EXHIBIT 4(b)
TO FORM 10-Q,
1ST QUARTER 1998
GUARANTY
GUARANTY, dated as of March 31, 1998, by BANGOR HYDRO - ELECTRIC
COMPANY, a Maine corporation (the "Guarantor") in favor of (a) BANKBOSTON,
N.A., a national banking association, as agent (hereinafter, in such
capacity, the "Agent") for itself and the other lending institutions
(hereinafter, collectively, the "Banks") which are or may become parties to a
Term Loan Agreement, dated as of March 31, 1998 (as amended and in effect
from time to time, the "Loan Agreement"), among BANGOR ENERGY RESALE, INC., a
Maine corporation (the "Company"), the Banks and the Agent and (b) each of
the Banks.
WHEREAS, the Guarantor is the holder of one hundred percent (100%) of
the issued and outstanding capital stock of the Company;
WHEREAS, the Guarantor expects to receive substantial direct and
indirect benefits from the extensions of credit to the Company by the Banks
pursuant to the Loan Agreement (which benefits are hereby acknowledged);
WHEREAS, it is a condition precedent to the Banks' making any loans or
otherwise extending credit to the Company under the Loan Agreement that the
Guarantor execute and deliver to the Agent, for the benefit of the Banks and
the Agent, a guaranty substantially in the form hereof; and
WHEREAS, the Guarantor wishes to guaranty the Company's obligations to
the Banks and the Agent under or in respect of the Loan Agreement as provided
herein;
NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Guarantor hereby agrees with the Banks and the Agent
as follows:
1. DEFINITIONS.
The term "Obligations" and all other capitalized terms used herein and
not otherwise defined herein shall have the respective meanings provided
therefor in the Loan Agreement.
2. GUARANTY OF PAYMENT AND PERFORMANCE.
The Guarantor hereby guarantees to the Banks and the Agent the full and
punctual payment when due (whether at stated maturity, by required pre-
payment, by acceleration or otherwise), as well as the performance, of all of
the Obligations including all such which would become due but for the
operation of the automatic stay pursuant to Section 362(a) of the Federal
Bankruptcy Code and the operation of Section Section 502(b) and 506(b) of the
Federal Bankruptcy Code. This Guaranty is an absolute, unconditional and
continuing guaranty of the full and punctual payment and performance of all
of the Obligations and not of their collectibility only and is in no way
conditioned upon any requirement that the Agent or any Bank first attempt to
collect any of the Obligations from the Company or resort to any collateral
security or other means of obtaining payment. Should the Company default in
the payment or performance of any of the Obligations, the obligations of the
Guarantor hereunder with respect to such Obligations in default shall, upon
demand by the Agent, become immediately due and payable to the Agent, for the
benefit of the Banks and the Agent, without demand or notice of any nature,
all of which are expressly waived by the Guarantor. Payments by the
Guarantor hereunder may be required by the Agent on any number of occasions.
All payments by the Guarantor hereunder shall be made to the Agent, in the
manner and at the place of payment specified therefor in the Loan Agreement,
for the account of the Banks and the Agent and shall be made without 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 hereinafter imposed, levied or collected, withheld or
assessed by any governmental authority, agency or instrumentality excluding,
in the case of the Agent and each Bank, net income and franchise taxes
imposed on the Agent or such Bank by the jurisdiction under the laws of which
such Agent or such Bank is organized or any political subdivision thereof or
taxing or other authority therein unless the Guarantor is compelled by law to
make such deduction or withholding. Notwithstanding anything to the contrary
in this Guaranty, the Guarantor's liability hereunder shall be limited to an
amount equal to $24,800,000, plus, without limitation as to the amounts
thereof, all interest (but only to the extent such interest accrues at the
rates (including default rates) expressly contemplated by the Credit
Agreement as in effect on the date hereof), banking charges, commissions,
costs and reasonable expenses chargeable to the Company in respect of the
Obligations (but only to the extent such Obligations are expressly provided
for in the Credit Agreement as in effect on the date hereof), plus all
interest and other costs and expenses payable by such Guarantor pursuant to
Section 3 hereof. The Agent's and the Bank's dealings with the Company need
not be limited to any particular sum notwithstanding any limitation herein
upon the liability of the Guarantor.
3. GUARANTOR'S AGREEMENT TO PAY ENFORCEMENT COSTS, ETC.
The Guarantor further agrees, as the principal obligor and not as a
guarantor only, to pay to the Agent, on demand, all reasonable out-of-pocket
fees, expenses and disbursements of the Agent (including court costs and
reasonable legal expenses) incurred or expended in connection with the
preparation, administration or interpretation of this Guaranty and the
enforcement thereof. Notwithstanding the foregoing, the Guarantor shall have
no obligation hereunder to the Agent with respect to any such costs or
expenses arising from the gross negligence or willful misconduct of the
Agent.
