BANGOR HYDRO-ELECTRIC COMPANY
FORM 10-K
EXHIBIT 4(a)
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EXECUTION COPY
SECOND AMENDMENT, dated as June 6, 1997 (this "AMENDMENT"), to the
CREDIT AGREEMENT, dated as of June 30, 1995, as amended by the First
Amendment thereto dated as of October 2, 1995 (as further amended,
supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT"), among Bangor Hydro-Electric Company, a Maine corporation (the
"COMPANY"), the several banks from time to time parties to the Credit
Agreement (individually, a "BANK" and collectively, the "BANKS"), The Chase
Manhattan Bank (formerly known as Chemical Bank), as administrative agent for
the Banks, and Fleet Bank of Maine and The First National Bank of Boston, as
co-agents (in such capacity, the "CO-AGENTS"). Terms defined in the Credit
Agreement shall be used in this Amendment with their defined meanings unless
otherwise defined herein.
W I T N E S S E T H :
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WHEREAS, pursuant to Waivers with respect to the Credit Agreement,
dated as of March 31, 1997 and May 15, 1997, the Banks parties thereto
temporarily waived compliance by the Company with Section 6.8 of the Credit
Agreement for the period of four consecutive fiscal quarters ended March 31,
1997; and
WHEREAS, the Company has requested the Banks to permanently waive
compliance by the Company with Section 6.8 of the Credit Agreement for the
respective periods of four consecutive fiscal quarters ended March 31, 1997
and June 30, 1997 and to make certain other changes to the Credit Agreement
on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
I. AMENDMENT.
1. SECTION 1.1. (a) The definition of "Loan Documents" contained
in Section 1.1 of the Credit Agreement is hereby amended by adding the words
"and the Security Agreement" to the end thereof.
(b) The definition of "Substantial Part" contained in Section 1.1
of the Credit Agreement is hereby amended and restated in its entirety as
follows:
"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 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 the UNITIL Transfer 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 Section 6.6."
(c) The following new definitions are hereby added to Section 1.1
of the Credit Agreement in the appropriate alphabetical order:
"NET CASH PROCEEDS": in connection with the UNITIL Transfer,
the proceeds thereof in the form of cash, net of reasonable and
documented attorneys' fees and other customary fees and expenses
actually incurred in connection therewith.
"PERC CONTRACT": the power purchase agreement dated as of
June 21, 1984, as amended, between the Company and Penobscot Energy
Recovery Company.
"PERC LETTER OF INTENT": the draft letter of intent dated
January 30, 1997 between the Company and Penobscot Energy Recovery
Company.
"SECURITY AGREEMENT": the Security Agreement executed and
delivered by the Company in connection with the Second Amendment to this
Agreement, as the same may be amended, supplemented or otherwise
modified from time to time.
"UNITIL CONTRACT": the Power Sale Agreement dated as of March
26, 1986 between the Company and UNITIL Power Corp.
"UNITIL TRANSFER": as defined in Section 6.12.
2. SECTION 2.11. (a) Paragraph (a) of Section 2.11 of the Credit
Agreement is hereby amended and restated in its entirety as follows:
"(a) The Term Loans shall be repaid by the Company in
installments on the dates listed below and in the aggregate amount for
each such installment listed opposite such dates below:
INSTALLMENT DATE AGGREGATE INSTALLMENT AMOUNT
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June 30, 1996 $12,000,000
June 9, 1997 $12,000,000
September 30, 1997 $1,000,000
December 31, 1997 $1,000,000
March 31, 1998 $4,000,000
June 30, 1998 $6,000,000
September 30, 1998 $1,000,000
December 31, 1998 $1,000,000
March 31, 1999 $4,000,000
June 30, 1999 $6,000,000
September 30, 1999 $1,000,000
December 31, 1999 $1,000,000
March 31, 2000 $4,000,000
June 30, 2000 $6,000,000."
