shall
be deemed to include such Person's successors and assigns, (B) to the Company
shall be deemed to include the Company's successors and (C) to any applicable
law defined or referred to herein shall be deemed references to such
applicable law as the same may have been or may be amended or supplemented
from time to time.
(ii) When used in this Warrant, the words "herein", "hereof" and
"hereunder", and words of similar import, shall refer to this Warrant as a
whole and not to any provision of this Warrant, and the words "Section",
"Schedule" and "Exhibit" shall refer to Sections of, and Schedules and
Exhibits to, this Warrant unless otherwise specified.
(iii) Whenever the context so requires, the neuter gender includes the
masculine or feminine, and the singular number includes the plural, and vice
versa.
SECTION 2. EXERCISE OF WARRANT. Subject to the terms and conditions
hereof, this Warrant may be exercised, in whole or in part, at any time
during normal business hours on or after the opening of business on JUNE 26,
1998 and prior to 4:00 P.M., Eastern Prevailing Time, on the Expiration Date.
The rights represented by this Warrant may be exercised by the Holder, in
whole or in part (except that this Warrant shall not be exercisable as to a
fractional share), by (i) delivery of a written notice, in the form of the
Subscription Notice attached as Exhibit A, of the Holder's election to
exercise this Warrant, which notice shall specify the number of Warrant
Shares to be purchased, (ii) payment to the Company of an amount equal to the
Warrant Exercise Price multiplied by the number of Warrant Shares as to which
the Warrant is being exercised in cash or by certified or official bank
check, for the number of Warrant Shares as to which this Warrant shall have
been exercised, (iii) the surrender of this Warrant, properly endorsed, at
the principal office of the Company at 33 State Street, Bangor, Maine (or at
such other agency or office of the Company as the Company may designate by
notice to the Holder) and (iv) if the Warrant Shares issuable upon the
exercise of the rights represented by this Warrant have not been registered
under the Securities Act, delivery to the Company by the Holder of a letter
in the form of Exhibit B hereto [unless in the opinion of counsel to the
Holder reasonably acceptable to the Company (delivered to the Company)
delivery of such letter is not required]. If such Warrant Shares are to be
issued in any name other than that of the Holder or its nominee, such
issuance shall be deemed a transfer and the provisions of Section 15 shall be
applicable. In the event of any exercise of the rights represented by this
Warrant, a certificate or certificates for the Warrant Shares so purchased,
registered in the name of, or as directed by, the Holder, shall be delivered
to, or as directed by, Holder within a reasonable time, not exceeding five
days, after such rights shall have been so exercised. Unless the rights
represented by this Warrant shall have expired or have been fully exercised,
the Company shall issue a new Warrant identical in all respects to the
Warrant exercised except (A) it shall represent rights to purchase the number
of Warrant Shares purchasable immediately prior to such exercise under the
Warrant exercised, less the number of Warrant Shares with respect to which
such Warrant was exercised and (B) the Warrant Exercise Price thereof shall
be the Warrant Exercise Price of the Warrant exercised. The Person in whose
name any certificate for Warrant Shares is issued upon exercise of this
Warrant shall for all purposes be deemed to have become the holder of record
of such Warrant Shares immediately prior to the close of business on the date
on which the Warrant was surrendered and payment of the amount due in respect
of such exercise was made, irrespective of the date of delivery of such share
certificate, except that, if the date of such surrender and payment is a date
when the stock transfer books of the Company are properly closed, such Person
shall be deemed to have become the holder of such Warrant Shares at the
opening of business on the next succeeding date on which the stock transfer
books are open.
SECTION 3. COVENANTS AS TO COMMON STOCK. The Company covenants and
agrees that all Warrant Shares that may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be validly issued,
fully paid and nonassessable. The Company further covenants and agrees that
during the period within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized and reserved a
sufficient number of shares of Common Stock to provide for the exercise of
the rights then represented by this Warrant and that the par value of said
shares will at all times be less than the applicable Warrant Exercise Price.
SECTION 4. ADJUSTMENT OF WARRANT EXERCISE PRICE AND ADJUSTMENT OF
NUMBER OF SHARES. The number of shares and Warrant Exercise Price of Common
Stock issuable upon exercise of this Warrant shall be subject to adjustment
on a weighted average basis to prevent dilution, (a) in the event that the
Company issues additional Common Stock at less than the Market Price as of
the date of issue (other than pursuant to this Warrant), or rights, warrants,
or options to acquire Common Stock at less than the Market Price as of the
date of issue (other than shares reserved for issuance to employees or
directors); (b) in the event that the Company issues securities convertible
into or exchangeable for Common Stock at less than the equivalent Market
Price of the Common Stock as of the date of issue; (c) in the event that the
Company declares any cash distributions other than from current earnings; or
(d) upon stock splits, stock dividends, divisions, combinations,
reorganizations, reclassifications, or any other event which is similar in
effect to any of the events described in subsections (a) through (d) hereof.
SECTION 5. REORGANIZATIONS. (a) REORGANIZATION OR RECLASSIFICATION.
In case of any capital reorganization or of any reclassification of the
Capital Stock of the Company (other than a change in par value or from par
value to no par value or from no par value to par value), this Warrant shall,
upon such capital reorganization or reclassification, entitle the Holder to
purchase the kind and number of shares of stock or other securities or cash,
assets or other property of the Company to which the Holder would have been
entitled if the holder had held the Common Stock issuable upon the exercise
hereof immediately prior to such capital reorganization or reclassification.
(b) CHANGE OF CONTROL. In case of any Change of Control, this Warrant
shall entitle the holder, immediately and at all times thereafter until the
Expiration Date, to exercise this Warrant and to receive the kind and number
of shares of stock or other securities or cash, assets or other property of
the Person resulting from or surviving such Change of Control to which the
holder would have been entitled if the holder had held the Common Stock
issuable upon the exercise hereof immediately prior to such Change of
Control. The Company shall not effect any such Change of Control unless,
prior to or simultaneously with the consummation thereof, the successor
Person (if other than the Company) resulting from such Change of Control or
the corporation purchasing such assets shall assume by written instrument
executed and mailed or delivered to the holder the obligation to deliver to
the holder such shares of stock, securities, cash, assets or other property
as, in accordance with the foregoing provisions, such Holder may be entitled
to receive upon the exercise of this Warrant.
(c) APPLICABLE PROVISIONS. In case of either paragraph (a) or (b) of
this Section 5, appropriate provision shall be made with respect to the
rights and interests of the holder to the end that the provisions hereof
(including without limitation provisions for adjustment of the Warrant
Exercise Price and of the number of shares purchasable upon the exercise of
this Warrant) shall thereafter be applicable, as nearly as may be in relation
to any shares of stock, securities or assets thereafter deliverable upon the
exercise of the rights represented hereby.
SECTION 6. NOTICE OF WARRANT EXERCISE PRICE. The Company shall
annually give a notice to the Holder, which notice shall state the Warrant
Exercise Price in effect and the increase or decrease, if any, in the number
of shares purchasable at the Warrant Exercise Price upon the exercise of this
Warrant, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
SECTION 7. COMPUTATION OF ADJUSTMENTS. Upon each computation of an
adjustment to the Warrant Exercise Price and the number of shares that may be
subscribed for and purchased upon exercise of this Warrant, the Warrant
Exercise Price shall be computed to the nearest cent (i.e., fractions of 0.5
of a cent or greater, shall be rounded to the next highest cent) and the
number of shares that may be subscribed for and purchased upon exercise of
this Warrant shall be calculated to the nearest whole share (i.e., fractions
of less than one half of a share shall be disregarded and fractions of one
half of a share or greater shall be treated as being a whole share). No such
adjustment shall be made, however, if the change in the Warrant Exercise
Price would be less than $0.01 per share, but any such lesser adjustment
shall be made (i) at the time and together with the next subsequent
adjustment which, together with any adjustments carried forward, shall amount
to $0.01 per share or more, or (ii) if earlier, upon the third anniversary of
the event for which such adjustment is required.
SECTION 8. NOTICE OF CERTAIN EVENTS. In case at any time:
(a) the Company shall make any distribution in respect of its Common
Stock (other than the payment of a cash dividend from current earnings);
(b) the Company shall propose to register any of its Common Stock under
the Securities Act in connection with a public offering of such Common Stock
(other than with respect to a registration statement filed on Form S-8 or
other such similar form then in effect under the Securities Act);
(c) the Company shall offer for subscription pro rata to the holders of
its Common Stock any additional shares of stock of any class or other rights;
(d) there shall be any capital reorganization, or reclassification of
the capital stock, of the Company, or Change of Control; or
(e) there shall be a voluntary or involuntary dissolution, liquidation
or winding up of the Company;
then, in any one or more of said cases, the Company shall give notice to the
Holder of the date on which (i) the books of the Company shall close or a
record shall be taken for such distribution or subscription rights or (ii)
such reorganization, reclassification, Change of Control, dissolution,
liquidation or winding up shall take place, as the case may be. Such notice
shall be given not less than twenty-one (21) days prior to the record date or
the date on which the transfer books of the Company are to be closed in
respect thereto in the case of an action specified in clause (i) and at least
forty-five (45) days prior to the action in question in the case of an action
specified in clause (ii).
SECTION 9. NO CHANGE IN WARRANT TERMS ON ADJUSTMENT. Irrespective of
any adjustment in the Warrant Exercise Price or the number of shares of
Common Stock issuable upon exercise hereof, this Warrant, whether theretofore
or thereafter issued or reissued, may continue to express the same price and
number of shares as are stated herein and the Warrant Exercise Price and such
number of shares specified herein shall be deemed to have been so adjusted.
SECTION 10. LIMITATION ON RIGHT TO EXERCISE WARRANTS. Notwithstanding
the rights to exercise the Warrant granted herein, other than as provided in
Section 5, the Holder may exercise this Warrant only to the following extent:
(a) 25% of the Warrants initially granted hereunder may be exercised on or
after MARCH 26, 1999; (b) 50% of the Warrants initially granted hereunder may
be exercised on or after MARCH 26, 2000; (c) 75% of the Warrants initially
granted hereunder may be exercised on or after MARCH 26, 2001; (d) 100% of
the Warrants initially granted hereunder may be exercised on or after MARCH
26, 2002.
SECTION 11. REGISTRATION RIGHTS. (a) REQUIRED REGISTRATION. Upon
written request by Majority Holders, the Company shall use its best efforts
to register and to maintain in effect for a period of one year, pursuant to
the Securities Act of 1933, the Common Stock for which Warrants are
exercisable or have been exercised. The Company's Board of Directors may,
upon determining that there is a valid business reason for doing so, delay
filing a Registration Statement for up to 120 days after receipt of the
written request. Upon receipt of such written request, the Company shall
notify all holders of Warrants that such a request has been made and shall
provide all holders reasonable opportunity to include Common Stock in the
registration. If on the date of such written request the Company has filed
or notifies the Majority Holders it intends to file a Registration Statement
pursuant to the Securities Act of 1933 within 120 days, the requirements of
this subsection will be met by the inclusion of Common Stock within the
Registration Statement filed or to be filed. Upon filing a Registration
Statement pursuant to this subsection, the Company shall have no obligation
to file additional Registration Statements at the request of Majority Holders
for a period of one year.
(b) INCIDENTAL REGISTRATION. If the Company proposes to register any
of its common stock pursuant to the Securities Act of 1933 in connection with
a public distribution of that stock, other than pursuant to a merger or
acquisition for stock or pursuant to an employee benefits, option or
compensation plan (unless such plans in the aggregate provide for the
issuance of more than 10% of the Company's then outstanding common stock), it
shall give notice to all holders of Warrants and give them reasonable
opportunity to participate in the registration.
(c) TAG-ALONG RIGHTS. If the Company shall propose to issue and if any
single entity shall propose to acquire securities of the Company having
voting power equal to or more than the voting power of the then outstanding
shares of the Company, the Company may not accept the offer of such entity
unless such entity shall simultaneously make an offer to purchase this
warrant, or all of the shares underlying this warrant and all other warrants
of this class of warrant, or all of the shares underlying such warrants,
which is accepted by at least one of the holders of this class of warrants.
Such purchase must be simultaneous with the purchase of the securities to be
issued by the Company to such entity.
(d) COSTS OF REGISTRATION. All costs of registration shall be paid by
the Company.
SECTION 12. OPTIONS AT THE TIME OF EXERCISE. (a) COMPANY'S OPTION TO
PAY CASH IN LIEU OF ISSUING COMMON STOCK. Upon the exercise of this Warrant,
the Company may elect, at its option, to give the Holder immediate notice and
to pay the Holder within ten (10) business days a sum of cash in lieu of
Issuing Common Stock as provided in Section 2. The amount of cash payable
pursuant to this subsection shall be calculated by subtracting the Warrant
Exercise Price from the Market Price on the date of exercise and multiplying
the result by the number of shares of Common Stock as to which exercise is
being made. At the time of making any payment pursuant to this Section, the
Company shall repay to the Holder any amounts paid in connection with the
exercise of the Warrant pursuant to Section 2. The Company may exercise this
option only if in doing so it does not violate any material covenants
contained in any of its financing agreements that have not been waived.
(b) CASHLESS EXERCISE. At the time of exercise of this Warrant, the
Holder may elect to exercise the option provided in this subsection in lieu
of making the cash payment required by Section 2. Upon written notice of its
desire to exercise this option given at the same time and in the same manner
as the notice specified in Section 2, the Holder shall be entitled to the
issuance of Warrant Shares (in lieu of the Warrant Shares otherwise issuable
pursuant to Section 2), the number of which shall be calculated as follows:
the product of (x) the number of shares as to which the Warrant is being
exercised and (y) a fraction, the numerator of which is the Market Price of
the Common Stock minus the Warrant Exercise Price and the denominator of
which is the Market Price of the Common Stock.
SECTION 13. WARRANT HOLDER NOT DEEMED A SHAREHOLDER. Except as
provided in Section 8, no Holder, as such, shall be entitled to vote or
receive dividends or be deemed the holder of shares of the Company for any
purpose, nor shall anything contained in this Warrant be construed to confer
upon the Holder, as such, any of the rights of a shareholder of the Company
or any right to vote, give or withhold consent to any corporate action
(whether any reorganization, issue or reclassification of stock,
consolidation, merger, conveyance or otherwise), receive notice of meetings,
receive dividends or subscription rights, or otherwise, prior to the issuance
of record to the Holder of the Warrant Shares which it is then entitled to
receive upon the due exercise of this Warrant.
SECTION 14. NO LIMITATION ON CORPORATE ACTION; NO AVOIDANCE OF TERMS.
(a) No provisions of this Warrant and no right or option granted or
conferred hereunder shall in any way limit, affect or abridge the exercise by
the Company of any of its corporate rights or powers to recapitalize, amend
its charter, reorganize, consolidate or merge with or into another
corporation, or to transfer all or any part of its property or assets, or the
exercise of any other of its corporate rights and powers.
(b) The Company shall not by any action, including, without limitation,
amending its articles of incorporation or through any reorganization,
transfer of assets, consolidation, merger or arrangement, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms of this Warrant, but will
at all times in good faith assist in the carrying out of all such terms and
in the taking of all such actions as may be necessary or appropriate to
protect the rights of the Holder against impairment. Without limiting the
generality of the foregoing, the Company will take all such action as may be
necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of Common Stock upon the exercise
of this Warrant.
SECTION 15. TRANSFER; OPINIONS OF COUNSEL; RESTRICTIVE LEGENDS.
(a) Prior to any sale, transfer or other disposition of this Warrant or
the Warrant Shares, the Holder thereof will give seven (7) days' notice to
the Company of its intention to effect such transfer. Each such notice shall
describe the manner and circumstances of the proposed transfer and shall be
accompanied by an opinion of counsel for the Holder reasonably satisfactory
to the Company, addressed to the Company and reasonably satisfactory in form
and substance to it stating that, in the opinion of such counsel, such
transfer is a transaction exempt from registration under the Securities Act.
(b) If such sale, transfer or other disposition may, in the opinion of
such counsel, be effected without registration under the Securities Act, the
holder shall thereupon be entitled to transfer this Warrant and the Warrant
Shares in accordance with the terms of the notice delivered by the Holder to
the Company. If, in the opinion of such counsel, such transfer may not be
effected without registration under the Securities Act, the Holder shall not
be entitled to so transfer this Warrant or the Warrant Shares unless (i) the
Company elects to file a registration statement relating to such proposed
transfer and such registration statement has become effective under the
Securities Act or (ii) the provisions of Section 11 apply.
(c) Notwithstanding the provisions of this Section 15, the Holder may
at any time transfer this Warrant or the Warrant Shares to an Affiliate or an
Associate (as such term is defined in Section 12b-2 of the Securities
Exchange Act of 1934, as amended) of the Holder.
(d)(i) Except as otherwise provided in this Section 15, each
certificate for Warrant Shares initially issued upon the exercise of this
Warrant, and each certificate for Warrant Shares issued to any subsequent
transferee of any such certificate, shall be stamped or otherwise imprinted
with a legend stating that the shares represented by such certificate have
not been registered under the Securities Act of 1933 and may not be
transferred except in accordance with the provisions of the Securities Act of
1933 and Section 15 of this Warrant.
(ii) Except as otherwise provided in this Section 15, each Warrant
shall be stamped or otherwise imprinted with a legend stating that neither
the rights represented by the Warrant nor the shares issuable upon the
exercise thereof have been registered under the Securities Act of 1933 and
that such rights and shares may not be transferred except in accordance with
the provisions of the Securities Act of 1933 and Section 15 of this Warrant.
(e) TERMINATION OF RESTRICTIONS. The restrictions imposed by Section
15(a) and the legend requirements of Section 15(d) shall terminate as to any
particular Warrant or Warrant Share (i) when and so long as such security
shall have been effectively registered under the Securities Act of 1933 and
disposed of in a public sale or distribution pursuant thereto, (ii) when such
security shall have been disposed of in accordance with Rule 144 or (iii)
when the Company shall have received opinions of counsel reasonably
satisfactory to it, which opinions shall be satisfactory in substance and
form to the Company, to the effect that such restrictions on transfer
pursuant to the Securities Act of 1933 no longer apply. Whenever said
restrictions and legend requirements shall terminate as to this Warrant, as
hereinabove provided, the Holder shall be entitled to receive from the
Company, at the expense of the Company, a new Warrant bearing a legend in
place of the restrictive legend described in Section 15(d) stating that the
restrictions on transferability of the Warrant have been terminated.
Whenever the restrictions imposed by this Section 15 shall terminate as to
any Warrant Share, as hereinabove provided, the holder thereof shall be
entitled to receive from the Company, at the Company's expense, a new
certificate representing such Common Stock not bearing the restrictive legend
described in Section 15(d).
SECTION 16. EXCHANGE OF WARRANT. This Warrant is exchangeable upon the
surrender hereof by the Holder at the office or agency of the Company, for
new Warrants of like tenor representing in the aggregate the right to
subscribe for and purchase the number of shares which may be subscribed for
and purchased hereunder from time to time after giving effect to all the
provisions hereof, each of such new Warrants to represent the right to
subscribe for and purchase such number of shares as shall be designated by
the Holder hereof at the time of such surrender.
SECTION 17. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this
Warrant is lost, stolen, mutilated or destroyed, the Company shall, upon
receipt by it of indemnity satisfactory to it, issue a new Warrant of like
denomination and tenor as the Warrant so lost, stolen, mutilated or
destroyed. Any such new Warrant shall constitute an original contractual
obligation of the Company, whether or not the allegedly lost, stolen,
mutilated or destroyed Warrant shall be at any time enforceable by anyone.
SECTION 18. DIVISION AND COMBINATION. Subject to Section 15, this
Warrant may be divided or combined with other Warrants upon presentation
hereof at the office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be
issued, signed by the Holder or its agent or attorney. Subject to compliance
with Section 15, as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants
in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice. The Company shall prepare, issue and deliver at
its own expense the new Warrant or Warrants under each of Section 15 and this
Section 18.
SECTION 19. MAINTENANCE OF BOOKS. The Company agrees to maintain, at
its office or agency, books for the registration and the registration of
transfer of the Warrants.
SECTION 20. [Intentionally Omitted.]
SECTION 21. NOTICE. All notices and other communications under this
Warrant shall (a) be in writing, (b) be (i) sent by registered or certified
mail, postage prepaid, return receipt requested or (ii) delivered by hand,
(c) be given at the following respective addresses and to the attention of
the following Persons:
(i) if to the Company, to it at:
Bangor Hydro-Electric Company
33 State Street
P.O. Box 932
Bangor, Maine 04402-0932
Attention: President
(ii) if to the initial Holder, to it at:
PERC Management Company Limited Partnership
c/o KTI, Inc.
7000 Boulevard East
Guttenberg, NJ 07093
Attention: President
or to such other address or to the attention of such other person as the
party to whom such information pertains may hereafter specify for the purpose
in a notice to the other specifically captioned "Notice of Change of Address"
and (d) be effective or deeded delivered or furnished (i) if given by mail,
on the fifth Business Day after such communication is deposited in the mail,
addressed as above provided and (ii) if given by hand delivery, when left
with an employee of the addressee at the address of the addressee addressed
as above provided, except that notices of a change of address shall not be
deemed furnished until received.
SECTION 22. MISCELLANEOUS. This Warrant and any term hereof may not be
changed, waived, discharged, or terminated except by an instrument in writing
signed by the party or holder hereof against which enforcement of such
change, waiver, discharge or termination is sought. The headings in this
Warrant are for purposes of reference only and shall not limit or otherwise
affect the meaning hereof.
SECTION 23. DATE. The date of this Warrant is JUNE 26, 1998. This
Warrant, in all events, shall be wholly void and of no effect after the close
of business on the Expiration Date, except that notwithstanding any other
provisions hereof, the provisions of Sections 11 and 15 shall continue in
full force and effect after such date as to any Warrant Shares or other
securities issued upon the exercise of this Warrant.
SECTION 24. GOVERNING LAW. This Warrant shall be construed in
accordance with and governed by the laws of the State of Maine, excluding
those applicable to choice of law.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its duly authorized officers as of this JUNE 26, 1998.
BANGOR HYDRO-ELECTRIC COMPANY
By:
Its: Vice President - Finance & Law
Exhibit A
to Warrant
SUBSCRIPTION NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER IF SUCH
HOLDER DESIRES TO EXERCISE THIS WARRANT
BANGOR HYDRO-ELECTRIC COMPANY
The undersigned hereby exercises the right to purchase Warrant Shares
covered by this Warrant according to the conditions thereof and herewith
makes payment of $ , the aggregate Warrant
Exercise Price of such Warrant Shares, in full.
[NAME OF HOLDER]
By:
Title:
Number of
Warrant Shares Being
Purchased
Dated: , 19[20]
Exhibit B
to Warrant
Attention:
Re: Exercise of Warrant, dated
Dear Sirs:
In connection with the undersigned's purchase of Common Stock of Bangor
Hydro-Electric Company upon exercise of a warrant therefor, the undersigned
confirms and agrees as follows:
1. As the purchaser of the shares of Common Stock in a private
placement not registered under the Securities Act of 1933, as amended
(the "Act"), the undersigned is purchasing such shares for its own
account for investment and (subject to the disposition of its property
being at all times within its control) not with a view to any resale,
distribution or other disposition thereof, and the undersigned is
proceeding on the assumption that it must bear the economic risk of the
investment for an indefinite period, since the shares of Common Stock
may not be sold except as provided in paragraph 2 below.
2. The undersigned agrees that, if in the future the undersigned
should decide to dispose of the shares of Common Stock (such disposition
not being presently foreseen or contemplated), the undersigned will not
offer, sell, transfer or exchange such shares of Common Stock, except
under conditions that would not violated the Act or any applicable
securities laws.
3. The undersigned is purchasing the shares of Common Stock
pursuant to an exemption from the registration requirements of the Act
and from registration or qualification requirements under applicable
state securities laws.
If administrative or legal proceedings are commenced or threatened in
connection with which this notice is or would be relevant, the undersigned
irrevocably authorizes Bangor Hydro-Electric Company to produce this notice
or a copy thereof to any interested party in such proceedings.
Date:
[NAME OF HOLDER]
By:
Title:
EXHIBIT 4(c)
THIS WARRANT MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
EXCEPT AS SPECIFIED IN SECTION 15 HEREOF. NEITHER THE RIGHTS
REPRESENTED BY THIS WARRANT NOR THE SHARES ISSUABLE UPON THE
EXERCISE THEREOF HAVE BEEN REGISTERED FOR OFFER OR SALE UNDER THE
SECURITIES ACT OF 1933. SUCH RIGHTS AND SHARES MAY NOT BE SOLD OR
OFFERED FOR SALE IN WHOLE OR IN PART EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 15 HEREOF.
BANGOR HYDRO-ELECTRIC COMPANY
WARRANT TO PURCHASE COMMON STOCK
--------------------------------
BANGOR HYDRO-ELECTRIC COMPANY, a Maine corporation (the "Company"),
hereby certifies that, for value received, Energy National Inc., a Utah
corporation, is entitled, subject to the terms set forth below, to purchase
from the Company upon surrender of this Warrant, at any time or times on or
after JUNE 26, 1998 but not after 4:00 P.M., Eastern Prevailing Time, on the
Expiration Date, JUNE 26, 2008, two hundred eighty-seven thousand one hundred
and forty-three (287,143) fully paid nonassessable shares (the "Warrant
Shares") of Common Stock, $5.00 par value, of the Company (as adjusted from
time to time as provided in this Warrant) at an initial purchase price of
$7.00 per share in lawful money of the United States.
DEFINITIONS
-----------
SECTION 1. (a) DEFINITIONS. The following words and terms as used in
this Warrant shall have the following meanings:
"AFFILIATE" shall mean, with respect to a Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such first Person.
"BUSINESS DAY" shall mean, except as otherwise provided in the
definition of "Market Price", a day other than a Saturday, a Sunday or a day
on which banking institutions in Maine are authorized or obligated by law or
required by executive order to be closed.
"CHANGE OF CONTROL" shall mean (i) any merger, consolidation,
arrangement or reorganization of the Company with any Person whereby, after
such transaction, holders of Shares of Common Stock prior to the transaction,
do not continue to own, directly or indirectly, at least a majority,
determined on a fully-diluted basis, of the shares of the Voting Stock of the
Company or the surviving or resulting corporation, or (ii) any sale, lease or
exchange of 50% or more of the assets of the Company and its Subsidiaries,
taken as a whole, to any Person.
"COMMISSION" shall mean the United States Securities and Exchange
Commission or the principal United States agency administering the United
States securities laws.
"COMMON STOCK" shall mean with reference to the Common Stock for which
Warrants are exercisable, only Common Stock of the class existing on the date
hereof and any stock into which such Common Stock may thereafter have been
changed, and, when otherwise used herein, shall include also stock of the
Company of any other class, whether now or hereafter authorized, which ranks,
or is entitled to a participation, as to assets or dividends, substantially
on a parity with such existing Common Stock or other class of stock into
which such Common Stock have been changed.
"CONVERTIBLE SECURITIES" shall mean any securities issued by the Company
that are convertible into or exchangeable for, directly or indirectly, shares
of Common Stock.
"EXPIRATION DATE" shall mean JUNE 26, 2008.
"HOLDER" shall mean the Person in whose name the Warrant set forth
herein is registered on the books of the Company maintained for such purpose.
"MAJORITY HOLDERS" shall mean the holders of Warrants exercisable for
50% or more of the aggregate number of shares of Common Stock then
purchasable upon exercise of all Warrants.
"MARKET PRICE" shall mean (a) the higher of (i) the highest closing
sale price of the Common Stock on any domestic exchange on which the Common
Stock may be listed for the Business Day immediately preceding, or the last
Business Day that the Common Stock traded on such exchange prior to, the date
as to which "Market Price" is being determined and (ii) the average of the
closing prices of the Common Stock sales on all domestic exchanges on which
the Common Stock may at the time be listed or, if there shall have been no
sales on any such exchange on any day, the average of the reported bid prices
on all such exchanges at the end of such day or, if on any day the Common
Stock shall not be so listed, the average of the representative bid prices
quoted in the NASDAQ as of 3:30 P.M., New York prevailing time, or if on any
day the Common Stock shall not be quoted in the NASDAQ, the average of the
high and low bid prices on such day in the domestic over-the-counter market
as reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, in each such case averaged over a period of 10
consecutive Business Days (or other such period as shall be specified herein)
prior to the date as of which "Market Price" is being determined; provided,
however, that if the Common Stock is listed on any domestic exchange or the
NASDAQ the term "Business Day" as used in this definition shall mean any day
on which such exchange or the NASDAQ is open for trading or (b) in the event
the Common Stock is not Publicly Traded, the fair market value of the Common
Stock as determined in good faith by the Board of Directors of the Company;
provided, however, that such determination may be challenged by any Holders
and any dispute arising therefrom shall be resolved by an investment bank of
recognized standing selected by the Company and reasonably satisfactory to
such Holders whose determination of the fair market value of the Common Stock
shall be final and binding on the parties; and the fees and expenses incurred
by such investment bank in connection with its determination shall, in the
case it determines that the fair market value of the Common Stock is (i) 90%
or more of such determination of the Board of Directors, be borne by such
Holders, and (ii) less than 90% of such determination of the Board of
Directors, be borne by the Company.
"PERSON" shall mean an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock
company, government (or an agency or political subdivision thereof) or other
entity of any kind.
"PUBLIC OFFERING" shall mean a firm underwritten offering of Common
Stock registered under the Securities Act of 1933 on Form S-1, S-2 or S-3 (or
any successor form) and offered generally to the public.
"PUBLICLY TRADED" shall mean, with respect to any securities, listed on
a nationally recognized U.S. securities exchange or admitted for trading on
the NASDAQ.
"RULE 144" shall mean the rule of such number promulgated by the
Commission under the Securities Act and any successor rule thereto.
"VOTING STOCK" shall mean, as applied to the stock (or the equivalent
thereof) of any Person, stock (or such equivalent) of any class or classes,
however designated, having ordinary voting power for the election of at least
a majority of the board of directors (or other governing body) of such
Person, other than stock (or such equivalent) having such power only by
reason of the happening of a contingency.
"WARRANT EXERCISE PRICE" shall mean initially $7.00 per share and shall
be adjusted and readjusted from time to time as provided in this Warrant.
"WARRANTS" shall mean collectively the rights granted by this Warrant
and the rights granted by Warrants issued on JUNE 26, 1998 to Municipal
Review Committee, Inc. and PERC Management Company Limited Partnership.
(b) OTHER DEFINITIONAL PROVISIONS. (i) Except as otherwise specified
herein, all references herein (A) to any Person other than the Company shall
be deemed to include such Person's successors and assigns, (B) to the Company
shall be deemed to include the Company's successors and (C) to any applicable
law defined or referred to herein shall be deemed references to such
applicable law as the same may have been or may be amended or supplemented
from time to time.
(ii) When used in this Warrant, the words "herein", "hereof" and
"hereunder", and words of similar import, shall refer to this Warrant as a
whole and not to any provision of this Warrant, and the words "Section",
"Schedule" and "Exhibit" shall refer to Sections of, and Schedules and
Exhibits to, this Warrant unless otherwise specified.
(iii) Whenever the context so requires, the neuter gender includes the
masculine or feminine, and the singular number includes the plural, and vice
versa.
SECTION 2. EXERCISE OF WARRANT. Subject to the terms and conditions
hereof, this Warrant may be exercised, in whole or in part, at any time
during normal business hours on or after the opening of business on JUNE 26,
1998 and prior to 4:00 P.M., Eastern Prevailing Time, on the Expiration Date.
The rights represented by this Warrant may be exercised by the Holder, in
whole or in part (except that this Warrant shall not be exercisable as to a
fractional share), by (i) delivery of a written notice, in the form of the
Subscription Notice attached as Exhibit A, of the Holder's election to
exercise this Warrant, which notice shall specify the number of Warrant
Shares to be purchased, (ii) payment to the Company of an amount equal to the
Warrant Exercise Price multiplied by the number of Warrant Shares as to which
the Warrant is being exercised in cash or by certified or official bank
check, for the number of Warrant Shares as to which this Warrant shall have
been exercised, (iii) the surrender of this Warrant, properly endorsed, at
the principal office of the Company at 33 State Street, Bangor, Maine (or at
such other agency or office of the Company as the Company may designate by
notice to the Holder) and (iv) if the Warrant Shares issuable upon the
exercise of the rights represented by this Warrant have not been registered
under the Securities Act, delivery to the Company by the Holder of a letter
in the form of Exhibit B hereto [unless in the opinion of counsel to the
Holder reasonably acceptable to the Company (delivered to the Company)
delivery of such letter is not required]. If such Warrant Shares are to be
issued in any name other than that of the Holder or its nominee, such
issuance shall be deemed a transfer and the provisions of Section 15 shall be
applicable. In the event of any exercise of the rights represented by this
Warrant, a certificate or certificates for the Warrant Shares so purchased,
registered in the name of, or as directed by, the Holder, shall be delivered
to, or as directed by, Holder within a reasonable time, not exceeding five
days, after such rights shall have been so exercised. Unless the rights
represented by this Warrant shall have expired or have been fully exercised,
the Company shall issue a new Warrant identical in all respects to the
Warrant exercised except (A) it shall represent rights to purchase the number
of Warrant Shares purchasable immediately prior to such exercise under the
Warrant exercised, less the number of Warrant Shares with respect to which
such Warrant was exercised and (B) the Warrant Exercise Price thereof shall
be the Warrant Exercise Price of the Warrant exercised. The Person in whose
name any certificate for Warrant Shares is issued upon exercise of this
Warrant shall for all purposes be deemed to have become the holder of record
of such Warrant Shares immediately prior to the close of business on the date
on which the Warrant was surrendered and payment of the amount due in respect
of such exercise was made, irrespective of the date of delivery of such share
certificate, except that, if the date of such surrender and payment is a date
when the stock transfer books of the Company are properly closed, such Person
shall be deemed to have become the holder of such Warrant Shares at the
opening of business on the next succeeding date on which the stock transfer
books are open.
SECTION 3. COVENANTS AS TO COMMON STOCK. The Company covenants and
agrees that all Warrant Shares that may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be validly issued,
fully paid and nonassessable. The Company further covenants and agrees that
during the period within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized and reserved a
sufficient number of shares of Common Stock to provide for the exercise of
the rights then represented by this Warrant and that the par value of said
shares will at all times be less than the applicable Warrant Exercise Price.
SECTION 4. ADJUSTMENT OF WARRANT EXERCISE PRICE AND ADJUSTMENT OF
NUMBER OF SHARES. The number of shares and Warrant Exercise Price of Common
Stock issuable upon exercise of this Warrant shall be subject to adjustment
on a weighted average basis to prevent dilution, (a) in the event that the
Company issues additional Common Stock at less than the Market Price as of
the date of issue (other than pursuant to this Warrant), or rights, warrants,
or options to acquire Common Stock at less than the Market Price as of the
date of issue (other than shares reserved for issuance to employees or
directors); (b) in the event that the Company issues securities convertible
into or exchangeable for Common Stock at less than the equivalent Market
Price of the Common Stock as of the date of issue; (c) in the event that the
Company declares any cash distributions other than from current earnings; or
(d) upon stock splits, stock dividends, divisions, combinations,
reorganizations, reclassifications, or any other event which is similar in
effect to any of the events described in subsections (a) through (d) hereof.
SECTION 5. REORGANIZATIONS. (a) REORGANIZATION OR RECLASSIFICATION.
In case of any capital reorganization or of any reclassification of the
Capital Stock of the Company (other than a change in par value or from par
value to no par value or from no par value to par value), this Warrant shall,
upon such capital reorganization or reclassification, entitle the Holder to
purchase the kind and number of shares of stock or other securities or cash,
assets or other property of the Company to which the Holder would have been
entitled if the holder had held the Common Stock issuable upon the exercise
hereof immediately prior to such capital reorganization or reclassification.
(b) CHANGE OF CONTROL. In case of any Change of Control, this Warrant
shall entitle the holder, immediately and at all times thereafter until the
Expiration Date, to exercise this Warrant and to receive the kind and number
of shares of stock or other securities or cash, assets or other property of
the Person resulting from or surviving such Change of Control to which the
holder would have been entitled if the holder had held the Common Stock
issuable upon the exercise hereof immediately prior to such Change of
Control. The Company shall not effect any such Change of Control unless,
prior to or simultaneously with the consummation thereof, the successor
Person (if other than the Company) resulting from such Change of Control or
the corporation purchasing such assets shall assume by written instrument
executed and mailed or delivered to the holder the obligation to deliver to
the holder such shares of stock, securities, cash, assets or other property
as, in accordance with the foregoing provisions, such Holder may be entitled
to receive upon the exercise of this Warrant.
(c) APPLICABLE PROVISIONS. In case of either paragraph (a) or (b) of
this Section 5, appropriate provision shall be made with respect to the
rights and interests of the holder to the end that the provisions hereof
(including without limitation provisions for adjustment of the Warrant
Exercise Price and of the number of shares purchasable upon the exercise of
this Warrant) shall thereafter be applicable, as nearly as may be in relation
to any shares of stock, securities or assets thereafter deliverable upon the
exercise of the rights represented hereby.
SECTION 6. NOTICE OF WARRANT EXERCISE PRICE. The Company shall
annually give a notice to the Holder, which notice shall state the Warrant
Exercise Price in effect and the increase or decrease, if any, in the number
of shares purchasable at the Warrant Exercise Price upon the exercise of this
Warrant, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
SECTION 7. COMPUTATION OF ADJUSTMENTS. Upon each computation of an
adjustment to the Warrant Exercise Price and the number of shares that may be
subscribed for and purchased upon exercise of this Warrant, the Warrant
Exercise Price shall be computed to the nearest cent (i.e., fractions of 0.5
of a cent or greater, shall be rounded to the next highest cent) and the
number of shares that may be subscribed for and purchased upon exercise of
this Warrant shall be calculated to the nearest whole share (i.e., fractions
of less than one half of a share shall be disregarded and fractions of one
half of a share or greater shall be treated as being a whole share). No such
adjustment shall be made, however, if the change in the Warrant Exercise
Price would be less than $0.01 per share, but any such lesser adjustment
shall be made (i) at the time and together with the next subsequent
adjustment which, together with any adjustments carried forward, shall amount
to $0.01 per share or more, or (ii) if earlier, upon the third anniversary of
the event for which such adjustment is required.
SECTION 8. NOTICE OF CERTAIN EVENTS. In case at any time:
(a) the Company shall make any distribution in respect of its Common
Stock (other than the payment of a cash dividend from current earnings);
(b) the Company shall propose to register any of its Common Stock under
the Securities Act in connection with a public offering of such Common Stock
(other than with respect to a registration statement filed on Form S-8 or
other such similar form then in effect under the Securities Act);
(c) the Company shall offer for subscription pro rata to the holders of
its Common Stock any additional shares of stock of any class or other rights;
(d) there shall be any capital reorganization, or reclassification of
the capital stock, of the Company, or Change of Control; or
(e) there shall be a voluntary or involuntary dissolution, liquidation
or winding up of the Company;
then, in any one or more of said cases, the Company shall give notice to the
Holder of the date on which (i) the books of the Company shall close or a
record shall be taken for such distribution or subscription rights or (ii)
such reorganization, reclassification, Change of Control, dissolution,
liquidation or winding up shall take place, as the case may be. Such notice
shall be given not less than twenty-one (21) days prior to the record date or
the date on which the transfer books of the Company are to be closed in
respect thereto in the case of an action specified in clause (i) and at least
forty-five (45) days prior to the action in question in the case of an action
specified in clause (ii).
SECTION 9. NO CHANGE IN WARRANT TERMS ON ADJUSTMENT. Irrespective of
any adjustment in the Warrant Exercise Price or the number of shares of
Common Stock issuable upon exercise hereof, this Warrant, whether theretofore
or thereafter issued or reissued, may continue to express the same price and
number of shares as are stated herein and the Warrant Exercise Price and such
number of shares specified herein shall be deemed to have been so adjusted.
SECTION 10. LIMITATION ON RIGHT TO EXERCISE WARRANTS. Notwithstanding
the rights to exercise the Warrant granted herein, other than as provided in
Section 5, the Holder may exercise this Warrant only to the following extent:
(a) 25% of the Warrants initially granted hereunder may be exercised on or
after MARCH 26, 1999; (b) 50% of the Warrants initially granted hereunder may
be exercised on or after MARCH 26, 2000; (c) 75% of the Warrants initially
granted hereunder may be exercised on or after MARCH 26, 2001; (d) 100% of
the Warrants initially granted hereunder may be exercised on or after MARCH
26, 2002.
SECTION 11. REGISTRATION RIGHTS. (a) REQUIRED REGISTRATION. Upon
written request by Majority Holders, the Company shall use its best efforts
to register and to maintain in effect for a period of one year, pursuant to
the Securities Act of 1933, the Common Stock for which Warrants are
exercisable or have been exercised. The Company's Board of Directors may,
upon determining that there is a valid business reason for doing so, delay
filing a Registration Statement for up to 120 days after receipt of the
written request. Upon receipt of such written request, the Company shall
notify all holders of Warrants that such a request has been made and shall
provide all holders reasonable opportunity to include Common Stock in the
registration. If on the date of such written request the Company has filed
or notifies the Majority Holders it intends to file a Registration Statement
pursuant to the Securities Act of 1933 within 120 days, the requirements of
this subsection will be met by the inclusion of Common Stock within the
Registration Statement filed or to be filed. Upon filing a Registration
Statement pursuant to this subsection, the Company shall have no obligation
to file additional Registration Statements at the request of Majority Holders
for a period of one year.
(b) INCIDENTAL REGISTRATION. If the Company proposes to register any
of its common stock pursuant to the Securities Act of 1933 in connection with
a public distribution of that stock, other than pursuant to a merger or
acquisition for stock or pursuant to an employee benefits, option or
compensation plan (unless such plans in the aggregate provide for the
issuance of more than 10% of the Company's then outstanding common stock), it
shall give notice to all holders of Warrants and give them reasonable
opportunity to participate in the registration.
(c) TAG-ALONG RIGHTS. If the Company shall propose to issue and if any
single entity shall propose to acquire securities of the Company having
voting power equal to or more than the voting power of the then outstanding
shares of the Company, the Company may not accept the offer of such entity
unless such entity shall simultaneously make an offer to purchase this
warrant, or all of the shares underlying this warrant and all other warrants
of this class of warrant, or all of the shares underlying such warrants,
which is accepted by at least one of the holders of this class of warrants.
Such purchase must be simultaneous with the purchase of the securities to be
issued by the Company to such entity.
(d) COSTS OF REGISTRATION. All costs of registration shall be paid by
the Company.
SECTION 12. OPTIONS AT THE TIME OF EXERCISE. (a) COMPANY'S OPTION TO
PAY CASH IN LIEU OF ISSUING COMMON STOCK. Upon the exercise of this Warrant,
the Company may elect, at its option, to give the Holder immediate notice and
to pay the Holder within ten (10) business days a sum of cash in lieu of
Issuing Common Stock as provided in Section 2. The amount of cash payable
pursuant to this subsection shall be calculated by subtracting the Warrant
Exercise Price from the Market Price on the date of exercise and multiplying
the result by the number of shares of Common Stock as to which exercise is
being made. At the time of making any payment pursuant to this Section, the
Company shall repay to the Holder any amounts paid in connection with the
exercise of the Warrant pursuant to Section 2. The Company may exercise this
option only if in doing so it does not violate any material covenants
contained in any of its financing agreements that have not been waived.
(b) CASHLESS EXERCISE. At the time of exercise of this Warrant, the
Holder may elect to exercise the option provided in this subsection in lieu
of making the cash payment required by Section 2. Upon written notice of its
desire to exercise this option given at the same time and in the same manner
as the notice specified in Section 2, the Holder shall be entitled to the
issuance of Warrant Shares (in lieu of the Warrant Shares otherwise issuable
pursuant to Section 2), the number of which shall be calculated as follows:
the product of (x) the number of shares as to which the Warrant is being
exercised and (y) a fraction, the numerator of which is the Market Price of
the Common Stock minus the Warrant Exercise Price and the denominator of
which is the Market Price of the Common Stock.
SECTION 13. WARRANT HOLDER NOT DEEMED A SHAREHOLDER. Except as
provided in Section 8, no Holder, as such, shall be entitled to vote or
receive dividends or be deemed the holder of shares of the Company for any
purpose, nor shall anything contained in this Warrant be construed to confer
upon the Holder, as such, any of the rights of a shareholder of the Company
or any right to vote, give or withhold consent to any corporate action
(whether any reorganization, issue or reclassification of stock,
consolidation, merger, conveyance or otherwise), receive notice of meetings,
receive dividends or subscription rights, or otherwise, prior to the issuance
of record to the Holder of the Warrant Shares which it is then entitled to
receive upon the due exercise of this Warrant.
SECTION 14. NO LIMITATION ON CORPORATE ACTION; NO AVOIDANCE OF TERMS.
(a) No provisions of this Warrant and no right or option granted or
conferred hereunder shall in any way limit, affect or abridge the exercise by
the Company of any of its corporate rights or powers to recapitalize, amend
its charter, reorganize, consolidate or merge with or into another
corporation, or to transfer all or any part of its property or assets, or the
exercise of any other of its corporate rights and powers.
(b) The Company shall not by any action, including, without limitation,
amending its articles of incorporation or through any reorganization,
transfer of assets, consolidation, merger or arrangement, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms of this Warrant, but will
at all times in good faith assist in the carrying out of all such terms and
in the taking of all such actions as may be necessary or appropriate to
protect the rights of the Holder against impairment. Without limiting the
generality of the foregoing, the Company will take all such action as may be
necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of Common Stock upon the exercise
of this Warrant.
SECTION 15. TRANSFER; OPINIONS OF COUNSEL; RESTRICTIVE LEGENDS.
(a) Prior to any sale, transfer or other disposition of this Warrant or
the Warrant Shares, the Holder thereof will give seven (7) days' notice to
the Company of its intention to effect such transfer. Each such notice shall
describe the manner and circumstances of the proposed transfer and shall be
accompanied by an opinion of counsel for the Holder reasonably satisfactory
to the Company, addressed to the Company and reasonably satisfactory in form
and substance to it stating that, in the opinion of such counsel, such
transfer is a transaction exempt from registration under the Securities Act.
(b) If such sale, transfer or other disposition may, in the opinion of
such counsel, be effected without registration under the Securities Act, the
holder shall thereupon be entitled to transfer this Warrant and the Warrant
Shares in accordance with the terms of the notice delivered by the Holder to
the Company. If, in the opinion of such counsel, such transfer may not be
effected without registration under the Securities Act, the Holder shall not
be entitled to so transfer this Warrant or the Warrant Shares unless (i) the
Company elects to file a registration statement relating to such proposed
transfer and such registration statement has become effective under the
Securities Act or (ii) the provisions of Section 11 apply.
(c) Notwithstanding the provisions of this Section 15, the Holder may
at any time transfer this Warrant or the Warrant Shares to an Affiliate or an
Associate (as such term is defined in Section 12b-2 of the Securities
Exchange Act of 1934, as amended) of the Holder.
(d)(i) Except as otherwise provided in this Section 15, each
certificate for Warrant Shares initially issued upon the exercise of this
Warrant, and each certificate for Warrant Shares issued to any subsequent
transferee of any such certificate, shall be stamped or otherwise imprinted
with a legend stating that the shares represented by such certificate have
not been registered under the Securities Act of 1933 and may not be
transferred except in accordance with the provisions of the Securities Act of
1933 and Section 15 of this Warrant.
(ii) Except as otherwise provided in this Section 15, each Warrant
shall be stamped or otherwise imprinted with a legend stating that neither
the rights represented by the Warrant nor the shares issuable upon the
exercise thereof have been registered under the Securities Act of 1933 and
that such rights and shares may not be transferred except in accordance with
the provisions of the Securities Act of 1933 and Section 15 of this Warrant.
(e) TERMINATION OF RESTRICTIONS. The restrictions imposed by Section
15(a) and the legend requirements of Section 15(d) shall terminate as to any
particular Warrant or Warrant Share (i) when and so long as such security
shall have been effectively registered under the Securities Act of 1933 and
disposed of in a public sale or distribution pursuant thereto, (ii) when such
security shall have been disposed of in accordance with Rule 144 or (iii)
when the Company shall have received opinions of counsel reasonably
satisfactory to it, which opinions shall be satisfactory in substance and
form to the Company, to the effect that such restrictions on transfer
pursuant to the Securities Act of 1933 no longer apply. Whenever said
restrictions and legend requirements shall terminate as to this Warrant, as
hereinabove provided, the Holder shall be entitled to receive from the
Company, at the expense of the Company, a new Warrant bearing a legend in
place of the restrictive legend described in Section 15(d) stating that the
restrictions on transferability of the Warrant have been terminated.
Whenever the restrictions imposed by this Section 15 shall terminate as to
any Warrant Share, as hereinabove provided, the holder thereof shall be
entitled to receive from the Company, at the Company's expense, a new
certificate representing such Common Stock not bearing the restrictive legend
described in Section 15(d).
SECTION 16. EXCHANGE OF WARRANT. This Warrant is exchangeable upon the
surrender hereof by the Holder at the office or agency of the Company, for
new Warrants of like tenor representing in the aggregate the right to
subscribe for and purchase the number of shares which may be subscribed for
and purchased hereunder from time to time after giving effect to all the
provisions hereof, each of such new Warrants to represent the right to
subscribe for and purchase such number of shares as shall be designated by
the Holder hereof at the time of such surrender.
SECTION 17. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this
Warrant is lost, stolen, mutilated or destroyed, the Company shall, upon
receipt by it of indemnity satisfactory to it, issue a new Warrant of like
denomination and tenor as the Warrant so lost, stolen, mutilated or
destroyed. Any such new Warrant shall constitute an original contractual
obligation of the Company, whether or not the allegedly lost, stolen,
mutilated or destroyed Warrant shall be at any time enforceable by anyone.
SECTION 18. DIVISION AND COMBINATION. Subject to Section 15, this
Warrant may be divided or combined with other Warrants upon presentation
hereof at the office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be
issued, signed by the Holder or its agent or attorney. Subject to compliance
with Section 15, as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants
in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice. The Company shall prepare, issue and deliver at
its own expense the new Warrant or Warrants under each of Section 15 and this
Section 18.
SECTION 19. MAINTENANCE OF BOOKS. The Company agrees to maintain, at
its office or agency, books for the registration and the registration of
transfer of the Warrants.
SECTION 20. [Intentionally Omitted.]
SECTION 21. NOTICE. All notices and other communications under this
Warrant shall (a) be in writing, (b) be (i) sent by registered or certified
mail, postage prepaid, return receipt requested or (ii) delivered by hand,
(c) be given at the following respective addresses and to the attention of
the following Persons:
(i) if to the Company, to it at:
Bangor Hydro-Electric Company
33 State Street
P.O. Box 932
Bangor, Maine 04402-0932
Attention: President
(ii) if to the initial Holder, to it at:
Energy National Inc.
c/o NRG Energy, Inc.
1200 Nicollet Mall
Minneapolis, Minnesota
Attention: Stan Marks
or to such other address or to the attention of such other person as the
party to whom such information pertains may hereafter specify for the purpose
in a notice to the other specifically captioned "Notice of Change of Address"
and (d) be effective or deeded delivered or furnished (i) if given by mail,
on the fifth Business Day after such communication is deposited in the mail,
addressed as above provided and (ii) if given by hand delivery, when left
with an employee of the addressee at the address of the addressee addressed
as above provided, except that notices of a change of address shall not be
deemed furnished until received.
SECTION 22. MISCELLANEOUS. This Warrant and any term hereof may not be
changed, waived, discharged, or terminated except by an instrument in writing
signed by the party or holder hereof against which enforcement of such
change, waiver, discharge or termination is sought. The headings in this
Warrant are for purposes of reference only and shall not limit or otherwise
affect the meaning hereof.
SECTION 23. DATE. The date of this Warrant is JUNE 26, 1998. This
Warrant, in all events, shall be wholly void and of no effect after the close
of business on the Expiration Date, except that notwithstanding any other
provisions hereof, the provisions of Sections 11 and 15 shall continue in
full force and effect after such date as to any Warrant Shares or other
securities issued upon the exercise of this Warrant.
SECTION 24. GOVERNING LAW. This Warrant shall be construed in
accordance with and governed by the laws of the State of Maine, excluding
those applicable to choice of law.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its duly authorized officers as of this JUNE 26, 1998.
BANGOR HYDRO-ELECTRIC COMPANY
By: ___________________________________
Its: Vice President - Finance & Law
Exhibit A
to Warrant
SUBSCRIPTION NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER IF SUCH
HOLDER DESIRES TO EXERCISE THIS WARRANT
BANGOR HYDRO-ELECTRIC COMPANY
The undersigned hereby exercises the right to purchase Warrant Shares
covered by this Warrant according to the conditions thereof and herewith
makes payment of $ , the aggregate Warrant
Exercise Price of such Warrant Shares, in full.
[NAME OF HOLDER]
By:
Title:
Number of
Warrant Shares Being
Purchased
Dated: , 19[20]
Exhibit B
to Warrant
Attention:
Re: Exercise of Warrant, dated
Dear Sirs:
In connection with the undersigned's purchase of Common Stock of Bangor
Hydro-Electric Company upon exercise of a warrant therefor, the undersigned
confirms and agrees as follows:
1. As the purchaser of the shares of Common Stock in a private
placement not registered under the Securities Act of 1933, as amended
(the "Act"), the undersigned is purchasing such shares for its own
account for investment and (subject to the disposition of its property
being at all times within its control) not with a view to any resale,
distribution or other disposition thereof, and the undersigned is
proceeding on the assumption that it must bear the economic risk of the
investment for an indefinite period, since the shares of Common Stock
may not be sold except as provided in paragraph 2 below.
2. The undersigned agrees that, if in the future the undersigned
should decide to dispose of the shares of Common Stock (such disposition
not being presently foreseen or contemplated), the undersigned will not
offer, sell, transfer or exchange such shares of Common Stock, except
under conditions that would not violated the Act or any applicable
securities laws.
3. The undersigned is purchasing the shares of Common Stock
pursuant to an exemption from the registration requirements of the Act
and from registration or qualification requirements under applicable
state securities laws.
If administrative or legal proceedings are commenced or threatened in
connection with which this notice is or would be relevant, the undersigned
irrevocably authorizes Bangor Hydro-Electric Company to produce this notice
or a copy thereof to any interested party in such proceedings.
Date:
[NAME OF HOLDER]
By:
Title:
EXHIBIT 4(d)
BANGOR HYDRO-ELECTRIC COMPANY
To
CITIBANK, N.A.,
As Trustee
_____________________________
SUPPLEMENTAL INDENTURE
Dated as of June 29, 1998
______________________________
Re: $115,000,000 First Mortgage Bonds
Collateral Series due 2001
Supplemental to Mortgage and Deed of Trust
Dated as of July 1, 1936,
and Amendatory to Supplemental Indenture
Dated as of June 29, 1995
SUPPLEMENTAL INDENTURE, dated as of June 29, 1998, between BANGOR HYDRO-
ELECTRIC COMPANY, a corporation organized and existing under the laws of the
State of Maine (hereinafter called the "COMPANY"), party of the first part,
CITIBANK, N.A. (successor to City Bank Farmers Trust Company), a national
banking association organized under the laws of the United States of America,
having its corporate trust office at 111 Wall Street, in the Borough of
Manhattan, City and State of New York, as Trustee under the Mortgage and Deed
of Trust hereinafter referred to (hereinafter called the "TRUSTEE"), party of
the second part.
WHEREAS, the Company heretofore executed and delivered to City Bank
Farmers Trust Company, as Trustee, its Mortgage and Deed of Trust dated as of
July 1, 1936 (hereinafter referred to as the "ORIGINAL INDENTURE", and
hereinafter as heretofore supplemented and amended by duly recorded
Indentures supplemental thereto, referred to as the "INDENTURE"); and
WHEREAS, City Bank Farmers Trust Company was converted as of the close
of business on January 30, 1959, into a national banking association named
First National City Trust Company and having its head office at 55 Wall
Street, in the Borough of Manhattan, City, County and State of New York; and
WHEREAS, First National City Trust Company was merged on January 15,
1963 into First National City Bank, a national banking association
incorporated and existing under the laws of the United States of America and
having its head office at 55 Wall Street, in the Borough of Manhattan, City,
County and State of New York and said First National City Bank has succeeded
to First National City Trust Company, as Trustee under the Indenture and is
hereinabove denominated as Trustee; and
WHEREAS, First National City Bank changed its name to Citibank, N.A.,
effective March 1, 1976; and
WHEREAS, the Original Indenture was recorded in the following places in
the State of Maine: in Aroostook County Registry of Deeds, Book 444, Page
130; in Hancock County Registry of Deeds, in Book 654, Page 79; in Penobscot
County Registry of Deeds, in Book 1117, Page 3, in Piscataquis County
Registry of Deeds, in Book 257, Page 241, in Washington County Registry of
Deeds, in Book 418, Page 102; in Cumberland County Registry of Deeds, in Book
3957, Page 1; in Waldo County Registry of Deeds, in Book 786, Page 119; in
the City Clerk s Office for the City of Bangor, in Book 19, Page 304; and in
the Rockingham County Registry of Deeds in the State of New Hampshire, in
Book 2351, Page 203; and
WHEREAS, pursuant to the provisions of the Indenture, the Company duly
issued the following First Mortgage Bonds: 3.75% Series due 1966 in the
aggregate principal amount of $7,108,000, none of which is now outstanding;
3% Series due 1966 in the aggregate principal amount of $500,000, none of
which is now outstanding; 3% Series due 1975 in the aggregate principal
amount of $5,000,000, none of which is now outstanding; 3% Series due 1977 in
the aggregate principal amount of $2,500,000, none of which is now
outstanding; 2.75% Series due 1980 in the aggregate principal amount of
$2,000,000, none of which is now outstanding; 3.25% Series due 1982 in the
aggregate principal amount of $1,000,000, none of which is now outstanding;
3 % Series due 1984 in the aggregate principal amount of $1,000,000, none of
which is now outstanding; 3.25% Series due 1985 in the aggregate principal
amount of $1,500,000, none of which is now outstanding; 4% Series due 1988 in
the aggregate principal amount of $2,500,000, none of which is now
outstanding; 4% Series due 1993 in the aggregate principal amount of
$3,500,000, none of which is now outstanding; 6.75% Series due 1998 in the
aggregate principal amount of $2,500,000, none of which are now outstanding;
8.25% Series due 1999 in the aggregate principal amount of $3,500,000, none of
which are now outstanding; 10.5% Series due 2000 in the aggregate principal
amount of $5,000,000, none of which is now outstanding; 9.25% Series due 2001
in the aggregate principal amount of $3,000,000, none of which are now
outstanding; 8.60% Series due 2003 in the aggregate principal amount of
$2,500,000, none of which are now outstanding; 10.25% Series due 2004 in the
aggregate principal amount of $7,000,000, none of which is now outstanding;
15.25% Series due 1996 in the aggregate principal amount of $5,000,000, none
of which is now outstanding; 16.50% Series due 1996 in the aggregate
principal amount of $15,000,000, none of which is now outstanding; 12.50%
Series due 1998 in the aggregate principal amount of $19,500,000, none of
which are now outstanding; 17.35% Series due 1994 in the aggregate principal
amount of $11,000,000, none of which are now outstanding; 10.25% Series due
2019 in the aggregate principal amount of $15,000,000, all of which are now
outstanding; 10.25% Series due 2020 in the aggregate principal amount of
$30,000,000, all of which are now outstanding; 8.98% Series due 2022 in the
aggregate principal amount of $20,000,000, all of which are now outstanding;
7.38% Series due 2002 in the aggregate principal amount of $20,000,000, all
of which are now outstanding; 12.25% Series due 2001 in the aggregate
principal amount of $14,316,422, $4,508,704 of which are now outstanding;
7.30% Series due 2003 in the aggregate principal amount of $15,000,000, all
of which are now outstanding; and Collateral Series due 2000 in the aggregate
principal amount of $115,000,000 (the "2000 Series Bonds"), all of which are
now outstanding; and
WHEREAS, in accordance with Section 94 of the Indenture, the Company has
received the consent of each holder of 2000 Series Bonds to amend and modify
such Bonds as hereinafter set forth, such Bonds, as so amended and modified,
to be designated "Collateral Series due 2001"; and
WHEREAS, in order to confirm the terms, provisions and conditions of the
Bonds of the Collateral Series due 2001, the Company has determined to
execute this Supplemental Indenture, which shall amend and restate in full
the referenced provisions of that certain Supplemental Indenture, dated as of
June 29, 1995, pursuant to which the 2000 Series Bonds were issued (the
"Prior Supplemental Indenture"); and
WHEREAS, all conditions and requirements necessary to make this
Supplemental Indenture a valid, binding and legal instrument have been
performed and fulfilled and the execution and delivery hereof have in all
respects been duly authorized and all things necessary to make the Bonds of
the Collateral Series due 2001, when authenticated by the Trustee, the valid,
binding and legal obligations of the Company entitled in all respects to the
security of the Indenture, have been done and performed; and
WHEREAS, the Company and the Trustee deem it desirable to enter into
this Supplemental Indenture;
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH, that in
consideration of the premises and of the sum of One Dollar in lawful money of
the United States of America to the Company duly paid by the Trustee at or
before the execution and delivery of this Supplemental Indenture, the receipt
whereof is hereby acknowledged, the Company hereby covenants and agrees with
the Trustee and its successors in the Trust under the Indenture, as hereby
supplemented by this Supplemental Indenture, for the benefit of those who
shall hold the First Mortgage Bonds, and interest coupons, including the
First Mortgage Bonds, Collateral Series due 2001, or any of them, that
Sections 1 through 5, inclusive, of the Prior Supplemental Indenture is
hereby amended and restated in full as follows:
"Section 1. Section 3 of the Original Indenture is hereby amended by
adding the following sentence at the end of said Section:
"Notwithstanding the foregoing, the First Mortgage
Bonds, Collateral Series due 2001 shall be Registered
Bonds in the denomination of $1,000 and multiples of
$1,000.
Section 2. Section 11 of the original Indenture is hereby further
amended by deleting the last sentence at the end of the first paragraph of
such Section 11, and substituting in its stead:
"Notwithstanding the foregoing, the First Mortgage Bonds, 10.5%
Series due 2000 shall bear interest from November 25, 1975; the
First Mortgage Bonds, 10.25% Series due 2004 shall bear interest
from the date of issuance thereof; the First Mortgage Bonds, 15.25%
Series due 1996 shall bear interest from the date of issuance
thereof; the First Mortgage Bonds, 16.50% Series due 1996 shall be
dated as of, and shall bear interest from, July 30, 1981; the First
Mortgage Bonds, 12.50% Series due 1998 shall bear interest from the
date of issuance thereof; the First Mortgage Bonds, 17.35% Series
due 1994 shall be dated as of and shall bear interest from, the
date of issuance thereof; the First Mortgage Bonds, 10.25% Series
due 2019 shall be dated and shall bear interest from, the date of
issuance thereof; the First Mortgage Bonds, 10.25% Series due 2020
shall be dated and shall bear interest from, the date of issuance
thereof; the First Mortgage Bonds, 8.98% Series due 2022 shall be
dated and shall bear interest from, the date of issuance thereof;
the First Mortgage Bonds, 7.38% Series due 2002 shall be dated and
shall bear interest from, the date of issuance thereof; the First
Mortgage Bonds, 7.30% Series due 2003 shall be dated and shall bear
interest from the date of issuance thereof; and the First Mortgage
Bonds, Collateral Series due 2001 shall be dated the date of
issuance thereof and shall bear interest at a rate of 0%.
Section 3. Section 11 of the Original Indenture is hereby further
amended by adding the following sentence at the end of the second paragraph:
"Notwithstanding the foregoing, there shall not be reserved
unissued any Coupon Bond or Bonds of the First Mortgage Bonds,
Collateral Series due 2001.
Section 4. Pursuant to paragraph (b) of Section 93 of the Indenture,
the Indenture is hereby amended as follows, such amendments to remain in
effect for so long as any Bonds of the Collateral Series due 2001 (as defined
in Section 5 hereof) are outstanding:
(a) Section 66 of the Indenture is hereby amended by adding the
following after the word "expressed" in paragraph (a) thereof:
", upon a required redemption"
(b) Section 66 of the Indenture is hereby further amended by
adding the following after the word "notwithstanding" in the language
immediately following paragraph (e) thereof:
"(provided that if any default described in paragraph (d)
or (e) occurs and is continuing, all of the Bonds then
outstanding and the interest accrued thereon, if any, shall
immediately become due and payable without declaration,
presentment, demand or notice of any kind by the Trustee or
any holder of Bonds)"
Section 5. (a) The Company hereby creates a series of Bonds to be
issued under and secured by the Indenture, as hereby supplemented, in the
aggregate principal amount of $115,000,000, to be designated as "FIRST
MORTGAGE BONDS, COLLATERAL SERIES DUE 2001" (referred to herein as "BONDS OF
THE COLLATERAL SERIES DUE 2001"). The Bonds of said series shall be payable
as to principal on June 30, 2001, and shall not bear interest. The principal
thereof shall be payable in any coin or currency of the United States of
America which at the time of payment shall be legal tender for public and
private debts and shall be payable at the corporate trust office of the
Trustee in the Borough of Manhattan, City and State of New York.
(b) Definitive Bonds of the Collateral Series due 2001 shall be
issued as of the date of this Supplemental Indenture, as amended and shall be
issued only as fully Registered Bonds without coupons. The definitive
Registered Bonds without coupons shall be issuable in denominations of
$1,000, and any integral multiple of $1,000 approved by the Company, such
approval to be evidenced by the execution thereof. The several authorized
denominations of Registered Bonds without coupons of said series shall be
interchangeable in like aggregate principal amounts.
(c) Bonds of the Collateral Series due 2001 in a principal amount
of $82,500,000 are initially delivered to BankBoston, N.A., as administrative
agent (the "Administrative Agent") pursuant to the terms of that certain
Amended and Restated Bond Pledge and Security Agreement, dated as of June 29,
1998, between the Company and the Administrative Agent (the "Pledge
Agreement"), to secure the obligations of the Company (described in the
Pledge Agreement) under an Amended and Restated Revolving Credit and Term
Loan Agreement, dated as of June 29, 1998, among the Company, the Banks named
therein, and BankBoston, N.A., as administrative agent and Fleet National
Bank, as documentation agent (as amended from time to time, the "Credit
Agreement"). To the extent that scheduled installment payments are made in
respect of the term loans under the Credit Agreement ("Term Loans ), such
payments shall constitute a credit against the payment obligations of the
Company with respect to the Bonds of the Collateral Series due 2001 held by
the Administrative Agent or its transferees, provided that the making of any
such payment shall not constitute a credit (i) in respect of Bonds of the
Collateral Series due 2001 registered in the name of the Administrative Agent
while any Default or Event of Default (as defined in the Credit Agreement)
has occurred and is continuing under the Credit Agreement after giving effect
to such payment, or (ii) to the extent a principal amount of Bonds of the
Collateral Series due 2001 equal to the amount of any such payment is
assigned by the Administrative Agent to the G&R Trustee (as defined below) as
required by the Pledge Agreement.
Bonds of the Collateral Series due 2001 in a principal amount of
$30,000,000 are initially delivered to the trustee (the "G&R Trustee") under
the General and Refunding Mortgage Indenture and Deed of Trust, dated as of
June 1, 1995 between the Company and The Chase Manhattan Bank (formerly known
as Chemical Bank), as trustee (the "General and Refunding Mortgage"). No
payments shall be required to be made in respect of such Bonds of the
Collateral Series due 2001, or in respect of any additional Bonds of the
Collateral Series due 2001 which are assigned by the Administrative Agent to
the G&R Trustee as required by the Pledge Agreement, unless and until (i) all
Bonds of the Collateral Series due 2001 become or are declared to be due and
payable pursuant to Section 66 of the Indenture, or (ii) demand for
redemption of such Bonds is made by the G&R Trustee as provided in subsection
(d) below.
The Trustee may at any and all times conclusively assume that the
obligations of the Company to make payments with respect to the Bonds of the
Collateral Series due 2001, so far as such payments shall at the time have
become due, have been fully satisfied and discharged unless and until (i) all
Bonds of the Collateral Series due 2001 become or are declared to be due and
payable pursuant to Section 66 of the Indenture, (ii) the Trustee shall have
received a written notice from the Administrative Agent signed by one of its
officers stating that the indebtedness of the Company has become, or has been
declared to be, due and payable pursuant to the Credit Agreement and
demanding redemption of the Bonds of the Collateral Series due 2001 held by
the Administrative Agent as provided in subsection (d) of this Section, or
(iii) the Trustee shall have received the notice described in such subsection
(d) from the G&R Trustee in respect of Bonds of the Collateral Series due
2001 held by the G&R Trustee.
(d) The Bonds of the Collateral Series due 2001 are not redeemable
at the option of the Company at any time prior to maturity and are not
redeemable by the operation of the General Reserve Fund provisions of the
Indenture. Bonds of the Collateral Series due 2001 that are registered in
the name of the Administrative Agent shall immediately be redeemed by the
Company in whole, by payment of 100% of the outstanding principal amount
thereof, on the date of receipt by the Trustee and the Company of a written
notice (the "Acceleration Notice") from the Administrative Agent stating that
the indebtedness of the Company has become, or has been declared to be, due
and payable pursuant to the Credit Agreement. Each of the Administrative
Agent and the Trustee hereby waives any other right to receive notices of
redemption pursuant to Article Eighth of Indenture. Bonds of the Collateral
Series due 2001 that are registered in the name of the G&R Trustee shall be
subject to redemption by the Company at the option of the G&R Trustee as the
holder thereof, by payment of 100% of the principal amount thereof, on the
date of receipt by the Trustee of a written notice from the G&R Trustee
stating that the indebtedness of the Company under the General and Refunding
Mortgage has become, or has been declared to be, due and payable. So long as
the Administrative Agent is the registered holder of any Bonds of the
Collateral Series due 2001, receipt by the Trustee of any such notice and
demand for redemption from the G&R Trustee shall be deemed also to constitute
an Acceleration Notice with respect to any such Bonds held by the
Administrative Agent.
(e) If, while any bonds of the Collateral Series due 2001 are
outstanding, the Company effects the release, pursuant to Section 59 of the
Indenture, of any part of the mortgaged properties sold by the Company in a
Generating Asset Transaction (as defined in the Credit Agreement), the
Company covenants that it will forthwith direct the Trustee, pursuant to
Section 60 of the Indenture, to apply the net proceeds of such release to the
purchase, at a price equal to the principal amount thereof, of Bonds of the
Collateral Series due 2001 registered in the name of the Administrative
Agent, as authorized by paragraph (c) of Subdivision I of Section 49 of the
Indenture; provided, that the principal amount of Bonds of the Collateral
Series due 2001 so purchased shall not, without the consent of the
Administrative Agent, exceed the principal amount of Term Loans then
outstanding. Bonds of the Collateral Series due 2001 shall not be otherwise
subject to redemption or retirement with the proceeds of released Property.
(f) The Bonds of the Collateral Series due 2001 and the Trustee's
certificate to be endorsed on such Bonds, shall be substantially in the
following form:
(FORM OF BOND)
THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 AND SUCH SECURITY MAY NOT BE TRANSFERRED WITHOUT
COMPLIANCE WITH APPLICABLE SECURITIES LAWS.
No. R- $__________
BANGOR HYDRO-ELECTRIC COMPANY
FIRST MORTGAGE BOND
Collateral Series due 2001
Due June 30, 2001
BANGOR HYDRO-ELECTRIC COMPANY, a corporation organized and existing
under the laws of the State of Maine (hereinafter called the "COMPANY"), for
value received, hereby promises to pay to
______________________________________________
or registered assigns, the principal sum of
__________________________________ DOLLARS ($_________)
on June 30, 2001 upon presentation and surrender hereof to the Trustee. This
bond shall not bear interest.
The principal of this Bond is payable in any coin or currency of the
United States of America which at the time of payment shall be legal tender
for public and private debts, at the corporate trust office of the Trustee
hereinafter named, in the Borough of Manhattan, City and State of New York.
This Bond is one of a duly authorized issue of First Mortgage Bonds of
the Company, issuable in series and in fully registered form without interest
coupons, and is one of a series designated as "COLLATERAL SERIES DUE 2001",
all of which Bonds of whatever series are issued and to be issued under and,
irrespective of the time of issue, are equally secured by a certain Mortgage
and Deed of Trust dated as of July 1, 1936, executed by the Company to City
Bank Farmers Trust Company (of which Citibank, N.A., a national banking
association, is the successor), as Trustee, and all indentures amendatory
thereto and supplemental thereto (all collectively herein called the
"INDENTURE"), to which reference is hereby made for a description of the
properties mortgaged, the nature and extent of the security, the rights of
the holders of the Bonds with respect to such security and the terms and
conditions upon which the Bonds are secured.
In the manner provided in the Indenture, the rights and obligations of
the Company and of the holders of the Bonds may be changed and modified at
any time upon the consent and approval of the holders of 66-2/3% in aggregate
principal amount of the Bonds then outstanding affected by such change or
modification; PROVIDED, HOWEVER, that no such change or modification shall
(a) alter or impair the obligation of the Company to pay the principal of and
interest, if any, on any Bond at the time and place and at the rate and in
the currency provided therein, without the consent of the holder of such
Bond, or (b) permit the creation by the Company of any mortgage, or lien in
the nature of a mortgage, or security interest ranking prior to or PARI PASSU
with the lien of and security interest created by the Indenture, except as in
the Indenture otherwise provided, or (c) permit the reduction of the
percentage of outstanding Bonds affected required for any such change or
modification.
Bonds of this Series are not redeemable at the option of the Company at
any time prior to Maturity and are not redeemable by the operation of the
General Reserve Fund provisions of the Indenture. The Bonds of this Series
are subject to mandatory redemption as provided in the supplemental
indenture, dated as of June 29, 1995, as amended establishing such Series.
In case a default, as defined in the Indenture, shall occur, the
principal of all of the Bonds of each and every series issued and outstanding
thereunder may be declared or may become due and payable before maturity in
the manner and with the effect provided in the Indenture.
Subject to compliance with applicable securities laws, this Bond is
transferable by the registered owner in person or by a duly authorized
attorney at the corporate trust office of the Trustee in the Borough of
Manhattan, City and State of New York, upon the surrender and cancellation of
this Bond, and thereupon a registered Bond of this series will be issued to
the transferee in exchange therefor, as provided in the Indenture, and on
payment, if the Company shall so require, of the charge therein provided for.
Bonds of the Collateral Series due 2001 are issuable in the
denominations of $1,000 and any integral multiple of $1,000 approved by the
Company, such approval to be evidenced by the execution thereof. In the
manner prescribed in the Indenture, any registered Bond of such series may be
exchanged for a like aggregate principal amount of registered Bonds of such
series of other authorized denominations.
No recourse shall be had for the payment of any part of the principal of
this Bond, or for any claim based hereon, or for the consequences of any
default in the payment hereof, or otherwise in any manner in respect hereof
or in respect of the Indenture or of the indebtedness represented hereby, to
or against any incorporator, stockholder, officer or director, past, present
or future, of the Company or of any predecessor or successor corporation,
either directly or through the Company or any such predecessor or successor
corporation, whether by virtue of any statute or constitutional provision or
rule of law, or by the enforcement of any assessment or penalty or otherwise,
or in any manner; all such liability, by the acceptance hereof, and as part
of the consideration for the issue hereof, being expressly released, as
provided in the Indenture.
This Bond shall not be obligatory or valid for any purpose until
authenticated by the execution by the Trustee of the certificate endorsed
hereon.
IN WITNESS WHEREOF, the Company has caused this Bond to be signed by its
President or one of its Vice Presidents and impressed or imprinted with its
corporate seal or a facsimile thereof, attested by its Treasurer or an
Assistant Treasurer, as of June , 1998.
BANGOR HYDRO-ELECTRIC COMPANY
By__________________
Its Vice President
[SEAL]
ATTEST:
By________________________
Its Treasurer
(FORM OF TRUSTEE S CERTIFICATE)
TRUSTEE'S AUTHENTICATION CERTIFICATE
This is one of the Bonds of the series designated therein, described in
the within-mentioned Mortgage and Deed of Trust.
Dated:
CITIBANK, N.A., as Trustee,
By______________________________
Its Authorized Signatory
Section 6. Upon receipt of evidence satisfactory to the Trustee that
the registered holders of the bonds of the Collateral Series due 2000 have
consented to the amendment and modification of such Bonds as set forth in the
foregoing sections, the Trustee shall execute this Supplemental Indenture and
shall, upon written order of the Company and surrender for cancellation of
certificates representing the bonds of the Collateral Series due 2000,
authenticate and deliver new certificates representing the Bonds of the
Collateral Series due 2001, in the form set forth in Section 5, to the above-
mentioned registered holders.
Section 7. The Trustee accepts the trusts created by this
Supplemental Indenture upon the terms and conditions hereof and of the
Indenture. All covenants and provisions of the Indenture shall continue in
full force and effect, as this Supplemental Indenture shall form part of the
Indenture. Except as herein otherwise expressly provided, no duties,
responsibilities or liabilities are assumed, or shall be construed to be
assumed, by the Trustee by reason of this Supplemental Indenture, other than
as set forth in the Indenture. The Trustee shall not be responsible for the
recitals herein or in the Bonds, all of which are made by the Company solely.
Section 8. This Supplemental Indenture may be executed in any number
of counterparts, each of which, if so executed, shall be deemed to be an
original; and all such counterparts shall together constitute but one and the
same instrument
IN WITNESS WHEREOF, Bangor Hydro-Electric Company has caused this
Supplemental Indenture to be executed on its behalf by one of its Vice
Presidents and its corporate seal to be hereto affixed and attested by its
Clerk; and Citibank, N.A., as Trustee as aforesaid, has caused this
Supplemental Indenture to be executed on its behalf by one of its
and its corporate seal to be hereto affixed and
attested by an , all as of the day and year first above
written.
BANGOR HYDRO-ELECTRIC COMPANY
By __________________________
Its Vice President Finance &
Law, and Treasurer
WITNESS __________________
ATTEST ___________________
Its Clerk
CITIBANK, N.A., as Trustee as aforesaid,
By __________________________
WITNESS __________________
ATTEST ___________________
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On June , 1998 before me personally appeared the above-named
, a Vice President, and
, an Assistant Vice President, of
Citibank, N.A., the national banking institution that executed the within and
foregoing instrument as Trustee, and severally acknowledged said instrument
to be their free act and deed in their said capacities and the free act and
deed of the said national banking institution, as such Trustee.
IN WITNESS WHEREOF, I have hereunto set my hand and seal on the day and
year first above mentioned.
_____________________________________
Notary Public
My Commission expires .
[NOTARIAL SEAL]
COMMONWEALTH OF MASSACHUSETTS )
) ss.:
COUNTY OF )
On June , 1998 before me personally
appeared the above-named , a VICE
PRESIDENT, and ANDREW LANDRY, a CLERK, of Bangor Hydro-Electric Company, the
corporation that executed the within and foregoing instrument, and severally
acknowledged said instrument to be their free act and deed in their said
capacities and the free act and deed of the said corporation.
IN WITNESS WHEREOF, I have hereunto set my
hand and seal on the day and year first above mentioned.
______________________________
Notary Public
My Commission expires .
[NOTARIAL SEAL]
EXHIBIT 10(a)
SURPLUS CASH AGREEMENT
----------------------
This Agreement dated as of June 26, 1998 is among Penobscot Energy
Recovery Company, Limited Partnership, a Maine limited partnership (the
"Partnership"), Bangor Hydro-Electric Company, a Maine corporation ("Bangor
Hydro") and Municipal Review Committee, Inc., a Maine not-for-profit
corporation (the "MRC").
WHEREAS, the Partnership and the Finance Authority of Maine ("FAME")
have entered into a Loan Agreement pursuant to which FAME has agreed to issue
its Electric Rate Stabilization Revenue Refunding Bonds, Series 1998A
(Penobscot Energy Recovery Company, LP) in the aggregate principal amount of
$29,930,000 (the "Series A Bonds" and its Electric Rate Stabilization Revenue
Refunding Bonds, Series 1998B (Penobscot Energy Recovery Company, LP) in the
aggregate principal amount of $15,065,000 (the "Series B Bonds" and, together
with the Series A Bonds, the "Bonds") pursuant to the Trust Indenture dated
as of June 1, 1998 (the "Indenture") between FAME and The Chase Manhattan
Bank, as Trustee (the "Trustee"); and
WHEREAS, the Partnership and Bangor Hydro entered into a Power Purchase
Agreement dated June 21, 1984, as amended by Amendment No. 1 dated March 24,
1986 and as further amended by Amendment No. 2 (the "Power Purchase Agreement
Amendment No. 2") dated as of the date hereof (collectively, the "Power
Purchase Agreement"); and
WHEREAS, the MRC is the designated agent for certain municipalities in
the State of Maine which have entered into with the Partnership the First
Amended and Restated Waste Disposal Agreements on effective as of April 1,
1991 (the "Charter Municipalities") and Second Amended, Restated and Extended
Waste Disposal Agreements (the "Extended Waste Disposal Agreements") in 1998
in connection with the issuance of the Bonds (the "Amending Charter
Municipalities); and
WHEREAS, under Article XIX of the Extended Waste Disposal Agreements,
the Amending Charter Municipalities, acting through the MRC pursuant to
paragraph E of Article XII, have the option to participate in the purchase of
limited partnership interests in the Partnership, with the purchase price
payable from a designation of Performance Credits (as defined in the Extended
Waste Disposal Agreements), and under paragraph B of Article XVIII and
paragraph C.3.III of Article XIX, funds credited to the MRC Prepayment
Account in the Bond Prepayment and Reserve Fund from Revenues (as defined in
and pursuant to Article V of the Indenture) or deposited therein by the MRC
from designated Performance Credits and either (i) transferred to the
Special Redemption Account of the Debt Service Fund to redeem "Series 1998B
Special Term Bonds" (as defined in the Indenture) prior to their stated
maturity date, or (ii) used to purchase and cancel, or to defease or
otherwise optionally redeem, Bonds prior to their stated maturity date; and
WHEREAS, the distribution to the MRC constitutes the Performance Credits
contemplated in Article XVIII of the Extended Waste Disposal Agreement and
the calculation of such Performance Credits needs to be adjusted as a result
of additional reserve accounts required by FAME in connection with the
issuance of the Bonds, as contemplated in paragraph A of Article XVIII of the
Extended Waste Disposal Agreement and approved by the MRC; and
WHEREAS, under the Power Purchase Agreement, Bangor Hydro is obligated
to pay $250,000 on the first day of each January, April, July and October,
commencing October 1, 1998, until the amount paid equals $4,000,000, by wire
transfer to the Trustee for credit to the Bangor Hydro Funded Account of the
Bond Prepayment and Reserve Fund (the "Bangor Hydro Payment"); and
WHEREAS, under Section 5.01 of the Indenture, the Trustee has
established certain Trust Funds, including the Special Redemption Account of
the Debt Service Fund and the Bond Prepayment and Reserve Fund consisting of
(1) the Bangor Hydro-Funded Account (consisting of the MRC Retention
Subaccount and the Borrower Retention Subaccount), (2) the MRC Prepayment
Account, and (3) the Borrower Reserve Account; and
WHEREAS, Section 5.03 of the Indenture provides for the application of
Revenues on the fifteenth day of each calendar month (each an "Indenture
Distribution Date"), and any balance remaining after application pursuant to
clauses (1) through (9) and the funding of certain Accounts pursuant to
clause (10) of said Section 5.03 is paid to or at the direction of the
Partnership for distribution among the Partnership, Bangor Hydro and the MRC;
and
WHEREAS, the parties hereto desire to set forth herein their agreement
of the distribution of (i) the Allocable Funds after accounting for Reserve
Deposits, (ii) interest on various reserve funds held under the Indenture,
and (iii) Indenture Residual paid by the Trustee to or at the direction of
the Partnership under the Indenture.
NOW, THEREFORE, for good and valuable consideration, the parties hereto
hereby agree as follows:
Section 1. DEFINITIONS. Capitalized terms used herein and not
otherwise defined have the meanings given such terms in the Indenture. In
addition, the following terms, as used herein, have the following meanings:
"ALLOCABLE FUNDS" means, as of any Indenture Distribution Date, the
Revenue Fund Balance, LESS reimbursements of the Partnership and the MRC
under Section 4(a) of this Agreement for withdrawals by the Trustee from the
Borrower Reserve Account, the Borrower Retention Subaccount and the MRC
Reserve Accounts, and LESS the Prepayment Benefit (if any) for the Monthly
Period ended on such Indenture Disbursement Date.
"BANGOR HYDRO PAYMENT" has the meaning given such term in the sixth
WHEREAS clause above.
"BOND DOCUMENTS" means the Indenture and the Financing Documents.
"ENI" means Energy National, Inc., a Utah corporation, and its
successors or assigns as a general or limited partner in the Partnership.
"FUNDING DATE PARTNERS" means the partners of the Partnership (as their
respective interests are then reflected on the books and records of the
Partnership) on each Indenture Distribution Date from July 15, 1998 to the
date on which the aggregate amount of all deposits made into the Borrower
Reserve Account under Section 5.03(b)(10)(iv) is $2,500,000.
"INDENTURE RESIDUAL" has the meaning given such term in Section 6
hereof.
"ISSUE DATE PARTNERS" means PMC and ENI.
"MRC RESERVE ACCOUNTS" means collectively, the MRC Retention Subaccount
in the Bangor Hydro-Funded Account, and the MRC Prepayment Account, of the
Bond Prepayment and Reserve Fund.
"MONTHLY PERIOD" means a period beginning on an Indenture Distribution
Date and ending on the next succeeding Indenture Distribution Date.
"PMC" means PERC Management Company Limited Partnership, a Maine limited
partnership, and its successors or assigns as a general or limited partner in
the Partnership.
"PREPAYMENT BENEFIT" means, for any period of determination, an amount
equal to (i) the interest and the Capital Reserve Premium payable to the
Authority that would have been payable on the Bonds during such period if no
Bonds had been optionally redeemed, purchased or defeased as contemplated by
Section 7 of this Agreement, less (ii) the interest and the Capital Reserve
Premium payable to the Authority paid on outstanding Bonds during such
period.
"RESERVE DEPOSITS" means, as of any Indenture Distribution Date, the
aggregate amount of the Revenue Fund Balance credited by the Trustee (i) to
the MRC Retention Subaccount pursuant to Section 5.03(10)(i) of the
Indenture; (ii) to the Borrower Retention Subaccount pursuant to
Section 5.03(10)(ii) of the Indenture; (iii) to the MRC Prepayment Account
pursuant to Section 5.03(10)(iii) of the Indenture; and (iv) to the Borrower
Reserve Account pursuant to Section 5.03(10)(iv) of the Indenture.
"REVENUE FUND BALANCE" has the meaning given such term in
Section 5.03(10) of the Indenture; namely, it is the balance of the Revenues
in the Revenue Fund on each Indenture Distribution Date after application of
Revenues by the Trustee pursuant to clauses (1) through (9) of said
Section 5.03 of the Indenture.
Section 2. BANGOR HYDRO PAYMENTS. Bangor Hydro shall pay, by wire
transfer or in other immediately available funds, to the Trustee for credit
to the Bangor Hydro-Funded Account of the Bond Prepayment and Reserve Fund,
the Bangor Hydro Payment, one-half of which is to be designated by Bangor
Hydro for credit to the MRC Retention Subaccount and one-half of which is to
be designated by Bangor Hydro for credit to the Borrower Retention
Subaccount.
Section 3. INVESTMENT OF MRC ACCOUNTS; INTEREST EARNINGS.
(a) Under Section 5.12 of the Indenture, the Partnership has the right
to direct the investment, from time to time, of the various Trust Funds,
including the MRC Reserve Accounts, in Eligible Investments, and as of the
date hereof the Partnership has provided the Trustee with written investment
instructions and intends to do so from time to time, in its discretion,
except that upon the Partnership s receipt of written instructions of the
MRC, the Partnership agrees to direct the Trustee to invest funds in the MRC
Reserve Accounts, or either of them, in accordance with such instructions,
provided that such investment instructions comply with the provisions of
Section 5.12 of the Indenture and the Tax Regulatory Agreement. The MRC
hereby agrees and acknowledges that such investments may be made with or
through the Trustee or its affiliates, and neither the Trustee nor the
Partnership shall be responsible or liable for any losses incurred or
realized by the investment of such Account or Subaccount so long as such
investments qualify as "Eligible Investments" as required under the
Indenture.
(b) Under Section 5.12(b)(iii) of the Indenture, interest earnings on
funds credited to the Special Redemption Account and the Bond Prepayment and
Reserve Fund are to be distributed from time to time at the direction of the
Partnership. The parties hereto agree that the Partnership shall direct the
Trustee to distribute such interest earnings as follows: (i) on the Special
Redemption Account, as and when earned, to the Partnership; (ii) on the
Borrower Retention Subaccount, as and when earned, to the Issue Date
Partners; (iii) on the Borrower Reserve Account, as and when earned, to the
Funding Date Partners; and (iv) on the MRC Reserve Accounts, as and when
earned, to the MRC unless the MRC has provided the Partnership with written
instructions to direct the Trustee to retain such amounts therein, or to
transfer such amounts (in minimum increments as specified in Section 7 of
this Agreement) to the Special Redemption Account.
Section 4. DISTRIBUTION OF REVENUE FUND BALANCE. After applications
of the Revenue Fund Balance pursuant to Section 5.03(10) of the Indenture
(that is after any Reserve Deposits), the Trustee pays the balance to or at
the direction of the Partnership on each Indenture Distribution Date. The
parties hereto agree that the Partnership shall direct the Trustee to
disburse the balance payable to the Partnership on an Indenture Disbursement
Date, as follows:
(a) First, pro rata to the Issue Date Partners, an amount equal to any
amounts theretofore withdrawn by the Trustee from the Borrower Reserve
Account under Section 5.10(a)(2) of the Indenture and to the Funding Date
Partners, an amount equal to any amounts theretofore withdrawn by the Trustee
from the Borrower Retention Subaccount under Section 5.10(a)(2) of the
Indenture to pay deficiencies in the Debt Service Fund, until such partners
have been fully reimbursed for all such amounts withdrawn by the Trustee, and
to the MRC, an amount equal to any amounts theretofore withdrawn by the
Trustee from the MRC Reserve Accounts under Section 5.10(a)(2) of the
Indenture to pay deficiencies in the Debt Service Fund (but not including any
transfers to the Special Redemption Account or otherwise to optionally redeem
Bonds under Section 2.04(c) or (d) of the Indenture or to purchase and cancel
or defease Bonds), until the MRC has been fully reimbursed for all amounts so
withdrawn by the Trustee; provided that if the balance of funds available for
such purpose is insufficient to make such payments in full to the Issue Date
Partners, the Funding Date Partners and the MRC, then it shall be paid to the
Issue Date Partners and the Funding Date Partners (on one hand) and the MRC
(on the other hand) on a pro rata basis.
(b) Second, to the Partnership, the Prepayment Benefit (if any) for the
Monthly Period ended on such Indenture Disbursement Date.
(c) Third, the remaining balance distributed as follows:
(i) To Bangor Hydro: (A) one-third (1/3) of the Allocable
Funds LESS (B) any amount deposited in the MRC Retention Subaccount
by the Trustee under Section 5.03(10)(i) of the Indenture, and LESS
(C) any amount deposited in the Borrower Retention Subaccount by
the Trustee under Section 5.03(10)(ii) of the Indenture.
(ii) To or at the direction of the MRC: (A) one-third (1/3)
of the Allocable Funds LESS (B) any amount deposited to the MRC
Prepayment Account by the Trustee under Section 5.03(10)(iii) of
the Indenture; provided, however, that if the Partnership receives
written direction from the MRC not less than five (5) Business Days
prior to the Indenture Distribution Date that all or any designated
portion of such payment should be transferred by the Trustee to the
MRC Prepayment Account or the Special Redemption Account, the
Partnership shall direct the Trustee to effect such retention or
transfer;
(iii) To the Partnership: (A) one-third (1/3) of the
Allocable Funds LESS (B) any amounts deposited to the Borrower Reserve
Account by the Trustee under Section 5.03(10)(iv) of the Indenture.
Examples of the Partnership's directions to the Trustee regarding the
distribution of the Revenue Fund Balance remaining after Reserve Deposits
among the parties hereto is attached as Exhibit A.
Section 5. CLOSING DATE ADJUSTMENTS. The parties hereto agree that
following the date hereof, they will calculate an amount that would have been
distributed to the parties hereto, assuming that the issuance and delivery of
the Bonds (and the defeasance of the Prior Bonds), had occurred at the end of
business on April 30, 1998, and the Partnership will distribute among the
Partnership, the MRC and Bangor Hydro such amount within 45 days after June
30, 1998 or as soon thereafter as sufficient funds are available.
Section 6. DISTRIBUTION OF INDENTURE RESIDUAL. Under Section 5.15
of the Indenture, upon the payment and discharge in full of all of the Bonds,
and after application and other payments as described in clauses (i) through
(iv) of Section 5.15 of the Indenture, the Trustee shall pay the balance
remaining under the Indenture (the "Indenture Residual") to or at the
direction of the Partnership. The parties hereto agree that the Partnership
shall direct the Trustee to disburse the Indenture Residual as follows:
(i) Revenue Fund, one-third paid to the Partnership, one-third paid to
Bangor Hydro and one-third paid to the MRC.
(ii) Debt Service Fund (excluding the Special Redemption Account),
one-third paid to the Partnership, one-third paid to Bangor Hydro and
one-third paid to the MRC.
(iii) Special Redemption Account, paid to the Partnership.
(iv) Operating Account in the Operating Fund (after retention by the
Partnership of an amount necessary for working capital purposes), one-third
paid to the Partnership, one-third paid to Bangor Hydro and one-third paid to
the MRC.
(v) Operating Reserve Account in the Operating Fund, one-third paid to
Bangor Hydro, one-third paid to the MRC and one-third paid to the Issue Date
Partners.
(vi) Capital Improvement Fund, one-third paid to Bangor Hydro, one-third
paid to the MRC and one-third paid to the Issue Date Partners.
(vii) Capital Reserve Fund, one-third paid to Bangor Hydro,
one-third paid to the MRC and one-third paid to the Issue Date Partners.
(viii) MRC Reserve Accounts, to the MRC.
(ix) Borrower Retention Subaccount, to the Issue Date Partners.
(x) Borrower Reserve Account, to the Funding Date Partners.
Amounts paid to the Issue Date Partners under clauses (v), (vi), (vii) and
(ix) above shall be paid 71.28574% to PMC and 28.71426% to ENI. Amounts paid
to the Funding Date Partners under clause (x) above, shall be paid to each
Funding Date Partner in proportion to the fraction the numerator of which is
the cumulative sum of (a) the amount credited to the Borrower Reserve Account
on each Indenture Distribution Date multiplied by (b) that Funding Date
Partner's aggregate GP Sharing Ratio with respect to the general partners'
aggregate interest (currently 10%) and LP Sharing Ratio with respect to the
limited partners' aggregate interest (currently 90%) as of such date and the
denominator of which is the aggregate principal amount credited to the
Borrower Reserve Account over the life of the Bonds.
Section 7. OPTIONAL REDEMPTION, PURCHASE OR DEFEASANCE OF BONDS. At
any time and from time to time (but not more frequently than once in each
Calendar Quarter):
(a) upon notice from the MRC, the Partnership shall direct the Trustee
to transfer all or any designated portion of money on deposit in the MRC
Retention Subaccount or the MRC Prepayment Account (in a minimum increment of
$5,000 or any multiple thereof) to the Special Redemption Account of the Debt
Service Fund to be used to optionally redeem Series 1998B Special Term Bonds
(in authorized denominations) on the earliest date practicable under
Sections 2.04(d) and 5.07(iv) of the Indenture;
(b) the MRC may (i) purchase Bonds in the open market, and direct the
Partnership to tender such Bonds to the Trustee for cancellation, or
(ii) direct the Partnership to defease a designated portion of the Bonds in
authorized denominations, or (iii) from and after July 1, 2008, instruct the
Partnership to optionally redeem Bonds (in authorized denominations) on the
earliest practicable date under Section 2.04(c) of the Indenture. If Bonds
are to be defeased, all costs of defeasance shall be paid by funds in the MRC
Prepayment Account from such amount and shall include all costs and expenses
related to such defeasance, including the purchase price of Government
Obligations, the costs and expenses of the Trustee, Bond Counsel, counsel to
the Partnership, and any accounting or Rating Agency expenses. If Bonds are
to be optionally redeemed pursuant to Section 2.04(c) of the Indenture, the
redemption price, including any redemption premium, shall be paid from funds
in the MRC Retention Subaccount or the MRC Prepayment Account.
(c) Under Section 5.03(c)(10)(v) of the Indenture, at any time
additional money may be paid to the Trustee for credit to the MRC Prepayment
Account or for transfer to the Special Redemption Account. Upon receipt of
any such additional money, accompanied by a written direction from the MRC to
do so, the Partnership shall transfer such funds to the Trustee for credit to
the Account so specified in the MRC s written direction; provided that
amounts to be deposited in or transferred to the Special Redemption Account
shall be in integral amounts of $5,000.
(d) If the Partnership receives a written direction from the MRC to
direct the Trustee to transfer amounts in either of the MRC Reserve Accounts
to the Special Redemption Account or to pay all or a part of such amounts to
the MRC in accordance with Section 5.06(c) of the Indenture, the Partnership
will so direct the Trustee; provided that the amounts to be so transferred to
the Special Redemption Account shall be in integral amounts of $5,000.
Section 8. PREPAYMENT BENEFIT FOR DEBT SERVICE SAVINGS DUE TO EARLY
RETIREMENT OF BONDS FROM MRC PREPAYMENT ACCOUNT. If any Series 1998B Special
Term Bonds are optionally redeemed from funds deposited in or transferred to
the Special Redemption Account, or if any Bonds are purchased by the MRC and
tendered to the Trustee for cancellation, or defeased, in connection with an
MRC direction given to the Partnership pursuant to Section 7 of this
Agreement, the Partnership shall calculate the Prepayment Benefit for each
Monthly Period, and shall provide such calculations to the MRC and Bangor
Hydro. Absent manifest error, such calculations shall be deemed conclusive.
Section 9. NOTICES. Except when telephonic notice is expressly
authorized by this Agreement, any notice or other communication to any party
in connection with this Agreement shall be in writing and shall be sent by
manual delivery, overnight courier or United States mail (postage prepaid)
or facsimile transmission (followed by a written confirmation sent by manual
delivery, overnight courier or United States mail), addressed to such party
at the address specified on the signature page hereof, or at such other
address as such party shall have specified to the other parties hereto in
writing. All periods of notice shall be measured from the date of delivery
thereof if manually delivered, from the date of sending thereof if sent by
facsimile transmission, from the first Business Day after the date of sending
if sent by overnight courier, or from four days after the date of mailing if
mailed; provided, however, that any notice to the Partnership from the MRC
under Section 4(b) hereof shall be deemed to have been given only when
received by the Partnership.
Section 10. LIMITATION OF LIABILITY. Notwithstanding any other
provision of this Agreement, and without waiving or foregoing any rights
against the Partnership, there shall be no recourse against any general or
limited partner of the Partnership or any of their respective affiliates,
stockholders, partners, officers, directors, employees or agents, for any
liability or obligations of the Partnership arising under this Agreement.
The limitations on recourse set forth in this Section 10 shall survive
termination of this Agreement and the full performance of the obligations of
the Partnership hereunder.
Section 11. MRC APPROVAL. The MRC acknowledges that the
distributions to it pursuant to Section 4 hereof constitute the Performance
Credits, that the calculation of such distributions might be interpreted as
varying method defined in Article XVIII of the Extended Waste Disposal
Agreements, and that such variation is contemplated in paragraph A of Article
XVIII of the Extended Waste Disposal Agreements. The MRC hereby approves of
the variation in calculating such Performance Credits.
Section 12. MISCELLANEOUS PROVISIONS.
(a) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors
and assigns.
(b) GOVERNING LAW AND CONSTRUCTION; SEVERABILITY. The validity,
construction and enforceability of this Agreement shall be governed by the
internal laws of the State of Maine, without giving effect to the conflict of
laws principles thereof. Whenever possible, each provision of this Agreement
and any other statement, instrument or transaction contemplated hereby or
thereby or relating hereto or thereto shall be interpreted in such manner as
to be effective and valid under such applicable law, but, if any provision of
this Agreement, the Indenture or any other statement, instrument or
transaction contemplated hereby or thereby or relating hereto or thereto
shall be held to be prohibited or invalid under such applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement or any other statement, instrument or
transaction contemplated hereby or thereby or relating hereto or thereto.
(c) CAPTIONS. The captions or headings herein are for convenience only
and in no way define, limit or describe the scope or intent of any provision
of this Agreement.
(d) ENTIRE AGREEMENT. This Agreement and the Power Purchase Agreement,
the Waste Disposal Agreements, the Warrants, the Bond Documents, the
partnership agreement of the Partnership and the monitoring agreement between
the MRC and Bangor Hydro embody the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof and
thereof. This Agreement supersedes all prior agreements and understandings
relating to the subject matter hereof. Nothing contained in this Agreement
or in any other document, expressed or implied, is intended to confer upon
any Persons other than the parties hereto any rights, remedies, obligations
or liabilities hereunder or thereunder.
(e) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by
signing any such counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
Notice Address for Partnership:
One copy to: PENOBSCOT ENERGY RECOVERY
COMPANY, LIMITED PARTNERSHIP
c/o KTI, Inc.
7000 Boulevard East By PERC Management Company Limited
Guttenberg, NJ 07093 Partnership, a General Partner
Attn: President By PERC, Inc., its general partner
Fax No.: (201) 854-1771
Telephone No.: (201) 854-777
By:
and
Its:
One copy to:
By ENERGY NATIONAL, INC.,
Energy National, Inc. a General Partner
c/o NRG Energy, Inc.
1221 Nicollet Mall, Suite 700
Minneapolis, MN By:
Attn: Stan Marks
Fax No.: (612) 373-5312 Its:
Telephone No.: (612) 373-5455
and
One copy to:
Penobscot Energy Recovery Company,
Limited Partnership
Industrial Way
Orrington, Maine
Attn: Gary A. Stacey
Fax No. (207) 825-4115
Telephone No.: (207) 825-4566
Notice Address for MRC: MUNICIPAL REVIEW COMMITTEE, INC.
Municipal Review Committee, Inc.
P.O. Box 2579 By:
Bangor, Maine 04402
Attn: Clerk Its:
Fax No.: (207) 942-3548
Telephone No.: (207) 942-6389
Notice Address for Bangor Hydro: BANGOR HYDRO-ELECTRIC COMPANY
Bangor Hydro-Electric Company
33 State Street
P.O. Box 932 By:
Bangor, Maine 04402-0932
Attn: President Its:
Fax No.: (207) 945-5621
Telephone No.: (207) 941-6653
EXHIBIT 10(b)
ELECTRIC RATE STABILIZATION BOND PROGRAM
GUARANTY AGREEMENT
This Guaranty Agreement dated as of June 1, 1998, (the "Guaranty") is
given by BANGOR HYDRO-ELECTRIC COMPANY, a corporation organized and existing
under the laws of the State of Maine (the "Guarantor") to THE CHASE MANHATTAN
BANK, as Trustee (the "Trustee").
WHEREAS, the Authority has agreed with Penobscot Energy Recovery
Company, Limited Partnership (the "Borrower") to issue its Series 1998
Electric Rate Stabilization Revenue Refunding Bonds, Series 1998A and Series
1998B (Penobscot Energy Recovery Company, LP) in the aggregate principal
amount of $44,995,000 (the "1998 Bonds"), which will contemporaneously
herewith be issued to finance a loan (the "Loan") from the Finance Authority
of Maine (the "Authority") to the "Borrower" pursuant to a Loan Agreement
dated as of June 1, 1998 (the "Agreement"); and
WHEREAS, the Agreement will be assigned by the Authority to the Trustee
(except for certain Unassigned Issuers Rights and Shared Rights as defined
therein), contemporaneously with the execution thereof; and
WHEREAS, the obligation of the Borrower to the Authority pursuant to the
Agreement is evidenced by a promissory note of the Borrower to the Authority
(the "Loan Note"); and
WHEREAS, the Trustee has entered into a Trust Indenture with the
Authority dated as of June 1, 1998 (the "Indenture"); and
WHEREAS, in order to induce the Authority to make the Loan to the
Borrower, the Guarantor is prepared to guarantee the payment and performance
when due of the obligations of the Borrower to the Authority under the Loan
Agreement; and
WHEREAS, the Guarantor acknowledges that it will be benefited by the
Authority making the Loan to the Borrower, which benefits include, inter
alia, the reduction in certain payments required to be made by the Guarantor
to the Borrower pursuant to a certain Power Purchase Agreement dated June 21,
1984 as amended by Amendment No. 1 dated as of March 29, 1986, as further
amended by Amendment No. 2 to the Power Purchase Agreement which will be
executed and delivered by the parties thereto contemporaneously herewith (as
so amended, the "Power Purchase Agreement"); and
WHEREAS, for the purpose of providing security for the payment of the
Loan Note and other sums provided for in the Agreement, the Guarantor hereby
agrees to guaranty the prompt and punctual payment of the Loan and other
sums, as more fully set forth herein; and
WHEREAS, Guarantor has agreed to certain terms and conditions set forth
in the Commitment Letter dated December 16, 1997, as amended by Amendment to
Commitment Letter dated March 26, 1998, and which are further set forth in
the Indenture, which terms and conditions include the Guarantor funding a
capital reserve fund for benefit of the 1998 Bonds and, in the event of the
enforcement of the Guaranty, the provision of additional funds as provided in
Article V of the Indenture, a copy of which Article V is attached hereto as
Exhibit A.
NOW, THEREFORE, in consideration of the premises and in order to induce
the Authority to issue the 1998 Bonds and make the Loan, the Guarantor hereby
covenants and agrees with the Trustee as follows:
ARTICLE I
REPRESENTATIONS AND WARRANTIES
Section 1.1. Representations and Warranties. The Guarantor hereby
represents and warrants as follows:
(1) The Guarantor is a corporation duly organized, validly existing and
in good standing under the laws of the State of Maine, has the corporate
power and authority to own its property and assets, to carry on its business
as now being conducted by it and to execute, deliver and perform this
Guaranty. The Guarantor is duly qualified to do business in every
jurisdiction, in which such qualification is necessary, including the State
of Maine.
(2) The execution, delivery and performance of this Guaranty and the
consummation of the transactions herein contemplated have been duly
authorized by all requisite corporate action on the part of the Guarantor and
will not violate any provision of law, any order of any court or other agency
of government or the certificate of incorporation or bylaws of the Guarantor,
or any material provision of any indenture, agreement or other instrument to
which the Guarantor is a party or by which it or any of its property is
bound, or be in conflict with or result in a breach of or constitute (with
due notice and/or lapse of time) a default under any such indenture,
agreement or other instrument for which a waiver has not been obtained.
(3) The acceptance by the Guarantor of its obligations hereunder will
result in a material financial benefit to the Guarantor.
(4) This Guaranty and the Power Purchase Agreement constitute valid and
legally binding obligations of the Guarantor, enforceable in accordance with
their terms.
(5) There is no action or proceeding pending or to the knowledge of the
Guarantor, threatened against the Guarantor before any court or
administrative agency that which, if determined adversely to the Guarantor
would materially adversely affect the ability of the Guarantor to perform its
obligations hereunder, except as may be disclosed in its filings with the
Securities and Exchange Commission.
(6) The Guarantor has obtained all authorizations, approvals or other
actions required by any governmental authority or regulatory body which is
required for due execution, delivery and performance by the Guarantor of this
Guaranty and the Power Purchase Agreement.
(7) The Guarantor has fulfilled its obligations under the minimum
funding standards of ERISA with respect to any employee pension benefit plan
which is covered by Title 4 of ERISA, which is the subject of the minimum
funding standard under Section 412 of the Internal Revenue Code, and as to
which the Guarantor may have liability (or with respect to a multi-employer
Plan has made all required contributions) and is in compliance in all
material respects with applicable provisions of ERISA.
ARTICLE II
COVENANTS AND AGREEMENTS
Section 2.1. The Guaranty.
(A) The Guarantor hereby unconditionally guaranties to the Trustee for the
benefit of the holder of the 1998 Bonds and to and for the benefit of the
Authority as holder of the Loan Note to the extent of this Guaranty, as
limited by Section 2.1(C) hereof, the full and prompt payment of the
principal of and interest on the 1998 Bonds and all other sums due and
payable whether by acceleration or otherwise, when and as the same shall
become due, whether by demand or at the stated maturity thereof, by
acceleration or otherwise (the "Obligation").
(B) The Guarantor hereby expressly acknowledges and agrees to the terms of
Article V of the Indenture, which terms are incorporated herein to the extent
such terms affect or create obligation of the Guarantor to pay the obligation
and creates rights of the Trustee to enforce this Guaranty.
(C) The Guarantor further agrees that each of its undertakings in subsection
2.1(A) and 2.1(B) above constitutes an absolute, unconditional, present and
continuing guaranty provided, however, that the obligation of the Guarantor
to pay such Obligation shall be limited to the highest possible debt service
payable on the 1998 Bonds in such Bond Year, including principal, interest
and applicable fees and costs, which amount may be reimbursed pursuant to the
terms of Section 5.03(9) and Section 5.11 of the Indenture and if so
reimbursed, the amount covered by its Guaranty may subsequently be drawn
again. The Guarantor waives any right to require that any resort be had by
the Trustee to (i) any particular security or other Guaranty held by the
Authority or the Trustee (except as otherwise provided in the Indenture) or
(ii) the performance of any obligation of the Authority or Trustee under the
Indenture.
(D) If the Borrower shall default in payment of the Obligation, the
Guarantor, upon demand by the Trustee without notice other than such demand
and without the necessity of further action on their respective parts, or
Guarantor's successors or assigns, as the case may be, will promptly and
fully comply with the efforts of the Trustee to enforce this Guaranty. The
Guarantor will pay all reasonable costs and expenses, including attorneys'
fees, paid or incurred by the Trustee in connection with the enforcement of
the obligations of the Guarantor under this Guaranty. All payments by the
Guarantor shall be made in any coin or currency of the United States of
America which on the respective dates of payment thereof is legal tender for
the payment of public and private debts within two (2) Business Days of
receipt of demand from the Trustee.
Section 2.2. Absolute and Unconditional Guaranty. The obligations of
the Guarantor under this Guaranty are absolute and unconditional and shall
remain in full force and effect until every payment, obligation or liability
guaranteed hereunder shall have been fully and finally paid, and, to the
extent permitted by law, such obligations shall not be affected, modified,
released, or impaired by any state of facts or the happening from time to
time of any event including, without limitation, any of the following,
whether or not with notice to, or the consent of, the Guarantor:
(1) the termination, cancellation, invalidity, irregularity, illegality
or unenforceability of, or any defect in, the Indenture, any of the 1998
Bonds, this Guaranty, the Power Purchase Agreement, the Agreement, the Loan
Note or any other Financing Documents;
(2) the compromise, settlement, release, extension, indulgence, change,
modification or termination of any or all of the obligations, covenants or
agreements of the Agreement, the Loan Note, the Indenture, the 1998 Bonds,
the Power Purchase Agreement, any other guaranties, or any other Financing
Documents;
(3) the failure to give notice to the Guarantor of the occurrence of
any Event of Default under the terms and provisions of this Guaranty, the
Indenture, the Agreement, the Power Purchase Agreement, the Loan Note or any
other Financing Documents;
(4) the waiver of the payment, performance or observance by the
Authority or the Trustee of any of the obligations, conditions, covenants or
agreements of any or all of them contained in this Guaranty, the Indenture,
the 1998 Bonds, the Agreement, the Loan Note or any other Financing Documents
by the Authority or the Trustee, as the case may be;
(5) the extension of the time for payment of the principal of, premium
if any, or interest on the 1998 Bonds or the principal of, or interest on the
1998 Bonds or any other amounts that are due or may become due under the
Financing Documents or of the time for performance of any other obligations,
covenants or agreements under or arising out of the Financing Documents;
(6) the modification or amendment (whether material or otherwise) of
any duty, obligation, covenant or agreement set forth in the Indenture, the
1998 Bonds, or any of the Financing Documents;
(7) any failure, omission, delay or lack thereof on the part of the
Authority or the Trustee to assert or exercise any right, power or remedy
conferred on either of them in the Indenture, the 1998 Bonds, this Guaranty,
the Agreement, or any other Financing Documents;
(8) the voluntary or involuntary liquidation, dissolution, merger,
consolidation, sale or other disposition of all or substantially all the
assets, marshalling of assets and liabilities, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition with creditors, or other similar proceedings
affecting the Guarantor, any other guarantors, or the Borrower, the
Authority or the Trustee, or any or all of the assets of any of them, or any
allegation or contest of the validity of the Indenture, the 1998 Bonds, or
any of the Financing Documents, including this Guaranty, in any such
proceeding; it is specifically understood, consented and agreed to that this
Guaranty shall remain and continue in full force and effect and shall be
enforceable against the Guarantor to the same extent and with the same force
and effect as if such proceedings had not been instituted; and it is the
intent and purpose of this Guaranty that the Guarantor shall and does hereby
waive all rights and benefits which might accrue to the Guarantor by reason
of any such proceedings, and without limiting the generality of the
foregoing, it is further the intent and purpose of this Guaranty that the
liability of the Guarantor shall not be in any way limited by the filing of
any bankruptcy involving the Borrower, but rather shall in all respects
continue and extend to include, by way of example and not limitation, post-
filing interests and costs, including reasonable attorney's fees;
(9) to the extent permitted by law, the release or discharge of the
Guarantor from the performance or observance of any obligation, covenant or
agreement contained in this Guaranty by operation of law or the addition or
release of any other guarantor;
(10) the default or failure of any other guarantor fully to perform any
of its obligations set forth in any other guaranty;
(11) any release, substitution, replacement, destruction, loss or
impairment of the security pledged under the Financing Documents;
(12) any failure of the Authority or the Trustee to mitigate damages
resulting from any default by the Borrower under the Financing Documents;
(13) any other circumstances which might otherwise constitute a legal or
equitable discharge or defense of a surety or a guarantor; or
(14) any other act of commission or omission or any other occurrence
whatsoever, whether similar or dissimilar to the foregoing.
Section 2.3. [Reserved]
Section 2.4. Corporation. Guarantor covenants and agrees that there
shall be no amendments or changes to the Articles of Incorporation or other
charter forming Guarantor, a corporation, or the Bylaws governing its
operation, which will in any manner affect the Financing Documents.
Section 2.5. Good Standing. The Guarantor warrants that it is and
will be during the term of this Agreement incorporated and in good standing
under the laws of the State.
Section 2.6. Indemnification Covenants.
(A) The Guarantor agrees to protect, defend and hold harmless the Authority
and its officers, members, directors, agents, servants and employees (each an
"Indemnified Party") from any claim, demand, suit or action or other
proceeding whatsoever by any person or entity whatsoever, arising or
purportedly arising from or in connection with the Guaranty or the
transactions contemplated thereby or actions taken thereunder, except for any
bad faith, willful misconduct material misrepresentation or gross negligence
on the part of the Indemnified Party.
(B) All covenants, stipulations, promises, agreements and obligations
of the Authority contained herein shall be deemed to be the covenants,
stipulations, promises, agreements and obligations of the Authority and not
of any member, officer, director, agent or employee of the Authority in his
or her individual capacity, and no recourse shall be had for the payment of
any claim based thereon or hereunder against any member, officer or employee
of the Authority or any natural person executing the 1998 Bonds.
(C) In case any action shall be brought against one or more of the
Indemnified Party's based upon any of the above and in respect of which
indemnity may be sought against the Guarantor, such Indemnified Party shall
notify the Guarantor in writing, enclosing a copy of all papers served, but
the omission so to notify the Guarantor of any such action shall not relieve
it of any liability which it may have to any Indemnified Party other than
under this Section 2.6. In case any such action shall be brought against any
Indemnified Party and it shall notify the Guarantor and the Borrower of the
commencement thereof, the Guarantor shall be entitled to participate in and,
to the extent that it shall wish, to assume the defense thereof with counsel
satisfactory to such Indemnified Party, and after notice from the Guarantor
to such Indemnified Party of the Guarantor's election so to assume the
defense thereof the Guarantor shall not be liable to such Indemnified Party
for any legal or other expenses, other than reasonable costs of investigation
subsequently incurred by such Indemnified Party in connection with the
defense thereof. The Indemnified Party shall have the right to employ its
own counsel in any such action, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party unless (i) the employment
of counsel by such Indemnified Party has been authorized by the Guarantor,
(ii) the Indemnified Party shall have reasonably concluded that there may be
a conflict of interest between the Borrower and/or Guarantor and the
Indemnified Party in the conduct or the defense of such action (in which case
the Guarantor shall not have the right to direct the defense of such action
on behalf of the Indemnified Party), or (iii) the Guarantor shall not in fact
have employed counsel satisfactory to the Indemnified Party to assume the
defense of such action.
(D) The Guarantor also agrees to pay all reasonable and necessary out-of-
pocket expenses of the Authority (including charges of counsel) in connection
with the Guaranty and the enforcement of any rights thereunder, including,
without limitation, any fees, charges and expenses (including charges of
counsel).
(E) The obligations of the Guarantor under this section shall survive the
termination of this Guaranty. This section is not for the benefit of any
person not an Indemnified Party, and no waiver of the Maine Tort Claims Act
or other applicable law is intended.
Section 2.7. [Reserved]
Section 2.8. Default and Litigation Notification. Upon becoming aware of any
condition or event which constitutes, or with the giving of notice or the
passage of time would constitute, an Event of Default, the Guarantor
immediately shall deliver to the Authority a notice stating the existence and
nature thereof and specifying the corrective steps the Guarantor is taking
with respect thereto. The Guarantor shall promptly notify the Authority of
the commencement of any litigation, administrative, enforcement or other
proceeding by or against it, or the threat thereof, in which an unfavorable
outcome could materially affect the operation of the Guarantor or compliance
with this Guaranty or the Power Purchase Agreement.
Section 2.9. Notification Requirements.
(A) The Guarantor must provide the Authority with copies of each
filing and report made by the Guarantor or any subsidiary of a Guarantor with
or to the Securities and Exchange Commission including, without limitation,
all 10-Q, 10-K and 8-K Reports (other than registration statements that have
not become effective under the Securities Act of 1933, filings and reports
with respect to dividend reinvestment, employee benefits, or other similar
plans, and filings pertaining to sales of or other transactions in securities
of the Guarantor or any Subsidiary by persons other than the Guarantor or
such Subsidiary), and of each communication from the Guarantor or any
Subsidiary to public shareholders generally, promptly upon the filing or
making thereof. The Guarantor must meet periodically with the Authority at
the Authority s request to provide information on financial conditions
(whether or not included in such filings) and any other issue raised by the
Authority.
(B) The Guarantor must provide to the Authority a copy of its
Regulatory Update when each is distributed or any successor internal
publication and such other information regarding pending or anticipated
filings as the Authority may reasonably request.
Section 2.10. Compliance with Law. The Guarantor will observe and
comply in all material respects with all laws, regulations, ordinances,
rules, and orders (including without limitation those relating to zoning,
land use, environmental protection, air, water and land pollution, wetlands,
health, equal opportunity, minimum wages, worker s compensation and
employment practices) of any federal, state, municipal or other governmental
authority except during any period during which the Guarantor at its expense
and in its name shall be in good faith contesting its obligations to comply
therewith.
Section 2.11. Maine Public Utilities Proceedings. The Guarantor
agrees, unless it is legally precluded, that it will file for appropriate
rate relief from the Maine Public Utilities Commission in the event it is
unable to make any payments or perform any financial obligation under this
Guaranty.
Section 2.12. Debt Limitation Covenant. The Guarantor must not incur
any additional debt in excess of $15,000,000.
ARTICLE III
EVENTS OF DEFAULT AND REMEDIES
Section 3.1. Events of Default. An "Event of Default" hereunder shall
exist if any of the following occurs and is continuing:
(1) the Guarantor defaults on the guaranty referred to in Section 2.1
hereof and such default continues for more than two (2) Business Days after
demand is made by the Trustee;
(2) the Guarantor fails to observe and perform any covenant, condition
or agreement, other than that referred to in Sections 3.1(1) of this
Guaranty, or of any instrument, document or agreement now or hereafter
securing this Guaranty and such failure continues for more than thirty (30)
days after written notice (which shall be deemed given upon facsimile
transmission or three (3) Business Days after mailing of notice by first
class mail, postage prepaid or certified mail) of such failure has been given
to the Guarantor by the Trustee or if by reason of such default the same
cannot be remedied within said thirty (30) days;
(3) any warranty, representation or other statement by or on behalf of
the Guarantor contained in this Guaranty or in any certificate, letter or
other writing or instrument furnished or delivered to the Authority pursuant
hereto or in connection herewith and in connection with the Financing
Documents shall at any time proved to have been incorrect in any material
respect when made, effective, or reaffirmed, as the case may be;
(4) the entry of a decree or order for relief by a court having
jurisdiction of the Guarantor in an involuntary case under the federal
bankruptcy laws, as now or hereafter constituted, or any other applicable
federal or state bankruptcy, insolvency or other similar law, or appointing a
receiver, liquidator, assignee, custodian, trustee (or similar official) of
the Guarantor or for any substantial part of any of its property, or ordering
the winding-up or liquidation of any of its affairs and the continuance of
any such decree or order unstayed and in effect for a period of sixty (60)
consecutive days, or the commencement by the Guarantor of a voluntary case
under the federal bankruptcy laws, as now constituted or hereinafter amended,
or any other applicable federal or state bankruptcy insolvency or other
similar law, or the consent by the Guarantor to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian (or other
similar official) or the making by it of any assignment for the benefit of
creditors, or the taking of corporate or other action by the Guarantor to
authorize or effect any of the foregoing;
(5) A final and unappealable judgment or order for the payment for
money in excess of $1,000,000 or more shall be rendered against the
Guarantor, such judgment or order shall continue unsatisfied and unpaid for a
period of thirty (30) days.
Section 3.2. Remedies Upon Default. Upon an Event of Default under Section
3.1 of this Guaranty, the Trustee shall have the right to proceed directly
against the Guarantor without proceeding against or exhausting any other
remedies which it may have and without resorting to security held, including,
without limitation, the Capital Reserve Fund.
Section 3.3. [Reserved]
Section 3.4. Waiver of Notice of Non-Payment and Costs of Enforcement. The
Guarantor hereby expressly waives presentment, demand, protest and notice of
nonpayment and further waives notice from the Authority of its acceptance and
reliance on this Guaranty. The Guarantor agrees to pay all costs,
disbursements and expenses (including all reasonable attorneys' fees) which
may be incurred by the Authority in enforcing or attempting to enforce this
Guaranty and any security therefor following any default on the part of the
Guarantor hereunder, whether the same shall be enforced by suit or otherwise.
Section 3.5. The Authority Not Coguarantor. The Guarantor hereby
acknowledges that (a) the Authority has established a Capital Reserve Fund
under the Indenture in order to provide credit enhancement for the 1998
Bonds; (b) the Authority is not a coguarantor with the Guarantor, who shall
have no right of contribution, indemnity or subrogation against the
Authority; (c) all liability of the Guarantor under this Guaranty shall
continue in full force and effect notwithstanding any payment by the
Authority in the form of draws by the Trustee from the Capital Reserve Fund
under the Indenture or payments by Financial Security Assurance Inc. under
the Bond Insurance Policy provided to insure the 1998 Bonds or otherwise; and
(d) all liability of the Guarantor under this Guaranty shall continue in full
force and effect notwithstanding the fact that the Authority may have
acquired rights against the Guarantor by assignment, subrogation or
otherwise.
ARTICLE IV
MISCELLANEOUS
Section 5.1. Amendment. This Guaranty may not be amended, changed,
modified, altered or terminated without the concurring written consent of the
Guarantor and the Authority.
Section 5.2. Effective Date. The obligations of the Guarantor hereunder
shall arise absolutely and unconditionally upon the issuance and initial
delivery of the 1998 Bonds.
Section 5.3. Remedies Not Exclusive. No remedy herein conferred upon or
reserved to the Authority is intended to be exclusive of any other available
remedy or remedies, but each and every such remedy shall be cumulative and
shall be in addition to every other remedy given under this Guaranty or now
or hereafter existing at law or in equity. No delay or omission to exercise
any right or power accruing upon any Event of Default shall impair any such
right or power or shall be construed to be a waiver in the event any
provision contained in this Guaranty should be breached by any party and
thereafter duly waived by any other party so empowered to act. Such waiver
shall be limited to the particular breach so waived and shall not be deemed
to waive any other breach hereunder. No waiver, amendment, release or
modification of this Guaranty shall be established by conduct, custom or
course of dealing, but solely by an instrument in writing duly executed by
the parties thereunto duly authorized by this Guaranty.
Section 5.4. Notice. Except as otherwise provided herein, all notices or
other communications hereunder shall be sufficiently given and shall be
deemed given when delivered by hand delivery or on the third day following
the day on which the same has been mailed, postage prepaid, by registered or
certified mail addressed as follows:
if to Guarantor:
Bangor Hydro-Electric Company
33 State Street
PO Box 932
Bangor, ME 04402-0932
Attention: Frederick Samp
if to the Trustee:
The Chase Manhattan Bank
73 Tremont Street
Boston, MA 02108-3913
Attention: Corporate Trust Services
Any party, by notice given hereunder, may designate a different address for
future notices.
Section 5.5. Counterparts. This Guaranty constitutes the entire agreement,
and supersedes all prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof and may
be executed simultaneously in several counterparts, each of which shall be
deemed an original and all of which together shall constitute one and the
same instrument.
Section 5.6. Severability. The invalidity or unenforceability of any one or
more phrases, sentences, clauses, or Sections in this Guaranty contained,
shall not affect the validity or enforceability of the remaining portions of
this Guaranty, or any part thereof.
Section 5.7. Governing Law. This Guaranty shall be governed by and
construed in accordance with the laws of the State of Maine.
Section 5.8. Successors and Assigns. This Guaranty shall be binding upon,
inure to the benefit of and be enforceable by the parties hereto and their
respective successors and assigns.
Section 5.9. Reinstatement of Obligation. The obligations of the Guarantor
under this Guaranty shall be reinstated to the extent of any payment made by
the Borrower which must be returned by reason of the bankruptcy or insolvency
of the Borrower or for any other reason.
Section 5.10. Rules of Construction.
(A) Words of the neuter gender shall be deemed and construed to include
correlative words of the feminine and masculine genders.
(B) Unless the context shall otherwise indicate, the term Guarantor shall
include the plural as well as the singular number.
(C) Terms used and not defined herein shall have the meanings set forth in
the Agreement or in the Indenture to the extent such meaning is not
incompatible with the context used herein.
IN WITNESS WHEREOF, the Guarantor and the Trustee have caused this Guaranty
to be executed, all as of the date first above written.
WITNESS: BANGOR HYDRO-ELECTRIC COMPANY
______________________ __/s/__________________________________
By: Frederick S. Samp
Its: Vice President - Finance & Law
THE CHASE MANHATTAN BANK
______________________ _/s/___________________________________
By: Don Iacherri
Its: Authorized Signer
EXHIBIT 10(c)
AMENDMENT NO. 2
TO POWER PURCHASE AGREEMENT
This Amendment No. 2 to Power Purchase Agreement ("Second Amendment") is
entered into as of the 26th day of June , 1998 by and between PENOBSCOT
ENERGY RECOVERY COMPANY, LIMITED PARTNERSHIP, a Maine limited partnership
("Seller"), and BANGOR HYDRO-ELECTRIC COMPANY, a Maine corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, Seller and Buyer are parties to a Power Purchase Agreement
dated June 21, 1984 and amended by Amendment No. 1 dated March 24, 1986 (as
amended, the "Agreement") for the sale by Seller and the purchase by Buyer of
energy and capacity from Seller's Orrington, Maine waste-to-energy facility
(the "Facility"); and
WHEREAS, Seller has entered into certain long-term waste disposal
agreements with numerous Maine municipalities, pursuant to a standard form
First Amended and Restated Waste Disposal Agreement dated as of April 1, 1991
or shortly thereafter (the "First Waste Disposal Agreement") and intends to
enter into a standard form Second Amended, Restated and Extended Waste
Disposal Agreement (the "Second Waste Disposal Agreement") with many of the
same municipalities as of the Closing (as hereinafter defined); and
WHEREAS, those municipalities which are parties to the First Waste
Disposal Agreement are known as the "Charter Municipalities"; and
WHEREAS, those municipalities which become parties to the Second Waste
Disposal Agreement are known as "Amending Charter Municipalities;" and
WHEREAS, the Amending Charter Municipalities will be directly benefitted
by this Agreement, because it is expected that the continuing sale of energy
by Seller to Buyer will enable Seller to economically receive and process
municipal solid waste under the Second Waste Disposal Agreement, which is
expected to substantially assist the Amending Charter Municipalities in the
discharge of their obligation to provide for the disposition of municipal
solid waste discarded by their residents and businesses; and
WHEREAS, in accordance with 35-A M.R.S.A. Section3156, Buyer has
conclusively determined that (i) this Second Amendment provides near-term
benefits to its rate payers that will be reflected in rates paid by the
Buyer's customers; and (ii) as a result of this Second Amendment, potential
future adverse rate impacts are not likely to be disproportionate to near-
term gains; and (iii) this Second Amendment is consistent with 35-A M.R.S.A.
Section3191; and (iv) this Second Amendment will not adversely impact the
availability of a diverse and reliable mix of electric energy resources and
will not significantly reduce the long-term electric energy or capacity
resources available to Buyer and needed to meet future electric demand; and
WHEREAS, consistent with 35-A M.R.S.A. Section3208(4), Buyer has
conclusively determined that this Second Amendment will reduce the Buyer's
potential stranded costs; and
WHEREAS, at the request of Buyer, Seller is entering into a loan
agreement (the "Bond Financing Agreement") with the Finance Authority of
Maine ("FAME") to provide a loan to Seller pursuant to FAME's electric rate
stabilization loan program, as defined in 10 M.R.S.A. Section963-A (7-A), by
issuing bonds (the "New Bonds") to refinance and replace the existing loan
provided to Seller from certain bonds issued by the Town of Orrington, Maine
(the "Old Bonds"), which Old Bonds financed a portion of the construction of
the Facility; and
WHEREAS, this Amendment is being executed and delivered contingent upon
the closing of the refinancing referred to in the preceding paragraph (the
"Closing"); and
WHEREAS, delivery of the New Bonds shall be conclusive evidence that the
Closing has occurred; and
WHEREAS, Seller, Municipal Review Committee, Inc. (the "MRC") and Buyer
have approved the Bond Financing Agreement and the Trust Indenture (the
"Trust Indenture") to be entered into as of the Closing between FAME and The
Chase Manhattan Bank, as the trustee for the New Bonds (the "Bond Trustee"),
pursuant to which the Bond Trustee will receive specified payments from
Seller and Buyer at Closing to fund certain reserves held in trust by the
Bond Trustee under the Trust Indenture; and
WHEREAS, all Charter Municipalities are members of the MRC which is the
designated agent for the Charter Municipalities and the Amending Charter
Municipalities; and
WHEREAS, Seller and Buyer understand that the Amending Charter
Municipalities will receive certain benefits as a result of this Second
Amendment and related transactions, and intend that the MRC shall be an
express third party beneficiary hereunder for the benefit of the Amending
Charter Municipalities to the extent provided herein; and
WHEREAS, Buyer intends to issue warrants to the MRC or its designees for
the benefit of Amending Charter Municipalities at the Closing; and
WHEREAS, the MRC and Buyer are separately entering into an agreement as
of the Closing regarding certain operating reports about the Facility to be
prepared periodically by the MRC for which Buyer shall pay Forty Thousand
Dollars ($40,000.00) annually (subject to annual adjustment in accordance
with changes in the "CPI-U," so-called, published by the United States Bureau
of Labor Statistics), payable Ten Thousand Dollar ($10,000.00) quarterly in
advance;
NOW THEREFORE, in consideration of the mutual covenants and promises set
forth herein, and the consent of the MRC and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Seller and Buyer agree as follows:
1. It is the express intent of Seller and Buyer that the MRC possess
an enforceable benefit for the Amending Charter Municipalities as a
third party beneficiary of the Agreement. As a third party
beneficiary, it is intended that the MRC shall have standing in any
suit, bankruptcy, reorganization, arbitration, mediation or dispute
resolution proceeding arising out of the Agreement to enforce any
rights granted to the Amending Charter Municipalities or the MRC
hereunder, or to seek damages from the breach of any obligations
owed to the Amending Charter Municipalities and the MRC hereunder.
2. The following provisions of the Agreement shall not be materially
amended, supplemented or modified without the express written
consent of the MRC, which consent shall not be unreasonably
withheld or delayed:
Article II: Term
Article III: Sale of Power
Article IV: Billing and Payment
Article IX: Deliveries
Article XI: Continuity of Service
Article XIII: Breach
Article XIV: Assignment
Article XV: Indemnity
Article XVI: Liability, Dedication
Article XVII: Force Majeure
Article XIX: Representations and Warranties of the Parties
Article XXI: Waiver
Article XXIII: Choice of Law
The First and Second Amendments to the Agreement
3. At the Closing Buyer will (a) deposit with the Bond Trustee for the
benefit of Seller Six Million Dollars ($6,000,000.00) for credit to
the Capital Reserve Fund established under the Trust Indenture and
(b) a one-time payment of $151,393, which is an amount equal to
interest at the rate of eight percent (8%) per annum on One Million
Dollars ($1,000,000.00) over sixteen quarter-year periods,
discounted at the same interest rate (together, the "Closing
Payment"), for deposit under the terms of the Trust Indenture.
Buyer will pay to the Bond Trustee for the benefit of Seller and
the MRC, as agent for the Amending Charter Municipalities
additional cash payments in the aggregate amount of Four Million
Dollars ($4,000,000), for deposit under the terms of the Trust
Indenture, in quarterly payments of Two Hundred Fifty Thousand
Dollars ($250,000.00) due on the first day of each quarter for each
quarter or part thereof (January, April, July, October) which
occurs after the Closing, commencing October 1, 1998, until
sixteen such quarterly payments have been made (the "Installment
Payments," and together with the Closing Payment, the "Bangor Hydro
Payments," and each date of such payment, the "Payment Date"). All
Bangor Hydro Payments shall be made to the Bond Trustee but if a
Bond Trustee is not serving in such capacity on a particular
Payment Date then the Bangor Hydro Payment shall be made as Seller
and the MRC shall direct Buyer in writing. The obligation of Buyer
to make each of the Bangor Hydro Payments shall be absolute and
unconditional, and Buyer shall not be entitled to any abatement,
diminution, set off, abrogation, waiver or modification thereof nor
to any termination of the Agreement by any reason whatsoever except
as expressly provided herein, regardless of any rights of set-off,
recoupment or counterclaim that Buyer might otherwise have against
Seller or any other party or parties and regardless of any
contingency, act of God, event or cause whatsoever.
4. Buyer and Seller each agree to pay by wire transfer of same day
funds on the Closing Date or as soon thereafter as practicable,
one-half (1/2) of the third party costs of restructuring the
financing described above including but not limited to costs
related to: (a) extension and termination of the letter of credit
securing the Old Bonds, (b) retirement of the Old Bonds, (c)
issuance of the New Bonds and loans related thereto, (d) obtaining
FAME approval; and all of certain costs of other entities
including, but not limited to, reasonable expenses incurred by the
MRC, the Town of Orrington, bond counsel, FAME, the existing letter
of credit banks, and the Bond Trustee, and their respective
counsel, with credit for such portion thereof that may have been
advanced by Buyer or Seller, respectively, prior to the Closing.
5. Subject to the satisfaction of the requirements contained in
Paragraph 6 below, Seller shall pay to Buyer one-third (1/3) of any
Distributable Cash (as such term is defined in the Second Waste
Disposal Agreement), which is available for distribution in
accordance with the Trust Agreement, but only to the extent
permitted under the Bond Financing Agreement (each such payment a
"Bangor Hydro Distribution"), as more particularly described in the
Surplus Cash Agreement of even date herewith among Buyer, Seller,
and the MRC.
6. Seller's obligation to make a Bangor Hydro Distribution to Buyer is
contingent on Buyer making each Installment Payment as and when due
and performing each of its other obligations set forth in the
Agreement, as amended hereby. In the event of a payment default
hereunder by Buyer, Buyer shall immediately rebate to the Bond
Trustee (or if none, to Seller) all Bangor Hydro Distributions
previously received by Buyer in an amount equal to the sum of the
Bangor Hydro Payments (together with any other payments due
hereunder) which have not been paid when due, which rebate amount
(net of costs of collection) shall be distributed fifty percent
(50%) to Seller and fifty percent (50%) to the MRC, as agent for
the Amending Charter Municipalities.
7. In the event that Buyer's obligation to make payments under the
Agreement is avoided, or otherwise reduced in amount, or delayed,
or impaired in a bankruptcy, reorganization, or similar proceeding,
Seller's obligation to make any further Bangor Hydro Distributions
shall cease, and Seller and the MRC shall have valid and
enforceable claims against Buyer in the aggregate amount of all
Bangor Hydro Distributions previously paid to Buyer, net of any
reserves funded by Bangor Hydro Payments and held by the Bond
Trustee under the Trust Indenture, in addition to any other claims
for damages or other claims Seller and the MRC may possess.
8. Article V of the Agreement is amended as follows:
To Seller: Penobscot Energy Recovery Company, Limited Partnership
P.O. Box 96
Industrial Way
Orrington, ME 04475
Attention: Plant Manager
With a copy (which shall not constitute notice) to:
Gordon F. Grimes, Esq.
Bernstein, Shur, Sawyer & Nelson
100 Middle Street
P.O. Box 9729
Portland, ME 04104-5029
To Buyer: President
Bangor Hydro-Electric Company
33 State Street
P. O. Box 932
Bangor, ME 04402-0932
To Municipal Review Committee, Inc.:
Municipal Review Committee, Inc.
Eastern Maine Development Corporation
One Cumberland Place
Bangor, ME 04401
With a copy (which shall not constitute notice) to:
Thomas M. Brown, Esq.
Eaton, Peabody, Bradford & Veague, P.A.
Fleet Center - Exchange Street
P.O. Box 1210
Bangor, ME 04402-1210
Monthly billing statements to Buyer shall be sent to:
Assistant Treasurer
Bangor Hydro-Electric Company
33 State Street
P.O. Box 932
Bangor, ME 04402-0932
9. Article IX of the Agreement is amended by adding the following at the
end of the last sentence of the first paragraph:
"...until such time as retail access is permitted
pursuant to 35-A M.R.S.A. Section3202 or any successor
statute. Thereafter Seller may (without waiving any
right to continue buying from Buyer from time to time
thereafter) purchase such power as permitted by statute,
which shall be delivered by Buyer if requested by
Seller."
10. Article XIII(A) of the Agreement is amended by adding the
following at the end of the first sentence:
"...and in addition Buyer shall pay all Bangor Hydro
Payments set forth in paragraphs 6 and 7 of the Second
Amendment hereof."
11. Article XIV of the Agreement is amended by adding the following
words after the words "that the Trustee to which this Agreement is assigned"
in the second sentence thereof:
"..., upon taking possession of the Facility after
foreclosure of its liens on and security interests
therein,...
12. Article XV of the Agreement is amended by inserting the following
immediately after the first sentence thereof:
"Notwithstanding the above, no limitation appearing in the
preceding sentence will be construed to limit payment of the
amounts described in paragraphs 6 and 7 of the Second
Amendment hereof."
13. Article XVI is amended by adding the following to Section A:
"...except obligations to the MRC as provided for herein."
14. Article XXIV of the Agreement is amended by adding the following:
"...other than such terms and conditions referred to in
documents referred to in the Second Amendment."
Buyer acknowledges that any default under the Agreement referenced in the
16th WHEREAS clause hereof shall not be a default under this Agreement or in
any way excuse performance by Buyer hereunder or give rise to any rights of
offset with respect thereto. In all other respects, the Agreement shall
remain in full force and effect in accordance with the terms thereof, and
Seller and Buyer each hereby reaffirms its respective obligations thereunder.
IN WITNESS WHEREOF, Seller and Buyer have caused this Amendment No. 2 to be
executed as of the date first written above.
WITNESS: Penobscot Energy Recovery Company, Limited
Partnership
By: PERC Management Company Limited
Partnership, its General Partner
By: PERC, Inc. its General Partner
________________________________ By:_____________________________________
Name: Martin J. Sergi
Its President
By: Energy National, Inc., its General
Partner
________________________________ By:_____________________________________
Name: Michael J. Young
Its Secretary
Bangor Hydro-Electric Company
_________________________________ By:______________________________________
Name: Carroll R. Lee
Its Senior Vice President and Chief
Operating Officer
EXHIBIT 10(d)
AMENDED AND RESTATED
REVOLVING CREDIT
AND
TERM LOAN AGREEMENT
-------------------
DATED as of June 29, 1998
between
BANGOR HYDRO-ELECTRIC COMPANY
and
BANKBOSTON, N.A.,
as Administrative Agent for the Banks
and
FLEET NATIONAL BANK,
as Documentation Agent for the Banks
TABLE OF CONTENTS
Section 1. DEFINITIONS AND RULES OF INTERPRETATION. .
Section 1.1. Definitions.
Section 1.2. Rules of Interpretation.
Section 2. THE REVOLVING CREDIT FACILITY. . . . . . .
Section 2.1. Commitment to Lend.
Section 2.2. Commitment Fee.
Section 2.3. Reduction of Total Commitment.
Section 2.4. The Revolving Credit Notes.
Section 2.5. Interest on Revolving Credit
Loans.
Section 2.6. Requests for Revolving Credit
Loans.
Section 2.7. Conversion Options.
Section 2.7.1. Conversion to Different Type
of Revolving Credit Loan.
Section 2.7.2. Continuation of Type of
Revolving Credit Loan.
Section 2.7.3. LIBOR Rate Loans.
Section 2.8. Funds for Revolving Credit Loan.
Section 2.8.1. Funding Procedures.
Section 2.8.2. Advances by Administrative
Agent.
Section 2.9. Settlements.
Section 2.9.1. General.
Section 2.9.2. Failure to Make Funds
Available.
Section 2.9.3. No Effect on Other Banks.
Section 3. REPAYMENT OF THE REVOLVING CREDIT LOANS. .
Section 3.1. Maturity.
Section 3.2. Mandatory Repayments of Revolving
Credit Loans.
Section 3.3. Optional Repayments of Revolving
Credit Loans.
Section 4. THE TERM LOAN. . . . . . . . . . . . . . .
Section 4.1. Commitment to Lend.
Section 4.2. The Term Notes.
Section 4.3. Schedule of Installment Payments of
Principal of Term Loan.
Section 4.4. Optional Prepayment of Term Loan.
Section 4.5. Mandatory Prepayment of Term
Loan.
Section 4.6. Interest on Term Loan.
Section 4.6.1. Interest Rates.
Section 4.6.2. Notification by Borrower.
Section 4.6.3. Amounts, etc.
Section 5. LETTERS OF CREDIT. . . . . . . . . . . . .
Section 5.1. Letter of Credit Commitments.
Section 5.1.1. Commitment to Issue Letters
of Credit.
Section 5.1.2. Letter of Credit
Applications.
Section 5.1.3. Terms of Letters of
Credit.
Section 5.1.4. Reimbursement Obligations of
Banks.
Section 5.1.5. Participations of Banks.
Section 5.2. Reimbursement Obligation of the
Borrower.
Section 5.3. Letter of Credit Payments.
Section 5.4. Obligations Absolute.
Section 5.5. Reliance by Issuer.
Section 5.6. Letter of Credit Fee.
Section 6. CERTAIN GENERAL PROVISIONS. . . . . . . . .
Section 6.1. Fees.
Section 6.2. Funds for Payments.
Section 6.2.1. Payments to Administrative
Agent.
Section 6.2.2. No Offset, etc.
Section 6.3. Computations.
Section 6.4. Inability to Determine LIBOR
Rate.
Section 6.5. Illegality.
Section 6.6. Additional Costs, etc.
Section 6.7. Capital Adequacy.
Section 6.8. Certificate.
Section 6.9. Indemnity.
Section 6.10. Interest After Default.
Section 6.10.1. Overdue Amounts.
Section 6.10.2. Replacement Banks;
Mitigation.
Section 7. COLLATERAL SECURITY. . . . . . . . . . . .
Section 7.1. Security of Borrower.
Section 8. REPRESENTATIONS AND WARRANTIES. . . . . . .
Section 8.1. Corporate Authority.
Section 8.1.1. Incorporation; Good
Standing.
Section 8.1.2. Authorization.
Section 8.1.3. Enforceability.
Section 8.2. Governmental Approvals.
Section 8.3. Title to Properties; Leases.
Section 8.4. Financial Statements and
Projections.
Section 8.4.1. Fiscal Year.
Section 8.4.2. Financial Statements.
Section 8.4.3. Projections.
Section 8.5. No Material Changes, etc.
Section 8.6. Franchises, Patents, Copyrights,
etc.
Section 8.7. Litigation.
Section 8.8. No Materially Adverse Contracts,
etc.
Section 8.9. Compliance with Other Instruments,
Laws, etc.
Section 8.10. Tax Status.
Section 8.11. No Event of Default.
Section 8.12. Holding Company and Investment
Company Acts.
Section 8.13. Absence of Financing Statements,
etc.
Section 8.14. Perfection of Security Interest.
Section 8.15. Certain Transactions.
Section 8.16. Compliance with ERISA.
Section 8.17. Regulations U and X.
Section 8.18. Subsidiaries, etc.
Section 8.19. Year 2000 Problem.
Section 8.20. Disclosure.
Section 8.21. Collateral Bonds; Mortgages.
Section 9. AFFIRMATIVE COVENANTS OF THE BORROWER. . .
Section 9.1. Punctual Payment.
Section 9.2. Maintenance of Office.
Section 9.3. Records and Accounts.
Section 9.4. Financial Statements, Certificates
and Information.
Section 9.5. Notices.
Section 9.5.1. Defaults.
Section 9.5.2. Environmental Events.
Section 9.5.3. Notification of Claim against
Collateral Bonds.
Section 9.5.4. Notice of Litigation and
Judgments.
Section 9.6. Corporate Existence; Maintenance of
Properties.
Section 9.7. Insurance.
Section 9.8. Taxes.
Section 9.9. Inspection of Properties and Books,
etc.
Section 9.9.1. General.
Section 9.9.2. Communications with
Accountants.
Section 9.10. Compliance with Laws, Contracts,
Licenses, and Permits.
Section 9.11. Employee Benefit Plans.
Section 9.12. Use of Proceeds.
Section 9.13. Bank Accounts.
Section 9.14. Further Assurances.
Section 9.15. Sale of Generating Assets.
Section 9.16. Status.
Section 10. CERTAIN NEGATIVE COVENANTS OF THE BORROWER.
Section 10.1. Restrictions on Indebtedness.
Section 10.2. Restrictions on Liens.
Section 10.3. Restrictions on Investments.
Section 10.4. Merger, Consolidation and
Disposition of Assets.
Section 10.4.1. Mergers and Acquisitions.
Section 10.4.2. Disposition of Assets.
Section 10.5. Sale and Leaseback.
Section 10.6. Employee Benefit Plans.
Section 10.7. Business Activities.
Section 10.8. Fiscal Year.
Section 10.9. Transactions with Affiliates.
Section 10.10. Negative Pledges.
Section 10.11. Nuclear Acquisitions.
Section 10.12. Amendments to Bonds, Etc..
Section 11. FINANCIAL COVENANTS OF THE BORROWER. . . .
Section 11.1. Consolidated Net Worth.
Section 11.2. Consolidated Fixed Charge Ratio.
Section 11.3. Consolidated Total Debt Ratio.
Section 11.4. Dividends.
Section 12. CLOSING CONDITIONS. . . . . . . . . . . .
Section 12.1. Loan Documents.
Section 12.2. Certified Copies of Charter
Documents.
Section 12.3. Corporate Action.
Section 12.4. Incumbency Certificate.
Section 12.5. Validity of Liens.
Section 12.6. Registration and Amendment of
Collateral Bonds.
Section 12.7. Supplemental Indenture.
Section 12.8. Certificates of Insurance.
Section 12.9. Opinions of Counsel.
Section 12.10. Payment of Fees.
Section 12.11. Chase Assignment.
Section 12.12. Certified Approvals.
Section 12.13. Asset Sale.
Section 12.14. Financial Statements and
Projections.
Section 13. CONDITIONS TO ALL BORROWINGS. . . . . . .
Section 13.1. Representations True; No Event of
Default.
Section 13.2. No Legal Impediment.
Section 13.3. Governmental Regulation.
Section 13.4. Proceedings and Documents.
Section 14. EVENTS OF DEFAULT; ACCELERATION; ETC. . .
Section 14.1. Events of Default and
Acceleration.
Section 14.2. Termination of Commitments.
Section 14.3. Remedies.
Section 14.4. Distribution of Collateral Bonds
Proceeds.
Section 15. SETOFF. . . . . . . . . . . . . . . . . .
Section 16. THE AGENTS. . . . . . . . . . . . . . . .
Section 16.1. Authorization.
Section 16.2. Employees and Administrative
Agents.
Section 16.3. No Liability.
Section 16.4. No Representations.
Section 16.5. Payments.
Section 16.5.1. Payments to Administrative
Agent.
Section 16.5.2. Distribution by
Administrative Agent.
Section 16.5.3. Delinquent Banks.
Section 16.6. Holders of Notes.
Section 16.7. Indemnity.
Section 16.8. Administrative Agent as Bank.
Section 16.9. Resignation.
Section 16.10. Notification of Defaults and
Events of Default.
Section 16.11. Duties in the Case of
Enforcement.
Section 17. EXPENSES AND INDEMNIFICATION. . . . . . .
Section 17.1. Expenses.
Section 17.2. Indemnification.
Section 17.3. Survival.
Section 18. SURVIVAL OF COVENANTS, ETC. . . . . . . .
Section 19. ASSIGNMENT AND PARTICIPATION. . . . . . .
Section 19.1. Conditions to Assignment by
Banks.
Section 19.2. Certain Representations and
Warranties; Limitations; Covenants.
Section 19.3. Register.
Section 19.4. New Notes.
Section 19.5. Participations.
Section 19.6. Disclosure.
Section 19.7. Assignee or Participant Affiliated
with the Borrower.
Section 19.8. Miscellaneous Assignment
Provisions.
Section 19.9. Assignment by Borrower.
Section 20. NOTICES, ETC. . . . . . . . . . . . . . .
Section 21. GOVERNING LAW. . . . . . . . . . . . . . .
Section 22. HEADINGS. . . . . . . . . . . . . . . . .
Section 23. COUNTERPARTS. . . . . . . . . . . . . . .
Section 24. ENTIRE AGREEMENT, ETC. . . . . . . . . . .
Section 25. WAIVER OF JURY TRIAL. . . . . . . . . . .
Section 26. CONSENTS, AMENDMENTS, WAIVERS, ETC. . . .
Section 27. SEVERABILITY. . . . . . . . . . . . . . .
SCHEDULES AND EXHIBITS
Exhibit A -- Form of Revolving Credit Note
Exhibit B -- Form of Loan Request
Exhibit C -- Form of Term Note
Exhibit D -- Form of Compliance Certificate
Exhibit E -- Form of Assignment & Acceptance
Exhibit F -- Forms of Opinions
Exhibit G -- Guarantees of the Borrower
Exhibit H Bangor Energy Intercreditor
Agreement
Schedule 1 -- Banks
Schedule 8.2 -- Governmental Approvals
Schedule 8.7 -- Litigation
Schedule 8.18 -- Subsidiaries
Schedule 10.1 -- Existing Indebtedness
Schedule 10.2 -- Existing Liens
Schedule 10.3 -- Existing Investments
AMENDED AND RESTATED
REVOLVING CREDIT
AND
TERM LOAN AGREEMENT
-------------------
This AMENDED AND RESTATED REVOLVING CREDIT AND TERM
LOAN AGREEMENT is made as of June 29 1998, by and among
BANGOR HYDRO-ELECTRIC COMPANY (the "Borrower"), a Maine
corporation having its principal place of business at 33
State Street, Bangor, Maine 04402, and BANKBOSTON, N.A., a
national banking association, and the other lending
institutions listed on SCHEDULE 1 and BANKBOSTON, N.A. as
administrative agent for itself and such other lending
institutions (the "Administrative Agent") and FLEET NATIONAL
BANK, a national banking association, as documentation agent
(the "Documentation Agent" and collectively with the
Administrative Agent, the "Agents".
WHEREAS, pursuant to a certain Credit Agreement dated
as of June 30, 1995 (the "Chase Credit Agreement"), among
the Borrower, the banks named therein (such banks
collectively referred to as the "Prior Lenders"), and Chase
Manhattan Bank as the administrative agent thereof (the
"Prior Administrative Agent"), the Prior Lenders have made
revolving credit and term loans to the Borrower (the
"Original Loans");
WHEREAS, the Prior Lenders have assigned all of their
rights, interests and obligations under the Chase Credit
Agreement to the Banks pursuant the Assignment and
Acceptance dated as of June 29, 1998 between the Prior
Lenders and the Banks;
WHEREAS, the Borrower, the Agents and the Banks wish to
amend and restate the Chase Credit Agreement as set forth
below;
NOW THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged
(these recitals being an integral part of this Credit
Agreement), the Borrower, the Banks and the Agents hereby
agree that, as of the date hereof, the Chase Credit
Agreement shall be hereby amended and restated in its
entirety; the Commitments and Commitment Percentages of the
Banks shall be as set forth on Schedule 1 hereto; and BKB
shall become the new Administrative Agent under the amended
and restated Credit Agreement.
Section 1. DEFINITIONS AND RULES OF INTERPRETATION.
Section 1.1. Definitions.
The following terms shall have the meanings set forth
in this Section 1 or elsewhere in the provisions of this
Credit Agreement referred to below:
ACQUISITION DOCUMENTS. Collectively, the Rate Schedule
Agreement dated March 31, 1998, the Unitil Contract
Assignment dated March 31, 1998, the Service Agreement dated
March 31, 1998 and all agreements and documents delivered
pursuant thereto under the Bangor Energy Loan Agreement.
AFFILIATE. Any Person that would be considered to be
an affiliate of the Borrower under Rule 144(a) of the Rules
and Regulations of the Securities and Exchange Commission,
as in effect on the date hereof, if the Borrower were
issuing securities.
ADMINISTRATIVE AGENT. BankBoston, N.A. acting as
administrative agent for the Banks.
ADMINISTRATIVE AGENT'S HEAD OFFICE. The Administrative
Agent's head office located at 100 Federal Street, Boston,
Massachusetts 02110, or at such other location as the
Administrative Agent may designate by notice to the Borrower
from time to time.
ADMINISTRATIVE AGENT'S SPECIAL COUNSEL. Bingham
Dana LLP or such other counsel as may be approved by the
Administrative Agent.
APPLICABLE L/C RATE. With respect to each Letter of
Credit on any date, the applicable letter of credit rate as
set forth in the Pricing Table based upon the Status on such
date.
APPLICABLE MARGIN. With respect to each Loan on any
date, the applicable interest rate margin as set forth in
the Pricing Table based upon the Status on such date.
ASSIGNMENT AND ACCEPTANCE. See Section 19.1.
BALANCE SHEET DATE. December 31, 1997.
BANGOR ENERGY GUARANTY. The Guaranty dated as of March
31, 1998, by the Borrower in favor of BKB, as agent for
itself and the other banks party to the Bangor Energy Loan
Agreement.
BANGOR ENERGY INTERCREDITOR AGREEMENT. The
Intercreditor Agreement dated as of March 31, 1998, between
BKB, as agent for the Bangor Energy Banks, and the
Administrative Agent as successor to the Prior
Administrative Agent, as agent for the Banks, and attached
hereto as EXHIBIT H.
BANGOR ENERGY LIENS. The liens of Bangor Energy
Resale, Inc. permitted under the Bangor Energy Loan
Agreement.
BANGOR ENERGY LOAN AGREEMENT. The Term Loan Agreement
dated as of March 31, 1998, as amended from time to time,
among Bangor Energy Resale, Inc., the banks named therein
(the "Bangor Energy Banks") and BKB, as agent for the Bangor
Energy Banks.
BANGOR ENERGY STOCK PLEDGE. The Amended and Restated
Stock Pledge Agreement dated as of the date hereof, between
the Borrower and the Administrative Agent on behalf of the
Banks.
Banks. BKB and the other lending institutions listed
on Schedule 1 hereto and any other Person who becomes an
assignee of any rights and obligations of a Bank pursuant to
Section 19.
Base Rate. The higher of (i) the annual rate of
interest announced from time to time by BKB at its head
office in Boston, Massachusetts, as its "base rate" and (ii)
one-half of one percent (1/2%) above the Federal Funds
Effective Rate. For the purposes of this definition,
"Federal Funds Effective Rate" shall mean for any day, the
rate per annum equal to the weighted average of the rates on
overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average of
the quotations for such day on such transactions received by
the Administrative Agent from three funds brokers of
recognized standing selected by the Administrative Agent.
Base Rate Loans. Revolving Credit Loans and all or any
portion of the Term Loan bearing interest calculated by
reference to the Base Rate plus the Applicable Margin.
BKB. BankBoston, N.A., a national banking association,
in its individual capacity.
Borrower. As defined in the preamble hereto.
Business Day. Any day on which banking institutions in
Boston, Massachusetts, are open for the transaction of
banking business and, in the case of LIBOR Rate Loans, also
a day which is a LIBOR Business Day.
Capitalized Leases. Leases under which the Borrower or
any of its Subsidiaries is the lessee or obligor, the
discounted future rental payment obligations under which are
required to be capitalized on the balance sheet of the
lessee or obligor in accordance with GAAP.
Chase Assignment. The Assignment and Acceptance dated
as of June 29, 1998 among the Prior Lenders and the Banks.
Chase L/C. The Irrevocable Letter of Credit Number T-
247520 granted by Chase Manhattan Bank (as successor to
Chemical Bank) on August 2, 1995, in favor of State Street
Bank and Trust Company, as trustee.
Chase Revolver: The revolving credit loans made to the
Borrower pursuant to the Credit Agreement dated as of June
30, 1995, among the Borrower, the banks named therein, Chase
Manhattan Bank as administrative agent, and Fleet Bank of
Maine and BKB, as co-agents.
Chase Term Loan: The term loan made to the Borrower
pursuant to the Credit Agreement dated as of June 30, 1995,
among the Borrower, the banks named therein, Chase Manhattan
Bank as administrative agent, and Fleet Bank of Maine and
BKB, as co-agents.
Closing Date. The first date on which the conditions
set forth in Section 12 have been satisfied and any
Revolving Credit Loans and the Term Loan are to be made or
any Letter of Credit is to be issued hereunder.
Co-Arrangers. BancBoston Securities Inc. and Fleet
National Bank.
Code. The Internal Revenue Code of 1986.
Collateral Bonds. The amended non-interest bearing
First Mortgage Bonds, Collateral Series due 2001, of the
Borrower in the original principal amount of $82,500,000,
pledged to the Administrative Agent for the benefit of the
Banks.
Commission. The Public Utilities Commission of the
State of Maine.
Commitment. With respect to each Bank, the amount set
forth on Schedule 1 hereto as the amount of such Bank's
commitment to make Revolving Credit Loans to, and to
participate in the issuance, extension and renewal of
Letters of Credit for the account of, the Borrower, as the
same may be reduced from time to time; or if such commitment
is terminated pursuant to the provisions hereof, zero.
Commitment Fee Rate. The applicable commitment fee
rate as set forth in the Pricing Table based upon the Status
on the date the commitment fee is due.
Commitment Percentage. With respect to each Bank, the
percentage set forth on Schedule 1 hereto as such Bank's
percentage of the aggregate Commitments of all of the Banks.
Company Balance Sheet Date. March 31, 1998.
Consolidated or consolidated. With reference to any
term defined herein, shall mean that term as applied to the
accounts of the Borrower and its Subsidiaries, consolidated
in accordance with GAAP.
Consolidated Adjusted EBIT. For any period,
Consolidated Net Income (or deficit) for such period (a)
plus, without duplication and to the extent reflected as a
charge in the statement of such Consolidated Net Income (or
deficit) for such period, the sum of (i) total income tax
expense and (ii) interest expense, amortization or write-off
of debt discount and debt issuance costs and commissions,
discounts and other fees and charges associated with
Indebtedness (including the Loans) and (b) minus, to the
extent included in Consolidated Net Income (or deficit) for
such period, the amount which would appear in accordance
with GAAP on a statement of income of the Borrower and its
consolidated Subsidiaries opposite the heading "Allowance
for equity funds used during construction" (or any similar
item).
Consolidated Fixed Charges. For any period, (a) total
cash interest expense (including that attributable to
capital lease obligations) of the Borrower and its
Subsidiaries for such period with respect to all outstanding
Indebtedness of the Borrower and its Subsidiaries,
including, without limitation, all commissions, discounts
and other fees and charges owed with respect to letters of
credit and bankers acceptance financing, determined on a
consolidated basis in accordance with GAAP plus (b) to the
extent subtracted in arriving at the amount described in
clause (a) above, the amount which would appear in
accordance with GAAP on a statement of income of the
Borrower and its consolidated Subsidiaries for such period
opposite the heading "Allowance for borrowed funds used
during construction" (or any similar item).
Consolidated Fixed Charge Ratio. For any period, the
ratio of (a) Consolidated Adjusted EBIT for such period to
(b) Consolidated Fixed Charges for such period.
Consolidated Net Income (or deficit). For any period,
the net income (or loss) of the Borrower and its
Subsidiaries, determined on a consolidated basis in
accordance with GAAP; provided that there shall be excluded
(a) the income (or deficit) of any Person accrued prior to
the date it becomes a Subsidiary or is merged into or
consolidated with the Borrower or any of its Subsidiaries,
(b) the income (or deficit) of any Person (other than a
Subsidiary) in which the Borrower or any of its Subsidiaries
has an ownership interest, except to the extent that any
such income is actually received by the Borrower or such
Subsidiary in the form of dividends or similar distributions
and (c) the undistributed earnings of any Subsidiary to the
extent that the declaration or payment of dividends or
similar distributions by such Subsidiary is not at the time
permitted by the terms of any contractual obligation or any
law, rule, regulation or order applicable to such
Subsidiary.
Consolidated Net Worth. At any date of determination,
with respect to any Person, (a) the stated capital of the
common stock of such Person plus (b) additional paid-in
capital in respect of such common stock plus (c) retained
earnings (or minus accumulated deficit) of such Person,
determined on a consolidated basis in accordance with GAAP.
Consolidated Total Capitalization. At any date of
determination, the sum of (a) Consolidated Total Debt at
such date, and (b) the aggregate of all amounts which would
appear in accordance with GAAP on a balance sheet of the
Borrower and its consolidated Subsidiaries at such date
opposite the headings "Common stock investment", "Preferred
stock" and "Preferred stock subject to mandatory redemption"
or any similar items.
Consolidated Total Debt. At any date of determination,
the aggregate principal amount of all Indebtedness which
would appear in accordance with GAAP on a balance sheet of
the Borrower and its consolidated Subsidiaries at such date.
Consolidated Total Debt Ratio. At any date of
determination, the ratio of (a) Consolidated Total Debt at
such date to (b) Consolidated Total Capitalization at such
date.
Conversion Request. A notice given by the Borrower to
the Administrative Agent of the Borrower's election to
convert or continue a Loan in accordance with Section 2.7.
Credit Agreement. This Amended and Restated Revolving
Credit and Term Loan Agreement, including the Schedules and
Exhibits hereto, as amended from time to time.
Default. See Section 14.1.
Delinquent Bank. See Section 16.5.3.
Disclosure Documents. The Borrower s financial
statements referred to in Section 8.4.2, 1997 Form 10-K and
report to stockholders for the first quarter of 1998.
Distribution. The declaration or payment of any
dividend on or in respect of any shares of any class of
capital stock of the Borrower, other than dividends payable
solely in shares of common stock of the Borrower; the
purchase, redemption, or other retirement of any shares of
any class of capital stock of the Borrower, directly or
indirectly through a Subsidiary of the Borrower or
otherwise; the return of capital by the Borrower to its
shareholders as such; or any other distribution on or in
respect of any shares of any class of capital stock of the
Borrower.
Documentation Agent. Fleet National Bank, acting as
documentation agent for the Banks.
Dollars or $. Dollars in lawful currency of the United
States of America.
Domestic Lending Office. Initially, the office of each
Bank designated as such in Schedule 1 hereto; and, after
such Bank has provided the Borrower and the Administrative
Agent with written notice of a change in the office, such
other office of such Bank, if any, located within the United
States that will be making or maintaining Base Rate Loans.
Drawdown Date. The date on which any Revolving Credit
Loan or the Term Loan is made or is to be made, and the date
on which any Revolving Credit Loan is converted or continued
in accordance with Section 2.7 or all or any portion of the
Term Loan is converted or continued in accordance with
Section 4.6.
Eligible Assignee. Any of (i) a commercial bank
organized under the laws of the United States, or any State
thereof or the District of Columbia, and having total assets
in excess of $1,000,000,000; (ii) a savings and loan
association or savings bank organized under the laws of the
United States, or any State thereof or the District of
Columbia, and having a net worth of at least $100,000,000,
calculated in accordance with GAAP; (iii) a commercial bank
organized under the laws of any other country which is a
member of the Organization for Economic Cooperation and
Development (the "OECD"), or a political subdivision of any
such country, and having total assets in excess of
$1,000,000,000, provided that such bank is acting through a
branch or agency located in the country in which it is
organized or another country which is also a member of the
OECD; (iv) the central bank of any country which is a member
of the OECD; and (v) if, but only if, any Event of Default
has occurred and is continuing, any other bank, insurance
company, commercial finance company or other financial
institution or Person (not being an individual), in each
case approved by the Administrative Agent, such approval not
to be unreasonably withheld.
Employee Benefit Plan. Any employee benefit plan
within the meaning of Section 3(3) of ERISA maintained of
contributed to by the Borrower or any ERISA Affiliate, other
than a Guaranteed Pension Plan or a Multiemployer Plan.
Environmental Laws. Any judgment, decree, order, law,
license, rule or regulation pertaining to environmental
matters, including those arising under the Resource
Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation and Liability Act of
1980 ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986, the Federal Water Pollution
Control Act, the Federal Clean Air Act, the Toxic Substances
Control Act or any United States, state or local or any
other statute, regulation, ordinance, order or decree
relating to health, safety or the environment.
ERISA. The Employee Retirement Income Security Act of
1974.
ERISA Affiliate. Any Person which is treated as a
single employer with the Borrower under Section 414 of the
Code.
ERISA Reportable Event. A reportable event with
respect to a Guaranteed Pension Plan within the meaning of
Section 4043 of ERISA and the regulations promulgated
thereunder.
Event of Default. See Section 14.1.
FAME Loan Agreement. The Loan Agreement dated as of
June 1, 1995, between the Borrower and the Finance Authority
of Maine.
First Mortgage Bonds. The bonds issued pursuant to the
Mortgage.
General and Refunding Mortgage Indenture. The General
and Refunding Mortgage Indenture and Deed of Trust dated
June 1, 1995, as amended and supplemented as of the Closing
Date, between the Company and Chase Manhattan Bank, as
trustee.
GAAP. (i) When used in Section 11, whether directly or
indirectly through reference to a capitalized term used
therein, means (A) principles that are consistent with the
principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, in effect
for the fiscal year ended on the Balance Sheet Date, and (B)
to the extent consistent with such principles, the
accounting practice of the Borrower reflected in its
financial statements for the year ended on the Balance Sheet
Date, and (ii) when used in general, other than as provided
above, means principles that are (A) consistent with the
principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, as in
effect from time to time, and (B) consistently applied with
past financial statements of the Borrower adopting the same
principles, provided that in each case referred to in this
definition of "GAAP" a certified public accountant would,
insofar as the use of such accounting principles is
pertinent, be in a position to deliver an unqualified
opinion (other than a qualification regarding changes in
GAAP) as to financial statements in which such principles
have been properly applied.
Generating Asset Transaction(s). The sale of any
generating, transmission or power marketing resources assets
owned by the Borrower or any of its Subsidiaries or
Affiliates resulting in net cash sale proceeds to the
Borrower of $500,000 or more on an after tax basis.
Guaranteed Pension Plan. Any employee pension benefit
plan within the meaning of Section 3(2) of ERISA maintained
or contributed to by the Borrower or any ERISA Affiliate the
benefits of which are guaranteed on termination in full or
in part by the PBGC pursuant to Title IV of ERISA, other
than a Multiemployer Plan.
Hazardous Substances. Any hazardous waste, as defined
by 42 U.S.C. Section 6903(5), any hazardous substances as
defined by 42 U.S.C. Section 9601(14), any pollutant or
contaminant as defined by 42 U.S.C. Section 9601(33) or any
toxic substance, oil or hazardous materials or other
chemicals or substances regulated by any Environmental Laws.
Indebtedness. At any date, as to any Person, (a) all
indebtedness or other obligations of such Person for
borrowed money, for letters of credit opened for the account
of such person, or for the deferred purchase price of
property or services, or with respect to lease obligations
that are required to be capitalized on the balance sheet of
such Person in accordance with GAAP, (b) all indebtedness or
other obligations of any other Person for borrowed money or
for the deferred purchase price of property or services, the
payment or collection of which such Person has guaranteed
(except by reason of endorsement for collection and
endorsements in the ordinary course of business) or in
respect of which such Person is liable, contingently or
otherwise, including, without limitation, liability by way
of agreement to purchase, to provided funds for payment, to
supply funds to or otherwise to invest in such other Person,
or otherwise to assure a creditor against loss, and (c) all
indebtedness or other obligations of any other Person for
borrowed money or for the deferred purchase price of
property or services secured by (or for which the holder of
such indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, deed of trust,
pledge, lien security interest or other charge or
encumbrance upon or in property (including, without
limitation, accounts and contract rights) owned by such
Person, whether or not such Person has assumed or become
liable for the payment of such indebtedness or obligations.
It is understood that Interest Rate Protection Agreements
and commodities hedge agreement shall not constitute
Indebtedness for the purposes of this Credit Agreement.
Interest Payment Date. (i) As to any Base Rate Loan,
the last day of the calendar month with respect to interest
accrued during such calendar month, including, without
limitation, the calendar month which includes the Drawdown
Date of such Base Rate Loan; and (ii) as to any LIBOR Rate
Loan in respect of which the Interest Period is (A) 3 months
or less, the last day of such Interest Period and (B) more
than 3 months, the date that is 3 months from the first day
of such Interest Period and, in addition, the last day of
such Interest Period.
Interest Period. With respect to each Revolving Credit
Loan or all or any relevant portion of the Term Loan, (i)
initially, the period commencing on the Drawdown Date of
such Loan and ending on the last day of one of the periods
set forth below, as selected by the Borrower in a Loan
Request or as otherwise required by the terms of this Credit
Agreement (A) for any Base Rate Loan, the last day of the
calendar month; and (B) for any LIBOR Rate Loan, 1, 2, 3, or
6 months; and (ii) thereafter, each period commencing on the
last day of the next preceding Interest Period applicable to
such Revolving Credit Loan or all or such portion of the
Term Loan and ending on the last day of one of the periods
set forth above, as selected by the Borrower in a Conversion
Request; provided that all of the foregoing provisions
relating to Interest Periods are subject to the following:
(a) if any Interest Period with respect to a
LIBOR Rate Loan would otherwise end on a day that is
not a LIBOR Business Day, that Interest Period shall be
extended to the next succeeding LIBOR Business Day
unless the result of such extension would be to carry
such Interest Period into another calendar month, in
which event such Interest Period shall end on the
immediately preceding LIBOR Business Day;
(b) if any Interest Period with respect to a Base
Rate Loan would end on a day that is not a Business
Day, that Interest Period shall end on the next
succeeding Business Day;
(c) if the Borrower shall fail to give notice as
provided in Section 2.7, the Borrower shall be deemed
to have requested a conversion of the affected LIBOR
Rate Loan to a Base Rate Loan and the continuance of
all Base Rate Loans as Base Rate Loans on the last day
of the then current Interest Period with respect
thereto;
(d) any Interest Period relating to any LIBOR
Rate Loan that begins on the last LIBOR 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
LIBOR Business Day of a calendar month; and
(e) no Interest Period shall extend beyond the
Revolving Credit Loan Maturity Date (if comprising a
Revolving Credit Loan) or the Term Loan Maturity Date
(if comprising the Term Loan or a portion thereof).
Interest Rate Protection Agreements. Any interest rate
protection agreement, interest rate swap, interest rate cap
or other interest rate hedge arrangement entered into with
one of the Banks.
Investments. All expenditures made and all liabilities
incurred (contingently or otherwise) for the acquisition of
stock or Indebtedness of, or for loans, advances, capital
contributions or transfers of property to, or in respect of
any guaranties (or other obligations as described under
Indebtedness), or obligations of, any Person. In
determining the aggregate amount of Investments outstanding
at any particular time: (i) the amount of any Investment
represented by a guaranty shall be taken at not less than
the principal amount of the obligations guaranteed and still
outstanding; (ii) there shall be included as an Investment
all interest accrued with respect to Indebtedness
constituting an Investment unless and until such interest is
paid; (iii) there shall be deducted in respect of each such
Investment any amount received as a return of capital (but
only by repurchase, redemption, retirement, repayment,
liquidating dividend or liquidating distribution); (iv)
there shall not be deducted in respect of any Investment any
amounts received as earnings on such Investment, whether as
dividends, interest or otherwise, except that accrued
interest included as provided in the foregoing clause (ii)
may be deducted when paid; and (v) there shall not be
deducted from the aggregate amount of Investments any
decrease in the value thereof.
Letter of Credit. See Section 5.1.1.
Letter of Credit Application. See Section 5.6.
Letter of Credit Fee. See Section 5.1.1.
Letter of Credit Participation. See Section 5.1.4.
Level I Status. With respect to (i) the Revolving
Credit Loans, the Status that exists on any date if on such
date the Borrower has a long-term senior secured debt or
corporate credit rating (whether or not published) of BBB or
better by S&P and, unless the Borrower is then unrated by
Moody s, Baa1 or better by Moody's, and (ii) the Term Loan,
the Status that exists on any date if on such date the
Borrower has a long-term senior secured debt or corporate
credit rating (whether or not published) of BBB- or better
by S&P and, unless the Borrower is then unrated by Moody's,
Baa2 or better by Moody's.
Level II Status. With respect to (i) the Revolving
Credit Loans, the Status that exists on any date if on such
date Level I Status does not exist, and the Borrower has a
long-term senior secured debt or corporate credit rating
(whether or not published) of BBB- or better by S&P and,
unless the Borrower is then unrated by Moody's, Baa2 or
better by Moody's, and (ii) the Term Loan, the Status that
exists on any date if on such date Level I Status does not
exist, and the Borrower has a long-term senior secured debt
or corporate credit rating (whether or not published) of BB-
or better by S&P and, unless the Borrower is then unrated by
Moody's, Baa3 or better by Moody's.
Level III Status. With respect to (i) the Revolving
Credit Loans, the Status that exists on any date if on such
date neither Level I nor Level II Status exists, and the
Borrower has a long-term senior secured debt or corporate
credit rating (whether or not published) of BB+ or better by
S&P and, unless the Borrower is then unrated by Moody's, Ba1
or better by Moody's, and (ii) the Term Loan, the Status
that exists on any date if on such date neither Level I nor
Level II Status exists, or if the Status is lower than Level
II.
Level IV Status. With respect to the Revolving Credit
Loans, the Status that exists on any date if on such date
neither Level I nor Level II Status nor Level III Status
exists, and the Borrower has a long-term senior secured debt
or corporate credit rating (whether or not published) of BB
or better by S&P and, unless the Borrower is then unrated by
Moody's, Ba2 or better by Moody's.
Level V Status. With respect to the Revolving Credit
Loans, the Status that exists on any date if on such date
neither Level I nor Level II Status nor Level III Status not
Level IV Status exists, and the Borrower has a long-term
senior secured debt or corporate credit rating (whether or
not published) of BB- or better by S&P and, unless the
Borrower is then unrated by Moody's, Ba3 or better by
Moody's.
Level VI Status. With respect to the Revolving Credit
Loans, the Status that exists on any date if on such date
neither Level I nor Level II Status nor Level III Status nor
Level IV nor Level V Status exists.
LIBOR Business Day. Any day on which commercial banks
are open for international business (including dealings in
Dollar deposits) in Boston and London or such other
eurodollar interbank market as may be selected by the
Administrative Agent in its sole discretion acting in good
faith.
LIBOR Lending Office. Initially, the office of each
Bank designated as such in Schedule 1 hereto; thereafter,
and, after such Bank has provided the Borrower and the Agent
with written notice of a change in the office, such other
office of such Bank, that shall be making or maintaining
LIBOR Rate Loans.
LIBOR Rate. For any Interest Period with respect to a
LIBOR Rate Loan, the rate of interest equal to (a) the rate
determined by the Agent at which Dollar deposits for such
Interest Period are offered based on information presented
on Telerate Page 3750 as of 11:00 a.m. London time on the
second LIBOR Business Day prior to the first day of such
Interest Period, divided by (b) a number equal to 1.00 minus
the LIBOR Reserve Rate, if applicable.
LIBOR Rate Loans. Revolving Credit Loans and all or
any portion of the Term Loan bearing interest calculated by
reference to the LIBOR Rate plus the Applicable Margin.
LIBOR Reserve Rate. For any day with respect to a
LIBOR Rate Loan, the maximum rate (expressed as a decimal)
at which any Bank subject thereto would be required to
maintain reserves under Regulation D of the Board of
Governors of the Federal Reserve System (or any successor or
similar regulations relating to such reserve requirements)
against "Eurocurrency Liabilities" (as that term is used in
Regulation D), if such liabilities were outstanding. The
LIBOR Reserve Rate shall be adjusted automatically on and as
of the effective date of any change in the LIBOR Reserve
Rate.
Loan Documents. This Credit Agreement, the Notes, the
Letter of Credit Applications, the Letters of Credit, the
Security Documents, the Chase Assignment and the Bangor
Energy Intercreditor Agreement.
Loan Request. See Section 2.6.
Loans. The Revolving Credit Loans and the Term Loan.
Majority Banks. As of any date, the Banks holding at
least sixty-six and two-thirds percent (66 2/3%) of the
outstanding principal amount of the Notes on such date; and
if no such principal is outstanding, the Banks whose
aggregate Commitments constitutes at least sixty-six and
two-thirds percent (66 2/3%) of the Total Commitment.
Maximum Drawing Amount. The maximum aggregate amount
that the beneficiaries may at any time draw under
outstanding Letters of Credit, as such aggregate amount may
be reduced from time to time pursuant to the terms of the
Letters of Credit.
Moody's. Moody's Investors Service, Inc. and its
successors.
Mortgage. The Mortgage and Deed of Trust of the
Borrower to City Bank Farmers Trust Company (of which
Citibank, N.A., a national banking association, is the
successor), as trustee, dated as of July 1, 1936, as amended
and supplemented as of the Closing Date.
Multiemployer Plan. Any multiemployer plan within the
meaning of Section 3(37) of ERISA maintained or contributed
to by the Borrower or any ERISA Affiliate.
Notes. The Term Notes and the Revolving Credit Notes.
Obligations. All indebtedness, obligations and
liabilities of the Borrower to any of the Banks and the
Administrative Agent, individually or collectively, existing
on the date of this Credit Agreement or arising thereafter,
direct or indirect, joint or several, absolute or
contingent, matured or unmatured, liquidated or
unliquidated, secured or unsecured, arising by contract,
operation of law or otherwise, in each case arising or
incurred under this Credit Agreement or any of the other
Loan Documents or in respect of any of the Loans made or
Reimbursement Obligations incurred or any of the Notes,
Letter of Credit Application, Letter of Credit or other
instruments at any time evidencing any thereof, or Interest
Rate Protection Agreements.
outstanding. With respect to the Loans, the aggregate
unpaid principal thereof as of any date of determination.
PBGC. The Pension Benefit Guaranty Corporation created
by Section 4002 of ERISA and any successor entity or
entities having similar responsibilities.
PERC. Penobscot Energy Recovery Company Limited
Partnership, a Maine limited partnership.
PERC Closing Date. The date on which the principal
agreements relating to the PERC Restructuring shall have
been executed by each of the parties thereto.
PERC Contract. The power purchase agreement dated as
of June 21, 1984, as amended, between the Borrower and PERC.
PERC Restructuring. The restructuring of the power
purchase agreement between the Borrower and PERC in
connection with the refinancing by PERC of its waste-to-
energy facility in Orrington, Maine through a series of
agreements among the Borrower, PERC and certain other
parties thereto, pursuant to the terms of which the Borrower
will become obligated to make an initial payment to PERC of
$6,000,000 on the PERC Closing Date.
Permitted Liens. Liens, security interests and other
encumbrances permitted by Section 10.2.
Person. Any individual, corporation, partnership,
trust, unincorporated association, business, or other legal
entity, and any government or any governmental agency or
political subdivision thereof.
Pledge Agreement. The Amended and Restated Bond Pledge
and Security Agreement dated as of the date hereof, executed
by the Borrower in favor of the Administrative Agent for the
benefit of the Banks.
Pollution Control Bonds. The revenue bonds designated
The Industrial Development Authority of the State of New
Hampshire Variable Rate Demand Pollution Control Revenue
Bonds (Bangor Hydro-Electric Company Project) Series 1983.
Preferred Stock. Any and all shares, interest,
participations or other equivalents (however designated) of
capital stock of a corporation, excluding common stock, any
and all equivalent ownership interests in a Person (other
than a corporation), and any and all warrants or options to
purchase any of the foregoing.
Pricing Table:
Revolving Credit Loans Term Loan
| |
| |
Status Applicable Applicable| Applicable Applicable| Applicable Commitment
LIBOR Base Rate LIBOR Base Rate L/C Rate Fee Rate
Margin Margin Margin Margin (per (per annum)
(per (per (per (per annum)
annum) annum) annum) annum)
Level I 0.75% 0.00% 2.00% 1.00 0.75% 0.25%
Level
II 1.25% 0.25% 2.50% 1.50% 1.25% 0.375%
Level
III 1.75% 0.75% 3.50% 1.50% 1.75% 0.50%
Level
IV 2.00% 1.00% 2.00% 0.50%
Level
V 2.50% 1.50% 2.50% 0.625%
Level
VI 3.50% 1.50% 3.50% 0.625%
Rate Schedule Agreement. That certain agreement dated
October 30, 1997 by and between the Borrower and Bangor
Energy Resale, Inc. pursuant to which the Borrower has
agreed to provide energy to Bangor Energy Resale, Inc. in
connection with the servicing of the Unitil Contract.
Record. The grid attached to a Note, or the
continuation of such grid, or any other similar record,
including computer records, maintained by any Bank with
respect to any Loan referred to in such Note.
Register. See Section 19.3.
Reimbursement Obligation. The Borrower's obligation to
reimburse the Administrative Agent and the Banks on account
of any drawing under any Letter of Credit as provided in
Section 5.2.
Related Fund. With respect to any Bank which is a fund
that invests in loans, any other fund that invests in loans
and is managed by the same investment advisor as such Bank
or by an Affiliate of such Bank.
Release. Shall have the meaning specified in the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. Section Section 9601 et
seq. ("CERCLA") and the term "Disposal" (or "Disposed")
shall have the meaning specified in the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. Section
Section 6901 et seq. ("RCRA") and regulations promulgated
thereunder; provided, that in the event that either CERCLA
or RCRA is amended so as to broaden the meaning of any term
defined thereby, such broader meaning shall apply as of the
effective date of such amendment and provided further, that
to the extent that the laws of the State of Maine establish
a meaning for "Release" or "Disposal" which is broader than
specified in either CERCLA or RCRA, such broader meaning
shall apply.
Revolving Credit Loan Maturity Date. June 29, 2001.
Revolving Credit Loans. Revolving credit loans made or
to be made by the Banks to the Borrower pursuant to Section
2.
Revolving Credit Note Record. A Record with respect to
a Revolving Credit Note.
Revolving Credit Notes. See Section 2.4.
S & P. Standard & Poor s Ratings Group and its
successors.
Second Mortgage Bonds. The bonds issued pursuant to
the General and Refunding Mortgage Indenture.
Security Documents. The Pledge Agreement, the
Mortgage, the Supplemental Indenture, the Collateral Bonds
and the Bangor Energy Stock Pledge and all other instruments
and documents, required to be executed or delivered pursuant
to any Security Document.
Service Agreement. The Service Agreement dated as of
March 31, 1998 between the Borrower and Bangor Energy
Resale, Inc., as amended.
Settlement. The making or receiving of payments, in
immediately available funds, by the Banks, to the extent
necessary to cause each Bank's actual share of the
outstanding amount of Revolving Credit Loans (after giving
effect to any Loan Request) to be equal to such Bank's
Commitment Percentage of the outstanding amount of such
Revolving Credit Loans (after giving effect to any Loan
Request), in any case where, prior to such event or action,
the actual share is not so equal.
Settlement Amount. See Section 2.9.1.
Settlement Date. (a) The Drawdown Date relating to any
Loan Request, (b) Friday of each week, or if a Friday is not
a Business Day, the Business Day immediately following such
Friday, (c) at the option of the Administrative Agent, on
any Business Day following a day on which the account
officers of the Administrative Agent active upon the
Borrower's account become aware of the existence of an Event
of Default, (d) any Business Day on which the amount of
Revolving Credit Loans outstanding from BKB plus BKB's
Commitment Percentage of the sum of the Maximum Drawing
Amount and any Unpaid Reimbursement Obligations is equal to
or greater than BKB's Commitment Percentage of the Total
Commitment, (e) the Business Day immediately following any
Business Day on which the amount of Revolving Credit Loans
outstanding increases or decreases by more than $500,000 as
compared to the previous Settlement Date, (f) any day on
which any conversion of a Base Rate Loan to a LIBOR Rate
Loan occurs, or (g) any Business Day on which (i) the amount
of outstanding Revolving Credit Loans decreases and (ii) the
amount of the Administrative Agent's Revolving Credit Loans
outstanding equals zero Dollars ($0).
Settling Bank. See Section 2.9.1.
Status. The existence of Level I Status, Level II
Status, Level III Status, Level IV Status, Level V Status or
Level VI Status, as the case may be.
Subsidiary. Any corporation, association, trust, or
other business entity of which the designated parent shall
at any time own directly or indirectly through a Subsidiary
or Subsidiaries at least a majority (by number of votes) of
the outstanding Voting Stock.
Substantial Part. With respect to any Person, refers
to assets sold, leased or otherwise transferred at any time
on or after January 1, 1997 pursuant to any one or more
transactions (whether or not related) which, in the
aggregate (including any assets sold, leased or otherwise
transferred by any Subsidiary of such Person during such
period), have a fair market value, or yield gross proceeds,
in excess of $5,000,000 in any a calendar year, excluding
any such transaction in the ordinary course of business
pursuant to which equipment is sold and replaced with
equipment having an equivalent or higher value within 30
days after such sale. It is understood that (i) the
transfer of the Unitil Contract pursuant to the Unitil
Contract Assignment shall be disregarded for the purposes of
this definition, but that contract rights and receivables
shall otherwise constitute "assets" for the purposes of this
definition, and (ii) the Generating Asset Transactions shall
be disregarded for the purposes of this definition.
Supplemental Indenture. See Section 12.7.
Telerate Page 3750. The display of interest settlement
rates (commonly known as LIBOR) for Dollar deposits in
London designated as Page 3750 (British Bankers Association
(BBA) LIBOR rates) of the Dow Jones Markets Services (or any
other page that replaces Page 3750 and displays BBA London
interbank settlement rates for Dollar deposits).
Term Loan. The term loan made or to be made by the
Banks to the Borrower on the Closing Date in the aggregate
principal amount of $45,000,000 subject to the conditions
stated in Section 4.1.
Term Loan Exposure. With respect to each Bank, the
amount set forth on Schedule 1 hereto as the amount of such
Bank's commitment to make Term Loans to the Borrower, as the
same may be reduced from time to time; or if such commitment
is terminated pursuant to the provisions hereof, zero.
Term Loan Percentage. With respect to each Bank, the
percentage set forth on Schedule 1 hereto as such Bank's
percentage of the aggregate Term Loan Exposure of all of the
Banks.
Term Loan Maturity Date. June 29, 2000.
Term Notes. See Section 4.2.
Term Note Record. A Record with respect to a Term
Note.
Total Commitment. The sum of the Commitments of the
Banks, as in effect from time to time.
Type. As to any Revolving Credit Loan or all or any
portion of the Term Loan, its nature as a Base Rate Loan or
a LIBOR Rate Loan.
Uniform Customs. With respect to any Letter of Credit,
the Uniform Customs and Practice for Documentary Credits
(1993 Revision), International Chamber of Commerce
Publication No. 500 or any successor version thereto adopted
by the Administrative Agent in the ordinary course of its
business as a letter of credit issuer and in effect at the
time of issuance of such Letter of Credit.
Unitil Contract. The Power Sales Agreement between
Unitil Power Corp. and the Borrower, dated March 26, 1986
and amended by the Amendment to March 26, 1986 Power Sales
Agreement dated April 29, 1993 and the Second Amendment to
Power Sales Agreement dated March 1, 1995, which Unitil
Contract has been assigned by the Borrower to Bangor Energy
Resale, Inc. on or prior to March 31, 1998 pursuant to the
Unitil Contract Assignment.
Unitil Contract Assignment. The Assignment and
Assumption Agreement between the Borrower and Bangor Energy
Resale, Inc., dated as of March 31, 1998, pursuant to which
the Borrower assigned all of its right, title and
obligations under the Unitil Contract to Bangor Energy
Resale, Inc.
Unpaid Reimbursement Obligation. Any Reimbursement
Obligation for which the Borrower does not reimburse the
Administrative Agent and the Banks on the date specified in,
and in accordance with, Section 5.2.
Voting Stock. Stock or similar interests, of any class
or classes (however designated), the holders of which are at
the time entitled, as such holders, to vote for the election
of a majority of the directors (or persons performing
similar functions) of the corporation, association, trust or
other business entity involved, whether or not the right so
to vote exists by reason of the happening of a contingency.
Section 1.2. Rules of Interpretation.
(a) A reference to any document or agreement
shall include such document or agreement as amended,
modified or supplemented from time to time in
accordance with its terms and the terms of this Credit
Agreement.
(b) The singular includes the plural and the
plural includes the singular.
(c) A reference to any law includes any amendment
or modification to such law.
(d) A reference to any Person includes its
permitted successors and permitted assigns.
(e) Accounting terms not otherwise defined herein
have the meanings assigned to them by GAAP applied on a
consistent basis by the accounting entity to which they
refer.
(f) The words "include", "includes" and
"including" are not limiting.
(g) All terms not specifically defined herein or
by GAAP, which terms are defined in the Uniform
Commercial Code as in effect in the State of New York,
have the meanings assigned to them therein, with the
term "instrument" being that defined under Article 9 of
the Uniform Commercial Code.
(h) Reference to a particular "Section " refers
to that Section of this Credit Agreement unless
otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and
words of like import shall refer to this Credit
Agreement as a whole and not to any particular Section
or subdivision of this Credit Agreement.
(j) Unless otherwise expressly indicated, in the
computation of periods of time from a specified date to
a later specified date, the word "from" means "from and
including," the words "to" and "until" each mean "to
but excluding," and the word "through" means "to and
including."
(k) This Credit Agreement and the other Loan
Documents may use several different limitations, tests
or measurements to regulate the same or similar
matters. All such limitations, tests and measurements
are, however, cumulative and are to be performed in
accordance with the terms thereof.
(l) This Credit Agreement and the other Loan
Documents are the result of negotiation among, and have
been reviewed by counsel to, among others, the
Administrative Agent and the Borrower and are the
product of discussions and negotiations among all
parties. Accordingly, this Credit Agreement and the
other Loan Documents are not intended to be construed
against the Administrative Agent or any of the Banks
merely on account of the Administrative Agent's or any
Bank's involvement in the preparation of such
documents.
Section 2. THE REVOLVING CREDIT FACILITY.
Section 2.1. Commitment to Lend.
Subject to the terms and conditions set forth in this
Credit Agreement, each of the Banks severally agrees to lend
to the Borrower and the Borrower may borrow, repay, and
reborrow from time to time from the Closing Date up to but
not including the Revolving Credit Loan Maturity Date upon
notice by the Borrower to the Administrative Agent given in
accordance with Section 2.6, such sums as are requested by
the Borrower up to a maximum aggregate amount outstanding
(after giving effect to all amounts requested) at any one
time equal to such Bank's Commitment minus such Bank's
Commitment Percentage of the sum of the Maximum Drawing
Amount and all Unpaid Reimbursement Obligations, provided
that the sum of the outstanding amount of the Revolving
Credit Loans (after giving effect to all amounts requested)
plus the Maximum Drawing Amount and all Unpaid Reimbursement
Obligations shall not at any time exceed the Total
Commitment. The Revolving Credit Loans shall be made pro
rata in accordance with each Bank's Commitment Percentage.
Each request for a Revolving Credit Loan hereunder shall
constitute a representation and warranty by the Borrower
that the conditions set forth in Section 12 and Section 13,
in the case of the initial Revolving Credit Loans to be made
on the Closing Date, and Section 13, in the case of all
other Revolving Credit Loans, have been satisfied on the
date of such request.
Section 2.2. Commitment Fee.
The Borrower agrees to pay to the Administrative Agent
for the accounts of the Banks in accordance with their
respective Commitment Percentages a commitment fee
calculated at the Commitment Fee Rate on the average daily
amount during each calendar quarter or portion thereof from
the date hereof to the Revolving Credit Loan Maturity Date
by which the Total Commitment minus the sum of the Maximum
Drawing Amount and all Unpaid Reimbursement Obligations
exceeds the outstanding amount of Revolving Credit Loans
during such calendar quarter. The commitment fee shall be
payable quarterly in arrears on the first day of each
calendar quarter for the immediately preceding calendar
quarter commencing on the first such date following the date
hereof, with a final payment on the Revolving Credit
Maturity Date or any earlier date on which the Commitments
shall terminate.
Section 2.3. Reduction of Total Commitment.
The Borrower shall have the right at any time and from
time to time upon five (5) Business Days prior written
notice to the Administrative Agent to reduce by $5,000,000
or in integral multiples of $1,000,000 in excess of
$5,000,000 or terminate entirely the Total Commitment,
whereupon the Commitments of the Banks shall be reduced pro
rata in accordance with their respective Commitment
Percentages of the amount specified in such notice or, as
the case may be, terminated. Promptly after receiving any
notice of the Borrower delivered pursuant to this Section
2.3, the Administrative Agent will notify the Banks of the
substance thereof. Upon the effective date of any such
reduction or termination, the Borrower shall pay to the
Administrative Agent for the respective accounts of the
Banks the full amount of any commitment fee then accrued on
the amount of the reduction. No reduction or termination of
the Commitments may be reinstated.
Section 2.4. The Revolving Credit Notes.
(a) The Revolving Credit Loans shall be evidenced
by separate amended and restated promissory notes of
the Borrower in substantially the form of Exhibit A
hereto (each a "Revolving Credit Note"), dated as of
the Closing Date or the effective date of any future
assignment made pursuant to Section 19 hereof and
completed with appropriate insertions. One Revolving
Credit Note shall be payable to the order of each Bank
in a principal amount equal to such Bank's Commitment
and representing the obligation of the Borrower to pay
to such Bank such principal amount or, if less, the
outstanding amount of all Revolving Credit Loans made
by such Bank, plus interest accrued thereon, as set
forth below. The Borrower irrevocably authorizes each
Bank to make or cause to be made, at or about the time
of the Drawdown Date of any Revolving Credit Loan or at
the time of receipt of any payment of principal on such
Bank's Revolving Credit Note, an appropriate notation
on such Bank's Revolving Credit Note Record reflecting
the making of such Revolving Credit Loan or (as the
case may be) the receipt of such payment. The
outstanding amount of the Revolving Credit Loans set
forth on such Bank's Revolving Credit Note Record
shall, absent manifest error, be prima facie evidence
of the principal amount thereof owing and unpaid to
such Bank, but the failure to record, or any error in
so recording, any such amount on such Bank's Revolving
Credit Note Record shall not limit or otherwise affect
the obligations of the Borrower hereunder or under any
Revolving Credit Note to make payments of principal of
or interest on any Revolving Credit Note when due.
(b) Upon receipt of an affidavit of an officer of
any Bank as to the loss, theft, destruction or
mutilation of such Bank s Revolving Credit Note, and,
in the case of any such loss, theft, destruction or
mutilation, upon surrender and cancellation of such
Revolving Credit Note, the Borrower will issue, in lieu
thereof, a replacement Revolving Credit Note for such
Bank in the same principal amount thereof and otherwise
of like tenor.
Section 2.5. Interest on Revolving Credit Loans.
Except as otherwise provided in Section 6.10,
(a) Each Base Rate Loan shall bear interest for
the period commencing with the Drawdown Date thereof
and ending on the last day of the Interest Period with
respect thereto at the Base Rate plus the Applicable
Margin.
(b) Each LIBOR Rate Loan shall bear interest for
the period commencing with the Drawdown Date thereof
and ending on the last day of the Interest Period with
respect thereto at the LIBOR Rate plus the Applicable
Margin determined for such Interest Period.
(c) The Borrower promises to pay interest on each
Revolving Credit Loan in arrears on each Interest
Payment Date with respect thereto.
Section 2.6. Requests for Revolving Credit Loans. The
Borrower shall give to the Administrative Agent written
notice in the form of Exhibit B hereto (or telephonic notice
confirmed in a writing in the form of Exhibit B hereto) of
each Revolving Credit Loan requested hereunder (a "Loan
Request") no later than (i) 10:00 a.m.(Boston time) on the
Business Day of the proposed Drawdown Date of any Base Rate
Loan and (ii) 12:00 noon (Boston time) three (3) LIBOR
Business Days prior to the proposed Drawdown Date of any
LIBOR Rate Loan. Each such notice shall specify (A) the
principal amount of the Revolving Credit Loan requested, (B)
the proposed Drawdown Date of such Revolving Credit Loan,
(C) in the case of LIBOR Rate Loans the Interest Period for
such Revolving Credit Loan and (D) the Type of such
Revolving Credit Loan. Promptly upon receipt of any such
notice, the Administrative Agent shall notify each of the
Banks thereof. Each Loan Request shall be irrevocable and
binding on the Borrower and shall obligate the Borrower to
accept the Revolving Credit Loan requested from the Banks on
the proposed Drawdown Date. Each Loan Request shall be in a
minimum aggregate amount of $500,000 or an integral multiple
thereof.
Section 2.7. Conversion Options.
Section 2.7.1. Conversion to Different Type of
Revolving Credit Loan.
The Borrower may elect from time to time to convert any
outstanding Revolving Credit Loan to a Revolving Credit Loan
of another Type, provided that (i) with respect to any such
conversion of a Revolving Credit Loan to a Base Rate Loan,
the Borrower shall give the Administrative Agent at least
two (2) Business Days prior written notice of such election;
(ii) with respect to any such conversion of a Base Rate Loan
to a LIBOR Rate Loan, the Borrower shall give the
Administrative Agent at least three (3) LIBOR Business Days
prior written notice of such election; (iii) with respect to
any such conversion of a LIBOR Rate Loan into a Revolving
Credit Loan of another Type, such conversion shall only be
made on the last day of the Interest Period with respect
thereto and (iv) no Loan may be converted into a LIBOR Rate
Loan when any Default or Event of Default has occurred and
is continuing or if such conversion is not permitted by
Section 2.7.3. On the date on which such conversion is
being made each Bank shall take such action as is necessary
to transfer its Commitment Percentage of such Revolving
Credit Loans to its Domestic Lending Office or its LIBOR
Lending Office, as the case may be. All or any part of
outstanding Revolving Credit Loans of any Type may be
converted into a Revolving Credit Loan of another Type as
provided herein, provided that any partial conversion shall
be in an aggregate principal amount of $500,000 or an
integral multiple thereof. Each Conversion Request relating
to the conversion of a Revolving Credit Loan to a LIBOR Rate
Loan shall be irrevocable by the Borrower.
Section 2.7.2. Continuation of Type of Revolving
Credit Loan.
Any Revolving Credit Loan of any Type may be continued as a
Revolving Credit Loan of the same Type upon the expiration
of an Interest Period with respect thereto by compliance by
the Borrower with the notice provisions contained in Section
2.7.1; provided that no LIBOR Rate Loan may be continued as
such when any Event of Default has occurred and is
continuing, but shall be automatically converted to a Base
Rate Loan on the last day of the first Interest Period
relating thereto ending during the continuance of any Event
of Default of which officers of the Administrative Agent
active upon the Borrower's account have actual knowledge.
In the event that the Borrower fails to provide any such
notice with respect to the continuation of any LIBOR Rate
Loan as such, then such LIBOR Rate Loan shall be
automatically converted to a Base Rate Loan on the last day
of such Interest Period. The Administrative Agent shall
notify the Banks promptly when any such automatic conversion
contemplated by this Section 2.7 is scheduled to occur.
Section 2.7.3. LIBOR Rate Loans.
Any conversion to or from LIBOR Rate Loans shall
be in such amounts and be made pursuant to such
elections so that, after giving effect thereto, the
aggregate principal amount of all LIBOR Rate Loans
having the same Interest Period shall not be less than
$500,000 or an integral multiple thereof.
Section 2.8. Funds for Revolving Credit Loan.
Section 2.8.1. Funding Procedures.
Not later than 11:00 a.m. (Boston time) on the
proposed Drawdown Date of any Revolving Credit Loans,
each of the Banks will make available to the
Administrative Agent, at the Administrative Agent's
Head Office, in immediately available funds, the amount
of such Bank's Commitment Percentage of the amount of
the requested Revolving Credit Loans. Upon receipt
from each Bank of such amount, and upon receipt of the
documents required by Section Section 12 and 13 and the
satisfaction of the other conditions set forth therein,
to the extent applicable, the Administrative Agent will
make available to the Borrower the aggregate amount of
such Revolving Credit Loans made available to the
Administrative Agent by the Banks. The failure or
refusal of any Bank to make available to the
Administrative Agent at the aforesaid time and place on
any Drawdown Date the amount of its Commitment
Percentage of the requested Revolving Credit Loans
shall not relieve any other Bank from its several
obligation hereunder to make available to the
Administrative Agent the amount of such other Bank's
Commitment Percentage of any requested Revolving Credit
Loans.
Section 2.8.2. Advances by Administrative
Agent.
The Administrative Agent may, unless notified to
the contrary by any Bank prior to a Drawdown Date,
assume that such Bank has made available to the
Administrative Agent on such Drawdown Date the amount
of such Bank's Commitment Percentage of the Revolving
Credit Loans to be made on such Drawdown Date, and the
Administrative Agent may (but it shall not be required
to), in reliance upon such assumption, make available
to the Borrower a corresponding amount. If any Bank
makes available to the Administrative Agent such amount
on a date after such Drawdown Date, such Bank shall pay
to the Administrative Agent on demand an amount equal
to the product of (i) the average computed for the
period referred to in clause (iii) below, of the
weighted average interest rate paid by the
Administrative Agent for federal funds acquired by the
Administrative Agent during each day included in such
period, times (ii) the amount of such Bank's Commitment
Percentage of such Revolving Credit Loans, times (iii)
a fraction, the numerator of which is the number of
days that elapse from and including such Drawdown Date
to the date on which the amount of such Bank's
Commitment Percentage of such Revolving Credit Loans
shall become immediately available to the
Administrative Agent, and the denominator of which is
365. A statement of the Administrative Agent submitted
to such Bank with respect to any amounts owing under
this paragraph shall be prima facie evidence of the
amount due and owing to the Administrative Agent by
such Bank. If the amount of such Bank's Commitment
Percentage of such Revolving Credit Loans is not made
available to the Administrative Agent by such Bank
within three (3) Business Days following such Drawdown
Date, the Administrative Agent shall be entitled to
recover such amount from the Borrower on demand, with
interest thereon at the rate per annum applicable to
the Revolving Credit Loans made on such Drawdown Date.
Section 2.9. Settlements.
Section 2.9.1. General.
On each Settlement Date, the Administrative Agent
shall, not later than 11:00 a.m. (Boston time), give
telephonic or facsimile notice (i) to the Banks and the
Borrower of the respective outstanding amount of
Revolving Credit Loans made by the Administrative Agent
on behalf of the Banks from the immediately preceding
Settlement Date through the close of business on the
prior day and the amount of any LIBOR Rate Loans to be
made (following the giving of notice pursuant to
Section 2.6.1(ii)) on such date pursuant to a Loan
Request and (ii) to the Banks of the amount (a
"Settlement Amount") that each Bank (a "Settling Bank")
shall pay to effect a Settlement of any Revolving
Credit Loan. A statement of the Administrative Agent
submitted to the Banks and the Borrower or to the Banks
with respect to any amounts owing under this Section
2.9 shall be prima facie evidence of the amount due and
owing. Each Settling Bank shall, not later than 3:00
p.m. (Boston time) on such Settlement Date, effect a
wire transfer of immediately available funds to the
Administrative Agent in the amount of the Settlement
Amount for such Settling Bank. All funds advanced by
any Bank as a Settling Bank pursuant to this Section
2.9 shall for all purposes be treated as a Revolving
Credit Loan made by such Settling Bank to the Borrower
and all funds received by any Bank pursuant to this
Section 2.9 shall for all purposes be treated as
repayment of amounts owed with respect to Revolving
Credit Loans made by such Bank. In the event that any
bankruptcy, reorganization, liquidation, receivership
or similar cases or proceedings in which the Borrower
is a debtor prevent a Settling Bank from making any
Revolving Credit Loan to effect a Settlement as
contemplated hereby, such Settling Bank will make such
dispositions and arrangements with the other Banks with
respect to such Revolving Credit Loans, either by way
of purchase of participations, distribution, pro tanto
assignment of claims, subrogation or otherwise as shall
result in each Bank's share of the outstanding
Revolving Credit Loans being equal, as nearly as may
be, to such Bank's Commitment Percentage of the
outstanding amount of the Revolving Credit Loans.
Section 2.9.2. Failure to Make Funds Available.
The Administrative Agent may, unless notified to
the contrary by any Settling Bank prior to a Settlement
Date, assume that such Settling Bank has made or will
make available to the Administrative Agent on such
Settlement Date the amount of such Settling Bank's
Settlement Amount, and the Administrative Agent may
(but it shall not be required to), in reliance upon
such assumption, make available to the Borrower a
corresponding amount. If any Settling Bank makes
available to the Administrative Agent such amount on a
date after such Settlement Date, such Settling Bank
shall pay to the Administrative Agent on demand an
amount equal to the product of (i) the average computed
for the period referred to in clause (iii) below, of
the weighted average interest rate paid by the
Administrative Agent for federal funds acquired by the
Administrative Agent during each day included in such
period, times (ii) the amount of such Settlement
Amount, times (iii) a fraction, the numerator of which
is the number of days that elapse from and including
such Settlement Date to the date on which the amount of
such Settlement Amount shall become immediately
available to the Administrative Agent, and the
denominator of which is 360. A statement of the
Administrative Agent submitted to such Settling Bank
with respect to any amounts owing under this Section
2.9.2 shall be prima facie evidence of the amount due
and owing to the Administrative Agent by such Settling
Bank. If such Settling Bank's Settlement Amount is not
made available to the Administrative Agent by such
Settling Bank within three (3) Business Days following
such Settlement Date, the Administrative Agent shall be
entitled to recover such amount from the Borrower on
demand, with interest thereon at the rate per annum
applicable to the Revolving Credit Loans as of such
Settlement Date.
Section 2.9.3. No Effect on Other Banks.
The failure or refusal of any Settling Bank to
make available to the Administrative Agent at the
aforesaid time and place on any Settlement Date the
amount of such Settling Bank's Settlement Amount shall
not (i) relieve any other Settling Bank from its
several obligations hereunder to make available to the
Administrative Agent the amount of such other Settling
Bank's Settlement Amount or (ii) impose upon any Bank,
other than the Settling Bank so failing or refusing,
any liability with respect to such failure or refusal
or otherwise increase the Commitment of such other
Bank.
Section 3. REPAYMENT OF THE REVOLVING CREDIT LOANS.
Section 3.1. Maturity.
The Borrower promises to pay on the Revolving Credit
Loan Maturity Date, and there shall become absolutely due
and payable on the Revolving Credit Loan Maturity Date, all
of the Revolving Credit Loans outstanding on such date,
together with any and all accrued and unpaid interest
thereon.
Section 3.2. Mandatory Repayments of Revolving Credit Loans.
If at any time the sum of the outstanding amount of the
Revolving Credit Loans, the Maximum Drawing Amount and all
Unpaid Reimbursement Obligations exceeds the Total
Commitment, then the Borrower shall immediately pay the
amount of such excess to the Administrative Agent for the
respective accounts of the Banks for application: first, to
any Unpaid Reimbursement Obligations; second, to the
Revolving Credit Loans; and third, to provide to the
Administrative Agent cash collateral for Reimbursement
Obligations as contemplated by Section 5.2(b) and (c). Each
payment of any Unpaid Reimbursement Obligations or
prepayment of Revolving Credit Loans shall be allocated
among the Banks, in proportion, as nearly as practicable, to
each Reimbursement Obligation or (as the case may be) the
respective unpaid principal amount of each Bank's Revolving
Credit Note, with adjustments to the extent practicable to
equalize any prior payments or repayments not exactly in
proportion.
Section 3.3. Optional Repayments of Revolving Credit
Loans.
The Borrower shall have the right, at its election, to repay
the outstanding amount of the Revolving Credit Loans, as a
whole or in part, without premium or penalty (but subject to
Section 6.9), provided that the Borrower shall give the
Administrative Agent, no later than 10:00 a.m., Boston time,
at least five (5) Business Days prior written notice of any
proposed prepayment pursuant to this Section 3.3 of Base
Rate Loans, and five (5) LIBOR Business Days notice of any
proposed prepayment pursuant to this Section 3.3 of LIBOR
Rate Loans, in each case specifying the proposed date of
prepayment of Revolving Credit Loans and the principal
amount to be prepaid. Each such partial prepayment of the
Revolving Credit Loans shall be in an integral multiple of
$500,000, shall be accompanied by the payment of accrued
interest on the principal prepaid to the date of prepayment
and shall be applied, in the absence of instruction by the
Borrower, first to the principal of Base Rate Loans and then
to the principal of LIBOR Rate Loans, at the Administrative
Agent's option. Each partial prepayment shall be allocated
among the Banks, in proportion, as nearly as practicable, to
the respective unpaid principal amount of each Bank's
Revolving Credit Note, with adjustments to the extent
practicable to equalize any prior repayments not exactly in
proportion.
Section 4. THE TERM LOAN.
Section 4.1. Commitment to Lend.
Subject to the terms and conditions set forth in this
Credit Agreement, each Bank agrees to lend to the Borrower
on the Closing Date the amount listed on Schedule 1 hereto
of the principal amount of $45,000,000, provided that if the
PERC Closing Date shall not have occurred on or prior to the
Closing Date, $6,000,000 of such amount will be withheld and
will be provided to the Borrower on the PERC Closing Date,
provided that the Administrative Agent receives evidence
that the PERC Restructuring will be on terms substantially
the same as those set forth in the Borrower s 1997 annual
report, and provided further that the PERC Closing Date will
occur no later than December 31, 1998. If the PERC
Restructuring has not occurred on such terms by December 31,
1998, the principal amount stated above will be
automatically reduced to $39,000,000.
Section 4.2. The Term Notes.
(a) The Term Loan shall be evidenced by separate
amended and restated promissory notes of the Borrower
in substantially the form of Exhibit C hereto (each a
"Term Note"), dated the Closing Date or the effective
date of any future assignment made pursuant to Section
19 hereof and completed with appropriate insertions.
One Term Note shall be payable to the order of each
Bank in a principal amount equal to such Bank's Term
Loan Exposure set forth on Schedule 1 and representing
the obligation of the Borrower to pay to such Bank such
principal amount. The Borrower irrevocably authorizes
each Bank to make or cause to be made a notation on
such Bank's Term Note Record reflecting the original
principal amount of such Bank's Term Loan Exposure and,
at or about the time of such Bank's receipt of any
principal payment on such Bank's Term Note, an
appropriate notation on such Bank's Term Note Record
reflecting such payment. The aggregate unpaid amount
set forth on such Bank's Term Note Record shall, absent
manifest error, be prima facie evidence of the
principal amount thereof owing and unpaid to such Bank,
but the failure to record, or any error in so
recording, any such amount on such Bank's Term Note
Record shall not affect the obligations of the Borrower
hereunder or under any Term Note to make payments of
principal of and interest on any Term Note when due.
Notwithstanding the foregoing, the final principal
payment shall be adjusted to reflect any amount not
advanced to the Borrower.
(b) Upon receipt of an affidavit of an officer of
any Bank as to the loss, theft, destruction or
mutilation of such Bank's Term Note, and, in the case
of any such loss, theft, destruction or mutilation,
upon surrender and cancellation of such Term Note, the
Borrower will issue, in lieu thereof, a replacement
Term Note for such Bank in the same principal amount
thereof and otherwise of like tenor.
Section 4.3. Schedule of Installment Payments of
Principal of Term Loan.
The Borrower promises to pay to the Administrative Agent for
the account of the Banks the principal amount of the Term
Loan in three (3) consecutive payments of $3,000,000, such
installments to be due and payable on September 30, 1999,
December 31, 1999, and March 31, 2000, with a final payment
on the Term Loan Maturity Date in an amount equal to the
unpaid balance of the Term Loan.
Section 4.4. Optional Prepayment of Term Loan.
The Borrower shall have the right at any time to prepay
the Term Notes on or before the Term Loan Maturity Date, as
a whole, or in part, upon not less than three (3) Business
Days prior written notice to the Administrative Agent,
without premium or penalty, provided that (i) each partial
prepayment shall be in the principal amount of $5,000,000 or
in integral multiples of $1,000,000 in excess thereof, and
(ii) each partial prepayment shall be allocated among the
Banks, in proportion, as nearly as practicable, to the
respective outstanding amount of each Bank's Term Note, with
adjustments to the extent practicable to equalize any prior
prepayments not exactly in proportion. Any prepayment of
principal of the Term Loan shall include all interest
accrued to the date of prepayment and shall be applied
against the scheduled installments of principal due on the
Term Loan in the inverse order of maturity. No amount
repaid with respect to the Term Loan may be reborrowed.
Section 4.5. Mandatory Prepayments of Term Loan. Upon
the closing of a Generating Asset Transaction, the net cash
proceeds thereof received by the Borrower or any of its
Subsidiaries shall be used to prepay the Term Loan.
Any prepayment of principal of the Term Loan shall include
all interest accrued to the date of prepayment and shall be
applied against the scheduled installments of principal due
on the Term Loan in the inverse order of maturity.
Section 4.6. Interest on Term Loan.
Section 4.6.1. Interest Rates.
Except as otherwise provided in Section 6.10, the
Term Loan shall bear interest during each Interest
Period relating to all or any portion of the Term Loan
at the following rates, provided that no interest shall
accrue on the $6,000,000 holdback until the Banks have
advanced such amount:
(a) To the extent that all or any portion of
the Term Loan bears interest during such Interest
Period at the Base Rate, the Term Loan or such
portion shall bear interest during such Interest
Period at the Base Rate plus the Applicable
Margin.
(b) To the extent that all or any portion of
the Term Loan bears interest during such Interest
Period at the LIBOR Rate, the Term Loan or such
portion shall bear interest during such Interest
Period at the LIBOR Rate plus the Applicable
Margin.
The Borrower promises to pay interest on the Term Loan
or any portion thereof outstanding during each Interest
Period in arrears on each Interest Payment Date
applicable to such Interest Period.
Section 4.6.2. Notification by Borrower.
The Borrower shall notify the Administrative
Agent, such notice to be irrevocable, at least three
(3) LIBOR Business Days prior to the Drawdown Date of
the Term Loan if all or any portion of the Term Loan is
to bear interest at the LIBOR Rate. After the Term
Loan has been made, the provisions of Section 2.7 shall
apply mutatis mutandis with respect to all or any
portion of the Term Loan so that the Borrower may have
the same interest rate options with respect to all or
any portion of the Term Loan as it would be entitled to
with respect to the Revolving Credit Loans.
Section 4.6.3. Amounts, etc.
Any portion of the Term Loan bearing interest at
the LIBOR Rate relating to any Interest Period shall be
in the amount of $500,000 or an integral multiple
thereof. No Interest Period relating to the Term Loan
or any portion thereof bearing interest at the LIBOR
Rate shall extend beyond the date on which a regularly
scheduled installment payment of the principal of the
Term Loan is to be made unless a portion of the Term
Loan at least equal to the amount of such installment
payment has an Interest Period ending on such date or
is then bearing interest at the Base Rate.
Section 5. LETTERS OF CREDIT.
Section 5.1. Letter of Credit Commitments.
Section 5.1.1. Commitment to Issue Letters of
Credit.
Subject to the terms and conditions hereof and the
execution and delivery by the Borrower of a letter of credit
application on the Administrative Agent's customary form (a
"Letter of Credit Application"), the Administrative Agent on
behalf of the Banks and in reliance upon the agreement of
the Banks set forth in Section 5.1.4 and upon the
representations and warranties of the Borrower contained
herein, agrees, in its individual capacity, to issue, extend
and renew for the account of the Borrower one or more
standby or documentary letters of credit (individually, a
"Letter of Credit"), in such form as may be requested from
time to time by the Borrower and agreed to by the
Administrative Agent; provided, however, that, after giving
effect to such request, (a) the sum of the aggregate Maximum
Drawing Amount and all Unpaid Reimbursement Obligations
shall not exceed $15,000,000 at any one time and (b) the sum
of (i) the Maximum Drawing Amount on all Letters of Credit,
(ii) all Unpaid Reimbursement Obligations, and (iii) the
amount of all Revolving Credit Loans outstanding shall not
exceed the Total Commitment. Any Letter of Credit requested
by the Borrower hereunder shall not be required to be issued
by the Administrative Agent earlier than (x) three Business
Days after its receipt of a Letter of Credit Application
therefor in the case of Letters of Credit issued in support
of the Pollution Control Revenue Bonds or (y) one Business
Day after its receipt of a Letter of Credit Application
therefor in the case of Letters of Credit issued in
connection with fuel hedge contracts, and all such other
certificates, documents and other papers and information
relating thereto.
Section 5.1.2. Letter of Credit Applications.
Each Letter of Credit Application shall be
completed to the satisfaction of the Administrative
Agent. In the event that any provision of any Letter
of Credit Application shall be inconsistent with any
provision of this Credit Agreement, then the provisions
of this Credit Agreement shall, to the extent of any
such inconsistency, govern.
Section 5.1.3. Terms of Letters of Credit.
Each Letter of Credit issued, extended or renewed
hereunder shall, among other things, (i) provide for
the payment of sight drafts for honor thereunder when
presented in accordance with the terms thereof and when
accompanied by the documents described therein, and
(ii) have an expiry date no later than the Revolving
Credit Loan Maturity Date. Each Letter of Credit so
issued, extended or renewed shall be subject to the
Uniform Customs.
Section 5.1.4. Reimbursement Obligations of
Banks.
Each Bank severally agrees that it shall be
absolutely liable, without regard to the occurrence of
any Default or Event of Default or any other condition
precedent whatsoever, to the extent of such Bank's
Commitment Percentage, to reimburse the Administrative
Agent on demand for the amount of each draft paid by
the Administrative Agent under each Letter of Credit to
the extent that such amount is not reimbursed by the
Borrower pursuant to Section 5.2 (such agreement for a
Bank being called herein the "Letter of Credit
Participation" of such Bank).
Section 5.1.5. Participations of Banks.
Each such payment made by a Bank shall be treated
as the purchase by such Bank of a participating
interest in the Borrower's Reimbursement Obligation
under Section 5.2 in an amount equal to such payment.
Each Bank shall share in accordance with its
participating interest in any interest which accrues
pursuant to Section 5.2.
Section 5.2. Reimbursement Obligation of the
Borrower.
In order to induce the Administrative Agent to issue,
extend and renew each Letter of Credit and the Banks to
participate therein, the Borrower hereby agrees to reimburse
or pay to the Administrative Agent, for the account of the
Administrative Agent or (as the case may be) the Banks, with
respect to each Letter of Credit issued, extended or renewed
by the Administrative Agent hereunder,
(a) except as otherwise expressly provided in
Section 5.2(b) and (c), and upon notice thereof from
the Administrative Agent, on each date that any draft
presented under such Letter of Credit is honored by the
Administrative Agent, or the Administrative Agent
otherwise makes a payment with respect thereto, (i) the
amount paid by the Administrative Agent under or with
respect to such Letter of Credit, and (ii) the amount
of any taxes, fees, charges or other costs and expenses
whatsoever incurred by the Administrative Agent or any
Bank in connection with any payment made by the
Administrative Agent or any Bank under, or with respect
to, such Letter of Credit,
(b) upon the reduction (but not termination) of
the Total Commitment to an amount less than the Maximum
Drawing Amount, an amount equal to such difference,
which amount shall be held by the Administrative Agent
for the benefit of the Banks and the Administrative
Agent as cash collateral for all Reimbursement
Obligations, and
(c) upon the termination of the Total Commitment,
or the acceleration of the Reimbursement Obligations
with respect to all Letters of Credit in accordance
with Section 14, an amount equal to the then Maximum
Drawing Amount on all Letters of Credit, which amount
shall be held by the Administrative Agent for the
benefit of the Banks and the Administrative Agent as
cash collateral for all Reimbursement Obligations.
Each such payment shall be made to the Administrative Agent
at the Administrative Agent's Head Office in immediately
available funds. Interest on any and all amounts remaining
unpaid by the Borrower under this Section 5.2 at any time
from the date such amounts become due and payable (whether
as stated in this Section 5.2, by acceleration or otherwise)
until payment in full (whether before or after judgment)
shall be payable to the Administrative Agent on demand at
the rate specified in Section 6.10 for overdue principal on
the Revolving Credit Loans.
Section 5.3. Letter of Credit Payments.
If any draft shall be presented or other demand for payment
shall be made under any Letter of Credit, the Administrative
Agent shall promptly notify the Borrower of the date and
amount of the draft presented or demand for payment and of
the date and time when it expects to pay such draft or honor
such demand for payment. If the Borrower fails to reimburse
the Administrative Agent as provided in Section 5.2 on or
before the date that such draft is paid or other payment is
made by the Administrative Agent, the Administrative Agent
may at any time thereafter notify the Banks of the amount of
any such Unpaid Reimbursement Obligation. No later than
3:00 p.m. (Boston time) on the Business Day next following
the receipt of such notice, each Bank shall make available
to the Administrative Agent, at the Administrative Agent's
Head Office, in immediately available funds, such Bank's
Commitment Percentage of such Unpaid Reimbursement
Obligation, together with an amount equal to the product of
(i) the average, computed for the period referred to in
clause (iii) below, of the weighted average interest rate
paid by the Administrative Agent for federal funds acquired
by the Administrative Agent during each day included in such
period, times (ii) the amount equal to such Bank's
Commitment Percentage of such Unpaid Reimbursement
Obligation, times (iii) a fraction, the numerator of which
is the number of days that elapse from and including the
date the Administrative Agent paid the draft presented for
honor or otherwise made payment to the date on which such
Bank's Commitment Percentage of such Unpaid Reimbursement
obligation shall become immediately available to the
Administrative Agent, and the denominator of which is 360.
The responsibility of the Administrative Agent to the
Borrower and the Banks shall be only to determine that the
documents (including each draft) delivered under each Letter
of Credit in connection with such presentment shall be in
conformity in all material respects with such Letter of
Credit.
Section 5.4. Obligations Absolute.
The Borrower's obligations under this Section 5 shall be
absolute and unconditional under any and all circumstances
and irrespective of the occurrence of any Default or Event
of Default or any condition precedent whatsoever or any
setoff, counterclaim or defense to payment which the
Borrower may have or have had against the Administrative
Agent, any Bank or any beneficiary of a Letter of Credit.
The Borrower further agrees with the Administrative Agent
and the Banks that the Administrative Agent and the Banks
shall not be responsible for, and the Borrower's
Reimbursement Obligations under Section 5.2 shall not be
affected by, among other things, the validity or genuineness
of documents or of any endorsements thereon, even if such
documents should in fact prove to be in any or all respects
invalid, fraudulent or forged, or any dispute between or
among the Borrower, the beneficiary of any Letter of Credit
or any financing institution or other party to which any
Letter of Credit may be transferred or any claims or
defenses whatsoever of the Borrower against the beneficiary
of any Letter of Credit or any such transferee. The
Administrative Agent and the Banks shall not be liable for
any error, omission, interruption or delay in transmission,
dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except
to the extent resulting from the gross negligence or willful
misconduct on the part of the Administrative Agent or any of
the Banks. The Borrower agrees that any action taken or
omitted by the Administrative Agent or any Bank under or in
connection with each Letter of Credit and the related drafts
and documents, if done in good faith, shall be binding upon
the Borrower and shall not result in any liability on the
part of the Administrative Agent or any Bank to the
Borrower, except to the extent resulting from the gross
negligence or willful misconduct on the part of the
Administrative Agent or any of the Banks.
Section 5.5. Reliance by Issuer.
To the extent not inconsistent with Section 5.4, the
Administrative Agent shall be entitled to rely, and shall be
fully protected in relying upon, any Letter of Credit,
draft, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or
teletype message, statement, order or other document
believed by it in good faith to be genuine and correct and
to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel,
independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent shall be
fully justified in failing or refusing to take any action
under this Credit Agreement unless it shall first have
received such advice or concurrence of the Majority Banks as
it reasonably deems appropriate or it shall first be
indemnified to its reasonable satisfaction by the Banks
against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any
such action. The Administrative Agent shall in all cases be
fully protected in acting, or in refraining from acting,
under this Credit Agreement in accordance with a request of
the Majority Banks, and such request and any action taken or
failure to act pursuant thereto shall be binding upon the
Banks and all future holders of the Revolving Credit Notes
or of a Letter of Credit Participation.
Section 5.6. Letter of Credit Fee.
The Borrower shall, on the date of issuance or any extension
or renewal of any Letter of Credit pay a fee (in each case,
a "Letter of Credit Fee") to the Administrative Agent (i) in
respect of each standby Letter of Credit an amount equal to
the Applicable L/C Rate of the face amount of such standby
Letter of Credit, plus an amount equal to one-eighth percent
(1/8%) per annum of the face amount of such standby Letter
of Credit which shall be for the account of the
Administrative Agent, as a fronting fee, and the balance of
which Letter of Credit Fee shall be for the accounts of the
Banks in accordance with their respective Commitment
Percentages. In respect of each Letter of Credit, the
Borrower shall also pay to the Administrative Agent for the
Administrative Agent's own account, at such other time or
times as such charges are customarily made by the
Administrative Agent, the Administrative Agent's customary
issuance, amendment, negotiation or document examination and
other administrative fees as in effect from time to time.
Section 5.7. Letter of Credit Standard of Care. The
Borrower agrees that any action taken or omitted by the
Administrative Agent under or in connection with any Letter
of Credit or the related drafts or documents, if done in the
absence of gross negligence or willful misconduct and in
accordance with the standards of care specified in the
Uniform Commercial Code of the State of New York, shall be
binding on the Borrower and shall not result in any
liability of the Administrative Agent to the Borrower.
Section 6. CERTAIN GENERAL PROVISIONS.
Section 6.1. Fees.
The Borrower agrees to pay to the Administrative Agent, for
the account of the Administrative Agent and the
Documentation Agent, all fees at the times and in the
amounts set forth the fee letter dated June 1, 1998 among
the Borrower, the Administrative Agent, the Documentation
Agent and BancBoston Securities Inc. (the "Fee Letter").
Section 6.2. Funds for Payments.
Section 6.2.1. Payments to Administrative
Agent.
All payments of principal, interest, Reimbursement
Obligations, commitment fees, Letter of Credit Fees and
any other amounts due hereunder or under any of the
other Loan Documents shall be made to the
Administrative Agent, for the respective accounts of
the Banks and the Administrative Agent, at the
Administrative Agent's Head Office or at such other
location in the Boston, Massachusetts, area that the
Administrative Agent may from time to time designate in
a notice to the Borrower, in each case in immediately
available funds.
Section 6.2.2. No Offset, etc.
All payments by the Borrower hereunder and under
any of the other Loan Documents shall be made without
recoupment, setoff or counterclaim and free and clear
of and without deduction for any income, stamp or other
taxes, levies, imposts, duties, charges, fees,
deductions, withholdings, now or hereafter imposed,
levied or collected, withheld or assessed by any
governmental authority, agency or instrumentality
excluding, in the case of the Administrative Agent and
each Bank, net income and franchise taxes imposed on
the Administrative Agent or such Bank by the
jurisdiction under the laws of which such
Administrative Agent or such Bank is organized or any
political subdivision thereof or taxing or other
authority therein unless the Borrower is compelled by
law to make such deduction or withholding. If any such
obligation is imposed upon the Borrower with respect to
any amount payable by it hereunder or under any of the
other Loan Documents, the Borrower will pay to the
Administrative Agent, for the account of the Banks or
(as the case may be) the Administrative Agent, on the
date on which such amount is due and payable hereunder
or under such other Loan Document, such additional
amount in Dollars as shall be necessary to enable the
Banks or the Administrative Agent to receive the same
net amount which the Banks or the Administrative Agent
would have received on such due date had no such
obligation been imposed upon the Borrower. The
Borrower will deliver promptly to the Administrative
Agent, to the extent available, certificates or other
valid vouchers for all taxes or other charges deducted
from or paid with respect to payments made by the
Borrower hereunder or under such other Loan Document,
provided however that the foregoing obligation to pay
such additional amounts shall not apply:
(i) to any payment to a Bank if such Bank is
not, on the date hereof (or on the date it becomes
a Bank under this Agreement) and on the date of
any change in the lending office of such Bank
identified after its execution, entitled by virtue
of its status as a non-resident alien to submit
either a Form 1001 (relating to such Bank and
entitling it to a complete exemption from
withholding on all interest to be received by it
hereunder in respect of the Loans) or Form 4224
(relating to all interest to be received by such
Bank hereunder in respect of Loans) of the U.S.
Department of Treasury, or
(ii) to any item referred to in the preceding
sentence that would not have been imposed but for
the failure by such Bank to comply with applicable
certification, information, documentation or other
reporting requirements concerning the nationality,
residence, identity or connections of such Bank
with the United States if such compliance is
required by statute or regulation of the United
States as a precondition to relief or exemption
from such item.
Section 6.3. Computations.
All computations of interest on the Loans and of commitment
fees, Letter of Credit Fees or other fees shall, unless
otherwise expressly provided herein, be calculated on the
basis of a 360-day year for the actual days elapsed, and all
computations of interest on any Base Rate Loan shall be
calculated on the basis of a 365- (or 366-, as the case may
be) day year for the actual days elapsed. Except as
otherwise provided in the definition of the term "Interest
Period" with respect to LIBOR Rate Loans, whenever a payment
hereunder or under any of the other Loan Documents becomes
due on a day that is not a Business Day, the due date for
such payment shall be extended to the next succeeding
Business Day, and interest shall accrue during such
extension. The outstanding amount of the Loans as reflected
on the Revolving Credit Note Records and the Term Note
Records from time to time shall, absent manifest error, be
considered correct and binding on the Borrower unless within
five (5) Business Days after receipt of any notice by the
Administrative Agent or any of the Banks of such outstanding
amount, the Administrative Agent or such Bank shall notify
the Borrower to the contrary.
Section 6.4. Inability to Determine LIBOR
Rate.
In the event, prior to the commencement of any Interest
Period relating to any LIBOR Rate Loan, the Administrative
Agent shall determine or be notified by the Majority Banks
that adequate and reasonable methods do not exist for
ascertaining the LIBOR Rate that would otherwise determine
the rate of interest to be applicable to any LIBOR Rate Loan
during any Interest Period, the Administrative Agent shall
forthwith give notice of such determination (which shall be
conclusive and binding on the Borrower and the Banks) to the
Borrower and the Banks. In such event (i) any Loan Request
or Conversion Request with respect to LIBOR Rate Loans shall
be automatically withdrawn and shall be deemed a request for
Base Rate Loans, (ii) each LIBOR Rate Loan will
automatically, on the last day of the then current Interest
Period relating thereto, become a Base Rate Loan, and (iii)
the obligations of the Banks to make LIBOR Rate Loans shall
be suspended until the Administrative Agent determines that
the circumstances giving rise to such suspension no longer
exist, whereupon the Administrative Agent shall so notify
the Borrower and the Banks.
Section 6.5. Illegality.
Notwithstanding any other provisions herein, if subsequent
to the Closing Date, the adoption of or change in any
present or future law, regulation, treaty or directive or in
the interpretation or application thereof shall make it
unlawful for any Bank to make or maintain LIBOR Rate Loans,
such Bank shall forthwith give notice of such circumstances
to the Borrower and the other Banks and thereupon (i) the
commitment of such Bank to make LIBOR Rate Loans or convert
Loans of another Type to LIBOR Rate Loans shall forthwith be
suspended and (ii) such Bank's Revolving Credit Loans then
outstanding as LIBOR Rate Loans, if any, shall be converted
automatically to Base Rate Loans on the last day of each
Interest Period applicable to such LIBOR Rate Loans or
within such earlier period as may be required by law. The
Borrower hereby agrees promptly to pay the Administrative
Agent for the account of such Bank, upon demand by such
Bank, any additional amounts as may be required pursuant to
Section 6.9.
Section 6.6. Additional Costs, etc.
If subsequent to the Closing Date, the adoption of or change
in any present or future applicable law, which expression,
as used herein, includes statutes, rules and regulations
thereunder and interpretations thereof by any competent
court or by any governmental or other regulatory body or
official charged with the administration or the
interpretation thereof and requests, directives,
instructions and notices at any time or from time to time
hereafter made upon or otherwise issued to any Bank or the
Administrative Agent by any central bank or other fiscal,
monetary or other authority (whether or not having the force
of law), shall:
(a) subject any Bank or the Administrative Agent
to any tax, levy, impost, duty, charge, fee, deduction
or withholding of any nature with respect to this
Credit Agreement, the other Loan Documents, any Letters
of Credit, such Bank's Revolving Credit Note or Term
Note, such Bank s Commitment or the Loans (other than
taxes based upon or measured by the income or profits
of such Bank or the Administrative Agent or any
franchise tax imposed by such Bank s or the
Administrative Agent s jurisdiction of incorporation or
organization, or the location of its lending office,
hereinafter referred to as "Income Taxes"), or
(b) materially change the basis of taxation
(except for changes in Income Taxes) of payments to any
Bank of the principal of or the interest on its Notes
or any other amounts payable to any Bank or the
Administrative Agent under this Credit Agreement or any
of the other Loan Documents, or
(c) impose or increase or render applicable
(other than to the extent specifically provided for
elsewhere in this Credit Agreement) any special
deposit, reserve, assessment, liquidity, capital
adequacy or other similar requirements (whether or not
having the force of law) against assets held by, or
deposits in or for the account of, or loans by, or
letters of credit issued by, or commitments of an
office of any Bank, or
(d) impose on any Bank or the Administrative
Agent any other conditions or requirements with respect
to this Credit Agreement, the other Loan Documents, any
Letters of Credit, or such Bank's Notes, and the result
of any of the foregoing is
(i) to increase the cost to any Bank of
making, funding, issuing, renewing, extending or
maintaining such Bank's Notes or any Letter of
Credit, or
(ii) to reduce the amount of principal,
interest, Reimbursement Obligation or other amount
payable to such Bank or the Administrative Agent
hereunder on account of such Bank's Notes or any
Letter of Credit, or
(iii) to require such Bank or the
Administrative Agent to make any payment or to
forego any interest or Reimbursement Obligation or
other sum payable hereunder, the amount of which
payment or foregone interest or Reimbursement
Obligation or other sum is calculated by reference
to the gross amount of any sum receivable or
deemed received by such Bank or the Administrative
Agent from the Borrower hereunder,
then, and in each such case, the Borrower will, upon demand
made by such Bank or (as the case may be) the Administrative
Agent at any time and from time to time and as often as the
occasion therefor may arise, pay to such Bank or the
Administrative Agent such additional amounts as will be
sufficient to compensate such Bank or the Administrative
Agent for such additional cost, reduction, payment or
foregone interest or Reimbursement Obligation or other sum.
Section 6.7. Capital Adequacy.
If after the date hereof any Bank determines that (i) the
adoption of or change in any law, governmental rule,
regulation, policy, guideline or directive (whether or not
having the force of law) regarding capital requirements for
banks or bank holding companies or any change in the
interpretation or application thereof by a court or
governmental authority with appropriate jurisdiction, in
each case subsequent to the Closing Date, or (ii) compliance
by such Bank or any corporation controlling such Bank with
any such adoption of or change in, law, governmental rule,
regulation, policy, guideline or directive (whether or not
having the force of law) of any such entity regarding
capital adequacy, has the effect of reducing the return on
such Bank's Notes to a level below that which such Bank
could have achieved but for such adoption, change or
compliance (taking into consideration such Bank's then
existing policies with respect to capital adequacy and
assuming full utilization of such entity's capital) by any
amount deemed by such Bank to be material, then such Bank
may notify the Borrower of such fact. To the extent that
the amount of such reduction in the return on capital is not
reflected in the Base Rate, the Borrower and such Bank shall
thereafter attempt to negotiate in good faith, within thirty
(30) days of the day on which the Borrower receives such
notice, an adjustment payable hereunder that will adequately
compensate such Bank in light of these circumstances. If
the Borrower and such Bank are unable to agree to such
adjustment within thirty (30) days of the date on which the
Borrower receives such notice, then commencing on the date
of such notice (but not earlier than the effective date of
any such increased capital requirement), the fees payable
hereunder shall increase by an amount that will, in such
Bank's reasonable determination, provide adequate
compensation. Each Bank shall allocate such cost increases
among its customers in good faith and on an equitable basis.
Section 6.8. Certificate.
Each Bank shall notify the Borrower of any event entitling
such Bank to compensation under Section 6.6 or 6.7 as
promptly as practicable, but in any event within 60 days,
after such Bank obtains actual knowledge thereof; provided
that (i) if any Bank fails to give such notice within
60 days after it obtains actual knowledge of such an event,
such Bank shall, with respect to compensation payable
pursuant to Section 6.6 or 6.7 in respect of any costs
resulting form such event, only be entitled to payment under
such Section 6.6 or 6.7, as applicable, for costs incurred
from and after the date 60 days prior to the date that such
Bank does give such notice and (ii) each Bank will designate
a different lending office for the Loans of such Bank if
such designation will avoid the need for, or reduce the
amount of, such compensation and will not, in the sole
opinion of such Bank, be disadvantageous to such Bank. A
certificate setting forth any additional amounts payable
pursuant to Section 6.6 or 6.7 and a brief explanation of
such amounts which are due, submitted by any Bank or the
Agent to the Borrower, shall be conclusive, absent manifest
error, that such amounts are due and owing.
Section 6.9. Reasonable Efforts to Mitigate.
Each Bank agrees that as promptly as practicable after it
becomes aware of the occurrence of an event or the existence
of a condition that would cause it to be affected under
Section Section 6.4, 6.5, 6.6 or 6.7, such Bank will give
notice thereof to the Borrower, with a copy to the
Administrative Agent, and, to the extent so requested by the
Borrower and not inconsistent with such Bank's internal
policies, such Bank shall use reasonable efforts and take
such actions as are reasonably appropriate if as a result
thereof the additional moneys which would otherwise be
required to be paid to such Bank pursuant to such subSection
s would be materially reduced, or the illegality or other
adverse circumstances which would otherwise require a
conversion of such Loans or result in the inability to make
such Loans pursuant to such Section s would cease to exist,
and in each case if, as determined by such Bank in its sole
discretion, the taking such actions would not adversely
affect such Loans or such Bank or otherwise be
disadvantageous to such Bank. To the extent practicable and
applicable, each Bank shall allocate such cost increases
among its customers in good faith and on an equitable basis.
Section 6.10. Indemnity.
The Borrower agrees to indemnify each Bank and to hold each
Bank harmless from and against any loss, cost or expense
(including, such loss or expense associated with terminating
any interest rate protection arrangements entered into
between the Borrower and any Bank) that such Bank may
sustain or incur as a consequence of (i) default by the
Borrower in payment of the principal amount of or any
interest on any LIBOR Rate Loans as and when due and
payable, including any such loss or expense arising from
interest or fees payable by such Bank to lenders of funds
obtained by it in order to maintain its LIBOR Rate Loans,
(ii) default by the Borrower in making a borrowing or
conversion after the Borrower has given (or is deemed to
have given) a Loan Request, notice (in the case of all or
any portion of the Term Loan pursuant to Section 4.6.2) or a
Conversion Request relating thereto in accordance with
Section 2.6 or Section 2.7 (other than as a result of the
operation of Section 6.4) or (iii) the making of any payment
of a LIBOR Rate Loan or the making of any conversion of any
such Loan to a Base Rate Loan on a day that is not the last
day of the applicable Interest Period with respect thereto,
including interest or fees payable by such Bank to lenders
of funds obtained by it in order to maintain any such Loans.
Such loss or reasonable expense shall exclude any loss of
profits or margin applicable to such LIBOR Rate Loan but
shall include an amount equal to the excess, if any, as
reasonably determined by each Bank of (i) its cost of
obtaining the funds for the LIBOR Rate Loan being paid,
prepaid, converted, not converted, or not borrowed, as the
case may be (based on the LIBOR Rate) for the period from
the date of such payment, prepayment, conversion, or failure
to borrow or convert, as the case may be, to the last day of
the Interest Period for such portion of the Term Loan (or,
in the case of a failure to borrow, the Interest Period for
such portion of the Term Loan which would have commenced on
the date of such failure to borrow) over (ii) the amount of
interest (as reasonably determined by such Bank) that would
be realized by such Bank in re-employing the funds so paid,
prepaid, converted, or not borrowed, converted, or prepaid
for such period or Interest Period, as the case may be,
which determinations shall be prima facie correct and
binding, absent manifest error.
Section 6.11. Interest After Default.
Section 6.11.1. Overdue Amounts.
Overdue principal and (to the extent permitted by
applicable law) interest on the Loans or fees payable
hereunder or under any of the other Loan Documents
shall, following the expiration of the applicable grace
period, if any, bear interest compounded monthly and
payable on demand at a rate per annum equal to two
percent (2.00%) above the Base Rate plus the Applicable
Margin until such amount shall be paid in full (after
as well as before judgment).
Section 6.11.2. Replacement Banks; Mitigation.
(a) Within thirty (30) days after (i) any
Bank has demanded compensation from the Borrower
pursuant to Section Section 6.2.2, 6.6 or 6.7
hereof, or (ii) there shall have occurred a change
in law with respect to any Bank as a consequence
of which it shall become unlawful for such Bank to
make a LIBOR Rate Loan on any Drawdown Date, as
described in the previous Section 6.5 (any such
Bank described in the foregoing clauses (i) or
(ii) is hereinafter defined as an "Affected
Bank"), the Borrower may request that the other
Banks (the "Non-Affected Banks") acquire all, but
not less than all, of the Affected Bank s Notes
and assume all, but not less than all, of the
Affected Bank s Notes. If the Borrower so
requests, the Non-Affected Banks may elect to
acquire all of the Affected Bank s Notes and
assume all of the Affected Bank s Notes. If the
Non-Affected Banks do not elect to acquire and
assume all of the Affected Bank s Notes, the
Borrower may designate a replacement bank or banks
(which must be an Eligible Assignee), which must
be reasonably satisfactory to the Agent, to
acquire and assume that portion of the Notes of
the Affected Bank not being acquired and assumed
by the Non-Affected Banks. The provisions of
Section 19 hereof shall apply to all reallocations
pursuant to this Section 6.10.2, and the Affected
Bank and the Non-Affected Banks and/or replacement
banks which are to acquire the Notes of the
Affected Bank shall execute and deliver to the
Agent, in accordance with the provisions of
Section 19 hereof, such Assignments and
Acceptances and other instruments, as are required
pursuant to Section 19 hereof to give effect to
such reallocations; provided, however, the
Borrower shall, or shall cause the assignee Bank
to pay, the registration fee set forth in Section
19.3. On the effective date of the applicable
Assignment and Acceptances, the Borrower shall pay
to the Affected Bank all interest accrued on its
Notes up to but excluding such date, along with
any fees payable to such Affected Bank hereunder
up to but excluding such date, including, without
limitation, any amounts that would have been
payable pursuant to Section 6.9 hereof in
connection with prepayment.
(b) If (i) any Bank shall request
compensation under Section 6.6 or Section 6.7
hereof, (ii) any Bank deliver a notice described
in Section 6.5 hereof or (iii) the Borrower is
required to pay any additional amount to any Bank
or any governmental authority on account of the
Bank pursuant to Section 6.2.2 or Section 6.6,
such Bank agrees to use reasonable efforts
(consistent with legal policy and regulatory
restrictions) to change its Domestic Lending
Office or LIBOR Lending Office, as the case may
be, to avoid or minimize any amounts otherwise
payable under Section Section 6.2.2, 6.6 or 6.7 or
enable it to withdraw a notice given pursuant to
Section 6.5, in each case solely if such change
can be made in a manner so that such Bank, in its
sole determination, suffers no legal, economic or
regulatory disadvantage deemed by such Bank in its
sole discretion to be significant.
Section 7. COLLATERAL SECURITY.
Section 7.1. Security of Borrower.
The Obligations shall be secured by a perfected first
priority security interest (subject only to Permitted Liens)
in the Collateral Bonds of the Borrower and the stock of
Bangor Energy Resale, Inc. (subject to the provisions of the
Bangor Energy Intercreditor Agreement), pursuant to the
terms of the Security Documents to which the Borrower is a
party.
Section 8. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Banks and
the Administrative Agent as follows:
Section 8.1. Corporate Authority.
Section 8.1.1. Incorporation; Good Standing.
Each of the Borrower and its Subsidiaries (i) is a
corporation duly organized, validly existing and in
good standing under the laws of its state of
incorporation, (ii) has all requisite corporate power
to own its property and conduct its business as now
conducted and as presently contemplated, and (iii) is
in good standing as a foreign corporation and is duly
authorized to do business in each jurisdiction where
such qualification is necessary except where a failure
to be so qualified would not have a materially adverse
effect on the business, assets or financial condition
of the Borrower and its Subsidiaries, taken as a whole.
Section 8.1.2. Authorization.
The execution, delivery and performance of this
Credit Agreement and the other Loan Documents to which
the Borrower is or is to become a party and
transactions in connection with the Loan Documents (i)
are within the corporate authority of such Person, (ii)
have been duly authorized by all necessary corporate
proceedings, (iii) do not conflict with or result in
any material breach or contravention of any provision
of law, statute, rule or regulation to which the
Borrower is subject or any judgment, order, writ,
injunction, license or permit applicable to the
Borrower and (iv) do not conflict with any provision of
the corporate charter or bylaws of, or any agreement or
other instrument binding upon, the Borrower.
Section 8.1.3. Enforceability.
The execution and delivery of this Credit Agreement and the
other Loan Documents to which the Borrower is or is to
become a party will result in valid and legally binding
obligations of such Person enforceable against it in
accordance with the respective terms and provisions hereof
and thereof, except as limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to
creditors' rights and except to the extent that availability
of the remedy of specific performance or injunctive relief
is subject to the discretion of the court before which any
proceeding therefor may be brought.
Section 8.2. Governmental Approvals.
Except for the approvals identified in Schedule 8.2,
(which approvals either have been obtained or cannot be
obtained prior to the Closing Date in each case as noted on
such schedule), no action by, and no notice to or filing
with, any federal, state or local governmental authority or
regulatory body is or will be required for the due
execution, delivery and performance by the Borrower of this
Credit Agreement or the Loan Documents or any of the
transactions in connection with the Credit Agreement and the
other Loan Documents. The Borrower shall take all necessary
action to maintain and keep in effect all of the approvals
identified in Schedule 8.2.
Section 8.3. Title to Properties; Leases.
The Borrower and its Subsidiaries each has good and
sufficient title to all real property and all machinery and
equipment owned by it and owns or possesses adequate rights
to use all real property and all machinery and equipment
necessary tot he conduct of its business, all free and clear
of liens other than Permitted Liens. The Borrower enjoys
peaceful and undisturbed possession under all of its leases
with respect to materially important properties held under
lease, and all of such leases are in full force and effect.
Section 8.4. Financial Statements and Projections.
Section 8.4.1. Fiscal Year.
The Borrower and each of its Subsidiaries has a fiscal
year which is the twelve months ending on December 31 of
each calendar year.
Section 8.4.2. Financial Statements.
There has been furnished to the Administrative
Agent a consolidated balance sheet of the Borrower and
its Subsidiaries as at the Company Balance Sheet Date,
and a consolidated statement of income of the Borrower
and its Subsidiaries for the fiscal year then ended,
certified by Coopers & Lybrand. Such balance sheet and
statement of income have been prepared in accordance
with GAAP and fairly present in all material respects
the financial condition of the Borrower as at the close
of business on the date thereof and the results of
operations for the fiscal year then ended. There are
no contingent liabilities of the Borrower or any of its
Subsidiaries as of such date involving material
amounts, known to the officers of the Borrower, which
were not disclosed in such balance sheet and the notes
related thereto or in the Disclosure Documents.
Section 8.4.3. Projections.
The projections of the annual operating budgets of
the Borrower, balance sheets and cash flow statements
for the fiscal years 1998 to 2001, copies of which have
been delivered to the Administrative Agent, disclose
all material assumptions made with respect to general
economic, financial and market conditions used in
formulating such projections. To the knowledge of the
Borrower, no facts exist that (individually or in the
aggregate) would result in any material change in any
of such projections. The projections are based upon
reasonable estimates and assumptions, have been
prepared on the basis of the assumptions stated therein
and reflect the reasonable estimates of the Borrower of
the results of operations and other information
projected therein. Notwithstanding the foregoing, the
Administrative Agent and the Banks recognize that such
projections as to future events are not to be viewed as
facts and that actual results during the period covered
may differ from the projected results.
Section 8.5. No Material Changes, etc.
Since the Company Balance Sheet Date there has occurred no
materially adverse change in the financial condition or
business of the Borrower and its Subsidiaries as shown on or
reflected in the consolidated balance sheet of the Borrower
and its Subsidiaries as at the Company Balance Sheet Date,
or the consolidated statement of income for the fiscal year
then ended, other than changes in the ordinary course of
business that have not had any materially adverse effect on
the business or financial condition of the Borrower or any
of its Subsidiaries. Since the Company Balance Sheet Date,
the Borrower has not made any Distribution other than (a) as
permitted pursuant to Section 11.4 and disclosed to the
Banks, or (b) Distributions with respect to preferred stock.
Section 8.6. Franchises, Patents, Copyrights,
etc.
Each of the Borrower and its Subsidiaries possesses all
franchises, patents, copyrights, trademarks, trade names,
licenses and permits, and rights in respect of the
foregoing, adequate for the conduct of its business
substantially as now conducted without known conflict with
any rights of others.
Section 8.7. Litigation. As of the Closing Date,
except as set forth in Schedule 8.7 hereto, there are no
actions, suits, proceedings or investigations of any kind
pending or threatened in writing against the Borrower or any
of its Subsidiaries before any court, tribunal or
administrative agency or board that, if adversely
determined, might, either in any case or in the aggregate,
materially adversely affect the properties, assets,
financial condition or business of the Borrower and its
Subsidiaries as a whole, or result in any substantial
liability not adequately covered by insurance, or for which
adequate reserves are not maintained on the consolidated
balance sheet of the Borrower and its Subsidiaries, or which
question the validity of this Credit Agreement or any of the
other Loan Documents, or any action taken or to be taken
pursuant hereto or thereto.
Section 8.8. No Materially Adverse Contracts,
etc. Except as disclosed in the Disclosure Documents,
n
either the Borrower nor any of its Subsidiaries is subject
to any charter, corporate or other legal restriction, or any
judgment, decree, order, rule or regulation that has or is
expected, in the judgement of the Borrower s officers to
have a materially adverse effect on the business, assets or
financial condition of the Borrower and its Subsidiaries
taken as a whole. Neither the Borrower nor any of its
Subsidiaries is a party to any contract or agreement that
has or is expected, in the judgment of the Borrower's
officers, to have any materially adverse effect on the
business of the Borrower and its Subsidiaries, taken as a
whole.
Section 8.9. Compliance with Other Instruments, Laws,
etc.
Neither the Borrower nor any of its Subsidiaries is in
violation of any provision of its charter documents, bylaws,
or any agreement or instrument to which it is subject or by
which it or any of its properties is bound or any decree,
order, judgment, statute, license, rule or regulation, in
any of the foregoing cases in a manner that would materially
and adversely affect the financial condition, properties or
business of the Borrower and its Subsidiaries, taken as a
whole.
Section 8.10. Tax Status.
The Borrower has made or filed all federal and state income
and all other material tax returns, reports and declarations
required by any jurisdiction to which it is subject; has
paid all taxes and other governmental assessments and
charges shown or determined to be due on such returns,
reports and declarations, except those being contested in
good faith and by appropriate proceedings; and has set aside
on its books provisions reasonably adequate for the payment
of all taxes for periods subsequent to the periods to which
such returns, reports or declarations apply in accordance
with GAAP. There are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Borrower know of no
basis for any such claim.
Section 8.11. No Event of Default.
No Default or Event of Default has occurred and is
continuing.
Section 8.12. Holding Company Act. The Borrower is
exempt from the provisions of the Public Utility Holding
Company Act of 1935 and the rules promulgated thereunder
other than Section 9(a)(2) thereof, and is not a
"subsidiary" or an "affiliate" of any "holding company" as
such terms are defined in the act. The Borrower is not
subject to any other law, rule or regulation which in any
way restricts its ability to incur Indebtedness pursuant to
this Credit Agreement.
Section 8.13. Absence of Financing Statements, etc.
Except with respect to Permitted Liens, there is no
financing statement, security agreement, chattel mortgage,
real estate mortgage or other document filed or recorded
with any filing records, registry or other public office,
that purports to cover, affect or give notice of any present
or possible future lien on, or security interest in, any
assets or property of the Borrower or any of its
Subsidiaries or any rights relating thereto.
Section 8.14. Perfection of Security Interest.
All filings, assignments, pledges and deposits of documents
or instruments have been made and all other actions have
been taken that are necessary, under applicable law, to
establish and perfect the Administrative Agent's security
interest in the Collateral Bonds. The Collateral Bonds and
the Administrative Agent's rights with respect to the
Collateral Bonds are not subject to any setoff, claims,
withholdings or other defenses. The Collateral Bonds are
free from any lien, security interest, encumbrance and any
other claim or demand, except for Permitted Liens.
Section 8.15. Certain Transactions.
Except for the transactions expressly contemplated by the
Acquisition Documents and except for arm's length
transactions pursuant to which the Borrower or any of its
Subsidiaries makes payments in the ordinary course of
business upon terms no less favorable than the Borrower or
such Subsidiary, as applicable, could obtain from third
parties, none of the officers, directors, or employees of
the Borrower or any of its Subsidiaries is presently a party
to any transaction with the Borrower or any of its
Subsidiaries (other than for services as employees, officers
and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or
from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of
the Borrower, any corporation, partnership, trust or other
entity, in which any officer, director, or any such employee
has a substantial interest or is an officer, director,
trustee or partner.
Section 8.16. Compliance with ERISA. The Borrower
has satisfied the minimum funding standards under ERISA with
respect to its plans and is in compliance in all material
respects with the presently applicable provisions of ERISA.
Section 8.17. Regulations U and X.
No portion of any Loan is to be used, and no portion of
any Letter of Credit is to be obtained, for the purpose of
purchasing or carrying any "margin security" or "margin
stock" as such terms are used in Regulations U and X of the
Board of Governors of the Federal Reserve System, 12 C.F.R.
Parts 221 and 224.
Section 8.18. Subsidiaries, etc.
Attached hereto as Schedule 8.18 is a statement showing the
names of all the Subsidiaries of the Borrower as of the
Closing Date, the amount of the capital stock of each and
the amount thereof owned by the Borrower, and the business
of each. All shares of each such Subsidiary owned by the
Borrower have been duly and validly issued and are fully
paid and nonassessable, are free and clear of all liens
other than Permitted Liens and there are no outstanding
options, warrants or other rights to purchase or securities
convertible into or exchangeable for shares of capital stock
of any such Subsidiary.
Section 8.19. Year 2000 Problem.
The Borrower and its Subsidiaries have reviewed the areas
within their businesses and operations which could be
adversely affected by, and have developed or are developing
a program to address on a timely basis, the "Year 2000
Problem" (i.e. the risk that computer applications used by
the Borrower or any of its Subsidiaries may be unable to
recognize and perform properly date-sensitive functions
involving certain dates prior to and any date after December
31, 1999). Based upon such review, the Borrower reasonably
believes that the "Year 2000 Problem" will not have any
materially adverse effect on the business or financial
condition of the Borrower and its Subsidiaries, taken as a
whole.
Section 8.20. Disclosure.
The written information provided by the Borrower to the
Administrative Agent or the Banks pursuant to the Loan
Documents does not contain any untrue statement of a
material fact or omit to state a material fact necessary in
order to make the statements herein or therein, in light of
the circumstances under which they were made, not
misleading. There is no fact known to the Borrower which
materially adversely affects, or which is reasonably likely
in the future to materially adversely affect, the business,
assets or financial condition of the Borrower and its
Subsidiaries taken as a whole, exclusive of effects
resulting from changes in general economic conditions, legal
standards or regulatory conditions.
Section 8.21. Collateral Bonds; Mortgages.
(a) The Collateral Bonds pledged to the
Administrative Agent on behalf of the Banks are the
valid and binding legal obligations of the Borrower,
entitled in all respects to the security of the
Mortgage.
(b) The transfer and registration requirements
for assigning all security interest in the Collateral
Bonds to the Administrative Agent have been met.
(c) There is currently no default under either
the Mortgage or the General and Refunding Mortgage
Indenture, and no default under, or conflict with, such
agreements will be caused by execution of the Loan
Documents.
(d) True and correct copies of the Mortgage and
the General and Refunding Mortgage Indenture, each as
amended and supplemented as of the Closing Date, have
been provided to the Banks.
(e) No further action is necessary for the
Administrative Agent s lien on the Collateral Bonds to
be effective, and no further action is either necessary
or desirable in order for such lien to inure to the
benefit of the Administrative Agent on behalf of the
Banks.
(f) On or before each December 1, the Borrower
shall deliver to the Administrative Agent a copy of the
legal opinion required under the Mortgage.
(g) The Collateral Bonds have been properly
endorsed and certificated by the trustee and reissued
in the name of the Administrative Agent.
(h) All parties entitled to notice under the
Mortgage or the General and Refunding Mortgage
Indenture of the pledge of the Collateral Bonds, the
execution and delivery of the Supplemental Indenture
and the amendment of the Collateral Bonds have received
proper notice (as defined in such mortgage), or have
validly waived such notice.
(i) No consents of third parties other than those
obtained are necessary to grant the Administrative
Agent the rights contemplated under the Pledge
Agreement or to pledge the Collateral Bonds, execute
and deliver the Supplemental Indenture or amend the
Collateral Bonds.
Section 9. AFFIRMATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any
Loan, Unpaid Reimbursement Obligation, Letter of Credit or
Note is outstanding or any Bank has any obligation to make
any Loans or the Administrative Agent has any obligation to
issue, extend or renew any Letters of Credit:
Section 9.1. Punctual Payment.
The Borrower will duly and punctually pay or cause to be paid the principal
and interest on the Loans, all Reimbursement Obligations,
the Letter of Credit Fees, the commitment fees, the
Administrative Agent's fee and all other amounts provided
for in this Credit Agreement and the other Loan Documents to
which the Borrower is a party, all in accordance with the
terms of this Credit Agreement and such other Loan
Documents.
Section 9.2. Maintenance of Office.
The Borrower will maintain its chief executive office at 33
State Street, Bangor, Maine 04401, or at such other place in
the United States of America as the Borrower shall designate
upon written notice to the Administrative Agent, where
notices, presentations and demands to or upon the Borrower
in respect of the Loan Documents to which the Borrower is a
party may be given or made.
Section 9.3. Records and Accounts.
The Borrower will (i) keep, and cause each of its
Subsidiaries to keep, true and accurate records and books of
account in which full, true and correct entries will be made
in accordance with GAAP, (ii) maintain adequate accounts and
reserves for all taxes (including income taxes),
depreciation, depletion, obsolescence and amortization of
its properties and the properties of its Subsidiaries, and
all other proper reserves, and (iii) at all times engage
Coopers & Lybrand or other independent certified public
accountants of nationally recognized standing reasonably
satisfactory to the Administrative Agent as the independent
certified public accountants of the Borrower and its
Subsidiaries and will not permit more than thirty (30) days
to elapse between the cessation of such firm's (or any
successor firm's) engagement as the independent certified
public accountants of the Borrower and its Subsidiaries and
the appointment in such capacity of a successor firm as
shall be satisfactory to the Administrative Agent.
Section 9.4. Financial Statements, Certificates and
Information.
The Borrower will deliver to each of the Banks:
(a) as soon as practicable, but in any event not
later than one-hundred (100) days after the end of each
fiscal year of the Borrower, the consolidated balance
sheet of the Borrower and its Subsidiaries as at the
end of such year, and the related consolidated
statements of cash flows, operations and retained
earnings for such year, each setting forth in
comparative form the figures for the previous fiscal
year and all such consolidated statements to be in
reasonable detail, prepared in accordance with GAAP,
and certified without qualification by Coopers &
Lybrand or by other independent certified public
accountants of nationally recognized standing
reasonably satisfactory to the Administrative Agent,
together with a written statement from such accountants
to the effect that, in making the examination necessary
to said certification, they have obtained no knowledge
of any Default or Event of Default, or, if such
accountants shall have obtained knowledge of any then
existing Default or Event of Default they shall
disclose in such statement any such Default or Event of
Default; provided that such accountants shall not be
liable to the Banks for failure to obtain knowledge of
any Default or Event of Default;
(b) as soon as practicable, but in any event not
later than fifty (50) days after the end of each of the
first three fiscal quarters of the Borrower, copies of
the unaudited consolidated balance sheet of the
Borrower and its Subsidiaries as at the end of such
quarter, and the related consolidated statement of
income and consolidated statement of cash flow for the
portion of the Borrower's fiscal year then elapsed, all
in reasonable detail and prepared in accordance with
GAAP, together with a certification by the principal
financial or accounting officer of the Borrower that
the information contained in such financial statements
fairly presents, in all material respects, the
financial position of the Borrower and its Subsidiaries
on the date thereof (subject to year-end adjustments);
(c) simultaneously with the delivery of the
financial statements referred to in subSection s (a)
and (b) above, a statement certified by the principal
financial or accounting officer of the Borrower in
substantially the form of Exhibit D hereto and setting
forth in reasonable detail computations evidencing
compliance with the covenants contained in Section 11
and (if applicable) reconciliations to reflect changes
in GAAP since the Company Balance Sheet Date;
(d) contemporaneously with the filing or mailing
thereof, copies of all material of a financial nature
filed with the Securities and Exchange Commission or
sent to the stockholders of the Borrower;
(e) from time to time upon the reasonable request
of the Administrative Agent, projections of the
Borrower updating those projections delivered to the
Banks and referred to in Section 8.4.3 or, if
applicable, updating any later such projections
delivered in response to a request pursuant to this
Section 9.4(f);
(f) promptly upon entering into any material
long-term commitment for additional capacity for, or
sale agreement concerning, the generation or
transmission of electric energy in connection with a
transaction requiring the approval of the Commission
(or which would require such approval but for a
specific exception with respect to transactions with
any "co-generator" or "small power producer", as such
terms are defined in Chapter 172 of Title 35 of the
Maine Revised Statutes), notice of such commitment,
together with a brief description of the nature
thereof, the amount thereof and the approximate dates
on which expenditures under such commitment are to be
made and any changes in any of the foregoing upon the
effectiveness thereof;
(g) promptly upon the Borrower s knowledge
thereof, notice of (1) any material amendment of the
terms of any joint ownership agreement, joint venture,
partnership, plant construction or similar agreement or
arrangement for the ownership, construction or
operation of electric generating facilities to which
the Company is a party, and (2) any material default by
any party to such agreement or arrangement;
(h) (1) on or about June 30 and December 31 of
each year, a letter from S&P setting forth the
Borrower s long-term senior secured debt or corporate
credit rating then in effect and (2) within two
Business Days after the occurrence thereof, written
notice of any change in Status; provided that the
failure to provide such notice shall not delay or
otherwise affect any change in the Applicable Margin or
the Commitment Fee Rate which is to occur upon a change
in Status pursuant to the terms of this Credit
Agreement; and
(i) from time to time such other financial data
and information (including accountants, management
letters) as the Administrative Agent may reasonably
request.
Section 9.5. Notices.
Section 9.5.1. Defaults.
The Borrower will promptly notify the
Administrative Agent in writing of the occurrence of
any Default or Event of Default.
Section 9.5.2. Environmental Events.
The Borrower will promptly give notice to the
Administrative Agent (i) of any violation of any
Environmental Law that the Borrower or any of its
Subsidiaries reports in writing or is reportable by
such Person in writing (or for which any written report
supplemental to any oral report is made) to any
federal, state or local environmental agency and (ii)
upon becoming aware thereof, of any inquiry,
proceeding, investigation, or other action, including a
notice from any agency of potential environmental
liability, of any federal, state or local environmental
agency or board, that is reasonably expected to
materially adverse affect the assets, liabilities,
financial conditions or operations of the Borrower and
its Subsidiaries taken as a whole, or the
Administrative Agent's security interests pursuant to
the Security Documents.
Section 9.5.3. Notification of Claim against
Collateral Bonds.
The Borrower will, immediately upon becoming aware
thereof, notify the Administrative Agent in writing of
any setoff, claims (including environmental claims),
withholdings or other defenses to which any of the
Collateral Bonds, or the Administrative Agent's rights
with respect to the Collateral Bonds, are subject,
other than Permitted Liens.
Section 9.5.4. Notice of Litigation and
Judgments.
The Borrower will, and will cause each of its Subsidiaries
to, give notice to the Administrative Agent in writing
within fifteen (15) days of becoming aware of any litigation
or proceedings threatened in writing or any pending
litigation and proceedings affecting the Borrower or any of
its Subsidiaries or to which the Borrower or any of its
Subsidiaries is or becomes a party involving an uninsured
claim against the Borrower or any of its Subsidiaries that
could reasonably be expected to have a materially adverse
effect on the Borrower and its Subsidiaries taken as a whole
and stating the nature and status of such litigation or
proceedings. The Borrower will, and will cause each of its
Subsidiaries to, give notice to the Administrative Agent and
each of the Banks, in writing, in form and detail reasonably
satisfactory to the Administrative Agent, within ten (10)
days of any unpaid judgment not covered by insurance, final
or otherwise, against the Borrower or any of its
Subsidiaries in an amount in excess of $200,000.
Section 9.6. Corporate Existence; Maintenance of
Properties.
The Borrower will do or cause to be done all things
necessary to preserve and keep in full force and effect its
corporate existence, rights and its corporate and public
utility franchises, rights, licenses and permits necessary
for the conduct of its business and those of its
Subsidiaries and will not convert to a limited liability
company or a limited liability partnership. It (i) will
cause all of its properties and those of its Subsidiaries
used or useful in the conduct of its business or the
business of its Subsidiaries to be maintained and kept in
good condition, repair and working order and supplied with
all necessary equipment, and (ii) will cause to be made all
necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Borrower
may be necessary so that the business carried on in
connection therewith may be properly and advantageously
conducted at all times; provided that nothing in this
Section 9.6 shall prevent (i) the Borrower from
discontinuing the operation and maintenance of any of its
properties or any of those of its Subsidiaries if such
discontinuance is, in the judgment of the Borrower,
desirable in the conduct of its or their business and that
do not in the aggregate materially adversely affect the
business of the Borrower and its Subsidiaries on a
consolidated basis, or (ii) the Generating Asset
Transaction(s), provided that non-cash sales shall be on
terms reasonably acceptable to the Agents, or, if such terms
are not reasonably acceptable to the Agents, the Borrower
shall make a principal payment in respect of the Term Loan
in the amount of the fair market value of such non-cash
consideration.
Section 9.7. Insurance. The Borrower will, and will
cause each of its Subsidiaries to, maintain with financially
sound and reputable insurers insurance with respect to its
properties and business against such casualties and
contingencies in such amounts as shall be in accordance with
the general practices of businesses engaged in similar
activities in similar geographic areas and in amounts.
Section 9.8. Taxes.
The Borrower will, and will cause each of its
Subsidiaries to, duly pay and discharge, or cause to be paid
and discharged, before the same shall become overdue, all
taxes, assessments and other governmental charges imposed
upon it and its real properties, sale and activities, or any
part thereof, or upon the income or profits therefrom, as
well as all claims for labor, materials, or supplies, which
if unpaid might by law become a lien or charge upon any of
its property, except any such taxes, assessments, charges or
claims which are being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in
accordance with GAAP shall be maintained; provided, however,
that any such tax, assessment, charge, levy or claim need
not be paid if the validity or amount thereof shall
currently be contested in good faith by appropriate
proceedings and if the Borrower or such Subsidiary shall
have set aside on its books adequate reserves with respect
thereto; and provided, further, that the Borrower and each
Subsidiary shall pay all such taxes, assessments, charges,
levies or claims forthwith upon the commencement of
proceedings to foreclose any lien which may have attached as
security therefor.
Section 9.9. Inspection of Properties and Books,
etc.
The Borrower shall permit the Banks, through the
Administrative Agent or any of its other designated
representatives, to visit and inspect any of the properties
of the Borrower or any of its Subsidiaries, to examine the
books of account of the Borrower and its Subsidiaries (and
to make copies thereof and extracts therefrom), and to
discuss the affairs, finances and accounts of the Borrower
and its Subsidiaries with, and to be advised as to the same
by, its and their officers, all at such reasonable times and
intervals as the Administrative Agent or any Bank may
reasonably request.
Section 9.10. Compliance with Laws, Contracts,
Licenses, and Permits.
The Borrower will comply with (a) the provisions of its
charter documents and by-laws and (b)(i) all agreements and
instruments by which it or any of its properties may be
bound, and (ii) all applicable laws and regulations
(including Environmental Laws), decrees, orders and
judgments ("Applicable Laws"), except, where failure to so
comply is not reasonably expected to have a materially
adverse effect on the Borrower and its Subsidiaries, taken
as a whole. If at any time while any Note or the Loans are
outstanding, any authorization, consent, approval, permit or
license from any officer, agency or instrumentality of any
government shall become necessary or required in order that
the Borrower may fulfill any of its obligations hereunder or
under any of the Loan Documents, the Borrower will
immediately take or cause to be taken all reasonable steps
to obtain such authorization, consent, approval, permit or
license and furnish the Agent with evidence thereof.
Section 9.11. Employee Benefit Plans.
If and when the Borrower or any Subsidiary gives or is
required to give notice to the PBGC of any "reportable
event" (as defined in Section 4043 of ERISA) with respect to
any Plan which might constitute ground for a termination of
such Plan under Title IV of ERISA or knows that the plan
administrator of any Plan has given or is required to give
notice of any such reportable event, a copy of the notice of
such reportable event given or required to be given to the
PBGC.
Section 9.12. Use of Proceeds. The proceeds of (a)
the Revolving Credit Loans shall be used for working
capital, for purposes associated with the Chase Assignment
and general corporate purposes, and (b) the Term Loan shall
be used for working capital, and for purposes associated
with the Chase Assignment and to refinance the PERC
Contract.
Section 9.13. Further Assurances.
The Borrower will, and will cause each of its Subsidiaries
to, cooperate with the Administrative Agent and execute such
further instruments and documents as the Administrative
Agent shall reasonably request to carry out to its
satisfaction the transactions contemplated by this Credit
Agreement and the other Loan Documents.
Section 9.14. Sale of Generating Assets. The Borrower
will actively pursue the sale of substantially all of its
generating assets, provided that non-cash sales shall be on
terms reasonably acceptable to the Agents, or, if such terms
are not reasonably acceptable to the Agents, the Borrower
shall make a principal payment in respect of the Term Loan
in the amount of the fair market value of such non-cash
consideration.
Section 9.15. Status. The Borrower will maintain a
private senior secured debt or corporate credit rating with
either S&P or Moody s, or both. In addition, upon the
reasonable request by the Administrative Agent, the Borrower
shall obtain in writing from either S&P or Moody s such
senior secured debt or corporate credit rating and disclose
such rating to the Administrative Agent.
Section 10. CERTAIN NEGATIVE COVENANTS OF THE
BORROWER.
The Borrower covenants and agrees that, so long as any
Loan, Unpaid Reimbursement Obligation, Letter of Credit or
Note is outstanding or any Bank has any obligation to make
any Loans or the Administrative Agent has any obligations to
issue, extend or renew any Letters of Credit:
Section 10.1. Restrictions on Indebtedness.
The Borrower will not, and will not permit any of its
Subsidiaries to, create, incur, assume, guarantee or be or
remain liable, contingently or otherwise, with respect to
any Indebtedness other than the following:
(a) Indebtedness to the Banks and the
Administrative Agent arising under any of the Loan
Documents;
(b) endorsements for collection, deposit or
negotiation and warranties of products or services, in
each case incurred in the ordinary course of business;
(c) Indebtedness incurred in connection with the
acquisition after the date hereof of any real or
personal property by the Borrower or such Subsidiary or
under any Capitalized Lease, provided that the
aggregate principal amount of such Indebtedness of the
Borrower shall not exceed the aggregate amount of
$5,000,000 at any one time;
(d) Indebtedness existing on the date hereof and
listed and described on Schedule 10.1 hereto, or
described in the Disclosure Documents, and any
refinancing thereof, having covenants and maturities no
less favorable to the Borrower than the Indebtedness
being refinanced, and which does not increase the
principal amount of the Indebtedness being refinanced;
(e) Indebtedness of a Subsidiary of the Borrower
existing on the date hereof to the Borrower;
(f) the Bangor Energy Guaranty;
(g) non-recourse Indebtedness of any Subsidiary
participating in the planned joint venture with SEMPRA
Energy Solutions;
(h) guarantees of the Borrower of scheduled
payments of principal ad interest (not to exceed
$4,200,000 in the aggregate in any fiscal year of the
Borrower) in respect of Indebtedness of PERC, but only
on the scheduled dates, and at the rates, as originally
in effect (it being understood that the making of such
guarantee shall be subject to prior review by the
Administrative Agent of the documentation in respect
thereof for the purpose of establishing compliance with
the requirements of this paragraph);
(i) guarantees of the Borrower of the
indebtedness of others, as set forth in Exhibit G, but
only to the extent and upon the terms indicated;
(j) Indebtedness with respect to the Chase L/C
until replacement by a Letter of Credit hereunder; and
(k) any unsecured Indebtedness not otherwise
permitted by this Section 10.1 in an aggregate
principal amount not to exceed at any one time the sum
of (i) $5,000,000 plus (ii) an amount equal to 50% of
the aggregate amount of any reductions in the
Commitments made pursuant to Section 2.3.
Section 10.2. Restrictions on Liens.
The Borrower will not, and will not permit any of its
Subsidiaries to, (i) create or incur or suffer to be created
or incurred or to exist any lien, encumbrance, mortgage,
pledge, charge, restriction or other security interest of
any kind upon any of its property or assets of any character
whether now owned or hereafter acquired, or upon the income
or profits therefrom; or (ii) create, assume or suffer to
exist any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind in respect of the interest of a
vendor or a lessor under any conditional sale agreement,
financing lease or other title retention agreement relating
to any asset; provided that the Borrower or any of its
Subsidiaries may create or incur or suffer to be created or
incurred or to exist, any of the following (the "Permitted
Liens"):
(a) liens in favor of the Borrower on all or part
of the assets of Subsidiaries of the Borrower securing
Indebtedness owing by Subsidiaries of the Borrower to
the Borrower;
(b) liens to secure taxes, assessments and other
government charges in respect of obligations not
overdue or liens on properties to secure claims for
labor, material or supplies in respect of obligations
not overdue, or which are being contested in good faith
by appropriate proceedings diligently conducted an with
respect to which adequate reserves are being maintained
in accordance with GAAP so long as such liens are not
being foreclosed;
(c) deposits or pledges made in connection with,
or to secure payment of, workmen's compensation,
unemployment insurance, old age pensions or other
social security obligations;
(d) liens on properties in respect of judgments
or awards that have been in force for less than the
applicable period for taking an appeal so long as
execution is not levied thereunder or in respect of
which the Borrower or such Subsidiary shall at the time
in good faith be prosecuting an appeal or proceedings
for review and in respect of which a stay of execution
shall have been obtained pending such appeal or review;
(e) liens of carriers, warehousemen, mechanics
and materialmen, and other like liens on properties, in
existence less than 120 days from the date of creation
thereof in respect of obligations not overdue, or which
are being contested in good faith by appropriate
proceedings diligently conducted an with respect to
which adequate reserves are being maintained in
accordance with GAAP so long as such liens are not
being foreclosed;
(f) liens existing on the date hereof and listed
on Schedule 10.2 hereto or in the Disclosure Documents;
(g) purchase money security interests in or
purchase money mortgages on real or personal property
acquired after the date hereof to secure purchase money
Indebtedness of the type and amount permitted by
Section 10.1(c), incurred in connection with the
acquisition of such property, which security interests
or mortgages cover only the real or personal property
so acquired, not to exceed $5,000,000 in the aggregate;
(h) liens in favor of the Administrative Agent
for the benefit of the Banks and the Administrative
Agent under the Loan Documents, other than the
Mortgage;
(i) liens created by the Mortgage securing bonds
issued under and in accordance with the requirements of
the Mortgage as such Mortgage may be amended from time
to time, provided, however, no such amendment or
supplement thereof shall without the consent of all of
the Banks amend or supplement the Mortgage (1) to
include categories of property or property interests of
the Borrower not already included pursuant to the terms
of such Mortgage as in effect on the date hereof, or
(2) to permit the Borrower to withdraw "Deposited Cash"
or execute "Bonds" in excess of seventy-five percent
(75%) of the amount by which the actual cost or fair
value (whichever is lower) of "property additions"
shall exceed "property retirements", as set forth in
Section 27 of the Mortgage as in effect on the date
hereof. For purposes of this Section 10.2(i) only,
"Deposited Cash", "Bonds", "property additions" and
"property retirements" shall have the respective
definition of such terms as defined in the Mortgage on
the date hereof;
(j) second liens created pursuant to the General
and Refunding Mortgage Indenture;
(k) Bangor Energy Liens;
(m) liens existing on any property at the time of
acquisition thereof by the Borrower or any Subsidiary
or liens on property of a corporation existing at the
time such corporation becomes a Subsidiary and in each
case not created in connection with or in contemplation
of such acquisition or event, as the case may be,
whether or not assumed, provided that in each case such
lien shall apply and attach only to the property
originally subject thereto and improvements constructed
thereon;
(n) liens for the sole purpose of extending,
renewing or replacing (or successively extending,
renewing or replacing) in whole or in part the
Indebtedness secured by any lien permitted by
paragraphs (f) and (m) of this Section 10.2, provided
that the principal amount of Indebtedness secured
thereby shall not exceed the principal amount of
Indebtedness so secured at the time of such extension,
renewal or replacement, and that such extension,
renewal or replacement lien shall be limited to all or
a part of the property which secured the Indebtedness
so extended, renewed or replaced (plus improvements on
such property);
(o) deposits to secure the performance of
obligations (other than obligations for the payment of
borrowed money) incurred in the ordinary course of
business;
(p) banker's liens arising by operation of law
and other banker's possessory liens arising in the
ordinary course of business other than for the purpose
of securing obligations for the payment of borrowed
money (including, without limitation, obligations
arising from drafts accepted representing extensions of
credit to or for the benefit of the Borrower);
(q) liens incurred in connection with equipment
or vehicle financing leases having an aggregate
purchase cost to the lessors not to exceed $5,000,000;
(r) minor defects and irregularities in the title
(including easements, rights of way, restrictions or
other similar nonmonetary charges) to any real property
of the Borrower or any Subsidiary which have no
material adverse effect on the use or disposition
thereof by the Borrower or such Subsidiary; and
(s) liens with respect to cash collateral pledged
to back the Chase L/C until replacement by a Letter of
Credit hereunder.
Section 10.3. Restrictions on Investments.
The Borrower will not, and will not permit any of its
Subsidiaries to, make or permit to exist or to remain
outstanding any Investment except Investments in:
(a) marketable direct or guaranteed obligations
of the United States of America that mature within one
(1) year from the date of purchase by the Borrower;
(b) demand deposits, certificates of deposit,
time deposits or repurchase agreements which are fully
insured or are issued by commercial banks organized
under the laws of the United States of America or any
state thereof and having total assets in excess of
$1,000,000,000;
(c) securities commonly known as "commercial
paper" issued by a corporation organized and existing
under the laws of the United States of America or any
state thereof that at the time of purchase have been
rated and the ratings for which are not less than "P 1"
if rated by Moody's Investors Service, Inc., and not
less than "A 1" if rated by S&P's Rating Group;
(d) Investments existing on the date hereof and
listed on Schedule 10.3 hereto or described in the
Disclosure Documents;
(e) Investments with respect to Indebtedness
permitted by Section 10.1(f);
(f) Investments by the Borrower in Subsidiaries
of the Borrower not to exceed $500,000 during the term
of this Credit Agreement;
(g) Investments in Persons who are principally
engaged, or who propose principally to engage, in the
generation or transmission of electricity or in water
storage development, provided that the aggregate amount
expended pursuant to this paragraph (g) shall not
exceed $500,000 during the term of this Credit
Agreement;
(h) Investments in Persons for the purpose of
promoting the sale, installation and maintenance of
products that consume electricity, provided that the
aggregate amount expended pursuant to this paragraph
(h) shall not exceed $500,000 during the term of this
Credit Agreement;
(i) Investments in Persons participating in the
implementation of non-regulated energy-related
business, including the Home Security business,
provided that any such Investments shall not in the
aggregate principal amount exceed $500,000 during the
term of this Credit Agreement;
(j) services pursuant to the Service Agreement
with Bangor Energy Resale, Inc.;
(k) Investments by any Subsidiary participating
in the planned joint venture with SEMPRA Energy
Solutions, provided that the aggregate amount expended
pursuant to this paragraph (k) shall not exceed
$700,000 during 1998; and
(l) other Investments by any Subsidiary
participating in the planned joint venture with SEMPRA
Energy Solutions on terms acceptable to the Agents.
Section 10.4. Merger, Consolidation and Disposition of
Assets.
Section 10.4.1. Mergers and Acquisitions.
The Borrower will not, and will not permit any of
its Subsidiaries to, become a party to any merger or
consolidation, or agree to or effect any asset
acquisition or stock acquisition (other than the
acquisition of assets in the ordinary course of
business consistent with past practices or as otherwise
expressly permitted hereunder) except the merger or
consolidation of one or more of the Subsidiaries of the
Borrower with and into the Borrower, or the merger or
consolidation of two or more Subsidiaries of the
Borrower, or as permitted in Section 10.3.
Section 10.4.2. Disposition of Assets.
The Borrower will not (i) sell, lease or otherwise
transfer all or a Substantial Part of its assets during
the term of this Credit Agreement, and (ii) permit any
Subsidiary to transfer all or a Substantial Part of its
assets to any person other than the Borrower or a
wholly owned Subsidiary, provided that the Generating
Asset Transaction(s) shall be permitted under this
Section 10.4.2.
Section 10.5. Sale and Leaseback.
The Borrower will not, and will not permit any of its
Subsidiaries to, enter into any arrangement, directly or
indirectly, whereby the Borrower or any Subsidiary of the
Borrower shall sell or transfer any property owned by it in
order then or thereafter to lease such property or lease
other property that the Borrower or any Subsidiary of the
Borrower intends to use for substantially the same purpose
as the property being sold or transferred.
Section 10.6. Business Activities.
The Borrower will not, and will not permit any of its
Subsidiaries to, engage directly or indirectly (whether
through Subsidiaries or otherwise) in any type of business
other than the businesses conducted by them on the Closing
Date and in related businesses, provided that the proposed
sale of the Borrower s generating assets and the planned
joint venture with SEMPRA Energy Solutions to invest in the
gas distribution business, each on terms reasonably
acceptable to the Administrative Agent and the Documentation
Agent, will not constitute a change in business.
Section 10.7. Fiscal Year.
The Borrower will not, and will not permit any of it
Subsidiaries to, change the date of the end of its fiscal
year from that set forth in Section 8.4.1.
Section 10.8. Transactions with Affiliates.
Except as expressly permitted by the Acquisition
Documents, the Borrower will not engage in any transaction
with any Affiliate (other than with its Subsidiaries or for
services as employees, officers and directors), including
any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of
real or personal property to or from, or otherwise requiring
payments to or from any such Affiliate or, to the knowledge
of the Borrower, any corporation, partnership, trust or
other entity in which any such Affiliate has a substantial
interest or is an officer, director, trustee or partner, on
terms more favorable to such Person than would have been
obtainable on an arm's-length basis in the ordinary course
of business.
Section 10.9. Nuclear Acquisitions. The Borrower will
not, and will not permit any of its Subsidiaries to,
purchase or otherwise acquire direct or indirect ownership
of any nuclear plant.
Section 10.10. Amendments to Bonds, etc. Except as
contemplated hereby, the Borrower will not amend,
supplement, or otherwise modify, or consent to any
amendment, supplement or other modification to (a) the
General and Refunding Mortgage Indenture (including Section
7.05(b) therein), the Second Mortgage Bonds, or First
Mortgage Bonds (other than those held by the Administrative
Agent), or any agreement entered into by the Borrower in
connection therewith (provided that the foregoing will not
prohibit (i) the issuance of any supplemental indenture in
respect of the General and Refunding Mortgage Indenture for
the sole purpose of providing for the issuance of
refinancing Indebtedness expressly permitted by Section 10.1
or (ii) modifications to the General and Refunding Mortgage
Indenture made for the sole purpose of perfecting under
applicable law the liens contemplated thereby), or (b) the
terms of any Preferred Stock. The Borrower will not make
any optional payment or prepayment on or optional
redemption, purchase or defeasance of (a) any Second
Mortgage Bond, (b) any Indebtedness under the FAME Loan
Agreement, (c) any Preferred Stock, or (d) the First
Mortgage Bonds (other than those held by the Administrative
Agent).
Section 11. FINANCIAL COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any
Loan, Unpaid Reimbursement Obligation, Letter of Credit or
Note is outstanding or any Bank has any obligation to make
any Loans or the Administrative Agent has any obligation to
issue, extend or renew any Letters of Credit:
Section 11.1. Consolidated Net Worth.
The Borrower will not permit Consolidated Net Worth to
be less than the amounts set forth opposite the periods set
forth below:
Period Amount
Closing Date through $103,000,000
12/31/98
1/1/99 through 12/31/99 $110,000,000
Thereafter $120,000,000
Section 11.2. Consolidated Fixed Charge Ratio. The
Borrower will not permit the Consolidated Fixed Charge Ratio
for any period of four consecutive fiscal quarters ending on
any date set forth below to be less than the ratio set forth
opposite such date:
Date Ratio
6/30/98 - 9/30/98 1.00
12/31/98 1.25
Thereafter 1.50
Section 11.3. Consolidated Total Debt Ratio. The
Borrower will not permit the Consolidated Total Debt Ratio
for the periods set forth below to exceed the ratio set
forth opposite such period:
Period Ratio
Closing Date through 0.74
12/31/98
1/1/99 through 12/31/99 0.68
Thereafter 0.65
Section 11.4. Dividends. During any fiscal year of
the Borrower commencing after December 31, 1997, the
Borrower shall not declare or pay any dividend (other than
dividends payable solely in common stock of the Borrower)
on, or make any payment on account of, or set apart assets
for a sinking or other analogous fund for, the purchase,
redemption, defeasance, retirement or other acquisition of,
any shares of any class of common stock of the Borrower or
any warrants or options to purchase any such common stock,
whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or
indirectly, whether in cash or property or in obligations of
the Borrower or any Subsidiary. Notwithstanding the
foregoing, the Borrower may declare or otherwise become
obligated to make dividend payments not to exceed (a) sixty
percent (60%) of earnings applicable to common stock for
each fiscal year until the Term Loan is paid in full, and
(b) after the Term Loan is paid in full, dividend payments
shall not exceed seventy percent (70%) of earnings
applicable to common stock for each fiscal year. This
Section 11.4 shall not prohibit the payment of a dividend
that would otherwise be prohibited hereunder if (i) such
dividend is made within 45 days of the declaration thereof
and (ii) this Section 11.4 would not have prohibited the
payment of such dividend at the time of its declaration.
Section 12. CLOSING CONDITIONS.
The obligations of the Banks to make the initial
Revolving Credit Loans and the Term Loan and of the
Administrative Agent to issue any initial Letters of Credit
shall be subject to the satisfaction of the following
conditions precedent:
Section 12.1. Loan Documents. Each of the Loan
Documents shall have been duly executed and delivered by the
respective parties thereto, shall be in full force and
effect and shall be in form and substance satisfactory to
the Administrative Agent.
Section 12.2. Certified Copies of Charter Documents.
The Administrative Agent shall have received from the
Borrower a copy, certified by a duly authorized officer of
such Person to be true and complete on the Closing Date, of
each of (i) its charter or other incorporation documents as
in effect on such date of certification, and (ii) its by-
laws as in effect on such date.
Section 12.3. Corporate Action.
All corporate action necessary for the valid execution,
delivery and performance by the Borrower of this Credit
Agreement and the other Loan Documents to which it is or is
to become a party shall have been duly and effectively
taken, and evidence thereof satisfactory to the
Administrative Agent shall have been provided to the
Administrative Agent.
Section 12.4. Incumbency Certificate.
The Administrative Agent shall have received from the
Borrower an incumbency certificate, dated as of the Closing
Date, signed by a duly authorized officer of the Borrower,
and giving the name and bearing a specimen signature of each
individual who shall be authorized in the name and on behalf
of the Borrower: (i) to sign each of the Loan Documents to
which the Borrower is or is to become a party; (ii) to make
Loan Requests and Conversion Requests and to apply for
Letters of Credit; and (iii) to give notices and to take
other action on its behalf under the Loan Documents.
Section 12.5. Validity of Liens.
The Security Documents shall be effective to create in
favor of the Administrative Agent a legal, valid and
enforceable first security interest in and lien upon the
Collateral Bonds. All filings, recordings, deliveries of
instruments and other actions necessary or desirable in the
opinion of the Administrative Agent to protect and preserve
such security interests shall have been duly effected. The
Administrative Agent shall have received evidence thereof in
form and substance satisfactory to the Administrative Agent.
Section 12.6. Registration and Amendment of Collateral
Bonds. The Administrative Agent shall have received a
certificate evidencing the registration of the Collateral
Bonds, which shall have a maturity date of June 30, 2001, in
the name of the Administrative Agent along with all
necessary consents from third parties.
Section 12.7. Supplemental Indenture. Each of the
Banks and the Administrative Agent shall have received an
amended Supplemental Indenture (the "Supplemental
Indenture") to the Mortgage in form and substance
satisfactory to the Banks and the Administrative Agent,
providing for the amendment of the Collateral Bonds, along
with any necessary consents.
Section 12.8. Opinions of Counsel.
Each of the Banks and the Administrative Agent shall
have received a favorable legal opinion(s) addressed to the
Banks and the Administrative Agent, dated as of the Closing
Date, in form and substance satisfactory to the Banks and
the Administrative Agent, from:
(a) Andrew Landry, general counsel of the
Borrower substantially in the form of Exhibit F-1
attached hereto;
(b) Winthrop, Stimson, Putnam & Roberts, New York
counsel to the Borrower substantially in the form of
Exhibit F-2 attached hereto; and
(c) Eaton, Peabody, Bradford & Veague, special
Maine counsel to the Administrative Agent substantially
in the form of Exhibit F-3 attached hereto.
Section 12.9. Payment of Fees.
The Borrower shall have paid to the Administrative Agent the
remainder of the closing fee pursuant to Section 6.1.
Section 12.10. Chase Assignment.
The Administrative Agent shall have received the Chase
Assignment from the Prior Lenders, indicating the amount of
the loan obligations of the Borrower under the Chase
Revolver and the Chase Term Loan to be assigned on the
Closing Date, and assigning all Collateral Bonds, other
collateral, mortgages, deeds of trust and security interests
granted by the Borrower in favor of The Chase Manhattan
Bank.
Section 12.11. Certified Approvals. The
Administrative Agent shall have received a certified copy of
the order from the Commission authorizing the entering into,
execution, delivery and performance of the Loan Documents,
and all other approvals of third parties necessary to
authorize the same.
Section 12.12. Asset Sale. The Administrative Agent
shall have received a report from Reed Consulting Group
indicating that the proposed asset sale is likely to provide
an amount acceptable to the Agents.
Section 12.13. Financial Statements and Projections.
The Administrative Agent shall have received copies of (a)
the consolidated audited financial statements for the
Borrower and its Subsidiaries for the period ended December
31, 1997 and unaudited financial statements for the March
31, 1998 quarter, and (b) the financial projections referred
to in Section 8.4.3.
Section 13. CONDITIONS TO ALL BORROWINGS.
The obligations of the Banks to make any Loan,
including the Revolving Credit Loan and the Term Loan, and
of the Administrative Agent to issue, extend or renew any
Letter of Credit, in each case whether on or after the
Closing Date, shall also be subject to the satisfaction of
the following conditions precedent:
Section 13.1. Representations True; No Event of
Default.
Each of the representations and warranties of the
Borrower contained in this Credit Agreement, the other Loan
Documents or in any document or instrument delivered
pursuant to or in connection with this Credit Agreement
shall be true as of the date as of which they were made and
shall also be true at and as of the time of the making of
such Loan or the issuance, extension or renewal of such
Letter of Credit, with the same effect as if made at and as
of that time (except to the extent of changes resulting from
transactions contemplated or permitted by this Credit
Agreement and the other Loan Documents and changes occurring
in the ordinary course of business that singly or in the
aggregate are not materially adverse, and to the extent that
such representations and warranties relate expressly to an
earlier date) and no Default or Event of Default shall have
occurred and be continuing.
Section 13.2. No Legal Impediment.
No change shall have occurred after the Closing Date in
any law or regulations thereunder or interpretations thereof
that in the reasonable opinion of any Bank would make it
illegal for such Bank to make such Loan or to participate in
the issuance, extension or renewal of such Letter of Credit
or in the reasonable opinion of the Administrative Agent
would make it illegal for the Administrative Agent to issue,
extend or renew such Letter of Credit.
Section 13.3. Governmental Regulation.
Each Bank shall have received such statements in substance
and form reasonably satisfactory to such Bank as such Bank
shall require for the purpose of compliance with any
applicable regulations of the Comptroller of the Currency or
the Board of Governors of the Federal Reserve System.
Section 13.4. Proceedings and Documents.
The Administrative Agent and the Administrative Agent's
Special Counsel shall have received all information and such
counterpart originals or certified or other copies of such
documents as the Administrative Agent may have reasonably
requested in accordance with the terms hereof.
Section 14. EVENTS OF DEFAULT; ACCELERATION; ETC.
Section 14.1. Events of Default and Acceleration.
If any of the following events ("Events of Default" or,
if the giving of notice or the lapse of time or both is
required, then, prior to such notice or lapse of time,
"Defaults") shall occur:
(a) the Borrower shall fail to pay any principal
of the Loans or any Reimbursement Obligation when the
same shall become due and payable, whether at the
stated date of maturity or any accelerated date of
maturity or at any other date fixed for payment;
(b) the Borrower shall fail to pay any interest
on the Loans, any Letter of Credit Fee, the commitment
fee, or the Agent's fee due hereunder or under any of
the other Loan Documents, when the same shall become
due and payable, whether at the stated date of maturity
or any accelerated date of maturity or at any other
date fixed for payment within three (3) days after the
same shall become due and payable;
(c) the Borrower shall fail to comply with any of
its covenants contained in Section 9.6, 10 or 11;
(d) the Borrower shall fail to perform any term,
covenant or agreement contained herein or in any of the
other Loan Documents (other than those specified
elsewhere in this Section 14.1) for fifteen (15) days
after written notice of such failure has been given to
the Borrower by the Administrative Agent;
(e) any representation or warranty of the
Borrower in this Credit Agreement or any of the other
Loan Documents or in any other document or instrument
delivered pursuant to or in connection with this Credit
Agreement shall prove to have been false in any
material respect upon the date when made or deemed to
have been made or repeated;
(f) the Borrower or any of its Subsidiaries shall
fail to pay at maturity, or within any applicable
period of grace, any obligation for borrowed money or
credit received or in respect of any Capitalized Leases
in excess of $500,000 (other than the Loan Documents),
or fail to observe or perform any material term,
covenant or agreement contained in any agreement by
which it is bound, evidencing or securing borrowed
money or credit received or in respect of any
Capitalized Leases in excess of $500,000 for such
period of time as would permit (assuming the giving of
appropriate notice if required) the holder or holders
thereof or of any obligations issued thereunder to
accelerate the maturity thereof;
(g) the Borrower or any of its Subsidiaries shall
make an assignment for the benefit of creditors, or
admit in writing its inability to pay or generally fail
to pay its debts as they mature or become due, or shall
petition or apply for the appointment of a trustee or
other custodian, liquidator or receiver of the Borrower
or any of its Subsidiaries or of any substantial part
of the assets of the Borrower or any of its
Subsidiaries or shall commence any case or other
proceeding relating to the Borrower or any of its
Subsidiaries under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt,
dissolution or liquidation or similar law of any
jurisdiction, now or hereafter in effect, or shall take
any action to authorize or in furtherance of any of the
foregoing, or if any such petition or application shall
be filed or any such case or other proceeding shall be
commenced against the Borrower or any of its
Subsidiaries and the Borrower or any of its
Subsidiaries shall indicate its approval thereof,
consent thereto or acquiescence therein or such
petition or application shall not have been dismissed
within sixty (60) days following the filing thereof;
(h) a decree or order is entered appointing any
such trustee, custodian, liquidator or receiver or
adjudicating the Borrower or any of its Subsidiaries
bankrupt or insolvent, or approving a petition in any
such case or other proceeding, or a decree or order for
relief is entered in respect of the Borrower or any
Subsidiary of the Borrower in an involuntary case under
federal bankruptcy laws as now or hereafter
constituted;
(i) there shall remain in force, undischarged,
unsatisfied and unstayed for more than sixty (60) days,
any final unpaid judgment (from which all appeals have
been taken and determined or as to which all time for
appeals has lapsed) against the Borrower or any of its
Subsidiaries which, with other outstanding final
judgments shall continue unsatisfied and in effect,
(net of uncontested insurance coverage) against the
Borrower or any of its Subsidiaries exceeding in the
aggregate $500,000;
(j) the holders of First Mortgage Bonds shall
accelerate the maturity of all or any part of the First
Mortgage Bonds, or the First Mortgage Bonds (other than
the Collateral Bonds) shall be prepaid, redeemed or
repurchased in whole or in part;
(k) if any of the Loan Documents shall be
cancelled, terminated, revoked or rescinded or the
Administrative Agent's security interests, mortgages or
liens in a substantial portion of the Collateral Bonds
shall cease to be perfected, or shall cease to have the
priority contemplated by the Security Documents, in
each case otherwise than in accordance with the terms
thereof, or any action at law, suit or in equity or
other legal proceeding to cancel, revoke or rescind any
of the Loan Documents shall be commenced by or on
behalf of the Borrower as a party thereto or any of its
stockholders, or any court or any other governmental or
regulatory authority or agency of competent
jurisdiction shall make a determination that, or issue
a judgment, order, decree or ruling to the effect that,
any one or more of the Loan Documents is illegal,
invalid or unenforceable in accordance with the terms
thereof;
(l) the Borrower or any ERISA Affiliate shall
fail to pay when due an amount or amounts aggregating
in excess of $100,000 which it shall have become liable
to pay to the PBGC or to an Employee Benefit Plan under
Title IV of ERISA; or notice of intent to terminate an
Employee Benefit Plan or Employee Benefit Plans having
an aggregate Unfunded Vested Liability in excess of
$500,000 shall be filed pursuant to Title IV of ERISA
by the Borrower; or the PBGC shall institute
proceedings under Title IV of ERISA to terminate or
cause a trustee to be appointed to administer any such
Employee Benefit Plan or Employee Benefit Plans or a
proceeding shall be instituted by a fiduciary of any
such Employee Benefit Plan or Employee Benefit Plans to
enforce Section 515 of ERISA and such proceeding shall
not have been dismissed within 30 days thereafter; or a
condition shall exist by reason of which the PBGC would
be entitled to obtain a decree adjudicating that such
Employee Benefit Plan or Employee Benefit Plans must be
terminated;
(m) the Borrower or any of its Subsidiaries shall
be enjoined, restrained or in any way prevented by the
order of any court or any administrative or regulatory
agency from conducting any material part of its
business and such order shall continue in effect for
more than sixty (60) days; or
(n) (i) a judgement creditor shall obtain
possession of any material portion of the mortgaged
property (the "Mortgaged Property") referred to in the
Mortgage by any means, including, without limitation,
levy, distraint, replevin or self-help, (ii) any
foreclosure or other remedial action in respect of or
affecting the Mortgaged Property shall be commenced by
or on behalf of the holders of the Second Mortgage
Bonds or the trustee under the General and Refunding
Mortgage Indenture, (iii) any material portion of the
Mortgage Property shall be taken by eminent domain or
condemnation, (iv) the Mortgage shall cease to be in
full force and effect or the Borrower shall disavow its
obligations thereunder or shall contest the validity or
enforceability thereof, (v) the trustee under the
Mortgage (the "First Mortgage Trustee") shall cease, in
respect of any material portion of the Mortgaged
Property, to have a valid and perfected first priority
security interest therein, (vi) the security interest
of the First Mortgage Trustee in any material portion
of the Mortgaged Property shall otherwise become
impaired or unenforceable, or (vii) any provision of
the Mortgage, the Supplemental Indenture or the
Collateral Bonds shall be amended, supplemented, waived
or otherwise modified in any respect except to the
extent expressly permitted by the Pledge Agreement.
then, and in any such event, so long as the same may be
continuing, the Administrative Agent may, and upon the
request of the Majority Banks shall, by notice in writing to
the Borrower declare all amounts owing with respect to this
Credit Agreement, the Notes and the other Loan Documents and
all Reimbursement Obligations to be, and they shall
thereupon forthwith become, immediately due and payable
without presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived by the
Borrower; provided that in the event of any Event of Default
specified in Section Section 14.1(g), 14.1(h) or 14.1(j),
all such amounts shall become immediately due and payable
automatically and without any requirement of notice from the
Administrative Agent or any Bank.
Section 14.2. Termination of Commitments.
If any one or more of the Events of Default specified
in Section 14.1(g), Section 14.1(h) or Section 14.1(j) shall
occur, any unused portion of the credit hereunder shall
forthwith terminate and each of the Banks shall be relieved
of all further obligations to make Loans to the Borrower and
the Administrative Agent shall be relieved of all further
obligations to issue, extend or renew Letters of Credit. If
any other Event of Default shall have occurred and be
continuing, the Administrative Agent may and, upon the
request of the Majority Banks, shall, by notice to the
Borrower, terminate the unused portion of the credit
hereunder, and upon such notice being given such unused
portion of the credit hereunder shall terminate immediately
and each of the Banks shall be relieved of all further
obligations to make Loans and the Administrative Agent shall
be relieved of all further obligations to issue, extend or
renew Letters of Credit. No termination of the credit
hereunder shall relieve the Borrower of any of the
Obligations.
Section 14.3. Remedies.