4. WAIVERS BY GUARANTOR; BANK'S FREEDOM TO ACT.
The Guarantor agrees that the Obligations will be paid and performed
strictly in accordance with their respective terms, regardless of any law,
regulation or order now or hereafter in effect in any jurisdiction affecting
any of such terms or the rights of the Agent or any Bank with respect
thereto. The Guarantor waives promptness, diligence, presentment, demand,
protest, notice of acceptance, notice of any Obligations incurred and all
other notices of any kind, all defenses which may be available by virtue of
any valuation, stay, moratorium law or other similar law now or hereafter in
effect, any right to require the marshalling of assets of the Company or any
other entity or other person primarily or secondarily liable with respect to
any of the Obligations, all suretyship defenses generally, and any defense
based upon any requirement of law which provides that the obligation of a
surety must be neither larger in amount nor in other respects more burdensome
than that of the principal. Without limiting the generality of the
foregoing, the Guarantor agrees to the provisions of any instrument
evidencing, securing or otherwise executed in connection with any Obligation
and agrees that the obligations of the Guarantor hereunder shall not be
released or discharged, in whole or in part, or otherwise affected by (a) the
failure of the Agent or any Bank to assert any claim or demand or to enforce
any right or remedy against the Company or any other entity or other person
primarily or secondarily liable with respect to any of the Obligations;
(b) any extensions, compromise, refinancing, consolidation or renewals of any
Obligation; (c) any change in the time, place or manner of payment of any of
the Obligations or any rescissions, waivers, compromise, refinancing,
consolidation or other amendments or modifications of any of the terms or
provisions of the Loan Agreement, the Term Note, the other Loan Documents or
any other agreement evidencing or otherwise executed in connection with any
of the Obligations, (d) the addition, substitution or release of any entity
or other person primarily or secondarily liable for any Obligation; or
(e) the adequacy of any rights which the Agent or any Bank may have against
any collateral security or other means of obtaining repayment of any of the
Obligations; (f) the impairment of any collateral securing any of the
Obligations, including without limitation the failure to perfect or preserve
any rights which the Agent or any Bank might have in such collateral Security
or the Substitution, exchange, surrender, release, loss or destruction of any
such collateral security; or (g) any other act or omission which might in any
manner or to any extent vary the risk of the Guarantor or otherwise operate
as a release or discharge of the Guarantor, all of which may be done without
notice to the Guarantor. To the fullest extent permitted by law, the
Guarantor hereby expressly waives any and all rights or defenses arising by
reason of (i) any "one action" or "anti-deficiency" law which would otherwise
prevent the Agent or any Bank from bringing any action, including any claim
for a deficiency, or exercising any other right or remedy (including any
right of set-off), against the Guarantor before or after the Agent's or such
Bank's commencement or completion of any foreclosure action, whether
judicially, by exercise of power of sale or otherwise, or (ii) any other law
which in any other way would otherwise require any election of remedies by
the Agent or any Bank.
5. UNENFORCEABILITY OF OBLIGATIONS AGAINST COMPANY.
If for any reason the Company has no legal existence or is under no
legal obligation to discharge any of the Obligations, or if any of the
Obligations have become irrecoverable from the Company by reason of the
Company's insolvency, bankruptcy or reorganization or by other operation of
law or for any other reason, this Guaranty shall nevertheless be binding on
the Guarantor to the same extent as if the Guarantor at all times had been
the principal obligor on all such Obligations. In the event that
acceleration of the time for payment of any of the Obligations is stayed upon
the insolvency, bankruptcy or reorganization of the Company, or for any other
reason, all such amounts otherwise subject to acceleration under the terms of
the Loan Agreement, the Term Notes, the other Loan Documents or any other
agreement evidencing, securing or otherwise executed in connection with any
Obligation shall be immediately due and payable by the Guarantor.
6. SUBROGATION; SUBORDINATION.
6.1 WAIVER OF RIGHTS AGAINST COMPANY.
The Guarantor shall not exercise and hereby waives any rights
against the Company arising as a result of payment by the Guarantor
hereunder, by way of subrogation, reimbursement, restitution,
contribution or otherwise, and will not prove any claim in competition
with the Agent or any Bank in respect of any payment hereunder in any
bankruptcy, insolvency or reorganization case or proceedings of any
nature; the Guarantor will not claim any setoff, recoupment or
counterclaim against the Company in respect of any liability of the
Guarantor to the Company; and the Guarantor waives any benefit of and
any right to participate in any collateral security which may be held by
the Agent or any Bank.
6.2 SUBORDINATION.
The payment of any amounts due with respect to any indebtedness of
the Company for money borrowed or credit received now or hereafter owed
to the Guarantor is hereby subordinated to the prior payment in full of
all of the Obligations. The Guarantor agrees that, after the occurrence
of any default in the payment or performance of any of the Obligations,
the Guarantor will not demand, sue for or otherwise attempt to collect
any such indebtedness of the Company to the Guarantor until all of the
Obligations shall have been paid in full. If, notwithstanding the
foregoing sentence, the Guarantor shall collect, enforce or receive any
amounts in respect of such indebtedness while any Obligations are still
outstanding, such amounts shall be collected, enforced and received by
the Guarantor as trustee for the Banks and the Agent and be paid over to
the Agent, for the benefit of the Banks and the Agent, on account of the
Obligations without affecting in any manner the liability of the
Guarantor under the other provisions of this Guaranty.
7. SECURITY; SETOFF. Regardless of the adequacy of any collateral
security or other means of obtaining payment of any of the Obligations,
during the continuance of any Event of Default, any deposits or other sums
credited by or due from any of the Banks to the Guarantor and any securities
or other property of the Guarantor 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 hereunder. Such Agent or Bank shall notify Bangor promptly
after exercising any right of setoff.
8. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby repeats to each
of the Banks and the Agent each of the representations and warranties made in
Section Section 5.1, 5.8, 5.9, 5.16 and 5.21 of the Loan Agreement and hereby
repeats to each of the Banks and the Agent each of the representations and
warranties made in Section 5.6 of the Chase Credit Agreement, with such
representations and warranties being incorporated herein as if such
representations and warranties were set forth verbatim herein provided,
however, that the provisions of such sections shall apply mutatis mutandis to
the Guarantor so that such representations and warranties would apply to the
Guarantor instead of the Borrower. Such representations and warranties shall
survive termination, cancellation, amendment and recission of the Loan
Agreement and shall not be affected by any termination, cancellation,
amendment or recission of the Loan Agreement.
9. COVENANTS; FURTHER ASSURANCES. The Guarantor hereby agrees that (a)
it will not make any changes, amendments or modifications whatsoever to the
Rate Schedule Agreement or the Service Agreement or otherwise assign its
rights thereunder, without the prior written consent of the Agent; (b) the
Guarantor will at all times, at the reasonable request of the Agent,
cooperate with the Agent in exercising the Agent's rights under the Security
Documents so that the Agent is entitled to all its rights under the Security
Documents; and (c) if after an Event of Default the Agent or any assignee of
the Unitil Contract requests the Guarantor to do so, in connection with any
future assignment of the Unitil Contract, the Guarantor will remain obligated
to perform under the Service Agreement (including the Rate Schedule or the
Substitute Rate Schedule (as defined in the Service Agreement), as
applicable, in accordance with the terms of the Service Agreement) or any
subsequent agreement required by FERC in order to effectuate or carry out the
purpose and intent of the Service Agreement.
10. The Guarantor agrees that it will from time to time, at the request of
the Agent, do all such things and execute all such documents as the Agent may
consider reasonably necessary or desirable to give full effect to this
Guaranty and to perfect and preserve the rights and powers of the Banks and
the Agent hereunder. The Guarantor acknowledges and confirms that the
Guarantor itself has established its own adequate means of obtaining from the
Company on a continuing basis all information desired by the Guarantor
concerning the financial condition of the Company and that the Guarantor will
look to the Company and not to the Agent or any Bank in order for the
Guarantor to keep adequately informed of changes in the Company's financial
condition.
11. TERMINATION; REINSTATEMENT.
This Guaranty shall remain in full force and effect until the
Obligations have been undefeasibly repaid in full in cash, provided, however,
notwithstanding the foregoing, the covenant of the Guarantor in Section 9(c)
shall remain in full force and effect until the earlier to occur of (a) the
Guarantor having received written notice from the Agent of the Agent's
election to release the Guarantor from such provision; and (b) the date on
which all obligations under the Unitil Contract have been fully performed by
all parties thereto and all payments contemplated to be made thereunder have
been made. No such notice shall be effective unless received and
acknowledged by an officer of the Agent at the address of the Agent set forth
below. No such notice shall affect any rights of the Agent or any Bank
hereunder, including without limitation the rights set forth in Section 4 and
Section 6, with respect to any Obligations incurred or accrued prior to the
receipt of such notice or any Obligations incurred or accrued pursuant to any
contract or commitment in existence prior to such receipt. This Guaranty
shall continue to be effective or be reinstated, notwithstanding any such
notice, if at any time any payment made or value received with respect to any
Obligation is rescinded or must otherwise be returned by the Agent or any
Bank upon the insolvency, bankruptcy or reorganization of the Company, or
otherwise, all as though such payment had not been made or value received.
11. SUCCESSORS AND ASSIGNS.
This Guaranty shall be binding upon the Guarantor, its successors and
assigns, and shall inure to the benefit of the Agent and the Banks and their
respective successors, transferees and assigns. Without limiting the
generality of the foregoing sentence, each Bank may assign or otherwise
transfer its rights under the Loan Agreement, the Term Note, the other Loan
Documents or any other agreement or note held by it evidencing, securing or
otherwise executed in connection with the Obligations, or sell participations
in any interest therein, to any other entity or other person, and such other
entity or other person shall thereupon become vested, to the extent set forth
in the agreement evidencing such assignment, transfer or participation, with
all the rights in respect thereof granted to such Bank herein, all in
accordance with Section 16 of the Loan Agreement. The Guarantor may not
assign any of its obligations hereunder.
12. AMENDMENTS AND WAIVERS.
No amendment or waiver of any provision of this Guaranty nor consent to
any departure by the Guarantor therefrom shall be effective unless the same
shall be in writing and signed by the Agent. No failure on the part of the
Agent or any Bank to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right.
13. NOTICES.
All notices and other communications called for hereunder shall be made
in writing and, unless otherwise specifically provided herein, shall be
deemed to have been duly made or given when delivered by 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, at the address set forth
beneath the signatures hereto, or at such address as either party may
designate in writing to the other.
SECTION 14. GOVERNING LAW; CONSENT TO JURISDICTION.
THIS GUARANTY SHALL, PURSUANT TO NEW YORK GENERAL OBLIGATIONS LAW
Section 5-1401, FOR ALL PURPOSES BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK. THE GUARANTOR AGREES THAT ANY SUIT
FOR THE ENFORCEMENT OF THIS GUARANTY MAY BE BROUGHT IN THE COURTS OF THE
STATE OF NEW YORK OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
NON-EXCLUSIVE JURISDICTION OF SUCH COURT AND TO SERVICE OF PROCESS IN ANY
SUCH SUIT BEING MADE UPON THE GUARANTOR BY MAIL AT THE ADDRESS SPECIFIED BY
REFERENCE IN Section 13. THE GUARANTOR 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 WAS BROUGHT IN AN INCONVENIENT COURT.
15. WAIVER OF JURY TRIAL.
THE AGENT (ON BEHALF OF ITSELF AND EACH BANK) AND THE GUARANTOR HEREBY
WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING
OUT OF ANY DISPUTE IN CONNECTION WITH THIS GUARANTY, ANY RIGHTS OR
OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF ANY OF SUCH RIGHTS OR
OBLIGATIONS. Except as prohibited by law, the Guarantor hereby waives any
right which it 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
Guarantor (a) certifies that neither the Agent or any Bank nor any
representative, agent or attorney of the Agent or any Bank has represented,
expressly or otherwise, that the Agent or any Bank would not, in the event of
litigation, seek to enforce the foregoing waivers and (b) acknowledges that,
in entering into the Loan Agreement and the other Loan Documents to which the
Agent or any Bank is a party, the Agent and the Banks are relying upon, among
other things, the waivers and certifications contained in this Section 15.
SECTION 16. ENTIRE AGREEMENT.
This Guaranty constitutes the entire agreement of the Guarantor with
respect to the matters set forth herein.
SECTION 17. REMEDIES CUMULATIVE.
The rights and remedies herein provided are cumulative and not exclusive
of any remedies provided by law or any other agreement, and this Guaranty
shall be in addition to any other guaranty of or collateral security for any
of the Obligations.
SECTION 18. SEVERABILITY.
The invalidity or unenforceability of any one or more sections of this
Guaranty shall not affect the validity or enforceability of its remaining
provisions.
SECTION 19. HEADINGS.
The captions herein are for the ease of reference only and shall not
affect the meaning of the relevant provision. The meanings of all defined
terms used in this Guaranty shall be equally applicable to the singular and
plural forms of the terms defined.
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IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
executed and delivered as of the date first above written.
BANGOR HYDRO-ELECTRIC COMPANY
By: /s/ Carroll R. Lee
--------------------------------------
Name: Carroll R. Lee
Title: Senior Vice President and Chief
Financial Officer
33 State Street,
Bangor, Maine 04402
Fax: (207) 990-6963
ACCEPTED BY:
BANKBOSTON, N.A., as Agent
By: /s/ Michael M. Parker
------------------------
Michael M. Parker
Managing Director
100 Federal Street
Boston, Massachusetts 02110
Fax: (617) 434-3652