(b) Paragraph (b) of Section 2.11 of the Credit Agreement is
hereby amended by adding the following sentence immediately after the table
set forth therein:
"In addition, in the event that the UNITIL Transfer shall be
consummated, the Revolving Credit Commitments shall be automatically and
permanently reduced (a) on the date thereof in the aggregate amount of
$25,000,000, (b) on the first anniversary thereof in the aggregate
amount of 25% of the excess, if any, of the Net Cash Proceeds of the
UNITIL Transfer received by the Company OVER $40,000,000 and (c) on the
second anniversary thereof in the aggregate amount of 25% of the excess,
if any, of the Net Cash Proceeds of the UNITIL Transfer received by the
Company OVER $40,000,000. Each reduction in the Revolving Credit
Commitments pursuant to the preceding sentence shall be accompanied by a
prepayment of the Revolving Credit Loans in an aggregate amount equal to
the amount of such commitment reduction."
3. SECTION 6.3. (a) Paragraph (f) of Section 6.3 of the Credit
Agreement is hereby amended and restated in its entirety as follows:
"(f) Any unsecured Debt not otherwise permitted by this
Section 6.3 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 Revolving Credit Commitments
made pursuant to Section 2.6 or 2.11 prior to June 1, 1997 plus (iii) an
amount equal to 50% of the aggregate amount of any reductions in the
Revolving Credit Commitments made pursuant to Section 2.6 or 2.11 on or
after June 1, 1997 minus the aggregate outstanding principal amount of
any Indebtedness incurred pursuant to Section 6.3(g); and"
(b) Section 6.3 of the Credit Agreement is hereby amended by
adding a new paragraph (g) to the end thereof which shall read in its
entirety as follows:
"(g) Unsecured Debt incurred by the Company in connection
with the restructuring of the PERC Contract so long as the aggregate
principal amount of Debt incurred pursuant to this paragraph (g) does
not exceed $5,000,000."
4. SECTION 6.4. Section 6.4 of the Credit Agreement is hereby
amended by adding a new paragraph (e) to the end thereof which shall read in
its entirety as follows:
"(e) Investments in ACCESS Communications, a joint venture
formed for the purpose of providing two-way communication services, in
an aggregate amount not to exceed $1,000,000 during the term of this
Agreement, so long as no more than $500,000 of such investments are made
in the form of cash and the remainder are made in the form of
contributions of assets and services (with the fair market value of such
non-cash investments being certified in reasonable detail pursuant to a
written notice to the Administrative Agent delivered prior to the
contribution thereof)"
5. SECTION 6.7. Section 6.7 of the Credit Agreement is hereby
amended by adding the following sentence to the end thereof:
"Notwithstanding the foregoing, the maximum permitted Consolidated Total
Debt Ratio for the period from April 1, 1997 to but excluding September
30, 1997 shall be 0.74 to 1.0 rather than 0.72 to 1.0."
6. SECTION 6.8. Section 6.8 of the Credit Agreement is hereby
amended by adding the following sentence to the end thereof:
"Notwithstanding the foregoing, the Company shall not be required to
comply with this Section 6.8 for the four consecutive fiscal quarters
ending March 31, 1997 or June 30, 1997."
7. SECTION 6.10. The last sentence of paragraph (a) of Section
6.10 is hereby amended and restated in its entirety as follows:
"Notwithstanding the foregoing, the Company may pay dividends in respect
of its common stock in any fiscal year in an aggregate amount not to
exceed (i) in the case of the 1997 fiscal year, $1,320,000 (it being
understood that the full amount of dividends permitted for the 1997
fiscal year was paid in January 1997) and (ii) in the case of each
subsequent fiscal year, 60% of Adjusted Consolidated Net Income for such
fiscal year. As used in this paragraph, "Adjusted Consolidated Net
Income" means, for any period, Consolidated Net Income for such period
MINUS, to the extent included in such Consolidated Net Income, net
revenue attributable to gains recognized as a result of the UNITIL
Transfer, and PLUS, to the extent not reflected in such Consolidated Net
Income, net revenue that would have been attributable to the UNITIL
Contract during such period if the UNITIL Transfer had not been
consummated."