In case any one or more of the Events of Default shall
have occurred and be continuing, and whether or not the
Banks shall have accelerated the maturity of the Loans
pursuant to Section 14.1, each Bank, if owed any amount with
respect to the Loans or the Reimbursement Obligations, may,
with the consent of the Majority Banks but not otherwise,
proceed to protect and enforce its rights by suit in equity,
action at law or other appropriate proceeding, whether for
the specific performance of any covenant or agreement
contained in this Credit Agreement and the other Loan
Documents or any instrument pursuant to which the
Obligations to such Bank are evidenced, including as
permitted by applicable law the obtaining of the ex parte
appointment of a receiver, and, if such amount shall have
become due, by declaration or otherwise, proceed to enforce
the payment thereof or any other legal or equitable right of
such Bank. No remedy herein conferred upon any Bank or the
Administrative Agent or the holder of any Note or purchaser
of any Letter of Credit Participation is intended to be
exclusive of any other remedy and each and every remedy
shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law
or in equity or by statute or any other provision of law.
Section 14.4. Distribution of Collateral Bonds
Proceeds.
In the event that, following the occurrence or during the
continuance of any Event of Default, the Administrative
Agent or any Bank, as the case may be, receives any monies
in connection with the enforcement of any the Security
Documents, or otherwise with respect to the realization upon
any of the Collateral Bonds, such monies shall be
distributed for application as follows:
(a) First, to the payment of, or (as the case may
be) the reimbursement of the Administrative Agent for
or in respect of all reasonable costs, expenses,
disbursements and losses which shall have been incurred
or sustained by the Administrative Agent in connection
with the collection of such monies by the
Administrative Agent, for the exercise, protection or
enforcement by the Administrative Agent of all or any
of the rights, remedies, powers and privileges of the
Administrative Agent and the Banks under this Credit
Agreement or any of the other Loan Documents or in
respect of the Collateral Bonds or in support of any
provision of adequate indemnity to the Administrative
Agent against any taxes or liens which by law shall
have, or may have, priority over the rights of the
Administrative Agent to such monies;
(b) Second, to all other Obligations then due and
payable to be shared pro rata among the Banks in
accordance with their respective Commitment Percentages
and Term Loan Percentages; provided, however, that
distributions shall be made (A) pari passu among
Obligations with respect to the Agent's fee payable
pursuant to Section 6.1 and all other Obligations and
(B) with respect to each type of Obligation owing to
the Banks, such as interest, principal, fees and
expenses, among the Banks pro rata;
(c) Third, upon payment and satisfaction in full
or other provisions for payment in full satisfactory to
the Banks and the Administrative Agent of all of the
Obligations, to the payment of any obligations required
to be paid pursuant to Section 9-504(1)(c) of the
Uniform Commercial Code of the State of New York; and
(d) Fourth, the excess, if any, shall be returned
to the Borrower or to such other Persons as are
entitled thereto.
Section 15. SETOFF.
Regardless of the adequacy of any collateral, during
the continuance of any Event of Default, any deposits or
other sums credited by or due from any of the Banks to the
Borrower and any securities or other property of the
Borrower in the possession of such Bank may be applied to or
set off by such Bank against the payment of Obligations then
due and payable of the Borrower to such Bank. Each of the
Banks agrees with each other Bank that if such Bank shall
receive from the Borrower, whether by voluntary payment,
exercise of the right of setoff, counterclaim, cross action,
enforcement of the claim evidenced by the Notes held by, or
constituting Reimbursement Obligations owed to, such Bank by
proceedings against the Borrower at law or in equity or by
proof thereof in bankruptcy, reorganization, liquidation,
receivership or similar proceedings, or otherwise, and shall
retain and apply to the payment of the Note or Notes held
by, or Reimbursement Obligations owed to, such Bank any
amount in excess of its ratable portion of the payments
received by all of the Banks with respect to the Notes held
by, and Reimbursement Obligations owed to, all of the Banks,
such Bank will make such disposition and arrangements with
the other Banks with respect to such excess, either by way
of distribution, pro tanto assignment of claims, subrogation
or otherwise as shall result in each Bank receiving in
respect of the Notes held by it or Reimbursement Obligations
owed it, its proportionate payment as contemplated by this
Credit Agreement; provided that if all or any part of such
excess payment is thereafter recovered from such Bank, such
disposition and arrangements shall be rescinded and the
amount restored to the extent of such recovery, but without
interest. Such Bank shall notify the Borrower and the Agent
and the other Banks promptly after exercising any right of
setoff.
Section 16. THE AGENTS.
Section 16.1. Authorization.
(a) The Administrative Agent is authorized to
take such action on behalf of each of the Banks and to
exercise all such powers as are hereunder and under any
of the other Loan Documents and any related documents
delegated to the Administrative Agent, together with
such powers as are reasonably incident thereto,
provided that no duties or responsibilities not
expressly assumed herein or therein shall be implied to
have been assumed by the Administrative Agent.
(b) The relationship between the Administrative
Agent and each of the Banks is that of an independent
contractor. The use of the term "Administrative Agent"
is for convenience only and is used to describe, as a
form of convention, the independent contractual
relationship between the Administrative Agent and each
of the Banks. Nothing contained in this Credit
Agreement nor the other Loan Documents shall be
construed to create an agency, trust or other fiduciary
relationship between the Administrative Agent and any
of the Banks.
(c) As an independent contractor empowered by the
Banks to exercise certain rights and perform certain
duties and responsibilities hereunder and under the
other Loan Documents, the Administrative Agent is
nevertheless a "representative" of the Banks, as that
term is defined in Article 1 of the Uniform Commercial
Code, for purposes of actions for the benefit of the
Banks and the Administrative Agent with respect to all
collateral security and guaranties contemplated by the
Loan Documents. Such actions include the designation
of the Administrative Agent as "secured party",
"mortgagee" or the like on all financing statements and
other documents and instruments, whether recorded or
otherwise, relating to the attachment, perfection,
priority or enforcement of any security interests,
mortgages or deeds of trust in collateral security
intended to secure the payment or performance of any of
the Obligations, all for the benefit of the Banks and
the Administrative Agent.
(d) The Documentation Agent shall not have any
right, power, obligation, liability, responsibility or
duty under this Credit Agreement in such capacity,
other than those applicable to all Banks as Banks.
Section 16.2. Employees and Agents.
The Administrative Agent may exercise its powers and execute
its duties by or through employees or agents and shall be
entitled to take, and to rely on, advice of counsel
concerning all matters pertaining to its rights and duties
under this Credit Agreement and the other Loan Documents.
Section 16.3. No Liability.
Neither the Administrative Agent nor any of its
shareholders, directors, officers or employees nor any other
Person assisting them in their duties nor any Administrative
Agent or employee thereof, shall be liable for any waiver,
consent or approval given or any action taken, or omitted to
be taken, in good faith by it or them hereunder or under any
of the other Loan Documents, or in connection herewith or
therewith, or be responsible for the consequences of any
oversight or error of judgment whatsoever, except that the
Administrative Agent or such other Person, as the case may
be, may be liable for losses due to its willful misconduct
or gross negligence.
Section 16.4. No Representations. The Administrative
Agent shall not be responsible for the execution or validity
or enforceability of this Credit Agreement, the Notes, the
Letters of Credit, any of the other Loan Documents or any
instrument at any time constituting, or intended to
constitute, collateral security for the Notes, or for the
value of any such collateral security or for the validity,
enforceability or collectability of any such amounts owing
with respect to the Notes, or for any recitals or
statements, warranties or representations made herein or in
any of the other Loan Documents or in any certificate or
instrument hereafter furnished to it by or on behalf of the
Borrower, or be bound to ascertain or inquire as to the
performance or observance of any of the terms, conditions,
covenants or agreements herein or in any instrument at any
time constituting, or intended to constitute, collateral
security for the Notes or to inspect any of the properties,
books or records of the Borrower or any of its Subsidiaries.
The Administrative Agent shall not be bound to ascertain
whether any notice, consent, waiver or request delivered to
it by the Borrower or any holder of any of the Notes shall
have been duly authorized or is true, accurate and complete.
The Administrative Agent has not made nor does it now make
any representations or warranties, express or implied, nor
does it assume any liability to the Banks, with respect to
the credit worthiness or financial conditions of the
Borrower or any of its Subsidiaries. Each Bank acknowledges
that it has, independently and without reliance upon the
Administrative Agent or any other Bank, and based upon such
information and documents as it has deemed appropriate, made
its own credit analysis and decision to enter into this
Credit Agreement.
Section 16.5. Payments.
Section 16.5.1. Payments to Administrative
Agent.
A payment by the Borrower to the Administrative
Agent hereunder or any of the other Loan Documents for
the account of any Bank shall constitute a payment to
such Bank. The Administrative Agent agrees promptly to
distribute to each Bank such Bank's pro rata share of
payments received by the Administrative Agent for the
account of the Banks except as otherwise expressly
provided herein or in any of the other Loan Documents.
Section 16.5.2. Distribution by Administrative
Agent.
If in the opinion of the Administrative Agent the
distribution of any amount received by it in such capacity
hereunder, under the Notes or under any of the other Loan
Documents might involve it in liability, it may refrain from
making distribution until its right to make distribution
shall have been adjudicated by a court of competent
jurisdiction. If a court of competent jurisdiction shall
adjudge that any amount received and distributed by the
Administrative Agent is to be repaid, each Person to whom
any such distribution shall have been made shall either
repay to the Administrative Agent its proportionate share of
the amount so adjudged to be repaid or shall pay over the
same in such manner and to such Persons as shall be
determined by such court.
Section 16.5.3. Delinquent Banks.
Notwithstanding anything to the contrary contained
in this Credit Agreement or any of the other Loan
Documents, any Bank that fails (i) to make available to
the Administrative Agent its pro rata share of any Loan
or to purchase any Letter of Credit Participation or
(ii) to comply with the provisions of Section 15 with
respect to making dispositions and arrangements with
the other Banks, where such Bank's share of any payment
received, whether by setoff or otherwise, is in excess
of its pro rata share of such payments due and payable
to all of the Banks, in each case as, when and to the
full extent required by the provisions of this Credit
Agreement, shall be deemed delinquent (a "Delinquent
Bank") and shall be deemed a Delinquent Bank until such
time as such delinquency is satisfied. A Delinquent
Bank shall be deemed to have assigned any and all
payments due to it from the Borrower, whether on
account of outstanding Loans, interest, fees or
otherwise, to the remaining nondelinquent Banks for
application to, and reduction of, their respective pro
rata shares of all outstanding Loans and Unpaid
Reimbursement Obligations. The Delinquent Bank hereby
authorizes the Administrative Agent to distribute such
payments to the nondelinquent Banks in proportion to
their respective pro rata shares of all outstanding
Loans and Unpaid Reimbursement Obligations. A
Delinquent Bank shall be deemed to have satisfied in
full a delinquency when and if, as a result of
application of the assigned payments to all outstanding
Loans and Unpaid Reimbursement Obligations of the
nondelinquent Banks, the Banks' respective pro rata
shares of all outstanding Loans and Unpaid
Reimbursement Obligations and have returned to those in
effect immediately prior to such delinquency and
without giving effect to the nonpayment causing such
delinquency.
Section 16.6. Holders of Notes.
The Administrative Agent may deem and treat the payee of any
Note or the purchaser of any Letter of Credit Participation
as the absolute owner or purchaser thereof for all purposes
hereof until it shall have been furnished in writing with a
different name by such payee or by a subsequent holder,
assignee or transferee.
Section 16.7. Indemnity.
The Banks ratably agree hereby to indemnify and hold
harmless the Administrative Agent and its affiliates from
and against any and all claims, actions and suits (whether
groundless or otherwise), losses, damages, costs, expenses
(including any expenses for which the Administrative Agent
or such affiliate has not been reimbursed by the Borrower as
required by Section 17), and liabilities of every nature and
character arising out of or related to this Credit
Agreement, the Notes, or any of the other Loan Documents or
the transactions contemplated or evidenced hereby or
thereby, or the Administrative Agent's actions taken
hereunder or thereunder, except to the extent that any of
the same shall be directly caused by the Administrative
Agent's willful misconduct or gross negligence.
Section 16.8. Administrative Agent as Bank.
In its individual capacity, BKB shall have the same
obligations and the same rights, powers and privileges in
respect to its Commitment and the Loans made by it, and as
the holder of any of the Notes and as the purchaser of any
Letter of Credit Participations, as it would have were it
not also the Administrative Agent.
Section 16.9. Resignation.
The Administrative Agent may resign at any time by
giving sixty (60) days prior written notice thereof to the
Banks and the Borrower. Upon any such resignation, the
Majority Banks shall have the right to appoint a successor
Administrative Agent. Unless an Event of Default shall have
occurred and be continuing, such successor Administrative
Agent shall be reasonably acceptable to the Borrower. If no
successor Administrative Agent shall have been so appointed
by the Majority Banks and approved by the Borrower and shall
have accepted such appointment within thirty (30) days after
the retiring Administrative Agent's giving of notice of
resignation, then the retiring Administrative Agent may, on
behalf of the Banks, appoint a successor Administrative
Agent, which shall be a financial institution having a
rating of not less than A or its equivalent by S&P. Upon
the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges
and duties of the retiring Administrative Agent, and the
retiring Administrative Agent shall be discharged from its
duties and obligations hereunder. After any retiring
Administrative Agent's resignation, the provisions of this
Credit Agreement and the other Loan Documents shall continue
in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as
Administrative Agent.
Section 16.10. Notification of Defaults and Events of
Default.
Each Bank hereby agrees that, upon learning of the existence
of a Default or an Event of Default, it shall promptly
notify the Administrative Agent thereof. The Administrative
Agent hereby agrees that upon receipt of any notice under
this Section 16.10 it shall promptly notify the other Banks
of the existence of such Default or Event of Default.
Section 16.11. Duties in the Case of
Enforcement.
In case one of more Events of Default have occurred and
shall be continuing, and whether or not acceleration of the
Obligations shall have occurred, the Administrative Agent
shall, if (i) so requested by the Majority Banks and (ii)
the Banks have provided to the Administrative Agent such
additional indemnities and assurances against expenses and
liabilities as the Administrative Agent may reasonably
request, proceed to enforce the provisions of the Security
Documents authorizing the sale or other disposition of all
or any part of the Collateral Bonds and exercise all or any
such other legal and equitable and other rights or remedies
as it may have in respect of such Collateral Bonds. The
Majority Banks may direct the Administrative Agent in
writing as to the method and the extent of any such sale or
other disposition, the Banks hereby agreeing to indemnify
and hold the Administrative Agent, harmless from all
liabilities incurred in respect of all actions taken or
omitted in accordance with such directions, provided that
the Administrative Agent need not comply with any such
direction to the extent that the Administrative Agent
reasonably believes the Administrative Agent's compliance
with such direction to be unlawful or commercially
unreasonable in any applicable jurisdiction.
Section 17. EXPENSES AND INDEMNIFICATION.
Section 17.1. Expenses.
The Borrower agrees to pay (i) the reasonable costs of
producing and reproducing this Credit Agreement, the other
Loan Documents and the other agreements and instruments
mentioned herein, (ii) any taxes payable by the
Administrative Agent or any of the Banks on or with respect
to the transactions contemplated by this Credit Agreement in
accordance with Section 6.2.2 (the Borrower hereby agreeing
to indemnify the Administrative Agent and each Bank with
respect thereto), (iii) the reasonable fees, expenses and
disbursements of the Administrative Agent's Special Counsel
or any local counsel to the Administrative Agent incurred in
connection with the preparation, syndication, administration
or interpretation of the Loan Documents and other
instruments mentioned herein, each closing hereunder, any
amendments, modifications, approvals, consents or waivers
hereto or hereunder, or the cancellation of any Loan
Document upon payment in full in cash of all of the
Obligations or pursuant to any terms of such Loan Document
for providing for such cancellation, (iv) the reasonable
out-of-pocket fees, expenses and disbursements of the
Administrative Agent or any of its affiliates incurred by
the Administrative Agent or such affiliate in connection
with the preparation, syndication, administration or
interpretation of the Loan Documents and other instruments
mentioned herein, (v) any reasonable out-of-pocket fees,
costs, expenses and bank charges, including bank charges for
returned checks, incurred by the Administrative Agent in
establishing, maintaining or handling agency accounts, lock
box accounts and other accounts for the collection of any of
the Collateral Bonds or the stock of Bangor Energy Resale,
Inc.; and (vi) all reasonable out-of-pocket expenses
(including without limitation reasonable attorneys' fees and
costs, and reasonable consulting, accounting, appraisal,
investment banking and similar professional fees and
charges) incurred by any Bank or the Administrative Agent in
connection with (A) the enforcement of or preservation of
rights under any of the Loan Documents against the Borrower
or the administration thereof after the occurrence of a
Default or Event of Default and (B) any litigation,
proceeding or dispute whether arising hereunder or
otherwise, in any way related to any Bank's or the
Administrative Agent's relationship with the Borrower
hereunder. Notwithstanding the foregoing, the Borrower
shall have no obligation hereunder to the Administrative
Agent or any Bank with respect to any costs or expenses
arising from the gross negligence or willful misconduct of
the Administrative Agent or such Bank, as the case may be.
Section 17.2. Indemnification.
The Borrower agrees to indemnify and hold harmless the
Administrative Agent, the Documentation Agent, the Co-
Arrangers, their affiliates and the Banks from and against
any and all liabilities, losses, damages and expense of
every nature and character resulting from any and all
claims, actions and suits whether groundless or otherwise,
arising out of this Credit Agreement or any of the other
Loan Documents or the transactions contemplated hereby
including, without limitation, (i) any actual or proposed
use by the Borrower of the proceeds of any of the Loans or
Letters of Credit, (ii) the Borrower entering into or
performing this Credit Agreement or any of the other Loan
Documents or (iii) with respect to the Borrower and its
Subsidiaries and their respective properties and assets, the
violation of any Environmental Law, the presence, disposal,
escape, seepage, leakage, spillage, discharge, emission,
release or threatened release of any Hazardous Substances or
any action, suit, proceeding or investigation brought or
threatened with respect to any Hazardous Substances
(including, but not limited to, claims with respect to
wrongful death, personal injury or damage to property), in
each case including, without limitation, the reasonable fees
and disbursements of counsel incurred in connection with any
such investigation, litigation or other proceeding except
for the gross negligence or willful misconduct of the party
indemnified. In litigation, or the preparation therefor,
the Banks and the Administrative Agent and its affiliates
shall be entitled to select their own counsel and, in
addition to the foregoing indemnity, the Borrower agrees to
pay promptly the reasonable fees and expenses of such
counsel. Notwithstanding anything to the contrary herein,
the Borrower shall not be responsible for (i) the cost of
more than one counsel for the Administrative Agent and its
affiliates, and any Bank (that is not the Administrative
Agent) and its affiliates, respectively, or (ii)
settlements, waivers or releases made without Borrower s
consent. If, and to the extent that the obligations of the
Borrower under this Section 17.2 are unenforceable for any
reason, the Borrower hereby agrees to make the maximum
contribution to the payment in satisfaction of such
obligations which is permissible under applicable law.
Section 17.3. Survival.
The covenants contained in this Section 17 shall survive
payment or satisfaction in full of all other Obligations.
Section 18. SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations and
warranties made herein, in the Notes, in any of the other
Loan Documents or in any documents or other papers delivered
by or on behalf of the Borrower or any of its Subsidiaries
pursuant hereto shall be deemed to have been relied upon by
the Banks and the Administrative Agent, notwithstanding any
investigation heretofore or hereafter made by any of them,
and shall survive the making by the Banks of any of the
Loans and the issuance, extension or renewal of any Letters
of Credit, as herein contemplated, and shall continue in
full force and effect so long as any Letter of Credit or any
amount due under this Credit Agreement or the Notes or any
of the other Loan Documents remains outstanding or any Bank
has any obligation to make any Loans or the Administrative
Agent has any obligation to issue, extend or renew any
Letter of Credit, and for such further time as may be
otherwise expressly specified in this Credit Agreement. All
statements contained in any certificate or other paper
delivered to any Bank or the Administrative Agent at any
time by or on behalf of the Borrower or any of its
Subsidiaries pursuant hereto or in connection with the
transactions contemplated hereby shall constitute
representations and warranties by the Borrower hereunder.
Section 19. ASSIGNMENT AND PARTICIPATION.
Section 19.1. Conditions to Assignment by Banks.
Except as provided herein, each Bank may assign to one
or more Eligible Assignees all or a portion of its
interests, rights and obligations under this Credit
Agreement (including all or a portion of its Commitment
Percentage and Commitment and/or its Term Loan Percentage
and Term Loan Exposure, and the same portion of the Loans at
the time owing to it and the Notes held by it and, if
applicable, its participating interest in the risk relating
to any Letters of Credit); provided that (i) each of the
Administrative Agent and, unless an Event of Default shall
have occurred and be continuing, the Borrower shall have
given its prior written consent to such assignment, which
consent will not be unreasonably withheld, (ii) each such
assignment shall be of a constant, and not a varying,
percentage of all the assigning Bank's rights and
obligations under this Credit Agreement, (iii) each
assignment shall be in a minimum amount of $5,000,000 or, if
a Bank s total Commitment and/or Term Loan Exposure is less
than $5,000,000, in a minimum amount equal to such Bank s
total Commitment and/or Term Loan Exposure, (iv) the parties
to such assignment shall execute and deliver to the
Administrative Agent, for recording in the Register (as
hereinafter defined), an Assignment and Acceptance,
substantially in the form of Exhibit E hereto (an
"Assignment and Acceptance"), together with any Notes
subject to such assignment, (v) so long as no Event of
Default exists, the Administrative Agent and the
Documentation Agent (or their affiliates) shall retain, free
of any such assignment, an amount of not less than
$5,000,000, and (vi) any Bank may at any time, and from time
to time, assign to any branch, lending office, affiliate of
such Bank or Related Fund all or any part of its rights and
obligations under the Loan Documents by notice to the
Administrative Agent and the Borrower. Upon such execution,
delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance,
which effective date shall be at least five (5) Business
Days after the execution thereof, (i) the assignee
thereunder shall be a party hereto and, to the extent
provided in such Assignment and Acceptance, have the rights
and obligations of a Bank hereunder, and (ii) the assigning
Bank shall, to the extent provided in such assignment and
upon payment to the Administrative Agent of the registration
fee referred to in Section 19.3, be released from its
obligations under this Credit Agreement.
Section 19.2. Certain Representations and Warranties;
Limitations; Covenants.
By executing and delivering an Assignment and Acceptance,
the parties to the assignment thereunder confirm to and
agree with each other and the other parties hereto as
follows:
(a) other than the representation and warranty
that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any
adverse claim, the assigning Bank makes no
representation or warranty, express or implied, and
assumes no responsibility with respect to any
statements, warranties or representations made in or in
connection with this Credit Agreement or the execution,
legality, validity, enforceability, genuineness,
sufficiency or value of this Credit Agreement, the
other Loan Documents or any other instrument or
document furnished pursuant hereto or the attachment,
perfection or priority of any security interest or
mortgage,
(b) the assigning Bank makes no representation or
warranty and assumes no responsibility with respect to
the financial condition of the Borrower and its
Subsidiaries or any other Person primarily or
secondarily liable in respect of any of the
Obligations, or the performance or observance by the
Borrower or any other Person primarily or secondarily
liable in respect of any of the Obligations of any of
their obligations under this Credit Agreement or any of
the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto;
(c) such assignee confirms that it has received a
copy of this Credit Agreement, together with copies of
the most recent financial statements referred to in
Section 8.4 and Section 9.4 and such other documents
and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such
Assignment and Acceptance;
(d) such assignee will, independently and without
reliance upon the assigning Bank, the Administrative
Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or
not taking action under this Credit Agreement;
(e) such assignee represents and warrants that it
is an Eligible Assignee;
(f) such assignee appoints and authorizes the
Administrative Agent to take such action as
Administrative Agent on its behalf and to exercise such
powers under this Credit Agreement and the other Loan
Documents as are delegated to the Administrative Agent
by the terms hereof or thereof, together with such
powers as are reasonably incidental thereto;
(g) such assignee agrees that it will perform in
accordance with their terms all of the obligations that
by the terms of this Credit Agreement are required to
be performed by it as a Bank;
(h) such assignee represents and warrants that it
is legally authorized to enter into such Assignment and
Acceptance;
(i) if applicable, such assignee acknowledges
that it has made arrangements with the assigning Bank
satisfactory to such assignee with respect to its pro
rata share of Letter of Credit Fees in respect of
outstanding Letters of Credit; and
(j) if such assignee is not incorporated or
organized under the laws of the United States of
America or a state thereof or the District of Columbia
(a "Non-U.S. Bank"), such assignee agrees that it will
deliver to the Borrower and the Administrative Agent
two duly completed copies of United States Internal
Revenue Service Form 1001 or 4224 or successor
applicable form, as the case may be, certifying in each
case that such Non-U.S. Bank is entitled to receive
payments under this Agreement and the Notes payable to
it, without deduction or withholding of any United
States federal income taxes. Each Non-U.S. Bank that
so delivers a Form 1001 or 4224 pursuant to the
preceding sentence further undertakes to deliver to
each of the Borrower and the Administrative Agent two
further copies of Form 1001 or 4224 or successor
applicable form, or other manner of certification, as
the case may be, on or before the date that any such
letter or form expires or becomes obsolete or after the
occurrence of any event requiring a change in the most
recent form previously delivered by it to the Borrower,
and such extensions or renewals thereof as may
reasonably be requested by the Borrower, certifying in
the case of a Form 1001 or 4224 that such Non-U.S. Bank
is entitled to receive payments under this Agreement
and the Notes without deduction or withholding of any
United States federal income taxes, unless in any such
case an event (including, without limitation, any
change in treaty, law or regulation) has occurred prior
to the date on which any such delivery would otherwise
be required which renders all such forms inapplicable
or which would prevent such Non-U.S. Bank from duly
completing and delivering any such form with respect to
it and such Non-U.S. Bank advises the Borrower that it
is not capable of receiving payments without any
deduction or withholding of United States federal
income tax.
Section 19.3. Register.
The Administrative Agent shall maintain a copy of each
Assignment and Acceptance delivered to it and a register or
similar list (the "Register") for the recordation of the
names and addresses of the Banks and the Commitment
Percentage of, and principal amount of the Term Loan and the
Revolving Credit Loans owing to and Letter of Credit
Participations purchased by, the Banks from time to time.
The entries in the Register shall be conclusive, in the
absence of manifest error, and the Borrower, the
Administrative Agent and the Banks may treat each Person
whose name is recorded in the Register as a Bank hereunder
for all purposes of this Credit Agreement. The Register
shall be available for inspection by the Borrower and the
Banks at any reasonable time and from time to time upon
reasonable prior notice. Upon each such recordation, the
assigning Bank agrees to pay to the Administrative Agent a
registration fee in the sum of $3,500, provided that such
registration fee shall not be required for assignments
pursuant to Section 19.1(vi).
Section 19.4. New Notes.
Upon its receipt of an Assignment and Acceptance executed by
the parties to such assignment, together with each Note
subject to such assignment, the Administrative Agent shall
(i) record the information contained therein in the
Register, and (ii) give prompt notice thereof to the
Borrower and the Banks (other than the assigning Bank).
Within five (5) Business Days after receipt of such notice,
the Borrower, at its own expense, shall execute and deliver
to the Administrative Agent, in exchange for each
surrendered Note, a new Note to the order of such Eligible
Assignee in an amount equal to the amount assumed by such
Eligible Assignee pursuant to such Assignment and Acceptance
and, if the assigning Bank has retained some portion of its
obligations hereunder, a new Note to the order of the
assigning Bank in an amount equal to the amount retained by
it hereunder. Such new Notes shall provide that they are
replacements for the surrendered Notes, shall be in an
aggregate principal amount equal to the aggregate principal
amount of the surrendered Notes, shall be dated the
effective date of such in Assignment and Acceptance and
shall otherwise be substantially the form of the assigned
Notes. The surrendered Notes shall be cancelled and returned
to the Borrower.
Section 19.5. Participations.
Each Bank may sell participations to one or more banks or
other entities in all or a portion of such Bank's rights and
obligations under this Credit Agreement and the other Loan
Documents; provided that (i) each such participation shall
be in an amount of not less than $2,500,000, (ii) any such
sale or participation shall not affect the rights and duties
of the selling Bank hereunder to the Borrower, (iii) the
only rights granted to the participant pursuant to such
participation arrangements with respect to waivers,
amendments or modifications of the Loan Documents shall be
the rights to approve waivers, amendments or modifications
that would reduce the principal of or the interest rate on
any Loans, extend the term or increase the amount of the
Commitment and/or Term Loan Exposure of such Bank as it
relates to such participant, reduce the amount of any
commitment fees or Letter of Credit Fees to which such
participant is entitled or extend any regularly scheduled
payment date for principal or interest, and (iv) the
Borrower shall not be obligated to pay any such Bank any
greater amount pursuant to Section 6.2.2, Section 6.6,
Section 6.7 or Section 6.9 in respect of the amount of the
participation transferred by such transferor Bank to such
participant than had no such transfer occurred.
Section 19.6. Disclosure.
The Borrower agrees that in addition to disclosures made in
accordance with standard and customary banking practices any
Bank may disclose information obtained by such Bank pursuant
to this Credit Agreement to assignees or participants and
potential assignees or participants hereunder; provided that
such assignees or participants or potential assignees or
participants shall agree (i) to treat in confidence such
information unless such information otherwise becomes public
knowledge, (ii) not to disclose such information to a third
party, except as required by law or legal process and (iii)
not to make use of such information for purposes of
transactions unrelated to such contemplated assignment or
participation.
Section 19.7. Assignee or Participant Affiliated with
the Borrower.
If any assignee Bank is an Affiliate of the Borrower,
then any such assignee Bank shall have no right to vote as a
Bank hereunder or under any of the other Loan Documents for
purposes of granting consents or waivers or for purposes of
agreeing to amendments or other modifications to any of the
Loan Documents or for purposes of making requests to the
Administrative Agent pursuant to Section 14.1 or Section
14.2, and the determination of the Majority Banks shall for
all purposes of this Credit Agreement and the other Loan
Documents be made without regard to such assignee Bank's
interest in any of the Loans or Reimbursement Obligations.
If any Bank sells a participating interest in any of the
Loans or Reimbursement Obligations to a participant, and
such participant is the Borrower or an Affiliate of the
Borrower, then such transferor Bank shall promptly notify
the Administrative Agent of the sale of such participation.
A transferor Bank shall have no right to vote as a Bank
hereunder or under any of the other Loan Documents for
purposes of granting consents or waivers or for purposes of
agreeing to amendments or modifications to any of the Loan
Documents or for purposes of making requests to the
Administrative Agent pursuant to Section 14.1 or Section
14.2 to the extent that such participation is beneficially
owned by the Borrower or any Affiliate of the Borrower, and
the determination of the Majority Banks shall for all
purposes of this Credit Agreement and the other Loan
Documents be made without regard to the interest of such
transferor Bank in the Loans or Reimbursement Obligations to
the extent of such participation.
Section 19.8. Miscellaneous Assignment
Provisions.
Any assigning Bank shall retain its rights to be indemnified
pursuant to Section 17 with respect to any claims or actions
arising prior to the date of such assignment. If any
assignee Bank is not incorporated under the laws of the
United States of America or any state thereof, it shall,
prior to the date on which any interest or fees are payable
hereunder or under any of the other Loan Documents for its
account, deliver to the Borrower and the Administrative
Agent certification as to its exemption from deduction or
withholding of any United States federal income taxes.
Anything contained in this Section 19 to the contrary
notwithstanding, any Bank may at any time pledge all or any
portion of its interest and rights under this Credit
Agreement (including all or any portion of its Notes) to any
of the twelve Federal Reserve Banks organized under Section
4 of the Federal Reserve Act, 12 U.S.C. Section 341. No
such pledge or the enforcement thereof shall release the
pledgor Bank from its obligations hereunder or under any of
the other Loan Documents.
Section 19.9. Assignment by Borrower.
The Borrower shall not assign or transfer any of its rights
or obligations under any of the Loan Documents without the
prior written consent of each of the Banks.
Section 19.10. Confidentiality. Each of the Banks and
the Administrative Agent agrees, on behalf of itself and
each of its affiliates, directors, officers, employees and
representatives, to use reasonable precautions to keep
confidential, in accordance with their customary procedures
for handling confidential information of the same nature and
in accordance with safe and sound banking practices, any
non-public information supplied to it by the Borrower
pursuant to this Agreement that is identified by such Person
as being "confidential" or "for internal use only" at the
time the same is delivered to the Banks or the Agent,
provided that nothing herein shall limit the disclosure of
any such information (a) after such information shall have
become public other than through a violation of this Section
19.10, (b) to the extent required by statute, rule,
regulation or judicial process, (c) to counsel for any of
the Banks or the Agent, (d) to bank examiners or any other
regulatory authority having jurisdiction over any Bank or
the Agent, or to auditors or accountants, (e) to the Agent
or any Bank, (f) if required pursuant to legal process in
connection with any litigation to which any one or more of
the Banks or the Agent is a party, or in connection with the
enforcement of rights or remedies hereunder or under any
other Loan Document, or (g) to any assignee or participant
(or prospective assignee or participant) so long as such
assignee or participant agrees to be bound by the provisions
of Section 19.6.
Section 20. NOTICES, ETC.
Except as otherwise expressly provided in this Credit
Agreement, all notices and other communications made or
required to be given pursuant to this Credit Agreement or
the Notes or any Letter of Credit Applications shall be in
writing and shall be delivered in hand, mailed by United
States registered or certified first class mail, postage
prepaid, sent by overnight courier, or sent by telegraph,
telecopy or facsimile and confirmed by delivery via courier
or postal service, addressed as follows:
(a) if to the Borrower, at 33 State Street,
Bangor, Maine 04401, Attention: Frederick S. Samp,
Telecopy: 207-990-6963, or at such other address for
notice as the Borrower shall last have furnished in
writing to the Person giving the notice;
(b) if to the Administrative Agent, at 100
Federal Street, Boston, Massachusetts 02110, Attention:
Mr. Michael M. Parker, Managing Director, Telecopy:
617-434-3652, or such other address for notice as the
Administrative Agent shall last have furnished in
writing to the Person giving the notice; and
(c) if to any Bank, at such Bank's address set
forth on Schedule 1 hereto, or such other address for
notice as such Bank shall have last furnished in
writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been
duly given or made and to have become effective (i) if
delivered by hand, overnight courier or facsimile to a
responsible officer of the party to which it is directed, at
the time of the receipt thereof by such officer or the
sending of such facsimile along with receipt of confirmation
and (ii) if sent by registered or certified first-class
mail, postage prepaid, on the third Business Day following
the mailing thereof.
Section 21. GOVERNING LAW.
THIS AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY
PROVIDED THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS
UNDER THE LAWS OF THE STATE OF NEW YORK AND SHALL, PURSUANT TO
NEW YORK GENERAL OBLIGATIONS LAW Section 5-1401, BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF SAID STATE OF NEW
YORK. THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF
THIS CREDIT AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL
COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE
JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH
SUIT BEING MADE UPON THE BORROWER IN ACCORDANCE WITH LAW AT THE
ADDRESS SPECIFIED IN Section 20. THE BORROWER HEREBY WAIVES ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY
SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN
INCONVENIENT COURT.
Section 22. HEADINGS.
The captions in this Credit Agreement are for
convenience of reference only and shall not define or limit
the provisions hereof.
Section 23. COUNTERPARTS.
This Credit Agreement and any amendment hereof may be
executed in several counterparts and by each party on a
separate counterpart, each of which when executed and
delivered shall be an original, and all of which together
shall constitute one instrument. In proving this Credit
Agreement it shall not be necessary to produce or account
for more than one such counterpart signed by the party
against whom enforcement is sought.
Section 24. ENTIRE AGREEMENT, ETC.
The Loan Documents and any other documents executed in
connection herewith or therewith express the entire
understanding of the parties with respect to the
transactions contemplated hereby. Neither this Credit
Agreement nor any term hereof may be changed, waived,
discharged or terminated, except as provided in Section 26.
Section 25. WAIVER OF JURY TRIAL.
Each of the Administrative Agent, the Banks and the
Borrower hereby waive its right to a jury trial with respect
to any action or claim arising out of any dispute in
connection with this Credit Agreement, the Notes or any of
the other Loan Documents, any rights or obligations
hereunder or thereunder or the performance of which rights
and obligations. Except as prohibited by law, all parties
to this Credit Agreement hereby waive any right they may
have to claim or recover in any litigation referred to in
the preceding sentence any special, exemplary, punitive or
consequential damages or any damages other than, or in
addition to, actual damages. The Borrower (a) certifies
that no representative, agent or attorney of any Bank or the
Administrative Agent has represented, expressly or
otherwise, that such Bank or the Administrative Agent would
not, in the event of litigation, seek to enforce the
foregoing waivers and (b) acknowledges that the
Administrative Agent and the Banks have been induced to
enter into this Agreement, the other Loan Documents to which
it is a party by, among other things, the waivers and
certifications contained herein.
Section 26. CONSENTS, AMENDMENTS, WAIVERS, ETC.
Any consent or approval required or permitted by this
Credit Agreement to be given by the Banks may be given, and
any term of this Credit Agreement, the other Loan Documents
or any other instrument related hereto or mentioned herein
may be amended, and the performance or observance by the
Borrower of any terms of this Credit Agreement, the other
Loan Documents or such other instrument or the continuance
of any Default or Event of Default may be waived (either
generally or in a particular instance and either
retroactively or prospectively) with, but only with, the
written consent of the Borrower and the written consent of
the Majority Banks. Notwithstanding the foregoing, the rate
of interest on the Notes (other than interest accruing
pursuant to Section 6.10.2 following the effective date of
any waiver by the Majority Banks of the Default or Event of
Default relating thereto) hereunder, and the amount of the
Commitments of the Banks and the amount of commitment fee or
Letter of Credit Fees and the amount and time and any other
term or condition or application of any mandatory prepayment
under Section 4.5, may not be changed without the written
consent of the Borrower and the written consent all of the
Banks; the Revolving Credit Loan Maturity Date and the Term
Loan Maturity Date may not be postponed without the written
consent of all of the Banks; any substantial portion of the
Collateral (as defined in the Pledge Agreement) may not be
released without the written consent of all of the Banks
except (a) to the extent expressly contemplated by the
Supplemental Indenture and the Pledge Agreement and (b) to
the extent the aggregate principal amount of the Collateral
Bonds exceeds one-hundred and ten percent (110%) of the sum
of the aggregate Revolving Credit Commitments and the
outstanding principal amount of the Term Loans; this Section
26 and the definition of Majority Banks may not be amended,
without the written consent of all of the Banks; and the
amount of the Agent's Fee or any Letter of Credit Fees
payable for the Administrative Agent's account and Section
16 may not be amended without the written consent of the
Administrative Agent. No waiver shall extend to or affect
any obligation not expressly waived or impair any right
consequent thereon. No course of dealing or delay or
omission on the part of the Administrative Agent or any Bank
in exercising any right shall operate as a waiver thereof or
otherwise be prejudicial thereto. No notice to or demand
upon the Borrower shall entitle the Borrower to other or
further notice or demand in similar or other circumstances.
Section 27. SEVERABILITY.
The provisions of this Credit Agreement are severable
and if any one clause or provision hereof shall be held
invalid or unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall
affect only such clause or provision, or part thereof, in
such jurisdiction, and shall not in any manner affect such
clause or provision in any other jurisdiction, or any other
clause or provision of this Credit Agreement in any
jurisdiction.
Section 28. TRANSITIONAL ARRANGEMENTS.
Section 28.1. Chase Credit Agreement Superseded.
This Credit Agreement shall supersede the Chase Credit
Agreement in its entirety, except as provided in this
Section 28. On the Closing Date, the rights and obligations
of the parties under the Chase Credit Agreement and the
"Revolving Credit Notes" and the "Term Notes" as defined
therein shall be subsumed within and be governed by this
Credit Agreement and the Revolving Credit Notes and Term
Notes, respectively.
Section 28.2. Return and Cancellation of
Notes.
Upon its receipt of the Notes to be delivered hereunder on
the Closing Date, each Bank will promptly return to the
Borrower, marked "Canceled", the "Revolving Credit Notes"
and the "Term Notes" of the Borrower held by such Bank as a
Prior Lender pursuant to, and as defined in, the Chase
Credit Agreement, if any.
Section 28.3. Interest and Fees Under Superseded
Agreement.
All interest and all commitment, facility and other
fees and expenses owing or accruing under or in respect of
the Chase Credit Agreement shall be calculated as of the
Closing Date in accordance with the Transitional
Arrangements Letter and the Borrower shall be responsible
for such fees, including any breakage fees.
Section 28.4. No Claims Under Chase Credit
Agreement.
Each Bank wishes (and the Borrower agrees) to eliminate any
possibility that any past conditions, acts, omissions,
events, circumstances or matters would impair or otherwise
adversely affect such Bank's rights, interests, contracts,
collateral security or remedies. Therefore, the Borrower
unconditionally releases, waives and forever discharges (i)
any and all liabilities, obligations, duties, promises or
indebtedness of any kind of such Bank or Prior Lender to the
Borrower regarding the execution, delivery or performance of
the Chase Credit Agreement or any of the other Loan
Documents (as defined in the Chase Credit Agreement), except
the obligations to be performed by such Bank for the
Borrower as expressly stated in this Credit Agreement and
the other Loan Documents (as defined in this Credit
Agreement), and (ii) all claims, offsets, causes of action,
suits or defenses of any kind whatsoever (if any), whether
known or unknown, which the Borrower might otherwise have
against such Bank or Prior Lender or any of their directors,
offices, employees or agents, in either case (i) or (ii), on
account of any condition, act, omission, event, contract,
liability, obligation, indebtedness, claim cause of action,
defense, circumstance or matter of any kind whatsoever which
existed, arose or occurred at any time prior to the date
hereof regarding the execution, delivery or performance of
the Chase Credit Agreement or any of the Loan Documents (as
defined in the Chase Credit Agreement).
Section 28.5. Interbank Settlements.
On the Closing Date, each of the Banks shall pay to
each of the Prior Lenders such amounts as may be necessary
so as to result in the outstanding amount of Loans made by
each Bank being equal to such Bank's Commitment Percentage
and/or Term Loan Percentage of the aggregate amount of Loans
outstanding as of the Closing Date. The Borrower and the
Banks hereby agree that all amounts paid to any Bank or
Prior Lender by any other Bank in connection with interbank
settlements with respect to Loans outstanding immediately
prior to the date hereof shall be deemed to constitute Loans
under the Credit Agreement.
Section 28.6. Intercreditor Agreement with Bangor
Energy Banks. The Banks hereby agree to, ratify and confirm the Bangor
Energy Intercreditor Agreement on the terms set forth
therein, and further confirm that any matters concerning
such agreement or the intercreditor arrangements set forth
therein shall be governed by the provisions of the Bangor
Energy Intercreditor Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, the undersigned have duly executed
this Credit Agreement as of the date first set forth above.
BANGOR HYDRO-ELECTRIC COMPANY
By:
Name:
Title:
BANKBOSTON, N.A., individually
and as Administrative Agent
By:
Name:
Title:
FLEET NATIONAL BANK,
individually and as
Documentation Agent
By:
Name:
Title:
PEOPLES HERITAGE BANK
By:
Name:
Title:
BANK OF SCOTLAND
By:
Name:
Title:
DEEPROCK & COMPANY
By: Eaton Vance Management,
as Investment Advisor
By:
Name:
Title:
CYPRESSTREE INVESTMENT
MANAGEMENT COMPANY, INC.
As: Attorney-in-Fact and on
behalf of First Allmerica
Financial Life Insurance
Company as Portfolio
Manager
By:
Name:
Title:
KZH-CYPRESSTREE-1 CORPORATION
By:
Name:
Title:
CYPRESSTREE BOSTON PARTNERS
By:
Name:
Title:
