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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM U-1
APPLICATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
BEC ENERGY
BOSTON EDISON COMPANY
800 Boylston Street
Boston, Massachusetts 02199
(Name of company or companies filing this statement and
address of principal executive offices)
BEC ENERGY
BOSTON EDISON COMPANY
c/o Theodora S. Convisser, Esq.
BOSTON EDISON COMPANY
800 Boylston Street
Boston, Massachusetts 02199
Telephone: (617) 424-2000
(Names and addresses of agents for service)
Copies to:
David A. Fine, Esq.
Ropes & Gray
One International Place
Boston, Massachusetts 02110
Telephone: (617) 951-7000
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Item 1. Description of Proposed Transaction.
Pursuant to Sections 9(a)(2) and 10 of the Public Utility Holding
Company Act of 1935 (the "1935 Act"), BEC Energy, a Massachusetts business
trust ("Holding Company"), hereby applies for the approval of the Securities
and Exchange Commission (the "Commission") to form a holding company
structure for Boston Edison Company ("Boston Edison"), through an Agreement
and Plan of Merger (the "Merger Agreement") among Boston Edison, Holding
Company, a Massachusetts business trust formed by Boston Edison, and Boston
Edison Mergeco Electric Company, Inc., a Massachusetts electric company
("Merger Sub") formed by Holding Company. In addition, Holding Company
hereby applies pursuant to Section 3(a)(1) of the 1935 Act for an order
exempting Holding Company, and each of its subsidiary companies as such, from
all provisions of the 1935 Act (except for Section 9(a)(2) thereof); and
Boston Edison hereby applies, pursuant to Section 3(a)(1) of the 1935 Act,
for an order exempting Boston Edison, and each of its subsidiary companies as
such, from all provisions of the 1935 Act (except for Section 9(a)(2)
thereof).
A. Parties
Boston Edison is an "electric utility company" as defined under
Section 2(a)(3) of the 1935 Act. Boston Edison, with its wholly-owned
utility subsidiary, Harbor Electric Energy Company ("HEEC"), is currently
engaged principally in the generation, purchase, transmission, distribution
and sale of electric energy. Boston Edison provides electricity at
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retail to an area of 590 square miles, including the City of Boston and 39
surrounding cities and towns. In 1996, Boston Edison served an average of
657,487 customers. Boston Edison also supplies electricity at wholesale for
resale to other electric utilities and municipal electric departments. In
providing this service, Boston Edison is subject to regulation by the
Massachusetts Department of Public Utilities ("the Massachusetts DPU") under
Chapter 164 of the Massachusetts General Laws.
By virtue of its ownership of HEEC, Boston Edison is a "holding
company" for the purposes of the 1935 Act. However, pursuant to Section
3(a)(1) of the 1935 Act and Rule 2 thereunder, Boston Edison is not regulated
as a "holding company" and is exempt from all of the 1935 Act's provisions,
except Section 9(a)(2).
Through its wholly owned subsidiary, Boston Energy Technology Group
("BETG"), and BETG's subsidiaries, Boston Edison is also engaged in certain
non-utility businesses. These include Boston Edison Services, Inc.,
EnergyVision, LLC, BecoCom, Inc., RCN/BETG LLC, Northwind Boston, LLC, Coneco
Corporation, Coneco Financial Corporation, TravElectric Services Corp., and
Rez-Tek International Corp. The operations of Boston Edison's subsidiaries
that are not "public utility companies" contributed a net loss of
approximately $600,000 (or less than 1%) to Boston Edison's aggregate
after-tax net income in fiscal year 1996.
Boston Edison's current corporate structure is as follows:
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CURRENT CORPORATE STRUCTURE
[Graph omitted from electronic filing.] The omitted graph
represents a tree diagram of the current corporate structure, with Boston
Edison Company as the parent of the following companies: (i) Harbor Electric
Energy Company, and (ii) Boston Energy Technology Group (including Boston
Edison Services, Inc., EnergyVision, LLC, BecoCom, Inc., RCN/BETG LLC,
Northwind Boston, LLC, Coneco Corporation, Coneco Financial Corporation,
TravElectric Services Corp., and Rez-Tek International Corp.).
Holding Company and Merger-Sub were organized in Massachusetts on
March 6, 1997 and March 7, 1997, respectively, for the purpose of carrying
out the proposed transactions described in this application. Holding Company
is a direct, wholly-owned subsidiary of Boston Edison, and Merger-Sub is a
direct, wholly-owned subsidiary of Holding Company. Neither Holding Company
nor Merger-Sub owns any utility assets or currently is a "holding company"
for the purposes of the 1935 Act.
B. The Proposed Restructuring
Boston Edison proposes to form a holding company structure pursuant
to an Agreement and Plan of Merger to be entered into among Boston Edison,
Holding Company and
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Merger-Sub (the "Plan of Merger"), a copy of which is filed as Exhibit B-1
hereto. Under the terms of the Plan of Merger, Merger-Sub would be merged
(the "Merger") with and into Boston Edison, and each outstanding share of
common stock of Merger-Sub would be converted into one share of common stock,
$1.00 par value per share, of Boston Edison (collectively, the "Boston Edison
Stock"). In addition, pursuant to the Merger, each outstanding share of
Boston Edison Stock would be converted into one Common Share, $1.00 par value
per share, of Holding Company. Upon consummation of the Merger, each person
that would own Boston Edison Stock immediately prior to the Merger would own
a corresponding number of the outstanding shares of common stock of Holding
Company, and Holding Company would own all of the outstanding Boston Edison
Stock.
Subsequent to the Merger, Boston Edison would transfer to Holding
Company, by stock dividend or otherwise, the common stock of BETG. After the
Restructuring, Holding Company will engage in non-utility business activities
through BETG and its subsidiaries. The corporate structure, immediately
after the consummation of all of the above transactions (such transactions,
including the Merger, collectively, the "Restructuring"), would be as follows:
PROPOSED HOLDING COMPANY STRUCTURE
[Graph omitted from electronic filing.] The omitted graph
represents a tree diagram of the post-merger corporate structure, with BEC
Energy as the parent of the following companies: (i) Boston Edison Company,
and (ii) Boston Energy Technology Group (including
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Boston Edison Services, Inc., EnergyVision, LLC, BecoCom, Inc., RCN/BETG LLC,
Northwind Boston, LLC, Coneco Corporation, Coneco Financial Corporation,
TravElectric Services Corp., and Rez-Tek International Corp.). Harbor
Electric Energy Company remains a subsidiary of Boston Edison Company.
Prior to the Restructuring, Holding Company would apply to have its
common stock listed on the New York Stock Exchange, Inc. (the "NYSE") and the
Boston Stock Exchange ("BoSE"). It is anticipated that the common shares of
Holding Company would be listed and traded on such stock exchanges upon
consummation of the Restructuring, whereupon Holding Company would be
required to file reports with the Commission pursuant to Section 13(a) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"). The Boston
Edison Stock would cease to be listed on the NYSE and BoSE following the
Restructuring.
The consummation of the Merger pursuant to the Plan of Merger is
subject to various conditions. These conditions include "all of the
regulatory approvals and exemptions necessary, appropriate or desirable to be
obtained prior to effectuating the Merger and the Restructuring," which
include: (i) the approval of the Commission under Section 9(a)(2) of the
1935 Act, (ii) the granting by the Commission of exemptions under Section
3(a)(1) of the 1935 Act as requested in this application, (iii) the approval
of the Federal Energy Regulatory Commission (the "FERC"), (iv) the approval
of the Nuclear Regulatory Commission (the "NRC") and (v) the approval of the
Massachusetts DPU. The Plan of Merger was approved
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by the affirmative vote of a majority of the outstanding shares of Boston
Edison Stock at Boston Edison's annual meeting of shareholders held May 15,
1997.
Holding Company has filed with the Commission a Registration
Statement on Form S-4 (the "Registration Statement") under the Securities Act
of 1933, as amended which includes a Prospectus/Proxy Statement, which is
being filed for the purpose of (i) registering the Common Shares of Holding
Company to be issued in exchange for the Boston Edison Stock pursuant to the
Merger and (ii) complying with the requirements of the 1934 Act in connection
with the solicitation of proxies of Boston Edison's common shareholders. A
copy of the Registration Statement, including the Prospectus/Proxy Statement,
is filed herewith as Exhibit C-1.
C. Purpose and Anticipated Effects of the Restructuring
1. Purpose
The principal purpose of the Restructuring is to provide increased
financial, managerial and organizational flexibility in order to better
operate in the changing electric utility industry. The holding company
structure will permit Holdco to take advantage of non-utility business
opportunities in a more timely manner. In addition, the holding company's
structure will clearly separate Holdco's regulated and non-utility lines of
business. Boston Edison has identified the need to increase its long-term
growth potential through investment in related
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non-utility new businesses. The holding company structure is a
well-established form of organization for companies conducting multiple lines
of business, particularly entities engaged in both regulated and unregulated
activities. After extensive investigation and analysis, Boston Edison has
determined that the holding company structure offers the best means of
positioning the organization for future changes and opportunities and will
enable the organization to take advantage of emerging business opportunities
to the benefit of both shareholders and customers.
2. Anticipated Effects
The Restructuring would have no effect, adverse or otherwise, upon
the electric utility operations of Boston Edison. The Restructuring would
cause no real change in ownership or management of Boston Edison and would
not result in a transfer or acquisition of any utility asset. Moreover,
Boston Edison's electric utility business is expected to constitute the
predominant part of Holding Company's earning power for the immediately
foreseeable future.
Even though its utility operations would not be affected, a number
of benefits would accrue to Boston Edison and its customers and shareholders
as a result of the Restructuring. Boston Edison's adoption of a holding
company corporate structure would: (i) allow Boston Edison's affiliates to
more easily participate in non-utility businesses and to compete with
non-regulated companies in providing energy-related services; (ii) permit
the use of financing techniques that are more directly suited to the
particular requirements, characteristics and risks
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of unregulated operations without affecting the capital structure or
creditworthiness of Boston Edison; (iii) increase financial flexibility by
allowing the design and implementation of capitalization ratios appropriate
for the capital and business requirements of each subsidiary; (iv) allow for
separation of the operations of regulated and unregulated businesses,
providing a better structure for regulators to assure that there is no
cross-subsidization of costs or transfer of business risk from unregulated to
regulated lines of business; and (v) provide legal protection against the
imposition of liability on the regulated utility for the results of
unregulated business activities.
Because of these benefits, the holding company structure is a
highly desirable form of conducting regulated and unregulated businesses
within the same corporate group. In addition, a holding company structure is
preferred by the investment community because it is easier to analyze and
value the individual lines of business of an organization with such a
structure.
The Restructuring would have no material effect on the rights of
holders of Boston Edison Stock. Each class of preferred stock of Boston
Edison (collectively, the "Boston Edison Preferred Stock") and all
indebtedness of Boston Edison will remain securities and obligations of
Boston Edison following the Restructuring. Consequently, the holders of
Boston Edison's debt securities and the Boston Edison Preferred Stock would
not be affected by the Restructuring.
D. Additional Information
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No associate company or affiliate of Holding Company or Boston
Edison, or any affiliate of any associate company of Holding Company or
Boston Edison, has any direct or indirect material interest in the proposed
transaction except as stated herein.
For further information, reference is made to the financial
statements and other information in Exhibits G-1 through G-4 hereto.
Item 2. Fees, Commissions and Expenses.
The fees, commissions and expenses to be paid or incurred by Holding
Company and Boston Edison in connection with the Restructuring are estimated as
follows:
Commission filing fee for the application on Form U-1 (actual) . . .$ 2,000.00
Commission filing fee for the Registration Statement on Form S-4
(actual). . . . . . . . . . . . . . . . . . . . . . . . . . . $387,752.00
New York Stock Exchange Listing Fee (estimated). . . . . . . . . . $ 5,300.00
Boston Stock Exchange Listing Fee (estimated). . . . . . . . . . . . $5,000.00
Auditors Fee (estimated). . . . . . . . . . . . . . . . . . . . . . .$10,000.00
Legal Fees (estimated). . . . . . . .. . . . . . . . . . . . . . . $375,000.00
Printing (estimated). . . . . . . . . . . .. . . . . . . . . . . . $ 30,000.00
Stock Certificates (estimated). . . . . . . . . . . . .. . . . . . $ 35,000.00
Miscellaneous (estimated). . . . . . . . . . . . . . . . . .. . . . $149,948.00
Total $1,000,000.00
Item 3. Applicable Statutory Provisions.
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Sections 9(a)(2) and 10 of the 1935 Act are applicable to the
Restructuring. The Restructuring would result in Holding Company's owning,
directly or indirectly, all of the outstanding voting securities of two
"public utility companies", Boston Edison and HEEC; and Section 9(a)(2) of
the 1935 Act requires Commission approval before any person may acquire,
directly or indirectly, more than 5% of the outstanding voting securities of
more than one "public utility company". The standards for approval of a
transaction under Section 9(a)(2) of the 1935 Act are set forth in Section
10(b) and (c) of the 1935 Act.
Section 3(a)(1) of the 1935 Act is also applicable. Upon
effectuation of the Restructuring, Holding Company would become a "holding
company" for purposes of the 1935 Act because of its direct ownership of all
of the voting securities of Boston Edison and HEEC, respectively, both of
which are "public utility companies" under the 1935 Act. In addition, Boston
Edison would continue to be a "holding company" because of its continued
ownership of all of HEEC's voting securities. Consequently, in order to
avoid registered holding company status under the 1935 Act, in this
application each of Holding Company and Boston Edison have requested that the
Commission, by order, grant it an exemption pursuant to Section 3(a)(1) of
the 1935 Act.
For the reasons explained below, the Commission should grant
approval of the Restructuring pursuant to Section 9(a)(2) of the 1935 Act
based upon the transaction's compliance with the applicable standards of
Section 10(b) and (c) thereunder. In addition, for the reasons described
below, the Commission should by order grant Holding Company and
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Boston Edison an exemption pursuant to Section 3(a)(1) of the 1935 Act from
all of the provisions of the 1935 Act (except for Section 9(a)(2) thereof).
A. Approval of the Restructuring under Section 9(a)(2)
As noted above, the standards to obtain approval under Section
9(a)(2) of the 1935 Act are contained at Section 10(b) and (c) thereunder.
For the reasons explained below, the Restructuring should be found to meet
these standards.
1. Section 10(b)
Section 10(b) of the 1935 Act requires the Commission to approve
the Restructuring pursuant to Section 9(a)(2) unless the Commission finds
that:
(1) such acquisition will tend towards interlocking relations or
the concentration of control of public-utility companies, of a kind or to an
extent detrimental to the public interest or the interest of investors or
consumers;
(2) in case of the acquisition of securities or utility assets,
the consideration, including all fees, commissions, and other remuneration,
to whomsoever paid, to be given, directly or indirectly, in connection with
such acquisition is not reasonable or does not bear a fair relation
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to the sums invested in or the earning capacity of the utility assets to be
acquired or the utility assets underlying the securities to be acquired; or
(3) such acquisition will unduly complicate the capital structure
of the holding- company system of the applicant or will be detrimental to the
public interest or the interest of investors or consumers or the proper
functioning of such holding-company system.
Boston Edison and Holding Company respectfully submit that no adverse finding
should be made under any of these paragraphs.
a. Detrimental "Interlocking Relations" or "Concentration of
Control"
The Restructuring merely involves the formation of a holding
company over Boston Edison and its subsidiaries. No "public utility company"
other than Boston Edison and HEEC would be involved in the Restructuring. In
addition, both Boston Edison and HEEC would continue their utility operations
in essentially the same manner as prior to the Restructuring. Consequently,
the Restructuring should not, within the meaning of Section 10(b)(1), be
deemed to "tend towards interlocking relations . . . of public-utility
companies, of a kind or to an extent detrimental to the public interest or
the interest of investors or consumers".
For the same reasons, the Restructuring should not, within the
meaning of Section 10(b)(1), be deemed to tend toward any "concentration of
control of public-utility companies"
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that might be detrimental to the public interest, consumers, or investors.
The Restructuring would not involve the acquisition of any utility assets not
already owned, directly or indirectly, by Boston Edison and "will therefore
have no effect on the concentration of control of public utility companies."
Wisconsin Energy Corp., Holding Co. Act Release No. 35-24267, 37 SEC Docket
296, 300 (Dec. 18, 1986).
b. Fairness of Consideration and Fees
Section 10(b)(2) of the 1935 Act requires the Commission to
determine whether the consideration in connection with a proposed acquisition
of securities is reasonable and bears a fair relation to the investment in
and earning capacity of the utility assets underlying the securities being
acquired. As discussed above, the Restructuring would involve the merger of
Boston Edison with a subsidiary of the newly formed Holding Company, the
result of which would effectively convert each share of Boston Edison Stock
into one Common Share of the Holding Company. Because the proportion of each
shareholder's ownership will be unchanged, the consideration is fair and
reasonable. See Wisconsin Energy Corp., 37 SEC Docket at 300.
The fees and expenses to be paid in connection with the
Restructuring are reasonable and customary for a transaction of this kind and
are not material when measured against Boston Edison's consolidated book
value or the earning capacity of its assets. The standards of Section
10(b)(2) are thus satisfied.
<PAGE> c. Complication of Capital Structure
Section 10(b)(3) of the 1935 Act requires the Commission to
determine if the transaction will unduly complicate the capital structure of
the holding company, or will be detrimental to the public, investors or
consumers. No such effect would result from the Restructuring.
The Restructuring would not involve the creation of any ownership
interests other than those necessary to maintain the basic corporate
relationships of the holding company system to be established. Pursuant to
the Restructuring, Holding Company would acquire all of the common stock of
Boston Edison. No minority common stock interest in Boston Edison would
remain, and the existing debt and senior equity securities of Boston Edison
would be unaffected. Moreover, control of the system would remain in the
hands of the existing holders of Boston Edison Stock, who would become the
common shareholders of Holding Company. Consequently, as the Commission has
found in similar circumstances, the Restructuring would not result in any
complexity of capital structure contrary to Section 10(b)(3). See, e.g.,
CIPSCO, Inc., Holding Co. Act Release No. 35-25152, 47 SEC Docket 174, 178
(Sept. 18, 1990); Wisconsin Energy Corp., 37 SEC Docket at 300.
2. Section 10(c)
The relevant provisions of Section 10(c) of the 1935 Act state that
the Commission shall not approve:
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(1) an acquisition of securities or utility assets, or of any
other interest, which is . . . detrimental to the carrying out of the
provisions of Section 11; or
(2) the acquisition of securities or utility assets of a
public-utility or holding company unless the Commission finds that such
acquisition will serve the public interest by tending towards the economical
and the efficient development of an integrated public utility system . . . .
Boston Edison and Holding Company respectfully submit that an adverse
decision should not be made under either of these paragraphs.
a. Significant Benefits
Section 10(c)(1) prohibits an acquisition of securities which is
"detrimental to the carrying out of the provisions of Section 11." For the
purposes of the Commission's review of a proposed holding company formation,
the relevant provision of Section 11 is Section 11(b)(2), which requires the
Commission to find that "the corporate structure . . . of any company in the
holding-company system does not unduly or unnecessarily complicate the
structure . . . of such holding-company system." The Commission has
construed this requirement, in the context of the formation of a new holding
company over an existing public utility, to mean that "the structural change
must result in significant benefits to the holding company system." CIPSCO
Inc., 47 SEC Docket at 178.
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As discussed above in paragraph C.2. of Item 1, the holding company
structure resulting from the proposed reorganization would yield significant
benefits. In short, it would among other things: (i) facilitate the
enterprise's participation in unregulated businesses; (ii) better insulate
Boston Edison's utility ratepayers from the risks and costs associated with
business activities of unregulated subsidiaries; (iii) enhance managerial
accountability for separate business activities; and (iv) permit the use of
financing techniques that are more directly suited to the particular
requirements, characteristics and risks of unregulated and non-utility
operations without affecting the capital structure or creditworthiness of
Boston Edison. In cases involving similar corporate reorganizations, the
Commission has held that the existence of these kinds of potential benefits
satisfies the statutory standard of Section 10(c)(1). See, e.g., PP&L
Resources, Inc., Holding Co. Act Release No. 35-26248, 58 SEC Docket 2634
(Mar. 10, 1995); WPS Resources Corp., Holding Co. Act Release No. 35-26101,
57 SEC Docket 940 (Aug. 10, 1994); Unicom Corporation, Holding Co. Act
Release No. 35-26090, 57 SEC Docket 660 (July 22, 1994); KU Energy Corp.,
Holding Co. Act Release No. 35-25409, 50 SEC Docket 294 (Nov. 13, 1991);
CIPSCO, Inc., 47 SEC Docket 174; WPL Holdings, Inc., Holding Co. Act Release
No. 35-25377, 49 SEC Docket 1255 (Sept. 18, 1991); Wisconsin Energy Corp., 37
SEC Docket 296.
b. Economies and Efficiencies of an Integrated System
Section 10(c)(2) of the 1935 Act requires that a transaction serve
the public interest by tending towards the economical and efficient
development of an integrated public utility
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system. As explained below, the Restructuring would result in the economical
and efficient development of Boston Edison's existing integrated system.
(1) Economies and Efficiencies
In addition to the benefits referred to above in paragraph A.2.a.
of this Item, a number of economies and efficiencies would result from the
holding company structure. As the Commission has found in analogous cases, a
holding company structure permits adjustments of a utility's capital ratios
to appropriate levels through dividends to, or equity investments from, the
holding company. See, e.g., WPL Holdings, Inc., 49 SEC Docket at 1257. This
ability to adjust the components of Boston Edison's capital structure would
also increase general financial flexibility, allowing Boston Edison to take
advantage of more attractive financing opportunities that might not otherwise
be available. See CIPSCO Inc., 47 SEC Docket at 179.
The flexibility associated with a balanced capital structure
permits the issuance of various types of securities under any conditions and
thus increases the potential for cost reduction. As the Commission has noted
in similar circumstances, "(l)ower-cost financing can enhance efficient
utility operations and benefit ratepayers and senior security holders." KU
Energy Corp., 50 SEC Docket at 296.
The Restructuring should also help to broaden the holding company
system's financial base and its investment appeal by reducing the system's
dependence on its utility operations.
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This diversity should also increase financing alternatives and efficiencies,
since financing may be tailored to the specific needs and circumstances of
the individual utility and non-utility businesses.
The holding company structure would also tend to insulate Boston
Edison's customers and Boston Edison's security holders from the risks of
unregulated businesses by allowing the enterprise to pursue such businesses
through newly created subsidiaries of Holding Company. This reduced risk
exposure should enable Boston Edison to raise new preferred and debt capital
at a lower cost than might be possible if unregulated businesses were direct
subsidiaries of Boston Edison. As the Commission has stated in similar
circumstances, "(t)he insulation of the utility businesses . . . from any
risks of diversification and the resulting lower costs should tend toward
more efficient and economical operation of the utility businesses . . . ."
CIPSCO, Inc., 47 SEC Docket at 180.
The Commission has noted in analogous cases that these kinds of
financial and organizational advantages satisfy Section 10(c)(2). See KU
Energy Corporation, 50 SEC Docket at 297; CIPSCO, Inc., 47 SEC Docket at 180;
WPL Holdings, Inc., 49 SEC Docket at 1258. Moreover, a Commission finding of
"efficiencies and economies" may be based "on the potential for economies
presented by the acquisition even where these are not precisely
quantifiable." In the Matter of American Elec. Power Co., Holding Company Act
Release No. 35-20633, [1978 Transfer Binder] Fed. Sec. L. Rep. (CCH) Para.
81, 647, at 80, 608 (July 21, 1978). In this case, the Restructuring
promises to provide significant financial and
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organizational advantages, and the resulting substantial potential economies
and efficiencies should be found to meet the standard of Section 10(c)(2).
(2) Integrated Public Utility System
The Commission has held that the economical and efficient
development of an existing integrated system satisfies the requirements of
Section 10(c)(2) of the 1935 Act. See WPL Holdings, Inc., 49 SEC Docket at
1257. The electric utility system of Boston Edison is presently "integrated"
within the meaning of Section 2(a)(29) of the 1935 Act and would remain so
after the Restructuring. Consequently, no adverse finding under Section
10(c)(2) should be made.
3. Section 10(f)
Section 10(f) provides that:
The Commission shall not approve any acquisition . . . under this
section unless it appears to the satisfaction of the Commission that
such State laws as may apply in respect of such acquisition have been
complied with, except where the Commission finds that compliance with
such State laws would be detrimental to the carrying out of the
provisions of section 11. . . .
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The Restructuring is conditioned on full compliance with the laws
of Massachusetts. Boston Edison will file an application with the
Massachusetts DPU. A copy of the filing and a copy of the Massachusetts
DPU's determination will be filed as exhibits by amendment hereto. Finally,
the Restructuring will be consummated in compliance with all other applicable
Massachusetts laws.
B. The Exemption under Sections 3(a)(1)
Following the Restructuring, neither Holding Company nor Boston
Edison intends to register as a holding company under the 1935 Act. As
demonstrated below, each of Holding Company and Boston Edison respectfully
submits that it should be granted, by Commission order, an exemption under
Section 3(a)(1) of the 1935 Act.
1. Section 3(a)(1): Holding Company's Exemption
Section 3(a)(1) of the 1935 Act makes available an exemption from
all of the provisions of the 1935 Act (except for Section 9(a)(2) thereof) to
a "holding company" if:
such holding company, and every subsidiary company thereof which is a
public-utility company from which such holding company derives,
directly or indirectly, any material part of its income, are
predominately intrastate in character and carry on their business
substantially in a single State in which such holding company and
every such subsidiary
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company thereof are organized.
Each of Holding Company and Boston Edison believes that, following the
Restructuring, Holding Company would satisfy such requirements. Both Holding
Company and Boston Edison would be organized and carry on their business in the
state of Massachusetts.
Section 3(a) of the 1935 Act provides that, if an applicant
satisfies the objective requirements for an exemption, the applicant shall be
granted the exemption, "unless and except insofar as [the Commission] finds
the exemption detrimental to the public interest or the interest of investors
or consumers." In assessing whether a proposed exemption is "detrimental",
the Commission has focused upon the presence of state regulation,
establishing that federal intervention is unnecessary when state control is
adequate. See, e.g., KU Energy Corp., 50 SEC Docket at 299-300; CIPSCO Inc.,
47 SEC Docket at 180-81.
The Commission should here find that sufficient safeguards exist
under state law to ensure that no potential adverse consequences would occur
as a result of the Restructuring. As discussed above, the Restructuring will
be submitted for approval to the Massachusetts DPU, which will review the
Restructuring pursuant to its jurisdiction under Massachusetts law; and the
Commission has relied upon the public policy decisions of state public
utility commissions when granting approval of restructuring transactions.
See, e.g., KU Energy Corp., 50 SEC Docket at 299-300; CIPSCO Inc., 47 SEC
Docket at 180-81. In addition, as discussed above, Boston Edison would
continue to be regulated under the state utility laws of Massachusetts and
the Massachusetts DPU has the authority to insure that the unregulated
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affiliates of Boston Edison would not become detrimental to the operations of
the utility. For example, pursuant to such laws, the Massachusetts DPU may
disallow, for ratemaking purposes, any excessive costs shifted to the utility
from non-regulated companies or the value of any property improperly acquired
by the utility.
Item 4. Regulatory Approval.
The Restructuring will require the approval of the Massachusetts
DPU. A copy of the Application to the Massachusetts DPU is filed as Exhibit
D-1 hereto and a copy of the Massachusetts DPU's determination pursuant
thereto will be filed by amendment as exhibit D-2 hereto. The proposed
restructuring also must be approved by the FERC and the NRC before the Merger
can be consummated. A copy of the application to the FERC is filed as Exhibit
D-3 hereto, and a copy of the FERC's determination thereto will be filed as
Exhibit D-4 by amendment hereto. A copy of the application to the NRC is
filed as Exhibit D-5 hereto, and a copy of the NRC's determination thereto
will be filed as Exhibit D-6 by amendment hereto.
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Item 5. Procedure.
Both Holding Company and Boston Edison respectfully request the
Commission to issue and publish promptly the requisite notice under Rule 23
with respect to the filing of this application, to provide for the filing of
comments in a time frame that permits the Commission to enter an order
granting and permitting this application to become effective on or before
December 31, 1997. A form of notice suitable for publication in the Federal
Register is attached hereto as Exhibit H-1.
Holding Company and Boston Edison do not believe that there should
be a recommended decision by a hearing officer or any other responsible
officer of the Commission or that there should be a 30-day waiting period
between the issuance of the Commission's order and the date on which it is to
become effective. Holding Company and Boston Edison request that the
Commission's order become effective immediately upon the entry thereof.
Holding Company and Boston Edison both consent to the Division of Investment
Management assisting in the preparation of the Commission's decision or order
in this matter, unless such Division opposes this application.
Item 6. Exhibits and Financial Statements.
Financial statements of Holding Company are not included because it
has no assets and has not engaged in any business operations. Pro forma
financial statements of Boston Edison
<PAGE>
are not included because the Restructuring will have no material effect on the
financial statements of the company.
<PAGE>
NO. DESCRIPTION METHOD OF FILING
A-1 Amended and Restated Declaration of Filed herewith
Trust of Holding Company
A-2 Bylaws of Holding Company Filed herewith
A-3 Restated Articles of Organization Incorporated herein by
of Boston Edison reference to Exhibit 3.1 to
Boston Edison's Form 10-Q
Report for the quarter ended
June 30, 1994
A-4 Boston Edison Bylaws April 19, 1977, Incorporated herein by
as amended January 22, 1987, reference to Exhibit 3.1
January 28, 1988, May 24, 1988 and to Boston Edison's Form 10-Q
November 22, 1989 Report for the quarter ended
June 30, 1990
B-1 Agreement and Plan of Merger Filed herewith
C-1 Form S-4 Registration Statement of Incorporated herein by
BEC Energy, excluding all exhibits reference to Holding Company's
and consents Form S-4 Registration
statement filed March 17,
1997, declared effective as of
March 24, 1997 (Registration
Number 333-23439)
C-2 Prospectus and Proxy Statement Included in the Form S-4
Registration Statement
incorporated by reference as
Exhibit C-1
D-1 Application to the DPU Filed herewith
D-2 Determination of the DPU To be filed by Amendment
D-3 Application to the FERC Filed herewith
D-4 Determination of the FERC To be filed by Amendment
D-5 Application to the NRC Filed herewith
<PAGE>
D-6 Determination of the NRC To be filed by Amendment
E-1 Map showing service area of Filed herewith (filed in paper
Boston Edison form under Form SE pursuant to
Instruction E to Form U-1
Instructions to Exhibits)
F-1 Preliminary opinion of counsel Filed herewith
F-2 "Past-tense" opinion of counsel To be filed by amendment
G-1 Consolidated Balance Sheet of Boston Incorporated by reference to
Edison as of December 31, 1996 and Boston Edison's Form 10-K
Consolidated Statements of Income Report for the fiscal year
and Cash Flows for the three fiscal ended December 31, 1996
years ended December 31, 1996
G-2 Consolidated Balance Sheet of Boston Filed herewith
Edison (unaudited) as of March 31,
1997 and Consolidated Statements
of Income and Cash Flows of Boston
Edison (unaudited) for the twelve
months ended March 31, 1997.
G-3 Financial Data Schedules Filed herewith
G-4 Form U-3A-2, "Statement of Holding Incorporated herein by
Company Claiming Exemption under Rule reference to the Form U-3A-2
U-3A-2 from the Provisions of the dated February 27, 1997 filed
Public Utility Holding Company Act by Boston Edison(File No. 1-
of 1935," dated February 27, 1997, 2301)
filed by Boston Edison
(File No. 1-2301)
H-1 Form of Notice Filed herewith
<PAGE>
Item 7. Information as to Environmental Effects.
Holding Company and Boston Edison do not believe that the
Restructuring would involve a "major federal action" nor would it
"significantly affect the quality of the human environment" as those terms
are used in Section 102(2)(c) of the National Environmental Policy Act. The
only federal actions related to the Restructuring pertain to the Commission's
declaration of the effectiveness of the Registration Statement and the
Commission's approval of this application and granting of the exemptions
requested herein. The Restructuring would not result in changes in the
operations of Boston Edison that would have any impact on the environment.
No Federal agency has prepared or is preparing an environmental impact
statement with respect to the Restructuring.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, each of the undersigned companies has duly caused this
statement to be signed on its behalf by the undersigned thereunto duly
authorized.
BEC ENERGY
Date: June 23, 1997 By: /s/ JAMES J. JUDGE
James J. Judge, Senior Vice
President and Treasurer
(Signature and printed name
and title of signing officer)
BOSTON EDISON COMPANY
Date: June 23, 1997 By: /s/ JAMES J. JUDGE
James J. Judge, Senior Vice
President and Treasurer
(Signature and printed name
and title of signing officer)
<PAGE>
EXHIBIT INDEX
NO. DESCRIPTION DESIGNATIONS (IF ANY)
A-1 Amended and Restated Declaration of Trust
of Holding Company
A-2 Bylaws of Holding Company
B-1 Agreement and Plan of Merger
D-1 Application to the DPU
D-3 Application to the FERC
D-5 Application to the NRC
E-1 Map showing service area of Boston Edison P
F-1 Preliminary opinion of Counsel
G-2 Consolidated Balance Sheet of Boston Edison
(unaudited) as of March 31, 1997 and
Consolidated Statements of Income and
Cash Flows of Boston Edison (unaudited)
for the twelve months ended March 31, 1997
G-3 Financial Data Schedules
H-1 Form of Notice
<PAGE>
EXHIBIT A-1
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
BEC ENERGY
(FORMERLY BOSTON EDISON HOLDINGS)
(FORMERLY BEC GROUP)
(FORMERLY BOSTON EDISON HOLDCO)
Dated March 25, 1997
<PAGE>
TABLE OF CONTENTS
1. NAME; PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. DEFINITIONS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3. LIMITATIONS ON LIABILITY. . . . . . . . . . . . . . . . . . . . . . . . 2
4. NONASSESSABILITY OF SHAREHOLDERS. . . . . . . . . . . . . . . . . . . . 2
5. RELIANCE OF THIRD PERSONS . . . . . . . . . . . . . . . . . . . . . . . 2
6. PLACE OF BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
7. TRUST ESTATE; CONVERSION INTO PERSONAL ESTATE . . . . . . . . . . . . . 3
8. POWERS OF TRUSTEES. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
9. NUMBER AND ELECTION . . . . . . . . . . . . . . . . . . . . . . . . . . 7
10. RESIGNATION; VACANCIES; REMOVALS. . . . . . . . . . . . . . . . . . . . 8
11. VESTING IN NEW TRUSTEES . . . . . . . . . . . . . . . . . . . . . . . . 8
12. COMPENSATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
13. UNISSUED SHARES.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
14. DETERMINATION OF CAPITAL AND INCOME . . . . . . . . . . . . . . . . . . 9
15. DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
16. FISCAL YEAR; ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . 9
17. ACTION BY BOARD; QUORUM . . . . . . . . . . . . . . . . . . . . . . . . 9
18. BY-LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
19. CERTIFICATE EVIDENCING VOTES. . . . . . . . . . . . . . . . . . . . . . 10
20. TRUSTEES AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . 10
21. LIABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
22. BOOKS AND REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
23. ADVANCE OF EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . 11
24. RIGHTS NOT EXCLUSIVE; DEFINITIONS . . . . . . . . . . . . . . . . . . . 11
25. SHAREHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
26. SHAREHOLDERS, TRUSTEES, OFFICERS AND AGENTS . . . . . . . . . . . . . . 11
27. AUTHORIZATION OR RATIFICATION BY SHAREHOLDERS . . . . . . . . . . . . . 12
28. NUMBER; NONASSESSABLE . . . . . . . . . . . . . . . . . . . . . . . . . 12
29. SHARES PERSONAL PROPERTY; TRUST ONLY. . . . . . . . . . . . . . . . . . 13
30. RIGHTS OF SHAREHOLDERS; LIMITATION ON RIGHTS OF ACTION. . . . . . . . . 13
31. ADDITIONAL SHARES.. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
32. PREFERRED SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
33. ALL OTHER CHANGES IN SHARES.. . . . . . . . . . . . . . . . . . . . . . 13
34. CONSIDERATION FOR ISSUE . . . . . . . . . . . . . . . . . . . . . . . . 13
35. NO PREEMPTIVE OR PREFERENTIAL RIGHTS OF SUBSCRIPTION. . . . . . . . . . 13
36. TREASURY SHARES.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
37. TRANSFER BOOKS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
38. TRANSFER AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
39. SHARE CERTIFICATES. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
40. LOST, STOLEN OR DESTROYED SHARE CERTIFICATES. . . . . . . . . . . . . . 14
41. TRANSFER OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
42. TRANSFERS BY OPERATION OF LAW . . . . . . . . . . . . . . . . . . . . . 14
43. JOINT OWNERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
44. NO DUTY TO EXAMINE INTO TRUSTS, PLEDGES, ETC.,
TO WHICH SHARES ARE SUBJECT . . . . . . . . . . . . . . . . . . . . . 15
45. ANNUAL MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
46. SPECIAL MEETINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
47. PRESIDING OFFICER . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
48. BUSINESS TO BE TRANSACTED . . . . . . . . . . . . . . . . . . . . . . . 15
49. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
<PAGE>
50. VOTING; QUORUM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
51. ADJOURNMENT OF MEETING. . . . . . . . . . . . . . . . . . . . . . . . . 16
52. REQUISITE VOTE TO ACT . . . . . . . . . . . . . . . . . . . . . . . . . 16
53. RECORD DATE FOR VOTING, DIVIDENDS AND OFFERINGS.. . . . . . . . . . . . 16
54. DURATION OF TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
55. DEATH OF SHAREHOLDER OR TRUSTEE NOT TO TERMINATE TRUST. . . . . . . . . 17
56. TERMINATION; COMBINATION; AFFILIATION. . . . . . . . . . . . . . . . . 17
57. CERTAIN TRANSACTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 17
58. AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
59. CERTIFICATE OF TERMINATION OR AMENDMENT . . . . . . . . . . . . . . . . 21
60. DISPOSITION OF TRUST ESTATE ON TERMINATION. . . . . . . . . . . . . . . 22
61. FILING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
62. PROTECTION OF COMPANY, STOCK OF WHICH HELD BY TRUST . . . . . . . . . . 23
63. AUTHORITY OF THE TRUSTEES TO CONSTRUE TERMS HEREOF. . . . . . . . . . . 23
64. EFFECT OF CAPTIONS AND TABLE OF CONTENTS. . . . . . . . . . . . . . . . 23
65. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
66. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
67. PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS. . . . . . . . . . . . . 23
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
BEC ENERGY
(FORMERLY BOSTON EDISON HOLDINGS)
(FORMERLY BEC GROUP)
(FORMERLY BOSTON EDISON HOLDCO)
This AMENDED AND RESTATED DECLARATION OF TRUST made at Boston in the County
of Suffolk, The Commonwealth of Massachusetts, this 25th day of March, 1997 by
Thomas J. May of 107 Margery Lane, Westwood, MA 02090, James J. Judge of 30
Cushing Hill Road, Hanover, MA 02339 and Theodora S. Convisser of 613 Pleasant
Street, Belmont, MA 02178, hereby amends and restates in its entirety the
Amended and Restated Declaration of Trust dated the 14th day of March, 1997, as
heretofore amended.
WHEREAS it is desired to create under and in accordance with the provisions
of this instrument a voluntary business association with transferable shares for
the acquisition of property and the conduct of business as hereinafter set
forth;
NOW, THEREFORE, this DECLARATION OF TRUST WITNESSETH that said Thomas J.
May, James J. Judge and Theodora S. Convisser, for themselves, their heirs,
executors, administrators, successors and assigns, do hereby declare that they
and their successors from time to time, as Trustees hereunder, will hold, manage
and dispose of the trust estate, as hereinafter defined in trust in the manner
and with and subject to the powers and provisions hereinafter contained
concerning the same, for the benefit of the Shareholders (as hereinafter
defined) according to the number and kind of shares held by them respectively.
NAME; PURPOSE
1. NAME; PURPOSE. The Trustees as trustees hereunder, though not in their
individual capacities, shall be designated BEC Energy and are hereinafter
referred to as the "Company." So far as may be practicable, all things relating
to the trust hereby created shall be done under such name. The purpose of the
Company shall be to engage, either directly or through direct or indirect
subsidiaries, joint ventures, partnerships, limited liability companies or other
combinations or associations, in any manufacturing, mercantile, selling,
management, service or other business, operation or activity related to energy
generation, transmission or distribution, utilization, conservation or
transportation, construction, telecommunications, or any other manufacturing,
mercantile, selling, management, service or other business, operation or
activity, whether or not related to the foregoing enumerated areas, that a
corporation organized under the Business Corporation Law of The Commonwealth of
Massachusetts could carry on.
DEFINITIONS
2. DEFINITIONS. Except where the context otherwise requires, the
following terms when used herein shall mean the following:
(a) "Trustee" or "Trustees" means the person which is the trustee
hereunder for the time being, if there is only one, or if more than one,
the persons who are the trustees hereunder for the time being, whether, in
each case, original, additional or successor;
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<PAGE>
(b) "Trust estate" means the property at any time received by the Trustees
or otherwise acquired and held on behalf of the Company as hereinafter
provided;
(c) "Shareholder" or "Shareholders" means the person or persons, natural
or corporate, at the time registered as the holder or holders of the shares
of the Company and, except to the extent limited by any subscription or by
any subscription certificate or part-paid shares accepted or issued,
include the person or persons, natural or corporate, at the time registered
as the holder or holders of such subscription certificates and part-paid
shares; and
(d) "Share" or "shares" means the transferable share or shares of
beneficial interest provided for in Article 29 and includes any
subscription certificate or part-paid share issued except to the
extent limited in such subscription certificate or part-paid share.
RIGHTS OF THIRD PERSONS
3. LIMITATIONS ON LIABILITY. The Trust estate shall be directly liable
for the payment and satisfaction of all obligations and liabilities incurred in
the carrying on of the business of the Company. No Trustee shall be held to any
liability whatever for the payment of any sum of money, or for damages or
otherwise under any contract, obligation or undertaking made, entered into or
issued by the Company or by any Trustee, officer, agent or representative
thereof, or in tort or otherwise, and no such contract, obligation or
undertaking shall be enforceable against the Trustees, the Shareholders, or the
officers, agents or other representatives of the Company or any of them in
their, his or her individual capacities or capacity and all such contracts,
obligations and undertakings shall be enforceable only against the Company; and
every person, firm, association, trust and corporation shall look only to the
Trust estate for the payment or satisfaction of any liability, damages, claim or
demand. In every agreement and obligation entered into and in every writing by
or on behalf of the Company, reference shall be made to this declaration of
trust, and the substance of such parts of the preceding sentence of this Article
3 as are applicable shall be set forth; and neither the Trustees nor any
officer, agent or representative of the Company shall have any power or
authority to enter into any agreement or obligation on behalf of the Company
except in accordance with the provisions of this Article 3. Failure to comply
with the provisions of this Article shall, however, in no event render any
Trustee, Shareholder, officer, or agent personally liable to the Company or its
Shareholders.
4. NONASSESSABILITY OF SHAREHOLDERS. No Trustee, officer, agent or
representative of the Company shall be entitled to look to the Shareholders
personally for indemnity against any liability incurred by them in the execution
of this trust or to call upon the Shareholders for the payment of any sum of
money or any assessment whatever, except when and to the extent that shares in
the Company are by their express terms issued part-paid and assessable.
5. RELIANCE OF THIRD PERSONS. The receipts of the Company for moneys or
things paid or delivered to it shall be effective discharges to the person,
firm, association, trust or corporation paying or delivering the same and from
all liability to see to the application thereof. No purchaser or person, firm,
association, trust or corporation dealing with the Company or with the Trustees,
officers, agents or representatives of the Company shall be bound to ascertain
or inquire whether any consent, resolution or other authorization of the
Trustees or Shareholders, as is herein required or provided for, has been
obtained or passed or as to the existence or occurrence of any event or purpose
in or for which a sale, lease, mortgage, pledge or charge is herein authorized
or directed, or otherwise as to the purpose or regularity of any of the acts of
the Trustees or the officers, agents or representatives of the Company
purporting to be done in pursuance of the trust or powers herein contained, or
as to the regularity of the removal, resignation or appointment of any Trustee
or any officer, agent or representative; and a transfer of the Trust estate, or
any part thereof, executed by the Trustees in whom the same shall be vested at
the time of any such removal, resignation or appointment (including any retiring
Trustee who shall be willing to act and shall act in executing such transfer but
not otherwise including any such retiring Trustee) for the purpose
2
<PAGE>
of vesting the same in a successor Trustee or providing evidence of such vesting
independently of such removal, resignation or appointment, shall, as to the
property comprised in such transfer, be conclusive evidence in favor of any such
purchaser or other person, firm, association, trust or corporation dealing with
the Company of the validity of such transfer and of the matters therein recited
relating to such removal, resignation or appointment or the occasion thereof or
the occasion of such transfer.
PLACE OF BUSINESS; TRUST ESTATE
6. PLACE OF BUSINESS. The principal place of business of the Company
shall be 800 Boylston Street, Boston, MA 02199, or at such other place in
Massachusetts as the Trustees shall from time to time determine.
7. TRUST ESTATE; CONVERSION INTO PERSONAL ESTATE. All property at any
time and from time to time subject to this trust shall, subject to the
provisions of Articles 8(c) and 8(g), be transferred to and vested in such of
the Trustees as are residents of Massachusetts. Notwithstanding any other
provisions hereof, all real estate at any time forming part of the Trust estate
shall be held upon trust for sale and conversion into personal estate at such
time or times and in such manner and upon such terms as the Trustee shall
approve, but the Trustees shall have power, until the termination of this trust,
to postpone such conversion so long as they in their uncontrolled discretion
shall think fit, and for the purpose of determining the nature of the interest
of the Shareholders therein, all such real estate shall at all times be
considered as personal estate; and the real estate and personal property
comprised in the Trust estate shall constitute a single fund. For the purpose
of such sale and conversion of real estate the Trustees shall have full power to
sell or exchange the same and to execute and deliver proper deeds and
instruments of conveyance thereof.
THE TRUSTEES
8. POWERS OF TRUSTEES. Subject to the provisions and conditions contained
herein, the Trustees shall have power from time to time, in addition to the
specific powers and authorities herein expressly granted, to take any action
which they deem to be necessary or convenient to carry out the business of the
Company, including without limitation of the generality of the foregoing, the
powers hereinafter specified:
(a) HOLD INVESTMENTS. To purchase, subscribe for or otherwise acquire
stocks, shares, bonds or other securities, property or obligations of any
corporation, wherever incorporated, or of any trust, association or other
entity, or of any nation, state, municipality or other governmental or
public agency, division or body or certificates or other evidences of
interest in any real or personal property, and to be a member of any
company, syndicate or joint undertaking, or the beneficiary of any trust,
and all whether or not any such company be domestic or foreign, and whether
or not the purposes of or character of business carried on or assets held
by any such company, syndicate or joint undertaking, or comprised of any
such real or personal property, be similar to the purposes of or business
carried on or assets held by the Company, and whether or not any such
securities, membership or beneficial interest might be considered
speculative, hazardous, nonproductive or wasting or would ordinarily be
considered a proper or prudent investment or activity for a trustee and,
whether or not any contingent or other liability may arise or exist in
respect thereof and irrespective of the proportion of the Trust estate
invested in one or more of said securities, properties or companies, and to
exercise all the rights and privileges of an owner thereof and, without
limiting the generality of the foregoing, to acquire, by exchange, purchase
or otherwise, the shares and dividend and profit rights in, and the bonds
and other securities and obligations of, the Company;
(b) ASSUME OBLIGATIONS. To assume any obligations or liabilities of any
corporation, wherever incorporated, or of any trust, association or other
entity, and to discharge or liquidate such obligations or liabilities;
3
<PAGE>
(c) BORROW. To borrow money for the purposes of the Company, and to
issue, whether for borrowed money or for other consideration, bonds or
other securities or obligations therefor if desired, which may mature at
any time or times, and may be convertible or after the issuance thereof may
be made convertible, with or without additional consideration for such
conversion right, into other securities of the Company or into other
securities, all for such periods and upon such terms as the Trustees may
determine, and to secure the payment thereof if desired by mortgage,
pledge, assignment, transfer or conveyance of or charge on the whole or any
part of the Trust estate then owned or thereafter acquired, which bonds or
other securities or obligations may be signed on behalf of the Company by
the chairman, the president or a vice president and by the treasurer or an
assistant treasurer, or by facsimiles of such signatures if the bonds or
other securities or obligations are authenticated or certified by a trustee
or by a registrar other than a trustee, officer or employee of the Company,
and may have affixed thereto the common seal of the Company or a facsimile
thereof and may carry interest coupons authenticated by the facsimile
signature of the treasurer; provided that no mortgage, pledge, assignment,
transfer or conveyance of or charge on the Trust estate as a whole or
substantially as a whole shall be made without authorization or approval by
vote, at a meeting duly called and held, of the holders of a majority of
the shares outstanding and entitled to vote thereon; and provided further
that even though any officer who has signed or whose facsimile signature
has been placed on any bond or other security or obligation shall have
ceased to be such officer before such bond, security or obligation is
issued, such bond, security or obligation may nonetheless be issued by the
Company;
(d) LEND AND AID. To advance or lend money to, and otherwise aid by
endorsement, guarantee or otherwise, and with or without security, and to
make capital contributions to, any corporation, trust, association or other
entity, any of the stocks, shares, bonds or other securities or obligations
of which shall have been acquired or subscribed for by or on behalf of the
Company or in which the Company has any business interest (including,
without limitation of the generality of the foregoing, the power to
guarantee the performance of any undertaking or obligation or the payment
of dividends on stock), and to discharge and cancel without payment any
indebtedness thus arising or to convert the same into stocks, shares,
bonds, or other obligations of such corporation, trust association or other
entity, or any other with or into which it may be consolidated or merged,
or to which its property may be transferred or leased, and in like manner
to advance or lend money to and otherwise aid any person or company
(whether or not a Shareholder), whenever the Trustees shall deem such
action to be necessary or convenient in the business or conducive to the
advantage of the Company;
(e) EXERCISE POWERS OF HOLDER OF INVESTMENTS. To exercise any and all
powers and rights belonging to the holder of any stocks, shares, bonds,
securities, property or obligations forming part of the Trust estate,
whether by voting or by giving any consent, request or notice, or
otherwise, either in person or by proxy or attorney, and to give proxies or
powers of attorney therefor, with or without power of substitution, which
proxies and powers of attorney may be for meetings or action generally or
for any particular meeting, meetings or action, and may include the
exercise of any discretionary powers; and, without limiting the generality
of the foregoing, to vote in favor of or to consent to the creation of any
mortgage, lien or other encumbrance upon all or part of the franchises and
property, real and personal, then owned or thereafter acquired, of any or
all of the corporations, trusts, associations and other entities, any of
the stocks, shares, bonds, securities or obligations of which may at the
time be subject to this trust, or to vote in favor of or to consent to the
merger or consolidation of any such corporation, trust association or other
entity with any other corporation, trust association or other entity, or
the sale, lease, surrender or abandonment of all or part of the franchises
and property, real and personal, of any such corporation, trust association
or other entity;
(f) SELL. To sell at public auction or by private contract or otherwise
use and deal in and with the whole or any part of the Trust estate, free
and discharged of this trust, and to convert, exchange or refund the whole
or any part of the Trust estate for or into any shares, bonds or other
securities or obligations,
4
<PAGE>
property or effects in which the Company might, under the provisions
hereof, invest any moneys; provided, however, that except as provided in
Article 8(o), Article 57 or Article 60, no sale or other disposition of the
Trust estate as a whole or substantially as a whole shall be made without
authorization or approval by vote, at a meeting duly called and held, of
the holders of two-thirds of the shares outstanding and entitled to vote
thereon, but this proviso shall not apply to any disposition pursuant to
any mortgage, pledge, or charge;
(g) TRANSFER SECURITIES INTO NAMES OF OTHERS. To cause any real or
personal property, including without limitation of the generality of the
foregoing, securities forming all or part of the Trust estate, to be
transferred into the name of the Company or transferred into the name of or
vested in the Trustees, or to cause or allow any real or personal property
to remain in the name of, or to be transferred into the name of, any other
person, firm, association, or other entity, trust, corporation or other
entity and in any such case in such manner as not to give notice that the
same are affected by any trust;
(h) DELEGATE POWERS. To employ and act through and to delegate any or all
of the powers and discretions of the Company to, and to permit any or all
of such powers and discretions to be exercised by, any of the officers,
agents or representatives of the Company or of the Trustees, including
without limitation the officers, employees, agents and representatives
referred to in the last paragraph of this Article 8;
(i) COLLECT FUNDS. To collect, sue for, receive and receipt for all sums
of money coming due to the Company, to consent to the extension of the time
for payment, or to the renewal, of any bonds or other securities, property
or obligations subject to this trust, and to prosecute, defend, compound,
compromise, abandon or adjust, by arbitration or otherwise, any actions,
suits, proceedings, disputes, claims, demands and things relating to the
Trust estate, and to extend time, with or without security, for the payment
or delivery of any debts or property and to execute and enter into
releases, agreements and other instruments and to pay or satisfy any debts
or claims upon any evidence that the Trustees shall think sufficient;
(j) DEPOSIT FUNDS. To deposit any moneys included in the Trust estate in
any bank or trust company including any bank or trust company that may at
the time be the Trustee, and to entrust to any such bank or trust company
for safekeeping any of the stock or share certificates, bonds or other
securities, property or obligations and any documents and papers comprised
in or relating to the Trust estate;
(k) PAY TAXES. To pay any and all taxes or liens of whatever nature or
kind imposed upon or against the Company or the Trustee in connection with
the Trust estate, or upon or against the Trust estate or any part thereof;
(l) ESTABLISH SURPLUS FUNDS. To set apart, from time to time, as surplus
funds, such sums as the Trustees may deem proper out of any sources which
according to generally accepted accounting principles may be considered
surplus, which surplus funds shall be applicable to any purposes to which
money forming part of the capital or income of the Trust estate may be
applied, including the payment of dividends;
(m) ADOPT SEAL. To adopt and use a common seal;
(n) PURCHASE INSURANCE. To take out and maintain insurance or establish
self-insurance programs in such amounts and of such kinds and in such
companies and through such brokers and agents as may be necessary,
convenient or desirable, including insurance policies insuring the
Trustees, officers, employees and agents of the Company against claims and
liabilities of every nature arising by reason of holding, being or having
held any such office or position, or by reason of any action alleged to
have been taken or omitted by any such person as a Trustee, officer,
employee or agent, including any action taken
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or omitted that may be determined to constitute negligence, whether or not
the Company would have the power to indemnify such person against such
liability;
(o) TRANSFER TO NEW TRUST OR CORPORATION. When authorized by a majority
vote of Shareholders at a meeting, to sell and convey as an entirety and
going concern all the property and assets of the Company to a corporation
or a new association or trust organized for the purpose of acquiring the
same and organized with the same authorized classes of shares as the
Company shall then have with the same or substantially the same
preferences, voting powers, restrictions and qualifications thereof as
attach to the shares of the Company, the consideration for such sale and
conveyance to be the assumption by such new corporation, association or
trust of all liabilities and obligations of the Company then outstanding
and the issuance and delivery by such new corporation or association or
trust to the Company, or upon its order, for distribution as hereinafter
provided for, of such shares as will enable the Company to exchange its
shares, share for share and class for class, for the shares of such new
corporation or association or trust and thereupon such exchange shall be
made, and this trust shall be terminated, and each Shareholder of the
Company by becoming a Shareholder shall agree to receive and accept in such
case the shares of such new corporation or association or trust in exchange
on the basis aforesaid as a full and final distributive share of the
proceeds in liquidation of such sale and conveyance, and further agrees
that in such case his or her shares in the Company shall thereafter have no
rights and privileges whatsoever except the right and privilege of being
exchanged for shares of such new corporation or association or trust on the
basis aforesaid;
(p) INVEST CAPITAL. To invest and re-invest the capital or other funds of
this trust in real or personal property of any kind, or in any interest
therein;
(q) ESTABLISH PENSION AND OTHER COMPENSATION PLANS. To establish and
carry out pension, profit-sharing, share bonus, share purchase, share
option, savings, thrift and other retirement, incentive, health, welfare
and benefit plans, trusts and provisions for any or all of the Trustees,
officers, employees, agents and consultants of the Company or of any of its
subsidiaries;
(r) To enter into or become partners or members in joint ventures, general
or limited partnerships, limited liability companies and any other
combinations or associations;
(s) To purchase, acquire, hold, utilize, lease, carry on, sell, exchange
and dispose of any other business or property, rights, or privileges which
may be deemed to be suitable, convenient or profitable for or in connection
with any of the purposes of the Company;
(t) To grant rights or options good for any period of time, including an
unlimited period of time (but not exceeding the duration of the Company) to
purchase from the Company any securities of the Company which have been
authorized but remain unissued or are held in the treasury, at such prices
and on such terms and conditions as may be fixed from time to time by the
Trustees; and to create and issue warrants or other instruments
representing such rights or options in such form as the trustees mat
determine;
(u) PERFORM OTHER NECESSARY THINGS. To do each and every thing necessary,
suitable, desirable, convenient or proper for the accomplishment of any of
the purposes or the attainment of any one or more of the objects
hereinbefore enumerated or incidental to the powers herein named and,
without limiting the generality of the foregoing, to deal with the Trust
estate and manage and conduct the business of the trust hereunder as fully
as if the Company were the absolute owner of the Trust estate and in so
doing to execute all contracts, agreements, deeds, covenants and
instruments, and do all such things as the Trustees may deem proper for the
purposes of the Company, whether or not involving action of a kind or
extent legal or customary for a trustee or for the management of trust
funds.
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The powers and authority, whether discretionary or otherwise, conferred
upon the Trustees by this Article 8 and elsewhere in this declaration of trust
may be delegated to committees, officers, employees, agents and representatives
of the Company, and shall not be deemed to be mandatory but shall, together with
any and all implied powers and discretions, be exercised by the Trustees from
time to time to the extent deemed to be advantageous to the Company, and may be
exercised either alone or in association with others and to the same extent and
as fully as individuals might or could do as principals, agents, contractors or
otherwise and either alone or in conjunction with or in partnership with others,
and both within and without The Commonwealth of Massachusetts. The acts of any
committee, officers and agents, within the scope of their respective
authorities, shall be as agents and delegates of the Trustees, and shall be
deemed to be the acts of the Trustees and not of the Shareholders. When
authorized by the Trustees, mortgages, conveyances and other instruments of
transfer of real or other property may be executed by any officer of the Company
on behalf of the Trustees or such of them as are residents of Massachusetts.
THE TRUSTEES
9. NUMBER AND ELECTION. The persons signing this Declaration of Trust
shall be the original Trustees. At such time as the outstanding shares of the
Company are not wholly owned by Boston Edison Company (the "Transition Date"),
the following provisions shall apply. The number of Trustees shall be
determined from time to time by the Trustees, but shall not be less than three
nor more than sixteen, divided into classes and elected for terms as set forth
below, shall be elected at the annual meeting of the Shareholders by such
Shareholders as have the right to vote at such election. The number of Trustees
may be increased at any time or from time to time to any number not more than
sixteen either by the Shareholders or by the Trustees by vote of a majority of
the Trustees then in office. The number of Trustees may be decreased to any
number not less than three at any time or from time to time either by the
Shareholders or by the Trustees by a vote of a majority of the Trustees then in
office, but only to eliminate vacancies existing by reason of the death,
resignation or removal of one or more Trustees.
The Trustees shall be elected as follows. The Trustees shall be divided as
nearly equally as possible into three classes, with each class to consist of
approximately one-third of the number of Trustees. The first Trustees of the
Company shall consist of the directors of Boston Edison Company divided into the
same three classes. The term of office of the Trustees of the first class shall
continue until the first annual meeting of the Shareholders following the
Transition Date, the term of office of the Trustees of the second class shall
continue until the second annual meeting of the Shareholders following the
Transition Date, and the term of office of the Trustees of the third class shall
continue until the third annual meeting of the Shareholders following the
Transition Date, and, in each case, until their respective successors are
chosen and qualified (unless otherwise required by law) or until the Trustee
sooner dies, resigns or is removed.
At each annual meeting beginning with the first annual meeting of the
Shareholders following the Transition Date, the Trustees elected to succeed
those whose terms expire shall be of one class and shall be elected for a term
which shall continue until the third succeeding annual meeting, and until a
successor shall be elected (unless otherwise required by law) or until the
Trustee sooner dies, resigns or is removed. Any Trustee elected to fill a
vacancy caused by death, resignation or removal shall be elected for a term
which shall coincide with the term of the class of the vacant trusteeship. Any
Trustee elected to fill an additional trusteeship resulting from an increase in
the number of Trustees shall be of the class whose term continues and shall be
elected to serve until the annual meeting of the Shareholders closest to three
years from the date of the increase, and until a successor shall be elected and
qualified (unless otherwise required by law) or until the Trustee sooner dies,
resigns or is removed. The number of Trustees shall not be increased or
decreased at a time when, or to the extent that, it would result in the Trustees
not being divided as nearly equally as possible into three classes each
consisting of approximately one-third of the number of Trustees. The total
number of Trustees need not be an exact multiple of three. A Trustee may
succeed himself or herself. Whenever the holders of any one or more classes or
series of
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shares of the Company other than common shares shall have the right, voting
separately by class or series, to elect Trustees at an annual or special meeting
of stockholders, the election, term of office, filling of vacancies and other
features of such trusteeship shall be governed by the terms of such class or
series of shares, and such Trustees shall not be divided into classes pursuant
to this Article 9 unless expressly provided by such terms. References in this
Article 9 to an annual meeting of Shareholders shall be deemed to include a
special meeting held in place of an annual meeting. This Article 9 may be
amended only by vote of the holders of 80% of the shares issued and outstanding
and entitled to vote generally in the election of Trustees; provided, however,
that such 80% vote shall not be required for any alteration, amendment or
repeal that has been recommended by 80% of the Trustees then in office.
10. RESIGNATION; VACANCIES; REMOVALS. A Trustee may resign by presenting
his or her resignation in writing at a meeting of the Trustees or delivering the
same at the principal office of the Company, addressed to the chairman,
president or clerk of the Company, and its acceptance by the Trustees shall not
be required unless so stated in the resignation. Any vacancy in the number of
Trustees not required to be filled by the Shareholders may be filled by the
Trustees by vote of a majority of the remaining Trustees although less than a
quorum. Any Trustees so chosen shall continue in office for the remainder of
the full term of the class of Trustees in which the new trusteeship was created
or the vacancy occurred and until his or her successor, if there be one, is
chosen and qualified. The remaining Trustees may act notwithstanding any
vacancy in their numbers. Except as otherwise provided in this declaration of
trust, a Trustee (including persons elected by the Trustees to fill any
vacancies) may be removed from office: (i) for cause by the vote of the holders
of a majority of the shares issued and outstanding and entitled to vote
generally in the election of Trustees; (ii) without cause by the vote of 80% of
the shares issued and outstanding and entitled to vote generally in the election
of Trustees; or (iii) for cause by vote of a majority of the Trustees then in
office. A Trustee may be removed for cause only after reasonable notice and
opportunity to be heard before the body proposing to remove him or her. Except
where a right to receive compensation shall be expressly provided in a duly
authorized written agreement with the Company, no Trustee resigning or removed
shall have any right to any compensation as such Trustee for any period
following his or her resignation or removal, or any right to damages on account
of such removal, whether his or her compensation be by the month or by the year
or otherwise, unless the body acting on the removal, shall in their or its
discretion provide for compensation.
11. VESTING IN NEW TRUSTEES. Upon the resignation or removal of a Trustee
hereunder and upon the election or appointment of a new Trustee hereunder, such
instruments shall be executed, acknowledged and delivered as the remaining
Trustees or the new Trustees shall deem necessary or convenient for confirming
or providing evidence of the vesting of the Trust estate in the Trustees for the
time being who are residents of Massachusetts. Notwithstanding the failure to
execute any conveyance, the Trust estate shall always (not restricting the same
to the above enumerated cases) vest in the Trustees for the time being hereunder
and the Trust estate shall always vest in such Trustees as are residents of
Massachusetts.
12. COMPENSATION. Each Trustee shall receive such reasonable compensation
as the Trustees may determine, and shall not be limited by any provision of law
with regard to the compensation of trustees of an express trust.
13. UNISSUED SHARES. In particular, and without limiting the generality
of the foregoing, the Trustees may, subject to any requirement of law, at any
time issue all or from time to time any part of the unissued shares of the
Company from time to time authorized and may determine, subject to any
requirements of law, the consideration for which such shares is to be issued and
the manner of allocating such consideration between capital and surplus. Unless
the Trustees otherwise specify, the excess of the consideration for any share
with par value issued by it over such par value shall be paid-in surplus. The
Trustees may allocate to capital stock less than all of the consideration for
any share without par value issued by it, in which case the balance of such
consideration shall be paid-in surplus. All surplus shall be available for any
corporate purpose, including the payment of dividends.
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14. DETERMINATION OF CAPITAL AND INCOME. The Trustees shall have power to
determine what constitutes capital or income, what constitutes the income of the
Trust estate for any year or other period, in what manner any expenses or
disbursements are to be allocated between capital and income, and the amount of
the net earnings and of the earned surplus; and every such determination,
whether express or implied in the acts or proceedings of the Trustees, shall be
conclusive and binding upon all persons interested.
15. DIVIDENDS. The Trustees may from time to time in their discretion
declare dividends out of the net earnings of the Trust estate or out of the
earned surplus or capital surplus, payable out of the Trust estate, at any date
fixed by the Trustees, in cash or property, including without limitation bonds
or other obligations of and the shares in the Company, and for that purpose may
capitalize all or any part of the earned surplus; but no Shareholder shall have
any right to any dividends except when and as the same are declared by the
Trustees, and no Trustee or Shareholder, officer, agent or representative of the
Company shall be liable therefor, and any Shareholder entitled thereto shall
look only to the Trust estate for the payment of any such dividends. The
Company shall pay and distribute the said dividends so declared to the
Shareholders according to the number of shares held by them respectively.
16. FISCAL YEAR; ACCOUNTS. The Trustees may determine the fiscal year for
the Company, and the form in which the accounts of the Company shall be kept,
and may from time to time change the fiscal year or form of accounts.
17. ACTION BY BOARD; QUORUM. The action of the Trustees in respect of any
matter shall be by vote passed by the Trustees at a meeting or by a written vote
without a meeting (with or without notice to the other Trustees) signed by at
least a majority of the Trustees. At any meeting of the Trustees, six trustees
shall constitute a quorum for the transaction of business, except when the
number of Trustees then in office shall be less than twelve, in which case a
majority of the Trustees then in office shall constitute a quorum. Any meeting
may be adjourned from time to time by a majority of the votes cast on the
question, and the meeting may be held as adjourned without further notice.
Except as herein otherwise provided, when a quorum is present at any meeting a
majority of the Trustees in attendance thereat shall decide any questions before
such meeting. Nothing in this Article 17 shall be construed as limiting the
delegation of any power to a committee of the Trustees.
18. BY-LAWS. The Trustees may by vote of a majority of the Trustees then
in office, make and from time to time amend, add to or rescind by-laws for the
Company (the "By-laws"). The By-laws may, subject to the provisions of this
declaration of trust: (a) fix the fiscal year; (b) regulate the affairs of the
Trustees, including provisions for the nomination thereof; (c) provide for such
committees as the Trustees shall deem appropriate, including an executive
committee which shall be vested with all of the powers and authorities of the
Trustees in the intervals between meetings of the Trustees; (d) provide for the
appointment of a chairman of the Trustees, a president, one or more vice
presidents, a treasurer, a clerk and such other officers as the Trustees may
deem appropriate, and the manner of their appointment and removal, and their
respective powers and duties; (e) provide for the manner in which documents
shall be executed, including share certificates; (f) provide for the appointment
of transfer agents or officers and registrars, and (g) contain such further
provisions relating to the above matters or otherwise, incidental or in addition
to but not inconsistent with the provisions of this declaration of trust, as the
Trustees shall deem appropriate.
19. CERTIFICATE EVIDENCING VOTES. A certificate signed by the chairman,
the president, the treasurer, the clerk or any assistant or temporary clerk, or
one or more of the Trustees, shall be conclusive evidence, in favor of every
person, firm, association, trust and corporation acting in good faith in
reliance thereon, as to the contents of any vote of the Trustees, or any
committee thereof, or of the Shareholders, and as to all matters in such
certificate contained relating to the meeting, if any, at which any vote is
therein certified to have been passed, including the regularity of the said
meeting and the passage of any vote thereat, and as to all other matters and
things stated in such certificate, and no person, firm, association, trust or
corporation shall be obligated to make any inquiry as to any of the said
matters, or as to the election or appointment of any person acting as a Trustee
at such meeting, or as
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to the holding of any shares by any person, firm, association, trust or
corporation acting as a Shareholder at such meeting, or be affected by actual or
implied notice of any irregularity whatsoever therein.
INDEMNIFICATION AND LIMITATION OF LIABILITY
20. TRUSTEES AND OFFICERS. To the extent legally permissible, each of the
Company's Trustees and officers, as defined in Article 24, shall be indemnified
by the Trust estate against any loss, liability or expense, including amounts
paid in satisfaction of judgments, in compromise or as fines and penalties, and
counsel fees, imposed upon or reasonably incurred by such person in connection
with the defense or disposition of any action, suit or other proceeding, whether
civil or criminal, in which such person may be involved or with which such
person may be threatened, while in office or thereafter, by reason of such
person's being or having been such a Trustee or officer, except with respect to
any matter as to which such person shall have been adjudicated in such action,
suit or proceeding not to have acted in good faith in the reasonable belief that
his or her action was in the best interests of the Company; provided, however,
that as to any matter disposed of by a compromise payment by such Trustee or
officer, pursuant to a consent decree or otherwise, no indemnification either
for said payment or for any other expenses shall be provided unless such
compromise shall be approved as in the best interests of the Company, after
notice that it involves such indemnification, (i) by a disinterested majority of
the Trustees then in office, or (ii) by a majority of the Disinterested Trustees
then in office, provided that there has been obtained an opinion in writing of
independent legal counsel to the effect that such Trustee or officer appears to
have acted in good faith in the reasonable belief that his or her action was in
the best interests of the Company, or (iii) by the vote, at a meeting duly
called and held, of the holders of a majority of the shares outstanding and
entitled to vote thereon, exclusive of any shares owned by any interested
Trustee or officer.
21. LIABILITY. No Trustee, officer or agent of the Company shall be
liable except for acts or failures to act which at the time would impose
liability on him or her if this trust were a Massachusetts business corporation
and he or she were a director, officer or agent thereof respectively. In
determining what he or she reasonably believes to be in the best interests of
the Company, a Trustee may consider the interests of the Company's employees,
suppliers, creditors and customers, the economy of the state, region and nation,
community and societal considerations, and the long-term and short-term
interests of the Company, its subsidiaries and its Shareholders, including the
possibility that these interests may best be served by the continued
independence of the Company. Notwithstanding any provision of law or this
Article 21 or any other provision in this declaration of trust contained, a
Trustee shall not be liable to the Company or any Shareholder for monetary
damages for breach of fiduciary duty as a Trustee except with respect to any
matter as to which such liability is imposed by applicable law and he or she
shall have been adjudicated (i) to have breached his or her duty of loyalty to
the Company or its Shareholders, (ii) to have acted not in good faith, or
omitted to act in good faith, (iii) to have knowingly violated the law or
intentionally engaged in misconduct, or (iv) to have derived any improper
personal benefit from a transaction. No amendment to or repeal of this Article
shall apply to or have any effect on the liability or alleged liability of any
Trustee for or with respect to any acts or omissions of such Trustee occurring
prior to such amendment or repeal.
22. BOOKS AND REPORTS. In discharging his or her duties a Trustee or
officer of the Company, when acting in good faith, shall be fully protected in
relying upon the books of account of the Company or of another organization in
which he or she serves as contemplated by Article 24, reports made to the
Company or to such other organization by any of its officers or employees or by
counsel, accountants, appraisers or other experts or consultants selected with
reasonable care by the Trustees or similar governing body of such other
organization, or upon other records of the Company or of such other
organization.
23. ADVANCE OF EXPENSES. Expenses, including counsel fees, reasonably
incurred by any Trustee or officer with respect to the defense or disposition of
any action, suit or proceeding referred to in Article 20 may be advanced by the
Company prior to the final disposition of such action, suit or proceeding, upon
receipt of an undertaking by or on behalf of the recipient to repay such amount
unless it is ultimately determined that he or she
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is entitled to indemnification.
24. RIGHTS NOT EXCLUSIVE; DEFINITIONS. The rights of indemnification
provided in Article 20 shall not be exclusive of or affect any other rights to
which any Trustee or officer may be entitled and such rights shall inure to the
benefit of his or her successors, heirs, executors, administrators and other
legal representatives. Such other rights shall include all powers, immunities
and rights of reimbursement which would be allowed under the laws of The
Commonwealth of Massachusetts were the Company a business corporation organized
under such laws. As used in Articles 20, 21, 22 and 23 and this Article 24, the
terms "Trustee" and "officer" include persons who serve at the request of the
Company as directors, officers, or trustees of another organization in which the
Company has any direct or indirect interest as a shareholder, creditor or
otherwise. An "interested" Trustee or officer is one against whom in such
capacity the proceeding in question or another proceeding on the same or similar
grounds is then pending. Nothing contained in Articles 20, 21, 22 and 23 and
this Article 24 shall affect any rights to indemnification to which Company
personnel other than Trustees and officers may be entitled by contract or
otherwise under law. No Trustee shall be obligated to give any bond or other
security for the performance of any of his or her duties.
25. SHAREHOLDERS. In case any Shareholder shall at any time for any
reason be held to or be under any personal liability solely by reason of his or
her being or having been a Shareholder and not by reason of his or her acts or
omissions as a Shareholder, then such Shareholder (or his or her heirs,
executors, administrators, or other legal representatives) shall be entitled out
of the Trust estate to be held harmless from, and indemnified against, all loss,
liability or expense by reason of such liability.
INTERESTED TRUSTEES, SHAREHOLDERS, AND OFFICERS; RATIFICATION BY SHAREHOLDERS
26. SHAREHOLDERS, TRUSTEES, OFFICERS AND AGENTS. No agreement, dealing,
relationship or arrangement of any kind with the Company, or with any company
which may be controlled by the Company or in which the Company may have any
interest, in which any Shareholder, Trustee, officer, agent or other
representative of the Company shall have a personal interest shall be void or
voidable or otherwise affected by such interest nor shall such Shareholder,
Trustee, officer, agent or other representative so interested be liable to
account in respect thereof, except such effect or liability, if any, as would
have resulted under the same circumstances had the Company been a business
corporation organized under the laws of The Commonwealth of Massachusetts. No
Trustee, officer, agent or other representative of the Company shall be
precluded, by his or her office, from acquiring shares or stock in or bonds or
other obligations of or from holding any office or place of profit in the
Company or any company in which the Company shall be interested as stockholder
or otherwise. No Shareholder, by reason of his or her holding such shares,
however great in amount, shall be precluded from holding any office or place of
profit hereunder or under any company in which the Company or the Trustees shall
be interested as stockholder or otherwise.
27. AUTHORIZATION OR RATIFICATION BY SHAREHOLDERS. Regardless of whether
the foregoing provisions have or have not been complied with, any agreement,
dealing, relationship or arrangement entered into by or on behalf of the Company
or by the Trustees, officers, agents or other representatives of the Company, or
by or on behalf of any company in which the Company or the Trustees shall be
interested as stockholder, or otherwise, shall not be voided by reason of the
interest therein of any Shareholder, Trustee, officer, agent or other
representative nor shall any Shareholder, Trustee, officer, agent or other
representative being so interested be liable to account to the Company or to the
Trustees, officers or Shareholders, or otherwise, for any profit or benefit
realized through any such agreement, dealing, relationship or arrangement by
reason of such Shareholder, Trustee, officer, agent or other representative
holding that position or of the fiduciary relation thereby established, if such
agreement, dealing, relationship or arrangement shall have been authorized or
ratified by the Shareholders or by the stockholders of any such company, as the
case may be, after notice of the fact of the interest therein (including a
general statement of the nature and extent of such interest) of such
Shareholder, Trustee, officer, agent or other representative, except that if
such agreement, dealing, relationship or arrangement was with a Shareholder or
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Shareholders the authorization or ratification shall be by a majority vote of
disinterested Shareholders at a meeting.
SHARES OF BENEFICIAL INTEREST
28. NUMBER; NONASSESSABLE. The entire beneficial interest in the Trust
estate and in all business conducted by the Company and all profits earned by it
shall be, and during the continuance of this trust shall remain, in the owners
from time to time of transferable shares of beneficial interest. The shares of
beneficial interest shall consist of (i) 100,000,000 common shares all of the
same class and each with a par value of one dollar ($1.00), and (ii) 10,000,000
preferred shares, each with a par value of one dollar ($1.00) and may be issued
from time to time by the Trustees without the necessity of obtaining the consent
of the Shareholders. Subject to the limitations prescribed by law and the
provisions of this declaration of trust, the Trustees are authorized to issue
the preferred shares from time to time in one or more series, each of such
series to have such voting powers, full or limited, or no voting powers,
participating, optional or other special rights, and such qualifications,
limitations or restrictions thereof, as shall be determined by the Trustees in a
resolution or resolutions providing for the issue of such preferred shares.
Subject to the powers, preferences and rights of any preferred shares, including
any series thereof, having any preference or priority over, or rights superior
to, the common shares and except as otherwise provided by law, the holders of
the common shares shall have and possess all powers and voting and other rights
pertaining to the shares of this Company and each common share shall be entitled
to one vote. All shares issued and to be issued shall be fully paid and
nonassessable except to the extent otherwise specifically provided in the
certificates representing such shares. In any issue of common shares,
fractional shares may be issued if authorized by the Trustees; and in lieu
thereof the Trustees may issue transferable or nontransferable instruments
representing or relating to fractional interests (on such terms and in such form
as the Trustees shall determine) and may appoint an exchange agent or exchange
agents to assist Shareholders in buying or selling such fractional interests.
29. SHARES PERSONAL PROPERTY; TRUST ONLY. Shares shall be personal
property entitling the holders only to the rights and interest in the Trust
estate set forth in these presents, and it is expressly declared and agreed by
and between the Shareholders, Trustees and officers of the Company that a trust
and not a partnership is deemed to be created by this instrument and that
irrespective of whether any different status may be held to exist as far as
others are concerned, nevertheless as between the said Shareholders, Trustees
and officers the Shareholders shall be deemed to hold only the relationship of
CESTUIS QUE TRUSTENT to the Trustees, with only such rights as are conferred
upon them as such CESTUIS QUE TRUSTENT hereunder.
30. RIGHTS OF SHAREHOLDERS; LIMITATION ON RIGHTS OF ACTION. No
Shareholder shall have or acquire at any time any interest in any specific
property, real or personal, at any time forming part of the Trust estate, or any
right to any division or partition thereof or any other rights with reference
thereto, except to have said property dealt with as herein provided, to receive
dividends therefrom, as herein provided, and to share in the distribution of the
cash proceeds thereof, or distributions in kind, or both, upon the termination
of the trust, as herein provided. No action may be brought by a Shareholder on
behalf of the Company unless a prior demand regarding such matter has been made
on the Trustees and the Shareholders of the Company.
31. ADDITIONAL SHARES. Additional common shares may be authorized from
time to time by a majority vote of the Shareholders at a meeting. Such
additional common shares shall rank equally and be in all respects identical
with the common shares originally authorized and may be issued from time to time
by the Trustees without the necessity of obtaining the consent of the
Shareholders.
32. PREFERRED SHARES. Additional preferred shares may be authorized from
time to time by vote, at a meeting duly called and held, of the holders of
two-thirds of the shares outstanding and entitled to vote thereon, and such
additional shares may be issued in one or more classes and in one or more series
within a class and shall have such voting powers, full or limited, or no voting
powers, participating, optional or other special rights, and
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such qualifications, limitations or restrictions thereof, as shall be determined
in the vote authorizing them or by the Trustees pursuant to authority granted to
it by such vote or as provided in Article 29.
33. ALL OTHER CHANGES IN SHARES. Any authorized shares, whether issued or
unissued, may, by vote, at a meeting duly called and held, of the holders of a
majority of the shares outstanding and entitled to vote thereon, be changed by
increasing or decreasing their par value, be reduced in number, be changed into
the same or a different number of shares of any class or classes with or without
par value, or be classified or reclassified. In connection with any of the
foregoing, the Trustees may increase, decrease or adjust the capital accounts of
the Company.
34. CONSIDERATION FOR ISSUE. Unless otherwise prescribed by vote of the
Shareholders, all shares may be issued for money, services or property
(including other shares of the Company at the time outstanding), or as a
distribution to Shareholders, and upon such terms as to valuation of shares,
services or property and otherwise, as the Trustees may in its absolute
discretion determine.
35. NO PREEMPTIVE OR PREFERENTIAL RIGHTS OF SUBSCRIPTION. No holder of
shares of any class and no holder of other securities of the Company,
convertible or otherwise, shall have any preemptive or preferential right of
subscription to, or purchase of, any securities of the Company.
36. TREASURY SHARES. Shares in the Company acquired by the Company may be
canceled and the number of shares issued may thereby be reduced, or such shares
may be held in the treasury and be disposed of by the Company, when authorized
by the Trustees, as the trustees may from time to time determine; but such
shares while so held in the treasury shall not be entitled to any voting rights
or to any dividends and shall not be deemed outstanding in computing proportions
or percentages of shares hereunder or for any other purpose hereof. Shares
canceled pursuant to this Article 36 shall have the status of authorized but
unissued shares.
37. TRANSFER BOOKS. A register or registers shall be kept under the
direction of the Trustees, which shall contain the names and addresses of the
Shareholders and the number and kind of shares held by them respectively and a
record of all transfers thereof. No Shareholder shall be entitled to receive
payment of any dividend declared, nor to have any notice given to him or her as
herein provided, until he or she has given his or her address to the transfer
agent, or such other officer or agent of the Company as shall keep the said
register, for entry thereon.
38. TRANSFER AGENT. The Company, when authorized by the Trustees, may
employ in the City of Boston or in any other cities the Trustees may designate a
transfer agent or transfer agents and a registrar or registrars. The transfer
agent or transfer agents shall keep the said registers and record therein the
transfers of any of the said shares and countersign certificates of shares
issued to the persons entitled to the same. The transfer agents and registrars
shall perform the duties usually performed by transfer agents and registrars of
certificates of stock in a corporation, except as modified by the Trustees.
39. SHARE CERTIFICATES. No certificates certifying the ownership of
shares need be issued unless the Trustees otherwise determine from time to time.
The Trustees may make such rules as they consider appropriate for the issuance
of share certificates, the form thereof, and similar matters.
40. LOST, STOLEN OR DESTROYED SHARE CERTIFICATES. In the event the
Trustees authorize the issuance of share certificates, a new certificate may be
issued to replace any certificate previously issued, on satisfactory evidence
that the said certificate previously issued has been worn out, mutilated, lost
or destroyed and on such terms, if any, as to indemnity and otherwise, as the
Trustees shall deem proper.
41. TRANSFER OF SHARES. Every transfer of any certificated shares
(otherwise than by operation of law) shall be signed by the transferor or by his
or her agent thereunto duly authorized in writing, and upon delivery
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thereof to the Company or a transfer agent of the Company, accompanied by the
existing certificate for such shares and such evidence of the genuineness of
such transfer, authorization and other matters as may reasonably be required,
shall be recorded in the register, and a new certificate therefor shall be
issued to the transferee, and in case of a transfer of only a part of the shares
represented by any certificate a new certificate for the residue thereof shall
be issued to the transferor. A Shareholder of record shall be deemed to be the
holder of the share or shares represented thereby for all purposes hereof, and
neither the Trustees nor any transfer agent or registrar nor any officer or
agent of the Company shall be affected by any notice of a transfer until due
presentment of the certificate for such share or shares for registration of
transfer. The Trustees may determine from time to time procedures for the
transfer of uncertificated shares.
42. TRANSFERS BY OPERATION OF LAW. Any person becoming entitled to
any shares in consequence of the death, bankruptcy or insolvency of any
Shareholder, or otherwise by operation of law, shall be recorded in the register
as the holder of the said shares, and receive a new certificate for the same,
upon production of the proper evidence thereof and delivery of the existing
certificate to the Company or a transfer agent of the Company. Until such
production of evidence and delivery of the existing certificate, the Shareholder
of record shall be deemed to be the holder of such shares for all purposes
hereof, and neither the Trustees nor any transfer agent or registrar nor any
officer or agent of the Company shall be affected by any notice of such death,
bankruptcy, insolvency or other event. The Trustees may determine from time to
time procedures for the transfer by operation of law of uncertificated shares.
43. JOINT OWNERS. Any two or more persons in whose names any share
is registered shall be treated as joint owners of the entire interest therein,
and no entry shall be made in the register or in any certificate that any person
is entitled to any future, limited or contingent interest in any share.
However, any person registered as a holder of any share may, subject to the
provisions hereinafter contained, be described in the register or in any
certificate as a trustee or fiduciary of any kind, and appropriate words may be
added to the description to identify such trust.
44. NO DUTY TO EXAMINE INTO TRUSTS, PLEDGES, ETC., TO WHICH SHARES
ARE SUBJECT. The Company shall not, nor shall the Trustees or the Shareholders
or any officer of the Company or any transfer agent or other agents of the
Company, or the Trustees, be bound to take notice or be affected by notice of
any trust, whether express, implied or constructive, or of any charge, pledge or
equity to which any of the said shares or the interest of any of the
Shareholders in this trust may be subject, or to ascertain or inquire whether
any sale or transfer of any such shares or interest by any such Shareholder or
his or her personal representatives is authorized by such trust, charge, pledge
or equity, or to recognize any person as having any interest therein, except the
persons registered as such Shareholders. The receipt of the person in whose
name any share is registered, or, if such share is registered in the names of
more than one person, the receipt of any one of such persons, or the receipt of
the duly authorized agent of any such person, shall be a sufficient discharge
for all dividends and other money and for all shares, bonds, obligations and
other property payable, issuable or deliverable in respect of such share and
from all liability to see to the application thereof.
MEETINGS OF SHAREHOLDERS
45. ANNUAL MEETING. An annual meeting of the Shareholders shall be
held on the last Tuesday of April in every year, or on such other date as the
Trustees or the chairman or the president may from time to time fix, at the
principal office of the Company or at such other place in Massachusetts as may
be designated by the Trustees, the chairman or the president, for the purpose of
electing Trustees and for such other purposes as may be prescribed by law and
hereby or as may be specified in the notice by the Trustees or by the chairman
or by the president of the Company. If such annual meeting is omitted on the
day herein provided for, a special meeting may be held in lieu thereof, and any
business transacted or election held at such special meeting shall have the same
effect as if transacted or held at such annual meeting.
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46. SPECIAL MEETINGS. The Trustees, chairman or president of the
Company may, whenever any of them think fit, call or direct any officer of the
Company to call a special meeting of the Shareholders to be held at the
principal office of the Company or, in their discretion, at any other place in
Massachusetts, and such special meeting shall be so called by the clerk, or in
the case of the death, incapacity or refusal of the clerk, by another officer,
upon written application of one or more Shareholders who hold at least forty
percent in interest of the shares entitled to vote at such special meeting.
47. PRESIDING OFFICER. The chairman or, if there is no chairman or
the chairman is absent, the president shall preside at every meeting of the
Shareholders, but if neither the chairman nor the president is present at the
commencement of the meeting or, being present, shall not be willing to preside,
the Shareholders present in person or by proxy shall choose the chairman of such
meeting.
48. BUSINESS TO BE TRANSACTED. At any annual or special meeting of
Shareholders, no business shall be transacted other than such as is referred to
in the notice of the meeting.
49. NOTICES. A written or printed notice of each meeting of the
Shareholders, whether annual or special, specifying the time, place and purposes
thereof, shall be given as hereinafter provided by the clerk or any assistant
clerk or by an officer designated by the Trustees to each of the Shareholders
entitled to vote thereat at least seven (7) days (including Sundays and
holidays) before such meeting. Every notice to any Shareholder required or
provided for herein may be given to him or her personally or by mailing it to
him or her, postage prepaid, at his or her address specified in the records of
the Company. Notice shall be deemed to have been given at the time when it is
so mailed. In respect of any share held jointly by several persons, notice so
given to any one of them shall be sufficient notice to all of them. Any notice
so sent to the address of any Shareholder shall be deemed to have been duly sent
in respect of any such share whether held by him or her solely or jointly with
others, notwithstanding he or she be then deceased or be bankrupt or insolvent
or legally incompetent, and whether the Trustees or any person sending such
notice have knowledge or not of his or her death, bankruptcy or insolvency or
legal incompetence, until some other person or persons shall be registered as
holders. The certificate of the person or persons giving such notice shall be
sufficient evidence thereof, and shall protect all persons acting in good faith
in reliance on such certificate. Whenever notice of meeting is required to be
given to a Shareholder under any provision of Massachusetts law applicable to
the Company or of this declaration of trust, a written waiver thereof, executed
before or after the meeting by such Shareholder or Shareholder's attorney
thereunto authorized and filed with the records of the meeting, shall be deemed
equivalent to such notice.
50. VOTING; QUORUM. At all meetings every Shareholder shall, subject
to the provisions of Article 53, have one vote for each share held by him or her
and may vote at any meeting or any adjournment or adjournments thereof in person
or by proxy in writing dated not more than six months before the meeting named
therein, which proxies shall be filed with the clerk or other person responsible
to record the proceedings of the meeting before being voted; and, except as
otherwise provided herein, the holders of a majority of all the shares issued
and outstanding and entitled to vote shall constitute a quorum for the
transaction of business. The placing of a shareholder's name on a proxy
pursuant to telephonic or electronically transmitted instructions obtained
pursuant to procedures reasonably designed to verify that such instructions have
been authorized by such shareholders shall constitute execution of such proxy by
or on behalf of such shareholder. Shares owned directly or indirectly by the
Company, if any, shall not be deemed outstanding for this purpose, and the
Company shall not, directly or indirectly, vote any share of its own shares.
When any share is held jointly by several persons, any one of them may vote at
any meeting in person or by proxy in respect of such share, but if more than one
of them shall be present at such meeting in person or by proxy, and such joint
owners or their proxies so present disagree as to any vote to be cast, such vote
shall not be received in respect of such share. If the holder of any share is a
minor or a person of unsound mind, or subject to guardianship or to the legal
control of any other person as regards the charge or management of such share,
he or she may vote by his or her guardian or such other person appointed or
having such control, and such vote may be given in person or by proxy. No
ballot shall be required for any election unless requested by a Shareholder
present or represented at the meeting and entitled to vote in the
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election.
51. ADJOURNMENT OF MEETING. Any meeting (or portion thereof) may be
adjourned from time to time by a majority of the votes properly cast upon the
question, whether or not a quorum is present, and the meeting (or portion
thereof) may be held as adjourned without further notice.
52. REQUISITE VOTE TO ACT. Except as otherwise herein provided, when
a quorum is present at any meeting, a plurality of votes properly cast for
election to any office shall elect to such office, and a majority of the shares
represented at the meeting and entitled to vote upon any question properly
brought before the meeting shall decide such question. Provisions hereunder for
a majority vote of Shareholders at a meeting mean a vote of the holders of a
majority of those shares entitled to vote thereon which are represented in
person or by proxy at such meeting.
53. RECORD DATE FOR VOTING, DIVIDENDS AND OFFERINGS. For the purpose
of determining the Shareholders who are entitled to vote or act at any meeting
or any adjournment thereof, or who are entitled to receive payment of any
dividend or of any other distribution or offering, the trustees may from time to
time fix in advance a time, which shall be not more than sixty (60) days before
the date of any meeting of Shareholders or the date for the payment of any
dividend or of any other distribution or the date of the offering, as the record
date for determining the Shareholders having the right to notice of and to vote
at such meeting and any adjournment thereof or the right to receive such
dividend or distribution or such offering, and in such case only Shareholders of
record on such record date shall have such right, notwithstanding any transfer
of shares on the books of the Company after the record date; or without fixing
such record date the Trustees may for any of such purposes close the register or
transfer books for all or any part of such period. If no record date is fixed
and the transfer books are not closed, (i) the record date for determining
Shareholders having the right to notice of or to vote at a meeting of
Shareholders shall be at the close of business on the date next preceding the
day on which notice is given, and (ii) the record date for determining
Shareholders for any other purpose shall be at the close of business on the day
on which the Trustees acts with respect thereto.
DURATION AND TERMINATION OF TRUST;
COMBINATION; AMENDMENTS
54. DURATION OF TRUST. Unless terminated as provided in Article 8(o)
or Article 56, this trust shall continue without limitation of time.
55. DEATH OF SHAREHOLDER OR TRUSTEE NOT TO TERMINATE TRUST. The
death of a Trustee hereunder or of a Shareholder or the dissolution of a
Shareholder hereunder during the continuance of this trust shall not operate to
terminate this trust, nor shall it entitle the legal representatives of any such
Trustee or Shareholder to an accounting or to take any action in the courts or
otherwise.
56. TERMINATION; COMBINATION; AFFILIATION. Except as provided in
Article 57 below, the Trustees may terminate this trust at any time, or may
cause the Company to be merged, combined, consolidated or otherwise affiliated
with another trust, association, company, corporation or other entity, if such
termination, merger, combination, consolidation, or affiliation has been
authorized by vote, at a meeting duly called and held, of the holders of
two-thirds of the shares outstanding and entitled to vote thereon or has been
authorized pursuant to Article 8(o). Such termination, merger, combination,
consolidation or affiliation shall become effective only upon presentation to
the Trustees, as required by Article 59, of the counterpart of the certificate
referred to in said Article 59, or at such later time as may be specified in the
vote effecting such action. In respect of any such merger, combination,
consolidation or affiliation (other than as provided in Article 8(o)), the
agreement in respect thereof shall confer on the holders of all shares of the
Company who dissent from such transaction within the time and in the manner
provided in the Massachusetts statute applicable to business corporations,
substantially those rights they would have if the Company were at the time a
Massachusetts business corporation. Such rights shall
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be the Shareholders' exclusive remedy in respect of such holders' dissent from
any such actions.
57. CERTAIN TRANSACTIONS.
A. HIGHER VOTE FOR CERTAIN BUSINESS TRANSACTIONS. In addition to any
affirmative vote required by law or otherwise in this declaration of trust, and
except as otherwise expressly provided in Section C of this Article 57:
(1) any merger or consolidation of the Company or any Subsidiary (as
hereinafter defined) with (a) any Interested Shareholder (as
hereinafter defined) or (b) any other company (whether or not itself
an Interested Shareholder) which is or after such merger or
consolidation would be an Affiliate (as hereinafter defined) or
Associate (as hereinafter defined) of an Interested Shareholder; or
(2) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) to or
with any Interested Shareholder or any Affiliate or Associate of any
Interested Shareholder involving any assets or securities of the
Company, any Subsidiary or any Interested Shareholder or any Affiliate
or Associate of any Interested Shareholder having an aggregate Fair
Market Value (as hereinafter defined) in excess of 5% of the total
consolidated book value of the total assets of the Company and its
Subsidiaries as of the end of the Company's most recent fiscal year
prior to the time the determination is made; or
(3) the adoption of any plan or proposal for the termination,
liquidation or dissolution of the Company proposed by or on behalf of
an Interested Shareholder or any Affiliate or Associate of any
Interested Shareholder; or
(4) any reclassification of securities (including any reverse stock
split) or recapitalization of the Company or any merger or
consolidation of the Company with any of its Subsidiaries or any other
transaction (whether or not with or otherwise involving an Interested
Shareholder) that has the effect, directly or indirectly, of
increasing the proportionate share of any class or series of Capital
Stock (as hereinafter defined), or any securities convertible into
Capital Stock or into equity securities of any Subsidiary, that is
beneficially owned by any Interested Shareholder or any Affiliate or
Associate of any Interested Shareholder; or
(5) any tender offer or exchange offer made by the Company for shares
of Capital Stock which may have the effect of increasing an Interested
Shareholder's percentage beneficial ownership (as hereinafter defined)
so that following the completion of the tender offer or exchange offer
the Interested Shareholder's percentage beneficial ownership of the
outstanding Capital Stock may exceed 110% of the Interested
Shareholder's percentage beneficial ownership immediately prior to the
commencement of such tender offer or exchange offer; or
(6) any agreement, contract or other arrangement providing for
any one or more of the actions specified in the foregoing clauses
(1) to (5);
shall require the affirmative vote of the holders of Voting Shares (as
hereinafter defined) representing shares equal to the sum of (i) a majority
of the then outstanding Voting Shares, excluding Voting Shares of which
such Interested Shareholder is the beneficial owner, plus (ii) the number
of Voting Shares of which such Interested Shareholder is the beneficial
owner, voting together as a single class. Such affirmative vote shall be
required notwithstanding the fact that no vote may be required, or that a
lesser percentage may be specified, by law or any agreement with any
national securities exchange or otherwise.
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B. DEFINITION OF "BUSINESS TRANSACTION". For the purposes of this
Article 57 the term "Business Transaction" shall mean any transaction
that is referred to in any one or more of clauses (1) through (6) of
Section A of this Article 57.
C. WHEN HIGHER VOTE IS NOT REQUIRED. The provisions of Section A of
this Article 57 shall not be applicable to any direct or indirect
purchase or other acquisition by the Company or any Subsidiary of any
shares of Capital Stock from an Interested Shareholder. The
provisions of Section A of this Article 57 shall also not be
applicable to any particular Business Transaction involving an
Interested Shareholder, and such Business Transaction shall require
only such affirmative vote, if any, as is required by law or by any
other provision of this declaration of trust if the Business
Transaction shall have been approved by a majority of the
Disinterested Trustees (whether such approval is made prior to or
subsequent to the acquisition of beneficial ownership of the Voting
Shares that caused the Interested Shareholder to become an Interested
Shareholder).
D. CERTAIN DEFINITIONS. For purposes of this Article 57:
(1) The term "Capital Stock" shall mean all the shares
of beneficial interest of the Company authorized to be
issued from time to time under Article 28 of this
declaration of trust.
(2) The term "person" shall mean any individual, firm,
corporation or other entity and shall include any group
comprised of any person and any other person with whom
such person or any Affiliate or Associate of such person
has any agreement, arrangement or understanding, directly
or indirectly, for the purpose of acquiring, holding,
voting or disposing of Capital Stock.
(3) The term "Interested Shareholder" shall mean any
person (other than the Company or any Subsidiary and
other than any profit-sharing, employee stock ownership
or other employee benefit plan of the Company or any
Subsidiary or any trustee of or fiduciary with respect
to any such plan when acting in such capacity) who or
which (a) is the beneficial owner of Voting Shares
representing 5% or more of the votes entitled to be cast
by the holders of all then outstanding Voting Shares; or
(b) is an Affiliate of the Company and at any time
within the two-year period immediately prior to the date
in question was the beneficial owner of Voting Shares
representing 5% or more of the votes entitled to be cast
by the holders of all the outstanding Voting Shares.
(4) A person shall be a "beneficial owner" of any
Capital Stock (a) which such person or any of its
Affiliates or Associates beneficially owns, directly or
indirectly; (b) which such person or any of its
Affiliates or Associates has, directly or indirectly, (i)
the right to acquire (whether such right is exercisable
immediately or subject only to the passage of time),
pursuant to any agreement, arrangement or understanding
or upon the exercise of conversion rights, exchange
rights, warrants or options, or otherwise, (ii) the right
to vote pursuant to any agreement, arrangement or
understanding, or (iii) which is beneficially owned,
directly or indirectly, by any other person with which
such person or any of its Affiliates or Associates has
any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any
shares of Capital
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Stock. For the purposes of determining whether a person is an
Interested Shareholder pursuant to paragraph 3 above, the number
of shares of Capital Stock deemed to be outstanding shall include
shares deemed beneficially owned by such person through
application of this paragraph 4, but shall not include any other
shares of Capital Stock that may be issuable pursuant to any
agreement, arrangement or understanding, or upon exercise of
conversion rights, warrants or options, or otherwise.
(5) An "Affiliate" of a specified person is a person
that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is
under common control with, the person specified.
(6) The term "Associate" used to indicate a relationship
with any person means (a) any company (other than the
Company or any Subsidiary) of which such person is an
officer or partner or is, directly or indirectly, the
beneficial owner of 10% or more of any class of equity
securities, (b) any trust or other estate in which such
person has a substantial beneficial interest or as to
which such person serves as trustee or in a similar
fiduciary capacity, and (c) any relative or spouse of
such person, or any relative of such spouse, who has the
same home as such person or who is a Trustee or officer
of the Company or any of its parents or subsidiaries.
(7) The term "Subsidiary" means any company of which a
majority of any class of equity security is beneficially
owned by the Company, PROVIDED, HOWEVER, that for the
purposes of the definition of Interested Shareholder set
forth in paragraph 3 above and the definition of
Associate set forth in paragraph 6 above, the term
"Subsidiary" shall mean only a company of which a
majority of each class of equity security is beneficially
owned by the Company.
(8) The term "Disinterested Trustee" means any Trustee
who is not an Affiliate or Associate or representative of
the Interested Shareholder and was a Trustee prior to the
time that the Interested Shareholder became an Interested
Shareholder, and any Trustee who is a successor of a
Disinterested Trustee, is not an Affiliate or Associate
or representative of the Interested Shareholder and is
recommended or elected to succeed the Disinterested
Trustee by a majority of the Disinterested Trustees.
(9) The term "Fair Market Value" means (a) in the case
of cash, the amount of such cash, (b) in the case of
stock, the highest closing sale price during the 30-day
period immediately preceding the date in question of a
share of such stock on the Composite Tape for New York
Stock Exchange Listed Stocks, or, if such stock is not
quoted on the Composite Tape, on the New York Stock
Exchange, or, if such stock is not listed on such
Exchange, on the principal United States securities
exchange registered under the Securities Exchange Act of
1934 on which such stock is listed, or, if such stock is
not listed on any such exchange, the highest closing bid
quotation with respect to a share of such stock during
the 30-day period immediately preceding the date in
question on the National Association of Securities
Dealers, Inc. Automated Quotations System or any similar
system then in use, or if no such quotation is
available, the fair market value on the date in
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question of a share of such stock as determined by a majority of
the Disinterested Trustees in good faith; and (c) in the case of
property other than cash or stock, the fair market value of such
property on the date in question as determined in good faith by a
majority of the Disinterested Trustees.
(10) The term "Voting Shares" means all Capital Stock
which by its terms may be voted generally in the election
of Trustees of the Company.
E. POWERS OF THE DISINTERESTED TRUSTEES. A majority of the
Disinterested Trustees shall have the power and duty to determine for
purposes of this Article 57, on the basis of information known to them
after reasonable inquiry, (1) whether a person is an Interested
Shareholder, (2) the number of shares of Capital Stock or other
securities beneficially owned by any person, (3) whether a person is
an Affiliate or Associate of another, and (4) whether the assets that
are the subject of any Business Transaction have, or the consideration
to be received for the issuance or transfer of securities by the
Company or any Subsidiary in any Business Transaction has, an
aggregate Fair Market Value in excess of the amount set forth in
clause (2) of Section A of this Article 57. Any such determination
made in good faith shall be binding and conclusive for all the
purposes of this Article 57.
F. NO EFFECT ON FIDUCIARY OBLIGATIONS OF INTERESTED SHAREHOLDERS.
Nothing contained in this Article 57 shall be construed to relieve any
Interested Shareholder from any fiduciary obligation imposed by law.
G. ALTERATION, AMENDMENT, REPEAL. Notwithstanding any other
provisions of this declaration of trust (and notwithstanding the fact
that a lesser percentage or separate class vote may be specified by
law or this declaration of trust), the affirmative vote of the holders
of 80% of the then outstanding Voting Shares shall be required to
alter, amend or repeal this Article 57; PROVIDED, HOWEVER, that this
Section G shall not apply to, and such 80% vote shall not be required
for, any alteration, amendment or repeal recommended by a majority of
the Disinterested Trustees.
58. AMENDMENTS. The declaration of trust may be altered, amended,
added to or rescinded by an instrument in writing signed by a majority of the
Trustees, if the same has been authorized by majority vote of the Shareholders
at a meeting, and such other vote, if any, as may be required by the rights or
preferences relating to any class or series of shares; provided that if such
alteration, amendment, addition or rescission shall in the judgment of the
Trustees be of a fundamental character it shall require authorization by vote,
at such a meeting, of the holders of a majority of the shares outstanding and
entitled to vote thereon; and provided further that any alteration, amendment,
addition or rescission of any provision requiring a vote of the holders of a
specified percentage of the shares shall be only by vote of the holders of such
percentage; and provided further that the provisions of Articles 3 and 4
exempting from personal liability the Shareholders, Trustees, officers, agents
and other representatives of the Company may be amended only by unanimous vote
of the holders of all shares entitled to vote at the time such vote is taken and
such amendment shall take effect only prospectively. Such alteration,
amendment, addition or rescission shall become effective at such time as may be
specified in the vote effecting such action. Notwithstanding anything preceding
in this Article to the contrary but subject to the provisions of Article 57, the
vote of the holders of 80% of the shares issued and outstanding and entitled to
vote generally in the election of Trustees shall be required for any alteration,
amendment or repeal of Articles 9 and 10; provided, however, that such 80% vote
shall not be required for any alteration, amendment or repeal adopted or
recommended by 80% of the Trustees then in office. Amendments for the purpose
of changing the name of the Company or of supplying any omission, curing any
ambiguity or curing, correcting or supplementing any defective or inconsistent
provision contained in this declaration of trust shall not require authorization
by vote of the Shareholders.
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59. CERTIFICATE OF TERMINATION OR AMENDMENT. In case this trust
shall be terminated or any merger, combination, consolidation or affiliation
shall be effected, or any of the terms, powers and provisions herein contained
shall be altered, amended, added to or rescinded, pursuant to the provisions of
Article 8(o), Article 56 or Article 58 or other authority, a certificate in any
number of counterparts deemed desirable, setting forth such termination,
alteration, amendment, addition or rescission or the terms of such merger,
combination, consolidation or affiliation and either that the Shareholders have
authorized the same in accordance with the provisions of said Article 8(o),
Article 56 or Article 58, or the other authority pursuant to which the same has
been made, shall be signed by the chairman or president and by the clerk or any
assistant clerk and shall be acknowledged by either the chairman or president
signing the same and shall be recorded or filed in the various public offices,
if any, in which this declaration of trust is then recorded or filed and at the
principal office of the Company and in such places as may be required by law,
but failure to record or file any such vote or resolution shall not affect the
validity thereof.
60. DISPOSITION OF TRUST ESTATE ON TERMINATION. Upon the termination
of this trust the Trustees shall, upon such terms as shall be determined by the
Trustees, sell and convert into money or into shares, bonds or other securities
or obligations, whether of the purchaser or otherwise, the whole or any part of
the Trust estate and shall apportion the proceeds thereof and any property
forming part of the Trust estate excepted from such sale among all the
Shareholders in accordance with their respective rights ratably according to the
number and kind of shares held by them respectively. In making any sale under
this provision the Trustees shall have power to sell by public auction or
private contract and to buy in or rescind or vary any contract of sale and to
resell, without being answerable for loss, and for the said purposes to execute
or cause to be executed all proper deeds and instruments and to do all proper
things. The Trustees may, after the distribution of the full amounts of money,
if any, due upon liquidation or termination on any preferred shares of any class
or series which may be outstanding, divide the whole or any part of the
remaining Trust estate in its actual state of investment among the Shareholders
in accordance with their respective rights ratably according to the number and
kind of shares held by them respectively, and for such purposes the Trustees
shall have power to determine the values of the property comprising said
remaining Trust estate.
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MISCELLANEOUS
61. FILING. This instrument and any amendment hereto shall be filed
with the Secretary of The Commonwealth of Massachusetts and in such other places
as may be required under the laws of The Commonwealth of Massachusetts and may
also be filed or recorded in such other places as the Trustees deem appropriate.
Unless any such amendment sets forth some later time for the effectiveness of
such amendment, such amendment shall be effective upon its filing with the
Secretary of The Commonwealth of Massachusetts. A restated declaration of
trust, integrating into a single instrument all of the provisions of this
instrument which are then in effect and operative, may be executed from time to
time by the Trustees and shall, upon filing with the Secretary of The
Commonwealth of Massachusetts, be conclusive evidence of all amendments
contained therein and may hereafter be referred to in lieu of this instrument
and the various amendments thereto.
62. PROTECTION OF COMPANY, STOCK OF WHICH HELD BY TRUST. No
corporation, trust, association or body politic shall be affected by notice that
any of its shares or bonds or other securities or obligations are subject to
this trust or be bound to see to the execution of this trust or to ascertain or
inquire whether any transfer of any such shares, bonds or securities or
obligations by the Company is authorized, notwithstanding such authority may be
disputed by some other person, firm, association, trust or corporation.
63. AUTHORITY OF THE TRUSTEES TO CONSTRUE TERMS HEREOF. The Trustees
shall have the authority to construe any of the terms, powers and provisions
herein contained and to act on any such construction, and its construction of
the same and any action taken pursuant thereto by the Trustees, or any
committee, officer or agent in good faith shall be final and conclusive.
64. EFFECT OF CAPTIONS AND TABLE OF CONTENTS. The captions and Table
of Contents are inserted for convenience of reference, and are not to be taken
as any part of this instrument or to control or affect the meaning, construction
or effect of the same.
65. COUNTERPARTS. This instrument may be simultaneously executed in
several counterparts, each of which shall be deemed to be an original, and such
counterparts, together, shall constitute one and the same instrument, which
shall be sufficiently evidenced by any such original counterpart.
66. GOVERNING LAW. This instrument is executed by the original
Trustees and delivered in The Commonwealth of Massachusetts, and with reference
to the statutes and law thereof, and the rights of all parties and the
construction and effect of every provision hereof shall be subject to and
construed according to the statutes and law of said Commonwealth.
67. PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS. The provisions of
this instrument are severable, and if the Trustees shall determine, with the
advice of counsel, that any of such provisions would be inconsistent with any of
the conditions necessary for qualification of the Company as an exempted holding
company within the meaning of the Public Utility Holding Company Act of 1935, as
amended, and the rules and regulations thereunder or is inconsistent with other
applicable laws and regulations, such provision shall be deemed never to have
constituted a part of this instrument, provided that such determination shall
not affect any of the remaining provisions of this instrument or render invalid
or improper any action taken or omitted prior to such determination. If any
provision of this instrument shall be held invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall attach only to such
provision in such jurisdiction and shall not in any manner affect such provision
in any other jurisdiction or any other provision of this instrument in any
jurisdiction.
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IN WITNESS WHEREOF we have hereunto set our hands and seals at Boston in
The Commonwealth of Massachusetts on the date first above mentioned.
[SEAL] /s/ THOMAS J. MAY
-------------------------
Thomas J. May
/s/ JAMES J. JUDGE
-------------------------
[SEAL] James J. Judge
/s/ THEODORA S. CONVISSER
-------------------------
[SEAL] Theodora S. Convisser
COMMONWEALTH OF MASSACHUSETTS
COUNTY OF SUFFOLK, SS.
March 25, 1997
Then personally appeared before me the above-named Thomas J. May, James J.
Judge and Theodora S. Convisser, and severally acknowledged the foregoing
instrument to be their free act and deed.
WITNESS MY HAND and official seal at Boston, Massachusetts.
NOTARIAL SEAL /s/ WAYNE FRIGARD
My commission expires 7/24/98
Notary Public in and for The Commonwealth of Massachusetts
<PAGE>
EXHIBIT A-2
BYLAWS
OF
BEC ENERGY
Section 1. DECLARATION OF TRUST
1.1 DECLARATION OF TRUST. References herein to the Declaration of Trust shall
apply to the Amended and Restated Declaration of Trust establishing BEC Energy,
dated March 25, 1997, as the same shall be amended from time to time. These By-
laws and all matters concerning the conduct and regulation of the business and
affairs of the Company shall be subject to such provisions in regard thereto, if
any, as are set forth in the Declaration of Trust as from time to time in
effect.
Section 2. TRUSTEES
2.1. NOMINATIONS. Nominations for the election of Trustees at an annual
meeting may be made by the Trustees or a committee appointed by the Trustees or
by any Shareholder entitled to vote generally in the election of Trustees;
however, any Shareholder entitled to vote generally in the election of Trustees
may nominate one or more persons for election as Trustees at an annual meeting
only if written notice of such Shareholder s intent to make such nomination or
nominations has been given, postage prepaid, to the clerk not later than forty-
five days prior to the anniversary of the date of the immediately preceding
annual meeting. Each such notice shall set forth: (a) the name and address of
the Shareholder who intends to make the nomination and of the person or persons
to be nominated; (b) a representation that the Shareholder is a holder of record
of the Company entitled to vote at such meeting and intends to appear in person
or by proxy at the meeting to nominate the person or persons specified in the
notice; (c) a description of all arrangements or understandings between the
Shareholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations are to be made by
the Shareholder; (d) such other information regarding each nominee proposed by
such Shareholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission; and (e)
the consent of each nominee to serve as a Trustee if so elected. The presiding
officer of the meeting may refuse to acknowledge the nomination of any person
not made in compliance with the foregoing procedure.
2.2 ACTION BY TRUSTEES. The action of the Trustees in respect of any matter
shall be by vote passed by the Trustees at a meeting or by a written vote
without a meeting (with or without notice to the other Trustees) signed by at
least a majority of the Trustees.
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2.3. REGULAR MEETINGS. Regular meetings of the Trustees may be held at such
places and at such times as the Trustees may by vote from time to time
determine, and if so determined no notice thereof need be given, provided,
however, that notice of the first regular meeting following any such
determination shall be given to absent Trustees. A regular meeting of the
Trustees may be held without notice immediately after and at the same place as
the annual meeting of the Shareholders or a special meeting of the Shareholders
held in lieu of such annual meeting.
2.4. SPECIAL MEETINGS. A special meeting of the Trustees may be held at any
time and at any place when called by the chairman, president, clerk or three or
more Trustees, by giving to each of the Trustees reasonable notice thereof.
2.5. NOTICE. Without implied limitation, a notice thereof, mailed prepaid,
addressed to any Trustee, at his or her usual address, and posted in the City of
Boston, or where the principal office of the Company is situated, at least
forty-eight (48) hours before such meeting, or a notice given by telephone or
telefax at least twenty-four (24) hours before such meeting, shall be deemed
sufficient notice to such Trustee, whether the same be received by him or her or
not. It shall not be necessary to give notice of any such meeting to any
Trustee who is present at the meeting, or who executes, before or after the
meeting, a written waiver of such notice; and if under the foregoing provisions
there is no Trustee to whom notice of a meeting need be given, such meeting may
be held without call at any time and at any place.
2.6. MINUTES OF MEETINGS. The Trustees shall cause to be kept minutes of all
meetings of the Trustees and minutes of all meetings of the Shareholders, and
all such minutes, if signed or certified by the clerk or any assistant or
temporary clerk, shall be conclusive evidence of the matters therein stated.
2.7. PRESENCE THROUGH COMMUNICATIONS EQUIPMENT. Unless otherwise prohibited by
law, members of the Trustees may participate in a meeting by means of a
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other at the same time and
participation by such means shall constitute presence in person at a meeting.
2.8. COMMITTEES. The Trustees shall, by a vote of the majority of the
Trustees then in office, elect from their number an executive committee which
shall include the chairman of the Trustees, if any, and the president, and which
shall have and exercise all powers of the Trustees which may lawfully be
delegated in the intervals between the meetings of the Trustees. The Trustees
may also from time to time appoint such other committees as it may determine and
such committees shall have such powers as shall be specified by vote of the
Trustees. Except as the Trustees may otherwise determine, any such committee
may make rules for the conduct of its business, but unless otherwise provided by
the Trustees or such rules, its business shall be conducted as nearly as may be
in the same manner as is
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provided by this declaration of trust for the conduct of business by the
Trustees.
Section 3. OFFICERS AND AGENTS
3.1. ENUMERATION; QUALIFICATION. The officers of the Company shall be a
president, a treasurer and a clerk and any other officers, including a chairman
of the Trustees, as the Trustees may from time to time in their discretion elect
or appoint. The Trustees may likewise from time to time appoint or employ or
authorize the appointment or employment of agents, employees or representatives
of the Company, may fix their compensation, term of employment, duties and
powers, or authorize the same to be fixed, and may remove them or terminate
their employment or authorize the same to be done. The clerk shall be a
resident of Massachusetts unless the Company has a resident agent appointed for
the purpose of service of process. Any action taken and any obligations entered
into by such officers or agents on behalf of the Company pursuant to authority
granted to them shall be binding upon the Trust estate. The Trustees may fix the
compensation and duties and powers of the officers or authorize the same to be
fixed. Any officer may be but need not be a Shareholder or Trustee and any two
or more offices may be held by the same person. Any officer may be required by
the Trustees to give bond for the faithful performance of his or her duties to
the Company in such amounts and with such sureties as the Trustees may
determine.
3.2 RESIGNATION AND REMOVALS. Any officer may resign at any time by delivering
his or her resignation in writing to the chairman of the Trustees, if any, the
president, the treasurer or the clerk or to a meeting of the Trustees. Such
resignation shall be effective upon its receipt unless specified to be effective
at some other time. The Trustees may remove any officer elected or appointed by
them with or without cause by the vote of a majority of the Trustees then in
office. An officer may be removed for cause only after reasonable notice and
opportunity to be heard before the Trustees. Except where a right to receive
compensation shall be expressly provided in a duly authorized written agreement
with the Company, no officer resigning or removed shall have any right to any
compensation as such officer for any period following his or her resignation or
removal, or any right to damages on account of such removal, whether his or her
compensation be by the month or by the year or otherwise, unless the Trustees
shall in their discretion provide for compensation
3.3. POWERS. Subject to law, to the Declaration of Trust, and the other
provisions of these By-laws, unless and until the Trustees otherwise
determines, the several officers shall have the authority and perform the duties
usually incident to their respective offices in the case of corporations and
such other duties and powers as the Trustees may from time to time designate.
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3.4. ELECTION. The chairman of the Trustees, if any, and the president,
treasurer and clerk shall be elected annually by the Trustees at their first
meeting following the annual meeting of the stockholders. Other officers, if
any, may be elected or appointed by the Trustees at said meeting or at any other
time. If the office of the president or the treasurer or clerk becomes vacant,
the Trustees may elect a successor by vote of a majority of the Trustees then in
office. If the office of any other officer becomes vacant, the Trustees may
elect a successor by vote of a majority of the Trustees present. Each such
successor shall hold office until his or her successor is chosen and qualified,
or until such officer sooner dies, resigns, is removed or becomes disqualified.
3.5. TENURE. The chairman of the trustees, the president, the treasurer and
the clerk shall continue in office until the first meeting of the Trustees
following the next succeeding annual meeting of the Shareholders or the special
meeting of the Shareholders held in lieu of such annual meeting, and until his
or her successor, if any, is chosen and qualified, and other officers shall hold
office until any such officer sooner dies, resigns, is removed or becomes
disqualified. Each agent shall retain his or her authority at the pleasure of
the Trustees.
3.6. CHIEF EXECUTIVE OFFICER, CHAIRMAN OF THE TRUSTEES, PRESIDENT AND VICE
PRESIDENTS. The Trustees shall designate either the chairman of the Trustees or
the president as the chief executive officer of the Company who shall have
general charge and supervision of the business of the Company, subject to the
control of the Trustees.
The president, if not designated as the chief executive officer, and any
vice presidents shall have the duties and powers as shall be designated by the
Trustees from time to time or the chief executive officer of the Company.
3.7. TREASURER AND ASSISTANT TREASURERS. The treasurer shall be in charge of
the Company's funds and valuable papers, books of account and accounting
records and shall have such other duties and powers as may be designated from
time to time by the Trustees or by the chief executive officer of the Company.
Any assistant treasurer shall have such duties and powers as shall be
designated from time to time by the Trustees or the chief executive officer of
the Company.
3.8. CLERK AND ASSISTANT CLERKS. The clerk shall record all proceedings of the
stockholders in a book or series of books to be kept therefor, which book or
books shall be kept in the principal office of the Company or at the office of
its transfer agent or of its clerk and shall be open at all reasonable times to
the inspection of any stockholder. In the absence of the clerk from any meeting
of stockholders, an assistant clerk, or if there be none or the assistant clerk
be absent, a temporary clerk chosen at the meeting, shall record the proceedings
thereof in the aforesaid book. Unless a transfer agent has been appointed, the
clerk shall keep or cause to be kept the stock and transfer records of the
Company,
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which shall contain the names and record addresses of all the stockholders and
the amount of stock held by each. The clerk shall keep a true record of the
proceedings of all meetings of the Trustees and in the clerk's absence from any
such meeting an assistant clerk, or if there be none or the assistant clerk is
absent, a temporary clerk chosen at the meeting, shall record the proceedings
thereof.
Any assistant clerk shall have such duties and powers as shall be
designated from time to time by the Trustees or the chief executive officer of
the Company.
Section 4. CAPITAL STOCK
4.1. STOCK CERTIFICATES. Every Shareholder shall be entitled to receive a
certificate or certificates specifying the number and kind of shares held by
such Shareholder, with such description, if any, as may be necessary to
distinguish them from other shares to which different rights are attached. Such
certificates shall be signed by the chairman, the president or a vice president
and by the treasurer or an assistant treasurer of the Company and countersigned
by the transfer agent, if any, and registered by or on behalf of the Trustees or
by a registrar, if any, and a notation of such registration shall be endorsed
thereon. Such signatures may be facsimiles if the certificate is signed by a
transfer agent or by a registrar other than a Trustee, officer or employee of
the Company. Even though any officer who has signed or whose facsimile
signature has been placed on such certificate shall have ceased to be such
officer before such certificate is issued, such certificate may nevertheless be
issued by the Company.
In lieu of issuing share certificates, the Trustees or the transfer agent
may either issue receipts therefor or keep accounts upon the books of the
Company for the record holders of such shares, who shall in either case be
deemed, for all purposes hereunder, to be the holders of certificates for such
shares as if they had accepted such certificates and shall be held to have
expressly assented and agreed to the terms hereof.
4.2. LOST, STOLEN OR DESTROYED SHARE CERTIFICATES. In the event the Trustees
authorized the issuance of share certificates, subject to Section 4.3, a new
certificate may be issued to replace any certificate previously issued, on
satisfactory evidence that the said certificate previously issued has been worn
out, mutilated, lost or destroyed and on such terms, if any, as to indemnity and
otherwise, as the Trustees shall deem proper.
Section 5. COMMON SEAL
The seal of the Company shall bear the inscription: BEC Energy -- 1997 --
Massachusetts.
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Section 6. EXECUTION OF PAPERS
Except as the Trustees may generally or in particular cases authorize the
execution thereof in some other manner, all deeds, leases, transfers, contracts,
bonds, notes, checks, drafts, and other obligations made, accepted or endorsed
on behalf of the Company shall be signed by the chairman of the Trustees, if
any, or by the president or by one or more of the vice presidents or the
treasurer.
Section 7. FISCAL YEAR
Until the Trustees shall change the same, the fiscal year shall end on the
last day of December in each year.
Section 8. CONTROL SHARE ACQUISITIONS
The provisions of Massachusetts General Laws Chapter 110D as in effect from
time to time shall not apply to control share acquisitions of the Company.
Section 9. AMENDMENTS
These By-laws may be altered, amended or repealed by vote of the majority of the
Trustees then in office, except with respect to any provision which by law or by
a provision of this trust requires action by the Shareholders.
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EXHIBIT B-1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("Agreement") dated as of March 25, 1997, by
and among Boston Edison Company, a Massachusetts electric utility corporation
("Boston Edison"), Boston Edison Mergeco Electric Company, Inc., a Massachusetts
utility corporation ("Mergeco"), and BEC Energy, a Massachusetts business trust
("Holdco").
WITNESSETH:
WHEREAS, Boston Edison has an authorized capitalization consisting of (i)
100,000,000 shares of common stock, par value $1.00 per share ("Boston Edison
Common Stock"), of which 48,514,973 shares are issued and outstanding and
1,429,424 shares have been reserved for issuance pursuant to Boston Edison's
Dividend Reinvestment and Common Stock Purchase Plan; (ii) 2,890,000 shares of
cumulative preferred stock, par value $100.00 per share ("Boston Edison
Preferred Stock"), 2,130,000 shares of which (consisting of shares of six
separate series) are issued and outstanding; and (iii) 8,000,000 shares of
preference stock, par value $1.00 per share ("Boston Edison Preference Stock"),
of which no shares are issued and outstanding; the number of shares of issued
and outstanding Boston Edison Common Stock being subject to increase to the
extent that shares reserved for issuance are issued prior to the Effective Time
(as defined below) of the Merger;
WHEREAS, Mergeco has an authorized capitalization consisting of 200,000
shares of common stock, par value $1.00 per share ("Mergeco Common Stock"), of
which 100 shares have been subscribed for by Holdco and, once the issuance
thereof has been approved by the Massachusetts Department of Public Utilities as
required by law, will be issued to and owned beneficially and of record by
Holdco;
WHEREAS, Holdco has an authorized capitalization consisting of (i)
100,000,000 shares of beneficial interest, par value $1.00 per share ("Holdco
Common Shares", each a "Holdco Common Share"), of which 100 shares are issued
and outstanding and owned beneficially and of record by Boston Edison; and (ii)
10,000,000 preferred shares, par value $1.00 per share, of which no shares are
issued and outstanding; and
WHEREAS, the Boards of Directors of the respective parties hereto deem it
advisable and in the best interests of Boston Edison and its stockholders to
merge Mergeco with and into Boston Edison (the "Merger") in accordance with
Section 96 of Chapter 164 of the Massachusetts General Laws and pursuant to this
Agreement and the Articles of Merger attached hereto as ANNEX I and incorporated
herein (the "Articles"), whereby the holders of shares of Boston Edison Common
Stock will exchange their shares for Holdco Common Shares;
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements herein contained, the parties hereto agree that
Mergeco shall be merged with into Boston Edison, which shall be the corporation
surviving the Merger, and that the terms and conditions of the Merger, the mode
of carrying it into effect, and the manner of converting and exchanging shares
shall be as follows:
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ARTICLE I
THE MERGER
(a) Subject to and in accordance with the provisions of this Agreement,
the Articles shall be executed and acknowledged by each of Boston Edison and
Mergeco and thereafter delivered to the Secretary of State of The Commonwealth
of Massachusetts for filing, as provided in Section 102A of Chapter 164 of the
Massachusetts General Laws. The Merger shall become effective at such time as
the Articles are filed as required by law with the Secretary of State of The
Commonwealth of Massachusetts or such date, not more than thirty days after such
filing, as may be specified in the Articles (the "Effective Time"). At the
Effective Time, the separate existence of Mergeco shall cease and Mergeco shall
be merged with and into Boston Edison (Mergeco and Boston Edison being sometimes
referred to collectively herein as the "Constituent Corporations" and Boston
Edison, the corporation designated in the Articles as the surviving corporation
being sometimes referred to herein as the "Surviving Corporation");
(b) Prior to and after the Effective Time, Holdco, Boston Edison and
Mergeco, respectively, shall take all such actions as may be necessary or
appropriate in order to effectuate the Merger. In this connection, Holdco shall
issue the Holdco Common Shares which the holders of Boston Edison Common Stock
are entitled to receive as provided in Article II hereof. In the event that at
any time after the Effective Time any further action is necessary or desirable
to carry out the purposes of this Agreement and to vest the Surviving
Corporation with full title to all properties, assets, rights, approvals,
immunities and franchises of either of the Constituent Corporations, the
officers and directors of each of the Constituent Corporations as of the
Effective Time shall take all such further action.
ARTICLE II
TERMS OF CONVERSION AND EXCHANGE OF SHARES
At the Effective Time:
(a) Each share of Boston Edison Common Stock issued and outstanding
immediately prior to the Merger thereupon shall be changed and converted into
one Holdco Common Share, which thereupon shall be issued, fully paid and
nonassessable;
(b) The shares of Boston Edison Preferred Stock issued and outstanding
immediately prior to the Merger shall not be converted or otherwise affected by
the Merger, and each such share shall continue to be issued and outstanding and
to be one fully paid and nonassessable share of the particular series of
preferred stock of the Surviving Corporation;
(c) The shares of Boston Edison Preference Stock issued and outstanding
immediately prior to the Merger, if any, shall not be converted or otherwise
affected by the Merger, and each such share shall continue to be issued and
outstanding and to be one fully paid and nonassessable share of the particular
series of preference stock of the Surviving Corporation;
(d) Each share of Mergeco Common Stock issued and outstanding immediately
prior to the Merger shall be converted into one share of common stock of the
Surviving Corporation, which thereupon shall be issued, fully paid and
nonassessable; and
(e) Each Holdco Common Share issued and outstanding immediately prior to
the Merger shall be canceled.
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ARTICLE III
ARTICLES OF ORGANIZATION AND BYLAWS
From and after the Effective Time, and until thereafter amended as provided
by law, the Restated Articles of Organization of Boston Edison as in effect
immediately prior to the Merger shall be and continue to be the Restated
Articles of Organization of the Surviving Corporation. The purposes of the
Surviving Corporation, the total number of shares and par value of each class of
stock which the Surviving Corporation is authorized to issue and a description
of each class of stock authorized at the Effective Time, with the preferences,
voting powers, qualifications, special or relative rights or privileges as to
each class and any series thereof then established, are as stated in such
Restated Articles of Organization, which are attached hereto as ANNEX II and
incorporated herein. From and after the Effective Time, the Bylaws of Boston
Edison shall be and continue to be the Bylaws of the Surviving Corporation until
amended in accordance with law.
ARTICLE IV
DIRECTORS AND OFFICERS
The persons who are directors and officers of Boston Edison immediately
prior to the Merger shall continue as directors and officers, respectively, of
the Surviving Corporation and shall continue to hold office as provided in the
Bylaws of the Surviving Corporation. If, at or following the Effective Time, a
vacancy shall exist in the Board of Directors or in the position of any officer
of the Surviving Corporation, such vacancy may be filled in the manner provided
in the Bylaws of the Surviving Corporation.
ARTICLE V
STOCK CERTIFICATES
Following the Effective Time, each holder of an outstanding certificate or
certificates theretofore representing shares of Boston Edison Common Stock may,
but shall not be required to, surrender the same to Holdco for cancellation or
transfer, and each such holder or transferee will be entitled to receive
certificates representing the same number of Holdco Common Shares as shares of
Boston Edison Common Stock previously represented by the surrendered stock
certificates. Until so surrendered or presented for transfer, each outstanding
certificate which, prior to the Effective Time, represented Boston Edison Common
Stock shall be deemed and treated for all corporate purposes to represent the
ownership of the same number of Holdco Common Shares as though such surrender or
transfer and exchange had taken place. The stock transfer books for the Boston
Edison Common Stock shall be deemed to be closed at the Effective Time and no
transfer of outstanding shares of Boston Edison Common Stock outstanding prior
to the Effective Time shall be made thereafter on such books.
ARTICLE VI
CONDITIONS OF THE MERGER
Consummation of the Merger is subject to the satisfaction of the following
conditions:
(a) The Merger shall have received the approval of the holders of each
class of common stock outstanding and entitled to vote thereupon of each of the
Constituent Corporations as required by Section 96 of Chapter 164 of the
Massachusetts General Laws.
(b) The issuance of Mergeco Common Stock and the Merger shall have been
approved by the Massachusetts Department of Public Utilities as required by
Chapter 164 of the Massachusetts General Laws and all other governmental
agencies whose approval is necessary, appropriate or desirable.
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(c) The Holdco Common Shares to be issued and to be reserved for issuance
pursuant to the Merger shall have been approved for listing, upon official
notice of issuance, by the New York Stock Exchange and the Boston Stock
Exchange.
(d) Ropes & Gray shall have delivered an opinion, satisfactory to the
Board of Directors of Boston Edison, with respect to the tax consequences of the
Merger.
ARTICLE VII
AMENDMENT AND TERMINATION
The parties hereto by mutual consent of their respective Boards of
Directors may amend, modify or supplement this Agreement in such manner as may
be agreed upon by them in writing, at any time before or after approval of this
Agreement by the stockholders of Boston Edison; PROVIDED, HOWEVER, that no such
amendment, modification or supplement shall, in the sole judgment of the Board
of Directors of Boston Edison, materially and adversely affect the rights of the
stockholders of Boston Edison.
This Agreement may be terminated and the Merger and other transactions
herein provided for abandoned at any time, whether before or after approval of
this Agreement by the stockholders of Boston Edison, by action of the Board of
Directors of Boston Edison if said Board of Directors determines for any reason
that the consummation of the transactions provided for herein would for any
reason be inadvisable or not in the best interests of Boston Edison or its
stockholders.
ARTICLE VIII
EFFECTIVE TIME OF THE MERGER
Subject to the prior satisfaction of the conditions of the Merger set forth
in Article VI hereof and the authority to terminate this Agreement as set forth
in Article VII hereof, the Constituent Corporations and Holdco shall do all such
acts and things as shall be necessary or desirable in order to make the
Effective Time occur as soon thereafter as practicable.
ARTICLE IX
ASSUMPTION OF BOSTON EDISON'S STOCK PLANS
Holdco shall take all required action to assume Boston Edison's obligations
under the following plans: (i) the Dividend Reinvestment and Common Stock
Purchase Plan, (ii) the Director Stock Plan, (iii) the Performance Share Plan,
(iv) the Negotiated Savings Plan for Production and Maintenance Employees, (v)
the Negotiated Savings Plan for Office, Technical & Professional Employees and
(vi) the Boston Edison Savings Plan.
ARTICLE X
MISCELLANEOUS
This Agreement may be executed in counterparts, each of which when so
executed shall be deemed to be an original, and such counterparts shall together
constitute but one and the same instrument.
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IN WITNESS WHEREOF, Boston Edison, Mergeco and Holdco, pursuant to approval
and authorization duly given by resolutions adopted by their respective Boards
of Directors, have each caused this Agreement and Plan of Merger to be executed
as of the date first written above by its President or one of its Vice
Presidents and Treasurer or Assistant Treasurer and its corporate or common seal
to be affixed hereto and attested by its Clerk.
ATTEST: BOSTON EDISON COMPANY
/s/ THEODORA S. CONVISSER By: /s/ THOMAS J. MAY
- ------------------------- --------------------------------
Theodora S. Convisser Name: Thomas J. May
Clerk Title: Chairman, President and
Chief Executive Officer
[BOSTON EDISON COMPANY SEAL] By: /s/ JAMES J. JUDGE
--------------------------------
Name: James J. Judge
Title: Treasurer
ATTEST: BOSTON EDISON MERGECO
ELECTRIC COMPANY, INC.
/s/ THEODORA S. CONVISSER By: /s/ THOMAS J. MAY
- ------------------------- -------------------------------
Theodora S. Convisser Name: Thomas J. May
Clerk Title: Chairman, President and
Chief Executive Officer
[BOSTON EDISON MERGECO
ELECTRIC COMPANY, INC. SEAL] By: /s/ JAMES J. JUDGE
--------------------------------
Name: James J. Judge
Title: Treasurer
ATTEST: BEC ENERGY
/s/ THEODORA S. CONVISSER By: /s/ THOMAS J. MAY
- -------------------------- ---------------------------------
Theodora S. Convisser Name: Thomas J. May
Clerk Title: Chairman, President and
Chief Executive Officer
[BEC ENERGY SEAL] By: /s/ JAMES J. JUDGE
--------------------------------
Name: James J. Judge
Title: Treasurer
5
<PAGE>
ANNEX I
to
Agreement and Plan of Merger
ARTICLES OF MERGER
of
BOSTON EDISON COMPANY
(A Massachusetts Utility Corporation)
and
BOSTON EDISON MERGECO ELECTRIC COMPANY, INC.
(A Massachusetts Utility Corporation)
and
BEC ENERGY
(A Massachusetts Business Trust)
Pursuant to the provisions of Section 102A of Chapter 164 of the
Massachusetts General Laws, the undersigned corporations adopt the following
Articles of Merger for the purpose of merging Boston Edison Mergeco Electric
Company, Inc. with and into Boston Edison Company, which shall be the Surviving
Corporation:
1. Attached hereto and incorporated herein by reference is the
Agreement and Plan of Merger dated as of March __, 1997, of the undersigned
corporations. The Surviving Corporation will furnish a copy of said agreement
to any of its stockholders, or to any person who was a stockholder of a
Constituent Corporation, upon written request and without charge. The Effective
Time as defined therein is 5:00 P.M., Boston time on ____________, 1997.
2. The undersigned president or vice president and clerk or
assistant clerk of each undersigned corporation hereby state under the penalties
of perjury that the attached Agreement and Plan of Merger has been duly executed
on behalf of such corporation and has been approved by the stockholders of such
corporation and by the Department of Public Utilities of The Commonwealth of
Massachusetts in the manner required by Section 96 of Chapter 164 of the
Massachusetts General Laws.
3. The post office address of the initial principal office of the
Surviving Corporation is 800 Boylston Street, Boston, Massachusetts 02199.
6
<PAGE>
4. The name, residence and post office address of each of the
initial directors and the chairman, president, treasurer and clerk of the
Surviving Corporation are as follows:
<TABLE>
<CAPTION>
NAME TITLE RESIDENCE POST OFFICE ADDRESS
<S> <C> <C> <C>
Thomas J. May Chairman of 107 Margery Lane c/o 800 Boylston Street
the Board Westwood, MA 02090 Boston, MA 02199
Chief Executive
Officer and
President
William F. Connell Director 111 Ocean Avenue c/o 800 Boylston Street
Swampscott, MA 01907 Boston, MA 02199
Gary L. Countryman Director 111 Hager Street c/o 800 Boylston Street
Marlboro, MA 01752 Boston, MA 02199
Thomas G. Dignan, Jr. Director 8 Saddle Ridge Road c/o 800 Boylston Street
Sudbury, MA 01776 Boston, MA 02199
Charles K. Gifford Director Blueberry Bill c/o 800 Boylston Street
Manchester, MA 01994 Boston, MA 02199
Nelson S. Gifford Director 14 Windsor Road c/o 800 Boylston Street
Wellesley, MA 02181 Boston, MA 02199
Matina S. Horner Director 100 U.N. Plaza c/o 800 Boylston Street
327 East 48th Street Boston, MA 02199
New York, NY 10017
Sherry H. Penney Director 90 Albee Road c/o 800 Boylston Street
Braintree, MA 02184 Boston, MA 02199
Herbert Roth, Jr. Director 134 Lake Street c/o 800 Boylston Street
Sherborn, MA 01770 Boston, MA 02199
Stephen J. Sweeney Director 7 Greenbrook Road c/o 800 Boylston Street
S. Hamilton, MA 01982 Boston, MA 02199
James J. Judge Senior Vice 30 Cushing Hill Road c/o 800 Boylston Street
President Hanover, MA 02339 Boston, MA 02199
and Treasurer
Theodora S. Convisser Clerk 613 Pleasant Street c/o 800 Boylston Street
Belmont, MA 02178 Boston, MA 02199
</TABLE>
7
<PAGE>
5. The fiscal year of the Surviving Corporation initially adopted
shall end on the last day of the month of December in each year.
6. The date and time initially fixed in the Bylaws for the annual
meeting of the stockholders of the Surviving Corporation is 11:00 a.m. on the
last Tuesday in April of each year.
[Remainder of this page intentionally left blank.]
8
<PAGE>
IN WITNESS WHEREOF, Boston Edison, Mergeco and Holdco, pursuant to approval
and authorization duly given by resolutions adopted by their respective Boards
of Directors, have each caused these Articles of Merger to be executed by its
president or one of its vice presidents and its clerk or one of its assistant
clerks.
Dated:
----------------
BOSTON EDISON COMPANY
By:
------------------------------
Name:
Title:
By:
---------------------------------
Name: Theodora S. Convisser
Title: Clerk
BOSTON EDISON MERGECO
ELECTRIC COMPANY, INC.
By:
------------------------------
Name:
Title:
By:
---------------------------------
Name: Theodora S. Convisser
Title: Clerk
BEC ENERGY
By:
------------------------------
Name:
Title:
By:
---------------------------------
Name: Theodora S. Convisser
Title: Clerk
<PAGE>
EXHIBIT D-1
THE COMMONWEALTH OF MASSACHUSETTS
DEPARTMENT OF PUBLIC UTILITIES
Application of Boston Edison Company )
and Boston Edison Mergeco Electric ) D.P.U. 97-
Company, Inc. for Approvals Related )
to a Reorganization Merger to Establish )
a Holding Company )
Respectfully represents Boston Edison Company, hereinafter called "Edison,"
and Boston Edison Mergeco Electric Company, Inc., hereinafter called "Mergeco",
as follows:
1. Edison is an electric utility having its usual place of business in
the City of Boston and subject to Chapter 164 of the General Laws of
Massachusetts.
2. Mergeco is an electric company having its usual place of business in
the City of Boston and subject to Chapter 164 of the General Laws of
Massachusetts.
3. Edison has an authorized capitalization consisting of (i) 100,000,000
shares of Common Stock, with a par value of one dollar ($1) per share ("Edison
Common Stock"), of which 48,514,973 shares were issued and outstanding and
1,429,424 shares were reserved for issuance pursuant to Edison s Dividend
Reinvestment and Common Stock Purchase Plan as of May 15, 1997; (ii) 2,890,000
shares of Cumulative Preferred Stock, with a par value of one hundred dollars
($100) per share ("Edison Preferred Stock"), of which 2,090,000 shares
(consisting of six separate series) were issued and outstanding as of May 15,
1997; and (iii)
1
<PAGE>
8,000,000 shares of Preference Stock, with a par value of one dollar ($1) per
share ("Edison Preference Stock"), of which no shares are currently issued and
outstanding. The Department has approved the issuance of all outstanding shares
of Edison Common Stock, Edison Preferred Stock and Edison Preference Stock and
in DPU 94-150 approved the issuance of additional shares of Edison Common Stock
reserved for issuance pursuant to Edison's Dividend Reinvestment and Common
Stock Purchase Plan. In addition, the Department, in DPU No. 94-160, authorized
the issuance and sale by Edison of long-term debt securities, shares of common
stock, shares of cumulative preferred stock and shares of preference stock in an
amount not to exceed $500,000,000.
4. BEC Energy is a voluntary association, commonly known as a
Massachusetts business trust, organized under Chapter 182 of the General Laws of
Massachusetts and having its principal place of business in the City of Boston.
5. By order dated February 28, 1997, issued in D.P.U. 97-17, the
Department approved the investment by Edison in BEC Energy of such amounts as
would be required to submit the proposed merger hereinafter described to
stockholders of Edison and regulatory authorities having jurisdiction. Edison
owns beneficially and of record 100 shares of Common Stock of BEC Energy, $1 par
value, being all of the outstanding Common Stock of BEC Energy. BEC Energy has
an authorized capitalization of 100,000,000 common shares, $1 par value ("BEC
Energy Common Shares").
6. Mergeco has an authorized capitalization consisting of 200,000 shares
of Common Stock, $1 par value ("Mergeco Common Stock"), of which 100 shares have
been subscribed for by BEC Energy and, subject to the approval of the
Department, will be issued and sold to BEC Energy at a price of $1.00 per share.
2
<PAGE>
7. Edison, Mergeco and BEC Energy have entered into an Agreement and Plan
of Merger (the "Merger Agreement") dated as of March 25, 1997, pursuant to which
Mergeco would merge into Edison (the "Merger"), with Edison being the surviving
corporation and with the following terms of conversion and exchange of shares:
(1) Each share of Edison Common Stock issued and outstanding
immediately prior to the Merger will be changed and converted into one BEC
Energy Common Share;
(2) The shares of Edison Preferred Stock issued and outstanding
immediately prior to the Merger will not be converted or otherwise affected
by the Merger and each such share will continue to be one issued and
outstanding share of Edison Preferred Stock, with the same preferences,
designations, relative rights, privileges and powers, and subject to the
same restrictions, limitations and qualifications as were applicable to
such stock prior to the Merger;
(3) Each share of Mergeco Common Stock issued and outstanding
immediately prior to the Merger will be changed and converted into one
share of Common Stock, $1 par value, of Edison, all of which will then be
owned by BEC Energy; and
(4) Each share of BEC Energy Common Stock issued and outstanding
immediately prior to the Merger will be cancelled.
As a result, Edison, the surviving corporation in the Merger, will become a
wholly-owned subsidiary of BEC Energy, and all of the BEC Energy Common Shares
to be outstanding immediately after the Merger will be owned by the holders of
Edison Common Stock outstanding immediately prior to the Merger.
3
<PAGE>
When the Merger becomes effective, holders of Edison Common Stock will
automatically become holders of BEC Energy Common Shares. Like the Edison
Preferred Stock, the outstanding debt securities of Edison and the terms thereof
will not be altered in the Merger. Such debt securities will remain outstanding
and will continue to be obligations of Edison as the survivor of the Merger.
8. Pursuant to the Merger Agreement, consummation of the Merger
contemplated thereby is subject to the satisfaction of the following conditions:
(a) The Merger shall have received the approval of the holders of
capital stock of each of Edison and Mergeco as required by Chapter 164 of
the Massachusetts General Laws.
(b) Ropes & Gray, counsel to Edison, shall have delivered an opinion
satisfactory to the Board of Directors of Edison with respect to the tax
consequences of the Merger.
(c) The issue of Mergeco Common Stock and the Merger shall have been
approved by the Department as required by Chapter 164 of the Massachusetts
General Laws and all other governmental agencies the approval of which is
necessary, appropriate or desirable.
(d) The BEC Energy Common Shares to be issued and to be reserved for
issuance pursuant to the Merger shall have been approved for listing, upon
official notice of issuance, by the New York and Boston Stock Exchanges.
9. The Merger Agreement and consummation of the transactions contemplated
thereby have been approved by the requisite votes of the shareholders of Edison,
the trustees of BEC Energy, the incorporators of Mergeco and the board of
directors of each of Edison,
4
<PAGE>
BEC Energy and Mergeco, subject to the approval of the Department. Votes of
the shareholders of Edison and of the directors and incorporators of Mergeco
approving the Merger Agreement and consummation of the transactions contemplated
thereby were passed on March 7, 1997 and May 15, 1997, respectively.
10. In connection with the Merger, Edison and BEC Energy will enter into a
Tax Sharing Agreement pursuant to which income tax benefits and liabilities will
be allocated among BEC Energy, Edison and the other companies affiliated with
BEC Energy.
11. In connection with the Merger, Edison will enter into a Management
Services Agreement with BEC Energy.
12. It is necessary, expedient and in the public interest for the
restructuring contemplated by the Merger Agreement to be consummated in order to
provide long-term advantages to the Company, its shareholders, customers and
employees.
13. This application was authorized by the board of directors of Edison at
a meeting duly called for the purpose and held on January 23, 1997.
14. This application was authorized by the board of directors of Mergeco
by unanimous consent dated May 16, 1997.
WHEREFORE, Edison and Mergeco respectfully pray that pursuant to the
applicable provisions of Chapter 164 of the General Laws of Massachusetts, the
Department:
a. Vote pursuant to Section 14 of Chapter 164 that the proposed issuance
of Mergeco Common Stock to BEC Energy is reasonably necessary for the purposes
stated;
b. Approve and authorize pursuant to Section 14 of Chapter 164 the
issuance by Mergeco of 100 shares of Mergeco Common Stock to BEC Energy in
consideration of payment of $100 by BEC Energy.
5
<PAGE>
c. Determine that the Merger and the terms thereof are consistent with
the public interest;
d. Approve pursuant to Section 96 of Chapter 164 the Merger Agreement and
the Merger of Mergeco into Edison pursuant thereto;
e. Approve pursuant to Sections 17A and 94B of Chapter 164 the Tax
Sharing Agreement between Edison and BEC Energy;
f. Approve pursuant to Section 94B of Chapter 164 the terms of the
Management Services Agreement between Edison and BEC Energy; and
g. Issue such other and further orders as may be necessary.
BOSTON EDISON COMPANY
/s/ THOMAS J. MAY
----------------------------------
Thomas J. May
Chairman, President and
Chief Executive Officer
BOSTON EDISON MERGECO
ELECTRIC COMPANY, INC
/s/ JAMES J. JUDGE
--------------------------------
James J. Judge
Senior Vice President and Treasurer
9
<PAGE>
EXHIBIT D-3
UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION
)
Boston Edison Company ) Docket No. EC97______
BEC Energy )
APPLICATION OF BOSTON EDISON COMPANY
AND BEC ENERGY FOR AUTHORITY TO IMPLEMENT
PROPOSED CORPORATE REORGANIZATION
Boston Edison Company ("BECo") and BEC Energy (herein sometimes jointly
referred to as the "Applicants") request that the Commission authorize
implementation of a corporate reorganization plan (the "Plan") which will create
a holding company structure. Because the Plan would be deemed to result in a
"disposition of jurisdictional facilities" in light of the Commission's decision
in CENTRAL VERMONT PUBLIC SERVICE CORP., 39 F.E.R.C. PARA 61,295 (1987), the
Applicants seek this authorization under Section 203 of the Federal Power Act
("FPA"), 16 U.S.C. Section 824b, and applicable Commission regulations, 18
C.F.R. Part 33. The proposed reorganization will create a holding company to
hold directly the common stock of BECo. The restructuring will have no effect
on the jurisdictional facilities, rates or services of BECo and will be
consistent with the public interest.
The Applicants respectfully request that the Commission approve this
application by September 30, 1997. This is approximately the same time frame in
which BECo anticipates receiving its other necessary regulatory approvals, and
will permit it to proceed as expeditiously as possible with its restructuring.
I.
INTRODUCTION AND BACKGROUND
BECo is an investor-owned regulated public utility incorporated in 1886
under the law of The Commonwealth of Massachusetts. BECo, with its wholly-owned
utility subsidiary Harbor Electric Energy Company ("HEEC"), is currently engaged
principally in the generation, purchase, transmission, distribution and sale of
electric energy. BECo supplies electricity at retail to an area of 590 square
miles in The Commonwealth of Massachusetts, including the City of Boston and 39
surrounding cities and towns. In 1996, the Company served an average of 657,487
retail electric customers.
1
<PAGE>
BECo is a public utility as defined in Section 201(e) of the Federal Power
Act, 16 U.S.C. Section 824(e). It sells electric energy at wholesale to, and
transmits electric energy in interstate commerce for, other electric utilities
and municipal electric departments under rate schedules and tariffs on file with
the Commission.
BECo owns a transmission system which as of December 31, 1996 consisted of
362 miles of overhead circuits operating at 115, 230 and 345 kilovolts ("kV")
and 156 miles of underground circuits operating at 115 and 345 kV. This system
includes substations with a capacity of 10,281 megavolt amperes. BECo also owns
electric generating facilities with an aggregate capacity of more than 2,709
megawatts ("MW") and a distribution system of approximately 4,700 overhead and
900 underground circuit miles.
BECo is subject to the regulation of the Department of Public Utilities of
The Commonwealth of Massachusetts (the "MDPU") under the General Laws of The
Commonwealth of Massachusetts. The MDPU has jurisdiction over BECo's retail
rates for electricity and issuances of bonds, capital stock and certain other
securities and investments by BECo in other entities, including subsidiaries.
BECo is currently an "exempt holding company" under the Public Utility Holding
Company Act of 1935 ("PUHCA") and is therefore subject to limited regulation by
the Securities and Exchange Commission ("SEC").
In addition to the utility operations which it conducts through itself and
HEEC, BECo is also engaged, through its unregulated subsidiary, Boston Energy
Technology Group ("BETG") and subsidiaries of BETG, in certain non-utility
businesses, including energy utilization and conservation, construction
management and district energy. Recently, BECo announced that BETG (through its
subsidiaries) has entered into two joint ventures in the areas of
telecommunications and energy marketing. To date, BECo's investment in, and the
results of operations of, BETG and its subsidiaries have not been material to
the financial condition and results of operations of BECo taken as a whole.
BEC Energy is a voluntary association, commonly known as a Massachusetts
business trust, organized under Chapter 182 of the General Laws of Massachusetts
and having its principal place of business in the City of Boston. It was
organized for the purpose of accomplishing the transactions discussed herein,
and currently holds no property and conducts no operations. All of the
outstanding Common Stock of BEC Energy is owned by BECo.
II.
THE PROPOSED RESTRUCTURING
Subject to various approvals, including the approval of this Commission,
the MDPU, the SEC, the Nuclear Regulatory Commission ("NRC") and BECo
shareholders, the Applicants propose to adopt a holding company structure under
which BECo will become a subsidiary of BEC Energy. As part of the proposal,
BECo also contemplates transferring to the holding company its ownership
interest in BETG. The resulting corporate structure will better position BECo
to operate in the changing electric utility industry, which is being
2
<PAGE>
restructured as the result of both federal and state initiatives, as well as
market changes.(1) The holding company structure is designed to insulate
utility ratepayers and BECo debt and preferred security holders from the
financial risks of non-utility enterprises, while increasing the financing
flexibility of non-utility businesses.
To carry out the restructuring, BECo has formed BEC Energy, a Massachusetts
business trust, and BEC Energy's wholly-owned subsidiary, Boston Edison Mergeco
Electric Company, Inc. ("Mergeco"), a Massachusetts utility corporation, neither
of which entities has any present business or properties of its own. The
outstanding BEC Energy Common Shares are presently owned by BECo, while the
authorized stock of Mergeco is presently subscribed for by BEC Energy and will
be issued to BEC Energy upon approval of the MDPU. BECo, Mergeco and BEC Energy
have entered into a Merger Agreement under which, subject to BECo common
stockholder approval as required by Massachusetts law, BECo will become a
subsidiary of BEC Energy through the merger of Mergeco with and into BECo. In
the Merger, the BECo Common Stock will be exchanged share-for-share for BEC
Energy Common Shares. A copy of the Merger Agreement is attached to this
application as Exhibit H.
Immediately following the Merger, BECo will transfer the stock of BETG to
BEC Energy. After the restructuring, BEC Energy will engage in non-utility
business activities through BETG and its subsidiaries. In the future, BEC
Energy may establish additional subsidiaries to engage in new non-utility
businesses. If the proposed restructuring is consummated, it is intended that
advances to and other investments in non-utility businesses will be made
primarily by BEC Energy rather than by BECo and that the proceeds of financings
by BECo will be used entirely in the conduct of its electric utility business.
HEEC will remain a subsidiary of BECo. None of the other securities of BECo,
including its six outstanding series of Cumulative Preferred Stock (two of which
are represented by Depositary Preferred Shares(2)) and debt securities,
consisting primarily of debentures, commercial paper and bank lines of credit,
will be altered by the Merger. These securities will continue to be outstanding
securities and obligations of BECo. The common shares of BECo will cease to be
listed on the New York and Boston Stock Exchanges, and the common shares of BEC
Energy will be listed and traded instead.
- ---------------
(1) See, e.g., Order No. 888: Promoting Wholesale Competition Through Open
Access Non-Discriminatory Transmission Services By Public Utilities, 75 F.E.R.C.
PARA 61,080 (1996), REAFF D AND CLARIFIED, Order No. 888-A, 78 F.E.R.C.
PARA 61,220 (1997); Electric Industry Restructuring, MDPU 96-100 (December 30,
1996).
(2) The Company's Cumulative Preferred Stock, 8.25% Series, is scheduled to be
redeemed on June 1, 1997.
3
<PAGE>
III.
THE PROPOSED RESTRUCTURING IS CONSISTENT
WITH THE PUBLIC INTEREST
The Commission has held that the transfer of a public utility's common
stock from its existing shareholders to a holding company constitutes a transfer
of the ownership and control of the utility's jurisdictional facilities and is
thus a "disposition of facilities" subject to Commission review and approval
under Section 203 of the FPA. See, e.g., ILLINOIS POWER CO., 67 F.E.R.C.
PARA 61,136 (1994); CENTRAL VERMONT PUBLIC SERVICE CORP., 39 F.E.R.C. PARA
61,295 (1987). Because BECo's proposed restructuring would entail the transfer
of the ownership of its common stock from existing shareholders to BEC Energy,
BECo is seeking approval under Section 203 and the Commission's regulations
thereunder.(3)
The Commission is obligated to approve a proposed disposition of facilities
under FPA Section 203 if it would be "consistent with the public interest". The
applicant need not show a positive public benefit. CENTRAL VERMONT PUBLIC
SERVICE CORP., 39 F.E.R.C. at 61,960, n.14. "Only an absence of negative
detriment [to the public interest] is required." ID. See also PACIFIC POWER AND
LIGHT CO. V. F.P.C., 111 F.2d 1014, 1016 (9th Cir. 1962). To determine whether
a proposal is compatible with the public interest, the Commission has identified
these principal considerations: (1) the effect on utility operating costs and
rate levels; (2) the contemplated accounting treatment; (3) the reasonableness
of the purchase price; (4) the possibility of coercion; (5) the effect on
competition; and (6) the impact on the effectiveness of state and federal
regulation. ILLINOIS POWER CO., 67 F.E.R.C. at 61,352, CITING COMMONWEALTH
EDISON CO., 36 FPC 927, 936-42 (1966), AFF D SUB NOM. UTILITY USERS LEAGUE V.
FPC, 394 F.2d 16 (7th Cir.), CERT. DENIED, 393 U.S. 953 (1968).
The restructuring proposed by the Applicants will be compatible with each
of the relevant public interest considerations. In particular, the
restructuring will provide BECo with a corporate structure that will facilitate
the separation from BECo of currently unregulated business activities, as well
as those that are currently regulated but may become unregulated or competitive
as the expected reduction of vertical integration of the utility business
evolves. The corporate restructuring will also further insulate utility
ratepayers, both wholesale and retail, from the financial risks of present and
future non-utility businesses. Moreover, as explained below, the proposed
restructuring will have no effect on the jurisdictional facilities, rates or
services of BECo.
A. THE PROPOSED RESTRUCTURING WILL NOT AFFECT OPERATING COSTS OR RATE
LEVELS.
The proposed reorganization will have no effect on either BECo's operating
costs or its rate levels. The transaction costs of the proposed restructuring
will not affect BECo's retail or wholesale rates because these costs will not be
included in rates. Any future changes in BECo's wholesale power or transmission
rates will continue to be subject to Commission
- ---------------
(3) Consistent with the Commission's authority under Section 203(b) to issue
supplemental orders if necessary or appropriate, FITCHBURG GAS AND ELECTRIC
LIGHT CO., 58 F.E.R.C. PARA 61,201 at 61,624 (1992), BECo reserves the right to
contest the Commission's jurisdiction over the proposed restructuring if future
events so warrant.
4
<PAGE>
review and acceptance under the FPA.
B. THERE WILL BE NO EFFECT ON BECO'S FINANCIAL STATEMENTS OTHER THAN TO
REFLECT THE TRANSFER OF ITS OWNERSHIP INTERESTS IN CERTAIN OF ITS
SUBSIDIARIES.
In the Merger, BECo will be the surviving entity. Inasmuch as Mergeco will
have no operations and no material assets, the consolidated financial statements
of BECo will be unaffected except for adjustments to reflect the transfer of
BECo's ownership interest in BETG to BEC Energy.(4) BECo's books and records
will continue to be maintained in accordance with the Commission's Uniform
System of Accounts.
C. REASONABLENESS OF PURCHASE PRICE
Because the Plan of Merger involves the conversion of each share of BECo
Common Stock into a share of BEC Energy Common Stock, the proportion of each
shareholder's ownership will be unchanged. As a result, there is no purchase
price for the conversion of this stock. There will be no sale or lease of
utility assets. The restructuring will not result in any change in BECo's
wholesale or retail rates.
D. THE PROPOSED RESTRUCTURING WILL ENTAIL NO COERCION.
Because the proposed reorganization involves only BECo and its affiliates,
there is no possibility of coercion.
E. THE PROPOSED RESTRUCTURING WILL NOT HAVE AN ADVERSE EFFECT ON
COMPETITION.
Market power in wholesale electric markets results from the ownership or
control of generation assets, transmission assets, or other inputs that could be
used as barriers to entry. See, e.g., KANSAS CITY POWER AND LIGHT CO., 67
F.E.R.C. PARA 61,183, at 61,556-558 (1994). BECo's proposed restructuring will
have no effect on the ownership or control of such assets and inputs and thus
will not adversely affect competition.
The restructuring would, moreover, facilitate the establishment in the
future of separate businesses to engage in competitive, unregulated activities.
In that event, the proposed holding company structure would insulate utility
ratepayers from many of the financial risks associated with such ventures.
Moreover, the effect of the proposed structure on competition in the electric
power industry either would be neutral or would offer positive benefits by
enhancing competition.
F. THE PROPOSED RESTRUCTURING WILL NOT IMPAIR THE EFFECTIVENESS OF STATE OR
FEDERAL REGULATION.
The proposed restructuring will not impair effective regulation of BECo's
utility operations by either state or federal agencies. BECo's utility
services, rates, and facilities
- ---------------
(4) The ownership of BETG and its subsidiaries will be transferred to BEC
Energy, and BECo's consolidated financial statements will not incorporate the
impact of these subsidiary operations as they do now. There will be a charge to
the equity accounts of BECo to reflect the removal of these subsidiaries as a
BECo investment. This charge (approximately $7 million) is immaterial to the
financial position of BECo.
5
<PAGE>
will be unaffected by the restructuring and will continue to be regulated by the
MDPU and the FERC. Indeed, because of the increase in the existing operational
delineation between the utility and its unregulated subsidiary which would
result from the contemplated transfer of BETG to BEC Energy, the proposed
reorganization will enhance the auditing of utility costs and revenues.
6
<PAGE>
IV.
INFORMATION REQUIRED UNDER SECTION 33.2 OF THE
COMMISSION'S REGULATIONS
The following information is required by Section 33.2 of the Commission's
regulations:
(a) The applicants' exact names and principal business offices are:
Boston Edison Company
BEC Energy
800 Boylston Street
Boston, Massachusetts 02199
(b) The persons authorized to receive notices and communications with
respect to this application are:
Theodora S. Convisser, Esq.
Clerk of the Corporation and Assistant General Counsel
Boston Edison Company
Legal Department P-361
800 Boylston Street
Boston, Massachusetts 02199
Phone: (617) 424-2530
Fax: (617) 424-2733
Carmen L. Gentile, Esq.
Bruder, Gentile & Marcoux
1100 New York Avenue, N.W.
Suite 510 East
Washington, D. C. 20005-3934
David A. Fine, Esq.
Ropes & Gray
One International Place
Boston, Mass. 02110-2624
(c) BECo's retail service territory is entirely within The Commonwealth of
Massachusetts and includes part or all of the following three of Massachusetts'
14 counties: Middlesex County, Norfolk County and Suffolk County. BEC Energy
has no service territory.
(d) BECo owns approximately 362 miles of overhead transmission circuits
operating at 115, 230 and 345 kV and 156 miles of underground circuits operating
at 115 and 345 kV. Transmission facilities include substations with a capacity
of approximately 10,281 kilovolt-
7
<PAGE>
amperes. All of these transmission facilities are located in Massachusetts.
The electric generating facilities owned by BECo have an aggregate
capacity of more than 2,709 MW. Its electric distribution system consists of
approximately 4,700 overhead and 900 underground circuit miles.
BEC Energy owns no facilities.
(e) As described above, this application is for authorization to implement
a corporate reorganization. There is no consideration or sales price involved.
(f) The facilities to be disposed of include all of the operating
facilities owned by BECo.
(g) The cost of BECo's net utility plant in the form prescribed by the
Uniform System of Accounts is shown in BECo's FERC Form No. 1 for the year ended
December 31, 1996, at pages 200-201.
(h) The proposed reorganization will have no effect on any of BECo's
contracts for the purchase, sale or interchange of electric energy. BEC Energy
has no such contracts.
(i) BECo has applied to and been granted authorization by the MDPU under
Chapter 164, Section 17A of the General Laws of Massachusetts to make the
initial investment in BEC Energy necessary to submit the restructuring proposal
to its stockholders for approval, which was granted on May 15, 1997. Concurrent
with the filing of this Application, BECo is also filing with the MDPU for
approval of the merger under M.G.L. c. 164, Section 96. BECo is also requesting
the concurrence of the NRC, under the Atomic Energy Act, in the restructuring
because BECo is the licensee for Pilgrim Nuclear Power Station. BEC Energy will
file with the SEC a claim of exemption under Section 3(a)(1) of PUHCA from the
obligation to register as a holding company under PUHCA, and an application for
the SEC's approval of the proposed transactions under Section 9(a)(2) of PUHCA.
In addition, BECo will seek an opinion of counsel confirming that the proposed
reorganization will not be a taxable event for its shareholders.
8
<PAGE>
(j) The facts relied upon are set forth above in Sections I through III of
this application. As stated therein, the proposed reorganization will provide
increased financial, managerial and organizational flexibility so that BECo may
be better positioned to operate in the changing electric utility industry; will
create a clear separation of BECo's electric utility business from the
non-utility businesses of other BEC Energy subsidiaries, thereby providing a
better structure for regulators to assure that there is no cross-subsidization
of cost or transfer of business risk from unregulated to regulated lines of
business; will mitigate the potential impact on BECo, its preferred stock and
debt security holders and its customers, of the risks of non-utility businesses;
and will permit the capital structure of BECo to be managed more efficiently.
(k) The franchises held by BECo and their dates of expiration are listed
in Attachment A hereto. BEC Energy holds no franchises.
(l) A form of notice of this filing, suitable for publication in the
Federal Register, is Attachment B hereto.
V.
REQUIRED EXHIBITS
The following exhibits required by Section 33.3 of the Commission's
regulations are filed herewith, except as noted. All Exhibits are relevant only
to, and therefore address only,
BECo:
Exhibit A Resolutions of BECo Board of Directors dated January 23, 1997
authorizing the proposed restructuring. The restructuring
was approved by BECo's shareholders at the May 15, 1997
Annual Meeting.
Exhibit B Statement of the measure of control or ownership exercised
by or over BECo and the nature and extent of any
intercorporate relationships.
Exhibits C BECo's balance sheets and supporting plant schedules as of
December 31, 1996,
E and F actual and PRO FORMA, and BECo's income statement and
retained earnings statement for the 12 months ended
December 31, 1996, actual and PRO FORMA.
Exhibit D A statement of known contingent liabilities, excepting minor
items.
9
<PAGE>
Exhibit G Copies of applications or requests filed with the MDPU,
the NRC and the SEC. Copies of agency orders will be
filed with the Commission after they have been issued.
Exhibit H Copy of the Agreement of Merger among BECo, Boston Edison
Mergeco Electric Company, Inc. and BEC Energy dated as of
March 25, 1997.
Exhibit I A map showing BECo properties and interconnections, and the
principal cities in the area served. BECo is the only
party to the proposed transaction for which a map is
relevant.
VI.
CONCLUSION
The corporate restructuring to be accomplished by the merger satisfies the
standards of Section 203 of the Federal Power Act and consequently should be
approved by the Commission. Such approval by September 30, 1997, assuming
contemporaneous receipt of MDPU and NRC approvals, would enable BECo to proceed
expeditiously with its restructuring plans.
Respectfully submitted,
BOSTON EDISON COMPANY
By: /s/ THOMAS J. MAY
-------------------
Thomas J. May
Chairman, President and Chief
Executive Officer
BEC ENERGY
By: /s/ THOMAS J. MAY
-------------------
Thomas J. May
Chairman, President and Chief
Executive Officer
Theodora S. Convisser
Carmen L. Gentile
Attorneys of BOSTON EDISON COMPANY
800 Boylston Street
Boston, Massachusetts 02199 Dated: May 30, 1997
10
<PAGE>
VERIFICATION
COMMONWEALTH OF MASSACHUSETTS)
) ss:
COUNTY OF SUFFOLK )
Thomas J. May, being duly sworn deposes and says: That he is the Chairman,
President and Chief Executive Officer of Boston Edison Company, a Massachusetts
corporation, and that he is also the Chairman, President and Chief Executive
Officer of BEC Energy, a Massachusetts business trust, these two entities being
the two Applicants in the foregoing Application; that he has read the foregoing
Application and knows the contents thereof; and that the same are true to the
best of his knowledge and belief.
/s/ THOMAS J. MAY
--------------------
Thomas J. May
Subscribed to and sworn to before me, a notary public of The Commonwealth of
Massachusetts, this 30th day of May, 1997 at Boston, Massachusetts.
/s/ THEODORA S. CONVISSER
-------------------------------
Theodora S. Convisser
Notary Public
The Commonwealth of Massachusetts
My commission expires: March 10, 2000
11
<PAGE>
EXHBIIT D-5
June 9, 1997
BECo Ltr. # 97-059
United States Nuclear Regulatory Commission
Attention: Document Control Desk
Washington, D. C. 20555
Docket No. 50-293
LICENSE NO. DPR-35
REQUEST FOR NUCLEAR REGULATORY COMMISSION CONSENT TO INDIRECT TRANSFER OF
CONTROL OF INTEREST IN THE PILGRIM NUCLEAR POWER STATION OPERATING LICENSE
INCONNECTION WITH CREATION OF NEW HOLDING COMPANY
Boston Edison Company ("Boston Edison") hereby requests Nuclear Regulatory
Commission ("NRC" or the "Commission") consent to the indirect transfer of
control of Boston Edison's interest in Operating License No. DPR-35 for Pilgrim
Nuclear Power Station ("Pilgrim") pursuant to 10 CFR Section 50.80. Approval of
the Commission is necessary in order to allow creation of a new holding company
structure for Boston Edison. Granting the request contained in this submission
will not in any way affect Boston Edison's position or commitment as owner and
operator of Pilgrim or its responsibilities under the Operating License or under
federal regulations.
1
<PAGE>
I. BACKGROUND
Boston Edison is an investor-owned regulated public utility incorporated in
1886 under the laws of the Commonwealth of Massachusetts. Boston Edison, with
its wholly-owned utility subsidiary Harbor Electric Energy Company, is currently
engaged principally in the generation, purchase, transmission, distribution and
sale of electric energy. Boston Edison supplies electricity at retail in an
area of 590 square miles in the Commonwealth of Massachusetts, including the
City of Boston and 39 surrounding cities and towns. In addition, Boston Edison
supplies electricity at wholesale to a number of municipal and other customers.
Among the electric generating facilities owned by Boston Edison is Pilgrim, a
670 MW nuclear powered electric generating facility which is owned and operated
by Boston Edison pursuant to Operating License No. DPR-35 issued in 1972 by the
Atomic Energy Commission in Docket No. 50-293.
Boston Edison's utility operations are subject to the regulation of the
Department of Public Utilities of the Commonwealth of Massachusetts (the "MDPU")
under chapter 164 of the General Laws of the Commonwealth of Massachusetts. The
MDPU's jurisdiction includes supervision over Boston Edison's retail rates for
electricity and issuances of bonds, capital stock and certain other securities
and investments by Boston Edison in other entities, including subsidiaries.
Boston Edison is also a "public utility" as defined in Section 201(e) of
the Federal Power Act, 16 U.S.C. Section 824(e). Boston Edison sells electric
energy at wholesale to, and transmits electric energy in interstate commerce
for, other electric utilities and municipal electric departments under rate
schedules and tariffs on file with the Federal Energy Regulatory Commission
("FERC"). Boston Edison is currently an "exempt holding
2
<PAGE>
company" under the Public Utility Holding Company Act and is, therefore, subject
to limited regulation by the Securities and Exchange Commission ("SEC").
By virtue of the comprehensive regulatory authority exercised by these
agencies over Boston Edison's rates for electricity, Boston Edison is an
"electric utility" as defined in 10 CFR Section 50.2.
In addition to the utility operations, which it conducts through itself and
Harbor Electric Energy Company, Boston Edison is also engaged, through its
unregulated subsidiary, Boston Energy Technology Group ("BETG") and subsidiaries
of BETG, in certain non-utility businesses, including energy conservation and
utilization, construction management, and district cooling. Recently, Boston
Edison announced that BETG (through its subsidiaries) has entered into
agreements to form two joint ventures in the areas of telecommunications and
energy marketing. To date, Boston Edison's investment in, and the results of
operations of, BETG and its subsidiaries have not been material to the financial
condition and results of operations of Boston Edison as a whole.
Subject to various approvals, including the approval of this Commission,
the MDPU, the SEC, and the FERC, Boston Edison proposes to adopt a holding
company structure under which it will become a wholly-owned subsidiary of a
parent company, BEC Energy ("BEC"), a Massachusetts business trust. This
proposal was approved by vote of Boston Edison shareholders at the Company's
annual meeting held on May 15, l997. As part of the proposal, Boston Edison
also contemplates transferring to BEC its ownership interest in BETG. The
resulting corporate structure will more clearly separate Boston Edison's
regulated utility activities from its non-utility enterprises consistent with
federal and state
3
<PAGE>
initiatives for restructuring of the electric utility industry(5).
The holding company structure will also provide increased financial, managerial,
and organizational flexibility to better position Boston Edison to operate in
the changing utility business environment and will increase the financing
flexibility of its non-utility businesses. Notwithstanding the formation of the
holding company, Boston Edison will continue to hold the Operating License for
Pilgrim and will remain fully regulated as an electric utility by the MDPU and
the FERC with respect to its rates and charges for electric service.
As a result of this corporate restructuring, Boston Edison will become a
wholly-owned subsidiary of BEC, a new holding company, and the present equity
owners of Boston Edison will become the equity owners of BEC. Thus, Boston
Edison will become indirectly, rather than directly, owned by its present equity
owners. The new holding company structure will result in a change in the
identity of the direct holder of Boston Edison's equity but no change in the
beneficial owners of that equity, who will merely exchange their Boston Edison
shares for shares in BEC. The holding company structure will not, in any way,
affect the license responsibilities and authority of Boston Edison to operate
and maintain Pilgrim, nor will it transfer ownership or control of Boston
Edison's present interest in Pilgrim to any other person. Moreover, the
restructuring will in no way affect Boston Edison's continued status as an
"electric utility" under federal regulations, nor will it affect Boston Edison's
continued technical and financial qualifications for the operation of Pilgrim.
OTHER REGULATORY APPROVALS.
- ---------------
(5) See, e.g., Order No. 888: Promoting Wholesale Competition Through Open
Access Non-Discriminatory Transmission Services By Public Utilities, 75
F.E.R.C. PARA61,080 (1996); REAFF'D AND CLARIFIED, Order No. 888-A, 78
F.E.R.C. PARA61,220 (1997); Electric Industry Restructuring, MDPU 96-100
(December 30, 1996).
4
<PAGE>
In addition to Commission approval, the proposed restructuring as a holding
company will also require the following regulatory approvals:
1. MASSACHUSETTS DEPARTMENT OF PUBLIC UTILITIES. Because Boston Edison is an
electric company under Massachusetts law (see, M.G.L. c.164, Section 1), it is
required to obtain authorization from the MDPU with respect to the corporate
restructuring under M.G.L. c.164, Section 96.
2. FEDERAL ENERGY REGULATORY COMMISSION. Because Boston Edison is a "public
utility" subject to FERC jurisdiction (see, l6 U.S.C. Section 824) by reason of
its ownership of facilities used to sell power for resale, it must obtain FERC
approval of the corporate restructuring under l6 U.S.C. Section 824(b).
3. SECURITIES AND EXCHANGE COMMISSION. Because Boston Edison is an "exempt"
holding company under the Public Utility Holding Company Act of 1935 ("PUHCA"),
it must obtain approval of the corporate restructuring from the SEC under
Section 9(a)(2) of PUHCA. BEC will file with the SEC a claim of exemption under
Section 3(a)(1) of PUHCA from the obligation to register as a holding company
under PUHCA.
II. APPLICATION FOR CONSENT TO INDIRECT TRANSFER OF CONTROL
Pursuant to 10 CFR Section 50.80, Boston Edison hereby requests that the
Commission consent to the indirect transfer of control of Boston Edison's
interest in Operating License No. DPR-35, which transfer of control will result
from the implementation of the proposed corporate restructuring.
A. REASONS FOR TRANSFER OF CONTROL. As described above, management of Boston
Edison is proposing a corporate restructuring which involves formation of BEC, a
holding company which will become the parent of Boston Edison and will itself be
owned by the present
5
<PAGE>
stockholders of Boston Edison. This action received stockholder approval on May
15, 1997 and is described more fully in the Proxy Statement/Prospectus dated
March 26, 1997, which has been filed by Boston Edison and BEC with the SEC, a
copy of which is attached hereto as Exhibit A.
The holding company structure is intended to provide clear separation
between BECo's regulated and non-utility lines of business which is consistent
with the directions of federal and state utility regulators. At the same time,
the holding company structure will provide increased financial, managerial and
organizational flexibility in order to better position Boston Edison to operate
in the changing electric utility industry and will permit BEC to take advantage
of non-utility business opportunities in a more timely manner. The holding
company structure is a well-established form of organization for companies
conducting multiple lines of business, particularly entities engaged in both
regulated and unregulated activities. See "Reasons for the Restructuring" and
"Benefits of Holding Company Structure" at pps. 13-15 of the Proxy
Statement/Prospectus.
The transfer of direct equity ownership of Boston Edison to the new holding
company involves a change of legal ownership of Boston Edison and, therefore, a
technical change in the direct control of Boston Edison and its interest in the
Operating License, which transfer of control is subject to prior consent of the
Commission. See 42 U.S.C. Section 2234 and 10 CFR Section 50.80(a). However,
this proposed corporate restructuring, in fact, has minimal effect on the
underlying ownership of Boston Edison because the existing stockholders of
Boston Edison will continue to indirectly control Boston Edison which holds the
Operating License.
B. SUPPORTING INFORMATION. Set forth below is the supporting information
required by the implementing regulation, 10 CFR Section 50.80, for an
application for consent to such an
6
<PAGE>
indirect transfer, namely information with respect to the identity and technical
and financial qualifications of the proposed transferee as described in 10 CFR
Sections 50.33 and 50.34. Insofar as Pilgrim's Operating License was issued
pursuant to Section 104(b) of the Atomic Energy Act, 42 U.S.C. Section 2134(b),
this application is not subject to the requirements of 10 CFR Section 50.33a.
1. 10 CFR SECTION 50.33 GENERAL INFORMATION:
(a) NAME OF LICENSEE: Boston Edison Company will continue to be the
Licensee under the Operating License.
(b) ADDRESS OF LICENSEE: The business address of Boston Edison is 800
Boylston Street, Boston, Massachusetts 02199.
(c) DESCRIPTION OF BUSINESS: Boston Edison is an "electric company" under
Massachusetts law, engaged in the business of making, selling and distributing
electricity, and regulated by the Massachusetts Department of Public Utilities
and the Federal Energy Regulatory Commission.
(d) CORPORATE CHARTER:
(i) Boston Edison is a corporation organized under the laws of
Massachusetts with its principal place of business in Boston, Massachusetts.
(ii) The names and addresses of the directors and principal
officers of Boston Edison, all of whom are United States citizens, are as
follows:
7
<PAGE>
Name and Address Title
---------------- -----
Thomas J. May Director, Chairman of the Board,
Boston Edison Company President and Chief Executive
800 Boylston St. Officer
Boston, MA 02199
Gary L. Countryman Director
Liberty Mutual Insurance Company
175 Berkeley Street
Boston, MA 02117
Thomas G. Dignan, Jr. Director
Ropes & Gray
One International Place - 40th Flr.
Boston, MA 02110-2624
Charles K. Gifford Director
Bank Boston
100 Federal Street
Mail Stop (01-25-05)
Boston, MA 02106-2016
Nelson S. Gifford Director
Fleetwing Capital
75 Federal Street - Suite 1100
Boston, MA 02110-2509
Matina S. Horner Director
Teachers Insurance and Annuity Association
College Retirement Equities Fund
730 Third Avenue
New York, NY 10017
Dr. Sherry H. Penney Director
University of Mass at Boston
Administration Building, Flr 3
100 Morrissey Boulevard
Boston, MA 02125-3393
8
<PAGE>
Herbert Roth, Jr. Director
Boston Edison Company
800 Boylston Street
Boston, MA 02199
Stephen J. Sweeney Director
Boston Edison Company
800 Boylston Street
Boston, MA 02199
Alison Alden Sr. Vice President-Sales,
Boston Edison Company Services and Human Resources
800 Boylston Street
Boston, MA 02199
E. Thomas Boulette Sr. Vice President-Nuclear
Boston Edison Company
800 Boylston Street
Boston, MA 02199
L. Carl Gustin Sr. Vice President-Corporate
Boston Edison Company Relations
800 Boylston Street
Boston, MA 02199
John J. Higgins, Jr. Sr. Vice President
Boston Edison Company
800 Boylston Street
Boston, MA 02199
Douglas S. Horan Sr. Vice President and General
Boston Edison Company Counsel
800 Boylston Street
Boston, MA 02199
9
<PAGE>
James J. Judge Sr. Vice President and Treasurer
Boston Edison Company
800 Boylston Street
Boston, MA 02199
Ronald A. Ledgett Sr. Vice President-Fossil, Field
Boston Edison Company and Electric Delivery Service
800 Boylston Street
Boston, MA 02199
Robert J. Weafer, Jr. Vice President-Finance,
Boston Edison Company Controller and
800 Boylston Street Chief Accounting Officer
Boston, MA 02199
Leon J. Olivier Vice President-Nuclear
Boston Edison Company Operations and Station Director
800 Boylston Street
Boston, MA 02199
Theodora S. Convisser Clerk of the Corporation
Boston Edison Company
800 Boylston Street
Boston, MA 02199
(iii) FOREIGN CONTROL: Boston Edison is not now owned, controlled or
dominated by an alien, foreign corporation or foreign government. After the
corporate restructuring, Boston Edison will become wholly-owned by the new
holding company organized under Massachusetts law, which will be a Massachusetts
business trust owned by Boston Edison's present stockholders and which will not
be owned, controlled or dominated by an alien, a foreign corporation or foreign
government.
(e) AGENCY STATUS: Boston Edison is not acting as agent or representative
of any person.
10
<PAGE>
(f) APPLICABLE REGULATORY AGENCIES:
The following regulatory agencies, in addition to the Commission, have
jurisdiction over Boston Edison:
Massachusetts Department of Public Utilities
100 Cambridge Street, - 12th Flr.
Boston, MA 02202
Federal Energy Regulatory Commission
888 First Street, N.E.
Washington, D.C. 20426
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
(g) TRADE AND NEWS PUBLICATIONS:
The following publications circulate in the general area of Pilgrim Nuclear
Power Station:
The Boston Globe
P. O. Box 2378
Boston, MA 02107-2378
Patriot Ledger
P. O. Box 9159
Quincy, MA 02169
Old Colony Memorial
P. O. Box 959
Plymouth, MA 02362
(h) RESTRICTED DATA:
This application does not contain any Restricted Data or other defense
information, and it is not expected that any such information will become
involved. To the extent such information were to be involved, Boston Edison
agrees that it will appropriately safeguard such information and will not permit
any individual to have access to Restricted Data until the Office of Personnel
Management shall have made an investigation and reported to the
11
<PAGE>
Commission on the character, associations and loyalty of such individual, and
the Commission shall have determined that permitting such person to have access
to Restricted Data will not endanger the common defense and security of the
United States.
2. 10 CFR SECTION 50.33 FINANCIAL INFORMATION:
Boston Edison is an "electric company" under applicable Massachusetts law,
M.G.L.c.164, Section 1, and a "public utility" under applicable federal law, l6
U.S.C. Section 824(e). Boston Edison's retail rates for electric service are
regulated by the MDPU under Massachusetts law, and its wholesale rates are
regulated by FERC under federal law. Boston Edison is an "electric utility" as
defined in the Commission's regulation at 10 CFR Section 50.2 and is, therefore,
exempt from the requirements of 10 CFR Section 50.33(f).
Notwithstanding the exemption from the requirements of 10 CFR Section 50.33
(f), the following additional information is provided addressing the subject of
financial qualifications.
OPERATION COSTS: A copy of Boston Edison's Annual Report to the SEC on
Form 10-K for the year 1996 is attached as Exhibit B hereto. The "Management's
Discussion and Analysis" and the financial statements as set forth at pps. 15-51
in Exhibit B demonstrate that Boston Edison continues to have reasonable
assurance of obtaining the funds necessary to cover the estimated operating
costs of Pilgrim. The revenues and expenses of Boston Edison relative to the
operation of Pilgrim will not be affected by the proposed corporate
restructuring.
DECOMMISSIONING FUNDING: In accordance with 10 CFR Sections 50.33(k)(2)
and 50.75(b), Boston Edison submitted the "Pilgrim Nuclear Power Station
Decommissioning Funding Report" to the Commission on July 26, 1990. Boston
Edison has continued to update
12
<PAGE>
decommissioning funding calculations as required by NRC regulations and has made
all required payments into its Decommissioning Trust. Decommissioning funding
for Pilgrim will not be affected by the proposed corporate restructuring.
3. 10 CFR SECTION 50.34 TECHNICAL INFORMATION:
The proposed restructuring into a holding company structure will result in
no change in the current operation and management of Pilgrim. Boston Edison
will continue as the owner and operator of Pilgrim. Dr. E. Thomas Boulette,
Senior Vice President - Nuclear will continue as the senior manager for Pilgrim
and will continue to report to Thomas J. May, Boston Edison's Chairman,
President and Chief Executive Officer. There will be no change as a result of
the corporate restructuring in any key station personnel, operators, or
management.
III. CONCLUSION
Based upon the foregoing, Boston Edison respectfully requests that the
Commission consent to the indirect transfer of control described herein.
Approvals from the Massachusetts Department of Public Utilities and FERC are
anticipated by September 1997. Boston Edison respectfully requests NRC action
on this application by September 30, 1997.
/s/ E.T. BOULETTE
E. T Boulette, PhD
JDK/dmc/holdcomp
Exhibit A: Proxy Statement/Prospectus, dated March 26, 1997
Exhibit B: Boston Edison's 1996 Annual Report to the SEC on Form 10-K
cc: Regional Administrator, Region I
U.S. Nuclear Regulatory Commission
475 Allendale Road
King of Prussia, PA 19406
Mr. Alan B. Wang, Project Manager
Project Directorate I-3
Office of Nuclear Reactor Regulation
Mail Stop: 14 B2
U.S. Nuclear Regulatory Commission
1 White Flint North
11555 Rockville Pike
Rockville, MD 20852
Senior Resident Inspector
Pilgrim Nuclear Power Station
George B. Dean, Esq., Massachusetts Attorney General's Office
William S. Stowe, Esq., Boston Edison Company
<PAGE>
EXHIBIT F-1
ROPES & GRAY
ONE INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02110-2624
June 23, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
We are counsel to Boston Edison Company ("Boston Edison") and its
subsidiary, BEC Energy ("Holding Company"). We have examined Holding Company's
Application on Form U-1 (File No. 1-2301) filed on June 23, 1997 with the
Securities and Exchange Commission (the "Commission") under the Public Utility
Holding Company Act of 1935, as amended (the "Act") (the "Application"),
requesting an order of the Commission under the Act (i) approving the
acquisition by Holding Company of all of the 49,944,397 outstanding and reserved
shares of Common Stock, $1.00 par value, of Boston Edison (the "Boston Edison
Shares") in connection with the proposed exchange of 49,944,397 Common Shares of
Holding Company, $1.00 par value (the "Shares") for the Boston Edison Shares
(the "Exchange") and (ii) granting Holding Company, and each of its subsidiary
companies, and Boston Edison, and each of its subsidiary companies, upon
consummation of such Exchange and reorganization, an exemption under Section
3(a)(1) of the Act from all provisions of the Act except Section 9(a)(2). The
Exchange is to be effected by means of an Agreement and Plan of Exchange, dated
as of March 25, 1997 (the "Plan"), between Boston Edison and Holding Company, a
copy of which is included as an exhibit to the Application.
Based upon our examination of the Application and such other instruments,
documents and matters of law as we have deemed requisite, we are of the opinion
that:
1. Holding Company and Boston Edison have each been duly organized and are
validly existing under the laws of The Commonwealth of Massachusetts, with full
power and authority to own its properties and conduct its business as described
in the Application. Boston Edison is qualified to do business as a foreign
corporation in the state of Maine. To the best of our knowledge, neither
Holding Company nor Boston Edison is qualified as a foreign corporation in any
other jurisdiction and the natures of their respective operations are such that
they are not required to be so qualified.
1
<PAGE>
2. Assuming the proposed Exchange is accomplished in accordance with the
Plan and as described in the Application: (i) all laws of The Commonwealth of
Massachusetts applicable to the Exchange will have been complied with, (ii) the
Shares will be legally issued, fully paid and nonassessable, and the holders
thereof will be entitled to the rights appertaining thereto set forth in the
Amended and Restated Declaration of Trust of Holding Company, (iii) Holding
Company will legally acquire the Boston Edison Shares; and (iv) the consummation
of the transactions proposed in said Application will not violate the legal
rights of the holders of any securities issued by Boston Edison or any associate
company thereof.
3. Holding Company is an entity of the type commonly known as a
"Massachusetts business trust." Under Massachusetts law, shareholders could,
under certain circumstances, be held personally liable for the obligations of
Holding Company. However, Holding Company's Amended and Restated Declaration of
Trust disclaims shareholder liability for acts or obligations of Holding Company
and requires that notice of such disclaimer be given in each agreement,
obligation and instrument entered into or executed by Holding Company or its
Trustees. The Amended and Restated Declaration of Trust provides for
indemnification out of the property of Holding Company for all loss and expense
of any shareholder held personally liable solely by his reason of being or
having been a shareholder of Holding Company. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which Holding Company itself would be unable to meet its
obligations.
We hereby consent to the filing of this opinion as an exhibit to the
Application.
Very truly yours,
/s/ ROPES & GRAY
Ropes & Gray
2
<PAGE>
EXHIBIT G-2
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Twelve months ended
March 31, 1997 March 31, 1996
------------------------------------
<S> <C> <C>
OPERATING REVENUES $1,701,179 $1,636,674
OPERATING EXPENSES:
Fuel 214,923 162,515
Purchased power 412,220 378,916
Operations and maintenance 414,320 454,343
Restructuring costs 0 34,000
Depreciation and amortization 191,360 155,542
Demand side management programs 31,345 39,991
Taxes - property and other 107,468 108,041
Income taxes 86,297 71,262
---------- ----------
Total operating expenses 1,457,933 1,404,610
---------- ----------
OPERATING INCOME 243,246 232,064
Other income (expense), net 98 (286)
---------- ----------
Operating and other income 243,344 231,778
Interest charges:
Long-term and medium-term debt 93,232 106,597
Other 15,087 10,818
AFUDC - debt (2,253) (2,948)
---------- ----------
Total interest charges 106,066 114,467
---------- ----------
---------- ----------
NET INCOME 137,278 117,311
Preferred stock dividends 15,292 15,559
---------- ----------
EARNINGS AVAILABLE FOR COMMON STOCK $121,986 $101,752
---------- ----------
---------- ----------
Weighted average shares outstanding 48,375 47,203
Earnings per share of common stock $2.52 $2.16
</TABLE>
1
<PAGE>
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
Mar. 31, 1997 Dec. 31, 1996
------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Utility plant in service, at original cost $4,404,687 $4,393,585
Less: accumulated depreciation 1,592,821 1,550,317
---------- $2,811,866 ---------- $2,843,268
Nuclear fuel, net 82,249 82,944
Construction work in progress 49,722 30,376
---------- ----------
Net utility plant 2,943,837 2,956,588
Investments in electric companies, at equity 23,525 23,054
Nuclear decommissioning trust 137,480 132,076
Current assets:
Cash and cash equivalents 4,201 5,651
Accounts receivable 232,569 233,024
Accrued unbilled revenues 32,665 34,922
Fuel, materials & supplies, at average cost 46,833 57,075
Prepaid expenses and other 28,690 344,958 45,146 375,818
---------- ----------
Regulatory assets:
Power contracts 84,122 88,963
Redemption premiums 29,719 31,052
Income taxes, net 47,823 47,483
Postretirement benefit costs 22,441 15,009
Nuclear outage costs 15,622 3,432
Other 15,822 215,549 16,087 202,026
---------- ----------
Other deferred debits 37,109 39,729
Total assets $3,702,458 $3,729,291
---------- ----------
---------- ----------
CAPITALIZATION AND LIABILITIES
Common stock equity $1,030,658 $1,036,424
Cumulative preferred stock:
Nonmandatory redeemable series 120,023 119,954
Mandatory redeemable series 81,622 81,465
Long-term and medium-term debt 1,058,553 1,058,644
Current liabilities
L-T debt/preferred due within one year $102,267 $102,667
Notes payable 220,790 201,454
Accounts payable 101,777 134,083
Accrued interest 13,313 24,378
Dividends payable 25,343 25,343
Other 122,150 585,640 115,812 603,737
---------- ----------
Deferred credits:
Power contracts 84,122 88,963
Accumulated deferred income taxes 496,712 498,718
Accumulated deferred ITC 57,881 58,899
Nuclear decommissioning liability 138,790 133,388
Other 48,457 825,962 49,099 829,067
---------- ---------- ---------- ----------
Total capitalization and liabilities $3,702,458 $3,729,291
---------- ----------
---------- ----------
</TABLE>
2
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
12 mos. ended 12 mos. ended
Mar. 31, 1997 Mar. 31, 1996
--------------------------------------
<S> <C> <C>
Cash flows from operating activities: $137,278 $117,311
Net income
Non-cash adjustments to net income:
Depreciation and amortization 230,704 204,710
Deferred income taxes and ITC (4,437) (25,819)
Allowance for borrowed funds used during construction (2,253) (2,948)
Net Changes in:
Accounts receivable and accrued unbilled revenues (2,488) (41,302)
Fuel, materials and supplies 4,925 7,629
Accounts payable 7,504 (12,214)
Other current assets and liabilities (76,257) 81,784
Other, net 35,527 28,150
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 327,503 357,301
-------- --------
Cash flows provided (used) by investing activities:
Plant expenditures (excluding AFUDC) (161,517) (163,804)
Nuclear fuel expenditures (51,598) (4,276)
Sale of plant assets, net (106) 3,018
Investments (30,123) (19,002)
-------- --------
NET CASH USED BY INVESTING ACTIVITIES (243,344) (184,064)
-------- --------
Cash flows provided (used) by financing activities:
Issuance of common stock 9,675 65,287
Issuance of long-term debt/medium-term, debt 100,000 125,000
Redemption of preferred stock (4,000) 0
Retirement of long-term debt (101,600) (200,600)
Net change in notes payable 18,730 (62,543)
Dividends paid (106,175) (101,961)
-------- --------
NET CASH USED BY FINANCING ACTIVITIES (83,370) (174,817)
-------- --------
Increase/(decrease) in cash and cash equivalents 789 (1,580)
Cash and cash equivalents at beginning of period 3,412 4,992
Cash and cash equivalents at end of period $4,201 $3,412
</TABLE>
3
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 2,943,837
<OTHER-PROPERTY-AND-INVEST> 161,005
<TOTAL-CURRENT-ASSETS> 344,958
<TOTAL-DEFERRED-CHARGES> 252,658
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 3,702,458
<COMMON> 48,515
<CAPITAL-SURPLUS-PAID-IN> 695,862
<RETAINED-EARNINGS> 286,281
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,030,658
81,622
120,023
<LONG-TERM-DEBT-NET> 1,058,553
<SHORT-TERM-NOTES> 131,290
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 89,500
<LONG-TERM-DEBT-CURRENT-PORT> 100,267
2,000
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,088,545
<TOT-CAPITALIZATION-AND-LIAB> 3,702,458
<GROSS-OPERATING-REVENUE> 422,725
<INCOME-TAX-EXPENSE> 12,489
<OTHER-OPERATING-EXPENSES> 362,647
<TOTAL-OPERATING-EXPENSES> 375,136
<OPERATING-INCOME-LOSS> 47,589
<OTHER-INCOME-NET> (140)
<INCOME-BEFORE-INTEREST-EXPEN> 47,449
<TOTAL-INTEREST-EXPENSE> 26,514
<NET-INCOME> 20,935
3,817
<EARNINGS-AVAILABLE-FOR-COMM> 17,118
<COMMON-STOCK-DIVIDENDS> 22,802
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 42,960
<EPS-PRIMARY> 0.35
<EPS-DILUTED> 0
</TABLE>
<PAGE>
EXHIBIT H-1
UNITED STATES OF AMERICA
BEFORE THE
SECURITIES AND EXCHANGE COMMISSION
BEC Energy ) File No.
Boston Edison Company ) 1-2301
NOTICE OF FILING
Take notice that on June , 1997, BEC Energy, a Massachusetts business
trust ("Holding Company"), 800 Boylston Street, Boston, Massachusetts 02199, and
Boston Edison Company ("Boston Edison"), a Massachusetts electric utility
company exempt from registration under Section 3(a)(1) of the Public Utility
Holding Company Act of 1935 (the "Act"), have filed an application under
Sections 3(a)(1), 9(a)(2) and 10 of the Act.
The application requests an order: (a) authorizing Holding Company to
acquire directly all of the outstanding common stock of Boston Edison; (2)
granting Holding Company an exemption under Section 3(a)(1) from all provisions
of the Act, except Section 9(a)(2) thereof; and (3) granting Boston Edison an
exemption under Section 3(a)(1) from all provisions of the Act, except Section
9(a)(2) thereof.
Boston Edison is an "electric utility company" as defined under Section
2(a)(3) of the Act and thus is a "public utility company" as defined in Section
2(a)(5) of the Act. Boston Edison supplies electricity service to the public in
eastern Massachusetts, with the majority of its customers located in the
metropolitan Boston area.
Holding Company was organized under Massachusetts law to carry out the
proposed restructuring, which would result in Holding Company's becoming a
holding company over Boston Edison. Currently, Holding Company has subscribed
for all of the outstanding common stock of Boston Edison Mergeco Electric
Company, Inc. ("Merger-Sub"), a Massachusetts corporation that has also been
incorporated to carry out the proposed restructuring. Neither Holding Company
nor Merger-Sub presently conduct any business or own any utility assets.
The proposed restructuring is intended to establish a more appropriate
corporate structure for the conduct of non-utility business activities, while
providing a mechanism for protecting the utility business and utility customers
of Boston Edison from the risks and costs of such activities.
1
<PAGE>
The transaction would be accomplished pursuant to an Agreement and Plan of
Merger to be entered into among Boston Edison, Holding Company and Merger Sub,
under which Merger-Sub would be merged with and into Boston Edison (the
"Merger") and each outstanding share of common stock of Merger-Sub would be
converted into one share of common stock of Boston Edison (collectively, the
"Boston Edison Stock"). In addition, pursuant to the merger, each outstanding
share of Boston Edison Stock would be converted into one common share of Holding
Company. Upon consummation of the Merger, each person that would own Boston
Edison Stock immediately prior to the merger would own a corresponding number of
common shares of Holding Company, and Holding Company would own all of the
outstanding Boston Edison Stock.
The preferred stock of Boston Edison (the "Boston Edison Preferred Stock")
and all indebtedness of Boston Edison would remain securities and obligations of
Boston Edison after the proposed restructuring. Consequently, the holders of
Boston Edison's debt securities and the Boston Edison Preferred Stock would not
be affected by the proposed restructuring.
Holding Company asserts that, following the consummation of the proposed
restructuring, it would be a public-utility holding company entitled to an
exemption under Section 3(a)(1) of the Act because it and each of its public-
utility subsidiaries from which it would derive a material part of its income
would be predominately intrastate in character and would carry on their business
substantially within The Commonwealth of Massachusetts.
All interested persons are referred to the application for complete
statements of the proposed restructuring summarized above. The application is
available for public inspection through the Commission's Office of Public
Reference.
Interested persons wishing to comment or request a hearing on the
application should submit their views in writing by _______________ to the
Secretary, Securities and Exchange Commission, Washington, DC 20549, and serve a
copy on the relevant applicants at the address specified above. Proof of
service (by affidavit or, in case of an attorney at law, by certificate) should
be filed with the request. Any request for hearing shall identify specifically
the issues of fact or law that are disputed. A person who so requests will be
notified of any hearing, if ordered, and will receive a copy of any notice or
order issued in the matter. After said date, the application, as filed or as
amended, may be granted.
2