8. SECTION 6.12. (a) Section 6.12 of the Credit Agreement is
hereby amended by adding a new clause (c) to the end thereof which shall read
in its entirety as follows:
"or (c) the UNITIL Contract"
(b) Section 6.12 of the Credit Agreement is hereby further amended
by adding the following sentences to the end thereof:
"The Company shall not sell, assign, transfer or otherwise dispose of
(other than pursuant to the Security Agreement) all or any part of its
rights or interests under the UNITIL Contract (the "UNITIL Transfer")
unless (a) the consideration paid to the Company in connection with the
UNITIL Transfer is entirely in the form of cash and (b) the Net Cash
Proceeds of the UNITIL Transfer received by the Company equal at least
$25,000,000. In the event that the PERC Contract shall be restructured,
(a) the aggregate amount expended by the Company and its Subsidiaries in
connection therewith (excluding reasonable transaction costs) shall not
exceed $8,000,000 plus any additional amounts (not to exceed $500,000
per annum) required to be paid by the Company as provided in the PERC
Letter of Intent plus any warrants to purchase common stock of the
Company issued as part of the consideration for such restructuring, (b)
the sources for any cash consideration paid in connection therewith
shall be limited solely to proceeds of the issuance or incurrence of
equity or, subject to clause (c) below, Debt or the net cash proceeds of
the UNITIL Transfer (as demonstrated in a certificate furnished by the
Company to the Administrative Agent prior to the consummation of such
restructuring) and (c) any Debt incurred to finance such restructuring
pursuant to Section 6.3(f) or (g) shall be subordinated, shall have no
scheduled amortization prior to July 1, 2001 and shall have terms and
conditions (including subordination terms) satisfactory to the Majority
Banks (which consent shall not be unreasonably withheld)."
II. MISCELLANEOUS.
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1. REPRESENTATIONS AND WARRANTIES. The Company hereby represents
and warrants as of the date hereof that, after giving effect to this
Amendment, (a) no Default or Event of Default has occurred and is continuing
and (b) all representations and warranties of the Company contained in the
Loan Documents are true and correct in all material respects with the same
effect as if made on and as of such date.
2. EXPENSES. The Company agrees to pay or reimburse the
Administrative Agent on demand for all its reasonable out-of-pocket costs and
expenses incurred in connection with the preparation and execution of this
Amendment, including, without limitation, the reasonable fees and
disbursements of counsel to the Administrative Agent.
3. NO CHANGE. Except as expressly provided herein, no term or
provision of the Credit Agreement shall be amended, modified or supplemented,
and each term and provision of the Credit Agreement shall remain in full
force and effect.
4. EFFECTIVENESS. This Amendment shall become effective as of
the date hereof upon (a) receipt by the Administrative Agent of counterparts
hereof duly executed by the Company and the Majority Banks, (b) receipt by
the Administrative Agent of a security agreement in form and substance
satisfactory to it, pursuant to which the Company shall have granted a first
priority security interest in the UNITIL Contract to the Administrative Agent
for the benefit of the Banks, and (c) receipt by the Administrative Agent of
an amendment fee in the aggregate amount of $125,000, to be distributed by
the Administrative Agent to the Banks PRO RATA based on the amounts of their
respective Revolving Credit Commitments and Term Loans.
5. COUNTERPARTS. This Amendment may be executed by the parties
hereto in any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument.
6. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed and delivered by their proper and duly authorized
officers as of the date first above written.
BANGOR HYDRO-ELECTRIC COMPANY
By:________________________________
Title:
THE CHASE MANHATTAN BANK, as Administrative
Agent and as a Bank
By:________________________________
Title:
THE FIRST NATIONAL BANK OF BOSTON
By:________________________________
Title:
THE BANK OF NEW YORK
By:________________________________
Title:
FLEET BANK OF MAINE
By:________________________________
Title:
KEY BANK
By:________________________________
Title:
THE TORONTO-DOMINION BANK
By:________________________________
Title: